Deck 10: Mutual Assent

Question 1

Both the Code and the Restatement provide that an authorized means of accepting an offer is any reasonable means of communication.

Answer 1

True

Question 2

George offered to paint Catherine's barn for $3,000. Catherine said she would accept the offer if George would paint the woodshed, too. At this point, they have made a valid and enforceable contract.

Answer 2

False

Question 3

A contractual agreement always involves either a promise exchanged for a promise or a promise exchanged for a completed act or forbearance to act.

Answer 3

True

Question 4

On Tuesday morning John sends a letter to Arlene rejecting her offer, but later the same day John changes his mind and sends a letter of acceptance to Arlene. The letter of acceptance will be effective only if it is received by Arlene before she receives the rejection.

Question 5

If an offer states that a reply must be received by a certain date, receipt is presumed in those situations when acceptance is mailed.

Question 6

Silence can never be an acceptance.

Question 7

A contract is invalid if all of the terms are not clearly stated.

Question 8

Pedro receives an unordered three-CD set in the mail accompanied by the statement, "This CD set can be purchased for the special price of $19.95. If the CDs are not returned within two weeks they will be deemed accepted and the payment is due within 30 days of receipt of the CDs." Pedro is under no obligation to either return the CDs or to pay for them; he may use them or give or throw them away.

Question 9

Contract law generally places more importance on the intent of the parties to form a contract than on the inclusion of certain terms in the contract.

Question 10

The common law "mirror image" rule applies to an offer and the acceptance of that offer in a contract for the sale of goods.

Question 11

If no time is stated, an offer will terminate automatically after a reasonable period of time.

Question 12

Under the UCC, an acceptance must always be identical to an offer for a valid contract to be formed.

Question 13

Ron offers to sell Pete his stamp collection. Pete gives Ron $10 to induce Pete into keeping his offer open for a week. If Ron decides on day four of the week that he really does not want to sell to Pete, he can revoke his offer without fear of a breach of contract lawsuit being filed against him.

Question 14

If Todd seemingly offers to sell to Ashton his wood gun cabinet but intended to and believes he is offering his wood china cabinet, and Ashton accepts the offer, reasonably believing it is for the gun cabinet, a contract is formed for the sale of the gun cabinet.

Question 15

An output contract is an agreement of a buyer to purchase a seller's entire output for a stated period.

Question 16

An acceptance is generally effective upon dispatch.

Question 17

If Megan intends to offer and believes she is offering for sale to Alexis her RL1500 space heater and Alexis reasonably believes Megan is offering her RL1900 heater and accepts on that belief, a contract has not been formed because there was no agreement as to the subject matter.

Question 18

Martha puts an ad in her company's newsletter saying she would pay $5,000 for a first-issue Grace Kelly stamp to the first person who accepted her offer. Martha decides she would rather go on a European vacation and changes her mind about investing in the stamp. Martha posts a sign at the executive water fountain saying the offer is no longer valid. A foreman from a branch plant takes a flight to the Chicago main office to see Martha and accept her offer. Martha does not owe him any money to pay for a breach of contract.

Question 19

An auctioneer is the offeror and a contract is formed when a bid is made.

Question 20

If Bill tells Sara that he will give her two days to decide if she wants to buy his car, he cannot sell it to anyone else during that time.

Question 21

Hugh recently purchased a motorcycle for $3,000 but has had extensive problems starting the motor. In disgust at not being able to start the motor, Hugh shouts to his friends, "Any of you want to buy this thing for $20?" A contract will be formed if a friend gives Hugh a twenty-dollar bill.

Question 22

Under FTC regulations and state legislation, a seller may not advertise goods at one price and then raise the price once demand has been stimulated.

Question 23

The law applies a subjective standard in determining whether there was the requisite intent to enter into a contract.

Question 24

In the case of Lefkowitz v. Great Minneapolis Surplus Store, Inc. , the court decided that the store's advertisement was not a valid offer to enter into a contract but was merely an invitation to make an offer.

Question 25

Unless an auction is advertised or announced to be without reserve, when a bid is made at an auction, it can be withdrawn if the auctioneer has not yet accepted the bid, because the auctioneer has the power of acceptance.

Question 26

In an output contract, the seller can operate a factory on a 24-hour-a-day schedule and insist that the buyer take all of the output when that buyer had operated only eight hours a day at the time the contract was made and the buyer had knowledge only of the eight-hour-a-day operating schedule.

Question 27

An offer may be made to the general public.

Question 28

Dakota's question to Austin, "Will you buy my computer for $800?" is an offer to Austin.

Question 29

On June 1, a civic club made an offer to pay a beer distributor to have ten kegs delivered to the city park for a July 4th fund-raising event. On June 30, the city passed a new law prohibiting consumption of alcohol in the city park. The civic club's offer is terminated on June 30.

Question 30

An offer can only be communicated by words; conduct cannot constitute an offer.

Question 31

The Code's firm offer rule applies only to offers in writing that are made by a merchant offeror.

Question 32

An offer is an indefinite proposal made by one person to another.

Question 33

An acceptance that contains terms different from or additional to those in the offer receives the same treatment under the common law and under the UCC.

Question 34

An offer must be in a particular form to have legal effect.

Question 35

Death or insanity of either the offeror or the offeree ordinarily terminates the offer.

Question 36

The person to whom an offer is made is an offeree.

Question 37

A counteroffer operates as a rejection of the original offer.

Question 38

The UCC and the Restatement make no provision for supplying terms omitted by the parties' contract.

Question 39

A defective acceptance does not create a contract, but does constitute a new offer.

Question 40

Ricardo posts a sign in the neighborhood offering $50 for the return of his Saint Bernard. Alicia, who knows nothing of the reward, finds the dog and returns it to Ricardo. Alicia is entitled to the reward.

Question 41

To be effective, an offer must:

A) be sufficiently definite and certain.
B) be communicated to the offeree.
C) manifest an intent to enter into a contract.
D) All of these.
E) None of these.

Question 42

Maxine offered to sell her video camera to Tom for $200 and also stated to Tom, "I will give you two weeks to accept my offer." One week later Tom learned that Maxine had sold the video camera to Cindy. In this case:

A) Maxine has revoked her offer to Tom.
B) Maxine's offer is a firm offer and she must sell Tom a video camera for $200.
C) Maxine must get the camera back from Cindy if Tom accepts within two weeks.
D) an option contract was created, so Maxine is liable to Tom if she sells the camera to someone else within the two-week period.

Question 43

Will makes an offer to Ike, but before Ike can accept, the state legislature passes a law that makes Will's offer illegal. The new statute:

A) automatically terminates the offer.
B) has no effect on the offer.
C) acts as a condition on the offer.
D) acts as a rejection of the offer by the offeree.

Question 44

Albert read ElectroCorp's ad in the local newspaper advertising a music system for $89. Albert rushed to the store to buy the system only to be told by the salesperson that the ad was a misprint and the price should have been $289. Albert gave the salesperson $89 plus sales tax and demanded the music system.

A) The ad is a firm offer by the merchant, and the music system must be sold for $89.
B) The ad is a contract and the store must abide by terms stated in the contract.
C) The store must accept the price stated in the ad, but only if Albert has a copy of the ad with him.
D) Albert is merely making an offer to ElectroCorp to buy the music system for $89 plus sales tax.

Question 45

The UCC provides that a merchant is bound to keep a written offer open for the stated period, but no longer than:

A) ten days.
B) two months.
C) three months.
D) a reasonable time.

Question 46

It is a fundamental policy that if the parties do not provide definite enough terms in their contracts, the courts will complete the contract in the court's best judgment.

Question 47

In the Osprey L.L.C. v. Kelly-Moore Paint Co.,Inc. case, the Supreme Court of Oklahoma held that:

A) the lease was ambiguous.
B) the plain language of the lease required that it be renewed by delivering notice either personally or by mail, and Kelly-Moore had done neither.
C) a faxed delivery of the written notice to renew the commercial lease was sufficient to exercise the renewal option of the lease.
D) a lease is a specialized contract, and therefore the usual rules for the interpretation of contractual writings do not necessarily apply.

Question 48

Action Play Equipment ordered 200 feet of chain, 400 clasps, and 50 swing seats from Brace Company for $1,600 to be delivered within three weeks of the order. Brace sent back an acceptance form which stated payment was due within 30 days of delivery or a finance charge of 2% per month would be added to the balance. What is the status of the interaction between Action and Brace?

A) There is a valid contract under the UCC, and the additional payment terms become part of the contract unless Action objects within a reasonable period of time.
B) There is a valid contract for the goods, but the payment terms will not become part of the contract.
C) There is no contract, because Brace has made a counteroffer by adding payment terms.
D) There is no contract, because the method of transportation has not been decided.

Question 49

An ad in a newspaper or a circular describing goods and stating prices would generally be considered:

A) a firm offer if made by a merchant.
B) an offer if made by a merchant, but not a firm offer.
C) an offer irrespective of who made the offer.
D) an invitation to buyers to make an offer to buy goods.

Question 50

The Rogers family has always wanted to buy the beautiful house at the top of the hill. The owners of the house, the Thompsons, decided to sell and called Mr. Rogers. Before he could get back in touch with Mr. Thompson, Mr. Rogers suffered a heart attack and died. Mr. Rogers' adult daughter, to whom the Thompsons had not spoken, still wants the house. She may:

A) not accept, since the offer is terminated.
B) not accept, because she does not have the capacity.
C) accept, since the contract offer is assignable.
D) accept, since the offer cannot be revoked without notice.

Question 51

When does acceptance of an offer to enter into a unilateral contract generally occur?

A) Upon notice of intent to accept by the offeree.
B) Upon full performance by the offeror.
C) Upon commencement of performance by the offeree.
D) Upon full performance by the offeree.

Question 52

The definition of commercial reasonableness as used in contract law includes:

A) the business judgment of expert business managers.
B) that the practices customary in the type of transaction involved be used as a standard.
C) the requirements to develop creative and innovative solutions never before used in a particular industry.
D) None of these.

Question 53

The UCC provides missing contract terms in which of the following instances?

A) The contract fails to specify the price.
B) The contract fails to specify the place of delivery.
C) Both failure to specify the price and failure to specify the place of deliver.
D) The UCC cannot provide missing contract terms; only the parties can provide terms.

Question 54

Elmer wrote a letter to his friend Fred offering to sell Fred an 80-acre farm for $200,000. After mailing the letter, Elmer learns that the farm is actually worth $300,000 and changes his mind about selling. In this case, Elmer:

A) has made a firm offer to Fred which cannot be revoked.
B) can revoke his offer at any time before Fred accepts it, because there is no consideration to keep it open.
C) must keep the offer open, because this is an option contract.
D) cannot, because of promissory estoppel, revoke his offer to Fred.

Question 55

Robinson Wiring Co. submits a written offer for Turner Construction's use as part of its bid as a general contractor for an office complex. Robinson knows Turner is relying on Robinson's bid. Robinson:

A) can revoke its offer at any time until it is notified that Turner's bid has been accepted.
B) cannot, under the doctrine of promissory estoppel, revoke its bid even prior to acceptance.
C) cannot revoke its offer since it is a "firm offer."
D) can revoke its offer for a reasonable time under the doctrine of "commercial reasonableness."

Question 56

An agreement of a seller to supply a buyer with all of the buyer's requirements for certain goods is known as:

A) an output contract.
B) a requirements contract.
C) a firm offer.
D) promissory estoppel.

Question 57

Elvis makes an offer to Fred, but before Fred can accept, the state supreme court decides a case that makes Elvis's offer illegal. The court's decision:

A) automatically terminates the offer.
B) has no effect on the offer.
C) acts as a condition on the offer.
D) acts as a rejection of the offer by the offeree.

Question 58

If there is no time specified for the acceptance of an offer, when does the offer terminate?

A) After 48 hours from receipt of the offer.
B) After two weeks from dispatch of the offer.
C) After 30 days from receipt of the offer.
D) After a reasonable period of time, which depends on the circumstances.

Question 59

Tim mails an offer to Brian on June 15. Brian receives the offer on June 16. Tim mails a revocation of the offer on June 17. Brian mails a letter of acceptance on June 18. Brian receives the revocation on June 19. Tim receives the letter of acceptance on June 20. Was a contract formed?

A) Yes, on June 16.
B) Yes, on June 18.
C) Yes, on June 20.
D) No, the offer was revoked before acceptance.

Question 60

Wes, who is an art collector, offered to buy a print from Le Monde Gallery. Le Monde balked at the price, sending Wes a letter of rejection. That day it discovered that the print was not as highly valued as originally thought. Le Monde immediately telephoned Wes to accept his offer. Is there a contract?

A) Yes, since the acceptance was received before the rejection.
B) No, because the rejection was effective upon dispatch.
C) No, because the rejection terminated the offer.
D) Yes, because the acceptance is always effective upon dispatch.

Question 61

Jeb submits a bid to construct a student union building for the local community college. He realizes after submitting the final bid that he forgot to include the cost of the window casings for the entire building. He may:

A) revoke his bid at any time.
B) not revoke his bid due to the statutory irrevocability of the bid.
C) reject the offer of the college to build the student union when the college chooses his bid because it is the lowest.
D) refuse, based on the windfall theory, to put in the window casings even if they were part of the bid specifications put out by the college.

Question 62

Marilyn read an ad in the school newspaper offering a $1,000 swimming scholarship to anyone who could swim 500 laps in the school pool. Marilyn called the advertiser and began swimming. She has reached lap number 460; she feels great and is sure she can make it all the way. The advertiser:

A) may revoke the offer since there has not yet been an acceptance.
B) may not revoke the offer since Marilyn has already accepted it.
C) must permit Marilyn the opportunity to finish her attempt to swim the 500 laps, or pay damages if he interferes with the completion of the laps.
D) must pay Marilyn $920, because she has performed 92% of the offer.

Question 63

The case in which the court held that a newspaper advertisement was an offer because it contained a promise of performance in definite terms in return for a requested act was:

A) Catamount Slate Products, Inc. v. Sheldon.
B) Sherrod v. Kidd.
C) Lefkowitz v. Great Minneapolis Surplus Store, Inc .
D) Giannetti v. Cornillie.

Question 64

The way parties usually show mutual assent is by:

A) an offer by words or conduct and an acceptance by words or conduct.
B) a proposal in words and an acceptance in words.
C) an act exchanged for an act.
D) an offer and a counteroffer.

Question 65

Which is not a revocable offer?

A) A bid to construct a bridge for the city.
B) An offer to buy stock in the ABC Corporation once it is formed.
C) A unilateral offer to pay John $30 to mow your lawn after he has completed half the job and indicates he wishes to finish.
D) None of these are revocable offers.

Question 66

Don offers to sell his diamond ring to Emily. If Diane overhears the offer and says, "I accept the offer":

A) Diane cannot accept because the offer wasn't made to her.
B) this is a valid acceptance.
C) the offer has not been communicated to the offeree.
D) Diane cannot accept because this is an invitation seeking offers and not an offer.

Question 67

Destruction of the subject matter has what effect on the offer?

A) The offer is terminated.
B) The offer is delayed until additional subject matter can be located.
C) This creates an impossibility of fact that does not terminate the offer.
D) The offer is merely delayed under the "Hardship Rule."

Question 68

Which of the following would NOT be a merchant under Article 2 of the UCC?

A) The owner of a hardware store which sells paint.
B) A car mechanic who fixes used cars and sells them in his spare time.
C) A person who inherits three speedboats and wants to sell them to buy a car.
D) Two of these are true.

Question 69

Assume an offeree mails a rejection to the offeror on November 1. This rejection arrives at the offeror's place of business on November 5. In the meantime, on November 4, the offeree sends the offeror an acceptance that arrives November 6. Which of the following statements correctly describes the situation?

A) There was no contract.
B) There was a contract since the acceptance was mailed prior to the time the rejection was received.
C) There was no contract because the rejection was mailed first.
D) There was no contract because the acceptance was mailed more than three days subsequent to the rejection.

Question 70

Charlene hears about a reward being offered by the local television station for information leading to the arrest and conviction of a local rapist. She supplies the requested information and the suspect is then arrested and convicted. In this case:

A) Charlene cannot collect the money unless the offer was specifically made to her by the station.
B) the offer by the television station was an offer made to the general public to enter into a unilateral contract, which offer Charlene has accepted.
C) because Charlene failed to notify the station of her intention to supply the information before actually doing so, she has not accepted their offer.
D) Charlene was just doing her duty as a citizen and has no right to the payment of any money.

Question 71

Under the common law, the __________ must be the mirror image of the __________.

A) acceptance, offer.
B) offer, acceptance.
C) contract, offer.
D) contract, consideration.

Question 72

Michelle's Boutique places an ad in the Sunday paper for beautiful, top-of-the-line designer suits for $3.00. Alice sees the ad in the paper and goes to the store to stock up on business suits for her new job. Michelle apologizes for the misprint. Alice has just finished a class in contract law and insists that the store sell her five suits for $15. Alice threatens to sue Michelle for breach of contract.

A) This is a valid contract based on commercial reasonableness.
B) The ad in the newspaper is an offer to sell, Alice accepted the offer, and there is an enforceable contract.
C) The ad in the newspaper is a solicitation seeking offers, but is not an offer to sell; therefore, Alice will not be able to successfully sue for breach of contract.
D) None of these.

Question 73

Which of the following would most likely be a merchant with respect to the goods in question under the UCC definition?

A) Arthur is an authorized IBM computer dealer.
B) Brian employs two salesmen to sell his homemade furniture.
C) Clarence has a store in which he sells used lawn mowers.
D) All of these would be merchants.
E) None of these would be merchants.

Question 74

A conditional acceptance:

A) generally accepts the original offer, but provides a way to later avoid contractual obligations.
B) is a common type of counteroffer.
C) operates as a rejection and not a new offer.
D) cannot exist because an acceptance is, by definition, an act that manifests the offeree's willingness to enter into a contract on the terms of the offer.

Question 75

Lyle offers to sell his house to Dennis for $95,000. Dennis responds, "I will pay you $95,000 for the house if you first paint the second floor." This response could best be described as:

A) an acceptance.
B) a counteroffer.
C) a rejection.
D) an invitation.

Question 76

Jack has been in the business of selling carpeting for 20 years. He calls Bob, who is opening another branch of his furniture stores, and offers to sell him 100 square yards of carpet at $20 per square yard. Bob agrees and sends back the following letter confirming the deal: Dear Jack:
As we discussed on the phone January 3, we accept your offer of 100 square yards of Saxony "heather blue" carpeting at the rate of $20 per square yard. We also reserve the right to purchase any additional yardage we need to carpet our other showroom facilities at the same rate for one year from that date. Very truly yours,
Bob
Which of the following is true?

A) There is a contract for only 100 square yards of carpeting.
B) There is a contract for 100 square yards PLUS the additional yardage.
C) There is no contract since Bob made a counteroffer.
D) There is no contract because the additional term is too uncertain to become a contract term.

Question 77

James offers to sell four acres of land to Jennifer for $8,000 and further offers to keep the offer open for one month if Jennifer will pay him $100 for the privilege. Jennifer pays James $100. Which statement describes the payment of $100?

A) An implied in fact contract has been formed.
B) A unilateral contract has been formed.
C) This created a formal contract.
D) This created an option contract.

Question 78

If Anna Laura, in return for the payment of $200 to her by Catherine, gives Catherine an option to buy Jesse, a prime Arabian mare, at any time within the next 14 days at a price of $50,000, Anna Laura's offer to Catherine is:

A) a revocable option contract.
B) an irrevocable output contract.
C) irrevocable for the 14 days covered by the option.
D) a requirements contract.

Question 79

A __________ is the refusal to accept an offer.

A) revocation.
B) counteroffer.
C) rejection.
D) statutory irrevocability.

Question 80

Arnold has offered to take Bob into his accounting firm as a partner upon payment of $5,000 cash. In response, Bob says, "I'll give you $3,000 cash now and I will pay you the remainder in two months after I see whether things are working out as a partnership."

A) Bob has made a counteroffer and hence there is no contract.
B) Bob has rejected the terms of the original offer, but there is still a contract.
C) Under Article 2 of the UCC, Arnold is a merchant making a firm offer. Hence there is a contract.
D) Any indefinite provisions in the contract between Arnold and Bob will be supplied by Article 2 of the UCC.