Deck 7: The Nature and Creation of Contracts

Question 1

Marissa had 500 shares in XYZ Corp that she was willing to sell at a price of $10 each.She wrote a letter to Mark that said,"I will sell 500 shares in XYZ Corp to you at a price of $10 each.You can accept any time within the next month.This is a firm offer." Marissa signed and sealed that document.When he received that letter two days later,Mark decided to accept Marissa's offer.He wrote a letter to that effect,but then forgot to mail it.Two weeks later,the value of the shares increased to $20 each.Marissa therefore no longer wanted to sell them at the original price.She telephoned Mark and told him that her offer was revoked.She was entitled to do so.

Answer 1

False

Question 2

Agreements created between family members or friends are never legally enforceable.

Answer 2

False

Question 3

Mysty offered to sell her car to Tim for $15 000.Tim faxed a letter to her that said,"Consider it sold.I'll bring the money to you next Monday when I pick up the vehicle.Of course,for that price,I'll want you to install a new stereo in it." Tim did not hear anything more from Mysty,but he arrived at her door the following Monday with $15 000 in cash.He was delighted to find that a new stereo had been installed in the car,but disappointed when Mysty refused to accept his money or hand over the vehicle.Mysty is required to do so because there was a valid offer and acceptance.

Answer 3

False

Question 4

An advertisement in a newspaper is usually considered an offer if it contains a clear description of the product and a specific price.

Question 5

On June 1,Sasha agreed to sell a car to Elaine for $10 000.Under the terms of that agreement,she was required to pay the price to him on June 10 and he was required to transfer ownership in the car to her on the same day.Once Sasha and Elaine do so,their contractual relationship will be terminated for all purposes.

Question 6

A person may be held liable under a contract even if they did not personally want (subjectively intend)to enter into an enforceable agreement.

Question 7

Anita was required to enter her co-worker's office to get a file.When she was there,she saw the draft of an email message on the screen of her co-worker's computer.The message was addressed to Anita,but it had not yet been sent.In the message,the co-worker offered to sell Anita her leather jacket for $100.Once Anita saw the email,she was entitled to accept the offer.

Question 8

Cindy calls David to accept his offer to trim her hedges in exchange for a haircut.Cindy is described as the

A)invitee.
B)contracting party.
C)offeree.
D)offeror.
E)proposer.

Question 9

The three elements needed to create most contracts are best described as

A)offer and acceptance,consideration,and a written agreement.
B)an intention to create legal relations,offer and acceptance,and consideration.
C)an intention to create legal relations,an exchange of value,and consideration.
D)offer and acceptance,an invitation to treat,and communication of the offer.
E)quid pro quo,volenti non fit injuria,and consensus ad idem.

Question 10

Henrique posts a notice at the racetrack that says he is willing to sell his old horse for $5000.When he returns to the track the next day two people arrive at the same time to buy the horse.A court would most likely say that Henrique

A)can keep the horse and refuse to sell to either person.
B)must choose between the buyers and sell the horse for $5000 to one of them.
C)must sell the horse to one buyer and find another horse to sell to the other buyer.
D)must sell the horse to one buyer and pay $5000 to the other buyer.
E)can accept the offer of both buyers.

Question 11

A statute makes it illegal and a crime for an unlicensed individual to "offer for sale a switchblade knife." Mack,who does not hold a licence,owns a store that deals in a variety of items.The front window display case,which is visible from the street,contains a switchblade knife that has a price tag on it.Mack has undoubtedly committed a crime because he does not hold a licence.

Question 12

In order to decide whether the parties intended to create a legally enforceable agreement,the courts apply a subjective "reasonable person" test.

Question 13

An offer,that is not an option contract,is always automatically revoked if either the offeror or the offeree dies before acceptance.

Question 14

A firm offer is binding upon the offeror if it was given in writing.

Question 15

As a general rule,the courts will not enforce an agreement that is not in writing.

Question 16

Simon owns 10 000 shares in ABC Inc.He wanted to sell half of them in order to raise $20 000 in cash.He therefore wrote separate letters to Bronwyn and Gwyneth on June 1.In each case he said,"I will sell 5000 shares in ABC Inc to you for $20 000.Please respond by any reasonable means within one week." Bronwyn replied on June 3 with a letter that said: "I accept your offer." Simon received that letter on June 5.On June 6,he received a fax from Gwyneth that said,"I accept your offer." Simon then informed Gwyneth by telephone that he had already sold the shares to Bronwyn.In that situation,there is no contract between Simon and Gwyneth.

Question 17

Wessam offers to sell Ivan a bicycle for $100.Ivan asks to think about it for a couple days.The next day,Wessam tells him that she has increased the price to $150.Wessam has

A)lost her capacity to enter into a contract.
B)rejected the offer.
C)allowed a reasonable time to lapse.
D)revoked her original offer.
E)made a counter offer.

Question 18

Jose and Mei entered into what appeared to be a contract for the sale of an antique automobile.Jose agreed to pay the purchase price and Mei agreed to deliver the car to Jose's garage.Secretly,however,Mei planned to keep the car for herself.Will a court enforce the agreement?

A)A court will not enforce the agreement because the existence of Mei's secret plan meant that the parties did not really agree to the same thing.
B)A court will not enforce the agreement because Mei expected to keep the automobile and contract law tries to protect reasonable expectations.
C)A court will enforce the agreement because a reasonable person would have concluded that the parties entered into an exchange of promises for value.
D)A court will enforce the agreement because Mei behaved badly and the court wants to punish that type of behaviour.
E)A court will not enforce the agreement because business people must be able to rely on outward appearances.

Question 19

An option is valid only if it is placed under seal.

Question 20

Under the normal tendering process,a party that submits a bid may have obligations under both Contract A and Contract B.

Question 21

Simon believed that he might want to buy certain shares from Melinda in the near future.On June 1.He therefore paid her $1000 in exchange for an option to purchase 5000 shares in Acme Inc at $10 each on or before October 1.Which of the following statements is TRUE?

A)If the market value of the shares immediately dropped to $5 each and stayed there throughout the option period,Simon would be obligated to buy 5000 shares from Melinda at double their actual value.
B)If the market value of the shares immediately increased to $20 each and stayed there throughout the option period,Melinda might be obligated to sell 5000 shares to Simon at half of their market value.
C)If the market value of the shares immediately increased to $20 each,Melinda could revoke her offer to sell the shares any time before Simon accepted it.
D)The option would create enforceable obligations only if and when Simon agreed to buy the shares.
E)Simon will be entitled to enforce the option only if Melinda cannot find any other potential buyers.

Question 22

The Town of Oxbridge wants to build a new arts centre,but it is not sure which construction company it should hire for the job.Which type of action is the town most likely to make?

A)a call for tenders
B)an auction
C)an option
D)an irrevocable bid
E)a request for invitations to treat

Question 23

In early March,Mathilde offered to rent her cottage to Tom for the first two weeks of July at a cost of $1200.Mathilde did not impose any restrictions on acceptance.Tom did not yet know when his vacation was scheduled,so he did not immediately respond to Mathilde's offer.Tom learned at the end of June that he was entitled to vacation during the first two weeks of July.He therefore arrived at the cottage on July 1st and told Mathilde for the first time that he was accepting her offer.Which of the following statements is most likely TRUE?

A)Tom has the right to stay at the cottage because he accepted Mathilde's offer by silence.
B)Tom has the right to stay at the cottage because he accepted Mathilde's offer by conduct.
C)Tom does not have the right to stay at the cottage because he let Mathilde's offer lapse as it was at best open for acceptance for a reasonable time.
D)Tom has the right to stay at the cottage because Mathilde should have known,as a reasonable person,that he would want to do so.
E)Tom has the right to stay at the cottage because Mathilde gave an offer.

Question 24

Which of the following statements is TRUE?

A)A firm offer can only be revoked in writing.
B)An offeree may never communicate a revocation in the same way that it communicated its offer.
C)The offeree cannot require acceptance to be made in writing.
D)An offer that appeared in a newspaper can only be terminated by a revocation that appears in the same newspaper.
E)An counter-offer destroys the original offer so as to act as a revocation of that offer.

Question 25

An offer can be revoked

A)even if it was a firm offer.
B)if it was made under seal.
C)within a reasonable time of acceptance.
D)if it is contained in an option.
E)as long as the offeror communicates that intention to a judge.

Question 26

Regarding a battle of the forms,which one of the following does a court often consider when deciding objectively which contractual terms were agreed to by the parties?

A)the likelihood of future dealings between parties
B)the existence of a duty of care in negligence
C)the availability of insurance
D)the parties' subjective intentions
E)the usual practice in the industry

Question 27

Gordon sends a letter to Thomas that says,"I will buy your diesel engine for $7000." At exactly the same time,Thomas sends a letter to Gordon that says,"I will sell my diesel engine to you for $7000." Which of the following statements is TRUE?

A)This situation is described as a "cross-acceptance."
B)This situation involves a meeting of the minds.
C)Both letters respond to an offer.
D)This situation creates a bilateral contract.
E)Each letter contains an offer,but neither contains an acceptance.

Question 28

Joan wants to buy a prime piece of real estate from Guiaumme,but she is waiting to find out whether the bank will give her a loan.In order to make sure that Guiaumme does not sell the land to anyone else,Joan gives him $5000 in exchange for his promise not to sell the land to her within a certain period of time if she decides to go through with the purchase.This type of agreement is called

A)a firm offer.
B)a tender.
C)a conditional offer.
D)an option.
E)a proposal.

Question 29

A battle of the forms usually occurs when

A)each party's standard form contract contains all of the terms of the agreement.
B)each party insists on multiple copies of a document.
C)each party insists upon using the offeror's standard form contract for every transaction.
D)each party claims to have entered into a contract on the basis of its own standard form contract and the two standard form contracts that the parties exchanged do not have the same terms.
E)each party insists upon using the offeree's standard form contract for every transaction.

Question 30

"Contract law represents the pathology of commerce." Which of the following statements fully explains that quotation?

A)Most contracts eventually develop problems that require a judge's help.
B)Since most contracts are performed without problems,there is no reason for business people to study the rules of contract.
C)Most of the problems that affect commercial contracts are unpredictable and unavoidable.
D)A business person should go to court every time that a commercial contract develops a problem.
E)Legal issues usually arise only if a commercial relationship becomes unhealthy.

Question 31

A bilateral contract

A)can occur as a result of a tendering process.
B)always imposes obligations on only one party.
C)must always be accepted through spoken words rather than through conduct.
D)does not require a meeting of the minds.
E)always starts with an invitation to treat.

Question 32

Lori offers to sell her season pass to the ballet for $200.Her co-worker,Alan,says that he will buy the pass for $150.Alan has provided

A)an option.
B)a counter offer.
C)a firm offer.
D)a tender.
E)a trust.

Question 33

Which of the following statements is TRUE?

A)An intention to create legal relations always exists in a commercial context.
B)An intention to create legal relations never exists in a family context.
C)The courts use a subjective test when determining whether or not there is an intention to create legal relations.
D)When dealing with the intention to create legal relations,courts apply presumptions that cannot be rebutted.
E)The existence of an intention to create legal relations is generally readily apparent.

Question 34

Rabby Inc is an oil exploration company that wants a sophisticated piece of equipment to be designed for its operations in northern Alberta.It therefore wants to receive bids from various engineering companies.In the context of a normal tendering process,which of the following statements is TRUE?

A)Each engineering company that participates will issue an invitation to treat,an offer,and an acceptance.
B)An engineering company should carefully check its cost calculations before submitting its bid because that bid will be turned into Contract A if Rabby Inc accepts it.
C)The law will recognize Contract B in order to protect the Rabby Inc while it evaluates the bids that it has received.
D)Rabby Inc will communicate an offer to enter into a fair bidding process,issue an invitation to treat for the offers for the design contract,and accept one engineering company's offer to design the equipment.
E)The tendering process requires the parties to satisfy a number of statutory requirements.

Question 35

Which of the following statements best explains why the courts use an objective test to determine whether or not there is an intention to create legal relations?

A)It would not be fair to recognize a contract unless both parties actually intended to be bound by that contract.
B)The law of contracts is intended to protect reasonable expectations.
C)The reasonable person test is only useful for determining subjective intentions.
D)The courts are confident that people do not lie in court.
E)An objective test is used if a party is a company,while a subjective test is used if a party is a human being.

Question 36

By submitting a tender,a party normally

A)creates an enforceable contract,called an option,to create another contract in the future.
B)prevents the other party from revoking its bid.
C)accepts an offer to enter into a contract for services.
D)creates an invitation to treat.
E)accepts an offer to enter into a fair bidding process.

Question 37

Morris posted a notice promising to pay a $50 reward to anyone who found his lost cat.Morris saw Edna,his neighbour,and drew her attention to the notice.She expressed sympathy,but said that she did not have time to help because she was rushing off to work.When she returned home early that afternoon,however,she went to Morris's house to tell him that she would look for the cat.Although he was not at home,she searched the area,found the animal,and returned it to his house.Morris now refuses to pay Edna the $50.A court would most likely say that Edna can

A)do nothing because Morris is entitled to revoke his offer at any time.
B)demand payment because a contract was created through her act of acceptance in acting on the offer.
C)do nothing because she was required to communicate her acceptance in writing.
D)demand payment because the offeree decides whether an offer has been open for a reasonable period.
E)do nothing because she rejected Morris's offer when she said she had to rush to work.

Question 38

Which of the following statements is TRUE?

A)The death or insanity of either the offeror or the offeree will always prevent acceptance.
B)An option will never come to an end by the mere lapse of time.
C)Neither party can revive an offer once a counter offer has been made.
D)A firm offer can be accepted any time before it is terminated.
E)There cannot be a "meeting of the minds" if the offeror accepts the offeree's counter offer.

Question 39

Which of the following statements is TRUE?

A)An offer is automatically terminated as soon as it is accepted by one person.
B)An invitation to treat indicates that the offeror is willing to receive an acceptance.
C)The courts sometimes recognize a difference between an offeree's harmless inquiry and a counter offer.
D)The courts use a subjective test to determine whether a statement is an offer or an invitation to treat.
E)An invitation to treat indicates that the offeree is willing to receive an acceptance.

Question 40

ABC Inc and XYZ Ltd entered into a written agreement for the purchase and sale of paper products.That agreement contained a clause that said: "This arrangement is not entered into,nor is this memorandum written,as a formal or legal agreement,and shall not be subject to the jurisdiction of the Law Courts or in any other way be enforceable by law." ABC Inc wants the paper products,but XYZ Ltd refuses to deliver them.Which of the following statements is most likely TRUE?

A)The agreement is legally enforceable because the clause in question is inconsistent with the rules of offer and acceptance.
B)The agreement is legally unenforceable because the clause in question was an invitation to treat,rather than an offer.
C)The agreement is legally enforceable because the clause in question demonstrates that the parties had a meeting of the minds.
D)The agreement is legally unenforceable because the parties did not intend to create legal relations.
E)The agreement is legally enforceable because it was written.

Question 41

An invitation to treat

A)can only occur within the context of a call for tenders.
B)is a type of offer.
C)always occurs in response to an offer.
D)is a part of some tenders.
E)constitutes a significant risk when it occurs in the context of sale negotiations.

Question 42

Ronan asked his friends,Siobhan and Jeff,to help him move,and said he would give them each $10.Siobhan tells him maybe and Jeff tells him he will be there.Which of the following is true?

A)Ronan and Siobhan have a contract only if Siobhan shows up and helps Ronan move.
B)Siobhan and Jeff have a contract only if Jeff shows up to help Ronan move.
C)Ronan does not have a contract with either Jeff or Siobhan because friends cannot enter into contracts.
D)Ronan has a contract with Jeff but not with Siobhan.
E)There is no contract with either because Ronan did not pay enough money.

Question 43

In late April,Harper Corp placed an advertisement in a newspaper that said: "We cater parties.Up to 150 people for only $3000.No hidden fees or costs." The manager of Martin Inc telephoned Harper and left a voice message that said,"We are calling to place an order to have a party for 150 people on the first of June." The next day,the manager of Harper called Martin and explained that,due to a scheduling conflict,it could not stage a party on the first of June.Martin now says that a contract had been created and that Harper has breached that agreement.Which of the following statements is TRUE?

A)Because a contract cannot be created between corporations,Harper Corp cannot be held liable to Martin Inc.
B)A contract was created between the parties as soon as Martin left its message on Harper's answering machine,regardless of when Harper listened to that message.
C)Because an advertisement is generally presumed to be an invitation to treat,Martin's telephone message probably was not a contractual acceptance.
D)In classifying the nature and effect of Martin's telephone message,a judge would focus exclusively on the intention that Martin had at the time.
E)If it did not actually have a scheduling conflict,Harper Corp would be obligated to satisfy Harper Inc's order.

Question 44

On March 1st,Janet,who lives in Edmonton,sent a letter to Tad,who lives in Toronto.The letter said: "I want to buy your car.I'll pay $10 000 for it.If I don't hear anything more from you,I'll assume that I can drive the car away when I'm in Toronto at the beginning of April." When he received that letter on March 5th,Tad phoned Janet.She was not home,but he left a message on her answering machine that said: "I'm willing to sell my car to you,but only if you promise to pay $15 000.I need your answer sent by mail within one week." Janet listened to that message on March 6.That same day,she sent a second letter to Tad that said,"I received your message.I'll pay $15 000,but not one cent more." On March 10,Tad decided that he did not want to sell the car after all.He immediately left a message on Janet's answering machine that said: "The deal is off.I'm keeping my car." An hour later,he received Janet's second letter.Which of the following statements is most likely TRUE?

A)The parties do not have a contract because an offer that is received by telephone cannot be accepted by mail.
B)A contract was created in Edmonton on March 6.
C)The parties do not have a contract because Janet was not entitled to say that her initial offer would be accepted through silence.
D)A contract was created in Toronto on March 10.
E)Tad successfully revoked his offer before he received Janet's acceptance.

Question 45

The phrase consensus ad idem means

A)one idea in two minds.
B)value for the agreement.
C)agreement on that previously mentioned.
D)offer of agreement.
E)less than the value of that.

Question 46

As Bennie entered The Big Table restaurant,he noticed a sign that said "All-U-Can-Eat-At Our Reasonable Price." Because the restaurant was busy,and because the staff was all tied up with other customers,Bennie found a table for himself and then began eating from the self-serve buffet.After finishing his meal,he paid an appropriate amount to the cashier and left the building.Bennie had not spoken,or been spoken to,at any point.Which of the following statements is TRUE?

A)While he undoubtedly was required to pay for his meal,the lack of communication means that Bennie's obligation to pay could not have arisen in the law of contract.
B)Assuming that the general rules apply,no contract was formed until Bennie paid for his meal.
C)The facts of this case provide a clear illustration of the concept of a unilateral contract.
D)If a court was required to decide how much Bennie had to pay for his meal,it would rely on the concept of quantum meruit.
E)because he ate without first receiving permission to do so from the restaurant,Bennie probably committed a crime.

Question 47

A firm offer is

A)always supported by consideration.
B)always placed under seal.
C)the same thing as an option.
D)freely revokable.
E)always found,among other times,in a tender situation.

Question 48

Jerry has made an offer to contract with Cosmo.If Cosmo returns to Kelowna from Brandon before August 31,he can live in Jerry's spare room for four months without paying rent.Cosmo proposes for an option on the offer until August 1,which Jerry accepts.In July,Jerry realizes his other friend,George,is willing to move in and pay twice what Cosmo will pay.Therefore,Jerry wants to revoke the offer.Which of the following is true?

A)Jerry cannot revoke the offer until August 2.
B)Jerry can revoke the offer because George has offered higher consideration.
C)Jerry can only revoke the offer if he can prove Cosmo is insane.
D)Jerry must wait until September 1,when the offer has lapsed.
E)Jerry can only hope that Cosmo rejects the offer.

Question 49

The phrase quid pro quo means

A)something for something in return.
B)agreement on point.
C)professional services.
D)a thing of value.
E)an intention to contract.

Question 50

Doug posted notices all over the neighborhood offering a reward of $100 to anyone who found his lost border collie,Lyla.Dr.Davidson who lived down the street was walking his dog in the river valley when he saw Lyla,who plays with his dog frequently.He returned Lyla back to Doug.Doug thanked him and Dr.Davidson returned home.He explained what he had done and then his children asked him if he had received the $100 reward being offered by Doug.When he stated he had not,Dr.Davidson's children insisted that he return to Doug's home and ask for the reward.When Dr.Davidson asked Doug for the reward,Doug told him that it was too late and he did not have to pay it.Which of the following is true?

A)Doug must pay the reward because Dr.Davidson accepted his offer by performing the act of finding Lyla,so there is a contract consisting of offer and acceptance.
B)Doug does not have to pay the reward because the offer was a unilateral offer open to the public at large and Dr.Davidson was unaware of the offer when he returned Lyla to Doug.
C)Doug must pay the reward because Dr.Davidson accepted his offer when he learned of it from his children.
D)Doug must pay the reward because there was a bilateral contract of offer and acceptance and,therefore,a contract was formed.
E)Doug does not have to pay the reward because Doug and Dr.Davidson are friends (even their dogs are friends)and friends cannot enter into unilateral contracts,only bilateral contracts.

Question 51

Layton Fine Fashions had a shipment of orange ties that it wished to sell.It therefore placed an advertisement,on Monday,in the town newspaper that said,"Fine silk orange ties.The season's hottest fashion trend.This week only-Come to Layton Fine Fashions and we guarantee that you'll pay no more than $35." The advertisement was such a success that the ties were almost entirely sold out within two days.Which of the following statements is TRUE?

A)Layton has nothing to worry about because a court certainly would find that the advertisement was an invitation to treat rather than an offer.
B)Layton's offer,if it is an offer,will be revoked if it places a notice in the same newspaper that says "Sorry,gentlemen- the orange silk ties are all sold out," even if some disappointed customers failed to read that notice before they came to the store.
C)because of the wording of the advertisement,the offer must be held open for one week,and Layton will be held liable to every potential customer who unsuccessfully tries to purchase one of the ties.
D)The advertisement can be properly classified as an option.
E)The situation probably is governed by the special rules that apply to tenders.

Question 52

The case of Carlill v Carbolic Smoke Ball Co is best known for dealing with the issue of

A)tenders.
B)counter-offers.
C)unilateral contracts.
D)invitations to treat.
E)insanity.

Question 53

The municipal government has a new contract and is accepting tenders.Your company,Epsilon Management,enters a tender to get the contract.Which of the following statements describes the relationship between the government and Epsilon?

A)The government is the offeror and Epsilon is the offeree.
B)This is an invitation to treat,so neither entity is offeror or offeree.
C)Because this is a firm offer,Epsilon becomes the offeror.
D)This is an invitation to treat,so each act as both offeror and offeree.
E)This is an invitation to treat,so Epsilon is the offeror and the government is the offeree.

Question 54

The Alberta Teachers' Association (ATA)is negotiating a collective bargaining agreement with the provincial government.The government offers a fixed 2% per year wage increase for five years.The ATA considers this reasonable,but thinks it can get more,so it makes a counter-offer for 3% per year for five years.The government fully rejects the offer.Which of the following is true?

A)Because the ATA partially accepted the terms,they can still accept the 2% increase.
B)The ATA can only accept the 2% increase now if it conforms to their standard form.
C)The ATA must hope that the government repeats its offer.
D)The ATA can accept the 2% increase because the government implicitly repeated the offer.
E)The ATA could not have made the counter-offer because the initial offer was firm.

Question 55

The "master of the offer"

A)can insist that silence will be treated as acceptance.
B)can change the terms of an offer after it has been accepted.
C)is a concept that occurs under a bilateral contract but not under a unilateral contract.
D)is a description of the offeree,who can either accept or reject an offer.
E)is always the same party that made and communicated the offer.

Question 56

Bentley sent a letter to Helene that said: "I'll sell 5000 widgets to you for $50 000.This offer is open for acceptance until August 10." As soon as she received that letter on August 1,Helene replied with a letter that said: "That sounds like a good deal.I will bring the money to your office on August 15.I'll also collect the widgets at that time." When Helene arrived at Bentley's office on August 15,however,he refused to accept the money or hand over the widgets.He explained that he had not yet received her letter.He also said that he was no longer willing to do business with her.Helene's letter finally reached Bentley on August 20.By that time,the market value of the widgets had increased to $75 000.Applying the general rules for communication of acceptance,which statement is most likely TRUE?

A)Bentley revoked his offer on August 15.
B)A court would refuse to recognize a contract because it would be unfair to require Bentley to sell $75 000 worth of widgets for $50 000.
C)A contract was created on August 1.
D)Bentley's offer was terminated by lapse of time.
E)A contract was created on August 20.

Question 57

Garfield owns and operates a wholesale business called the Overseas Sporting Goods Store (OSGS).He recently delivered a box of cricket balls to his twenty-year-old son,Imran,and a box of cricket outfits to another sporting goods store called Hit-for-Six.Because Garfield's store went into financial difficulties shortly after making those deliveries to Imran and Hit-for-Six,questions have arisen regarding the nature of those deliveries and in particular whether they were contractual sales.Which of the following statements is TRUE?

A)Neither transaction can be a contract unless money was exchanged for the balls and outfits.
B)As a matter of law,Garfield could not have had an intention to create legal relations when he entered into the transaction with Imran because Imran is his son.
C)As a matter of law,the transaction with Hit-for-Six could not be an enforceable contract unless it was sufficiently evidenced in writing.
D)Depending upon the facts,a court might be persuaded that the delivery to Hit-for-Six was not made with an intention to create legal relations.
E)Even if it did not request the outfits,and even though it has not had any communication with Garfield,OSGS will be required to pay for the outfits unless it immediately sends them back to Garfield.

Question 58

Quality Kitchens Inc operates a store that sells kitchen utensils and gadgets.In an attempt to increase sales,the store ran an advertisement in a newspaper that featured Juicy Brand Blenders for $49.99.Martha rushed to the store with the intention of buying a blender.When she arrived however,she was told that while there were no such blenders in stock,the store did have several Swirl Brand Blenders to sell for $99.99 each.After a bit of investigation,Martha discovered that the store knew that it never had any Juicy Brand Blenders,and that it was simply hoping that shoppers would buy the Swirl Brand Blenders once they got inside the store.Which of the following statements is TRUE?

A)The store is required to sell a Swirl Brand Blender to Martha for $49.99.
B)Martha can force the store to acquire a Juicy Brand Blender and sell it to her for $49.99.
C)The store is guilty of a bait and switch.
D)The advertisement contains an offer of a unilateral contract.
E)The store is legally obligated to sell a Juicy Brand Blender to Martha for $49.99.

Question 59

Eric bought a house for $150 000.He paid $25 000 immediately and promised the seller that he would pay the remainder in monthly installments over the next 10 years.Eric then told his daughter,Naomi,that he would transfer the house to her if and when she paid all of the monthly payments.Naomi was reluctant to commit herself to that arrangement because she was not sure if she would always have enough money to make the payments.Eric said to her,"Well,let's see how it goes." Naomi made the monthly payments for six years.Unfortunately,she and her father then began to fight.At that point,he told her that the deal was off.Eric has offered to repay Naomi for all of the payments that she had made,but he insists that the house will always belong to him.The market value of the house has recently and unexpectedly increased from $150 000 to $400000.Which of the following statements is most likely TRUE?

A)Eric and Naomi never had a contract because they never had an intention to create legal relations.
B)Eric and Naomi never had a contract because he revoked his offer before she completed making the payments.
C)Eric is required to give Naomi an opportunity to finish completing the payments,and if she does so,she is entitled to the house.
D)Since the parties created a unilateral contract,Naomi still has an obligation to make the monthly payments.
E)A court would not recognize a contract because no reasonable person would ever offer to sell a $400 000 house for less than half that amount.

Question 60

Hiram Brody worked as a research assistant for Rheem Shareef,who was one of his professors.Rheem regularly asked Hiram to proofread documents that she had written.Hiram therefore was not especially excited when he was asked to proofread a research proposal that Rheem had drafted in connection with a major project for which she had recently received generous funding from the government .He did,however,become very excited when he read paragraph 14 of the document: "I will offer Hiram Brody the position of joint-investigator.That position will require him to both resign from his present post as my research assistant and take a leave of absence from his current studies.Given the nature of the project and given his outstanding qualifications,Hiram will be paid $8000 per month for a period of eighteen months." After Hiram hurriedly finished proofreading the document,he unsuccessfully tried to contact Rheem to talk about his new position.He learned,however,that she had left town,on very short notice,to be with a sick relative who lived outside of Canada.He then wrote a letter to the Chair of his University Department in which he both resigned as Rheem's research assistant and took a two-year leave of absence from school.He also left a message on Rheem's telephone answering machine in which he said,"I accept.I can't wait to begin working as your joint investigator." Hiram consequently was very angry when Rheem said,after she had returned from abroad,that she had changed her mind and had hired another person to serve as her joint investigator.Hiram insists that she cannot do so because he had already accepted her offer.A court,however,would say that Hiram could not create a contract by leaving a telephone message for Rheem because

A)she had communicated her offer to him in writing.
B)she had given the document to Hiram as a proofreading assignment,rather than as a contractual offer.
C)it is impossible to accept an offer while the offeror is outside of the country.
D)he was already contractually required to work for her as a research assistant.
E)the document contained an invitation to treat,rather than an offer.

Question 61

"If a contractual offer is accepted by conduct,rather than words,the parties must have a unilateral contract,rather than a bilateral contract." Discuss that statement.Use examples to prove your answer.

Question 62

Theta Foods has a promotion in which a customer can send in 600 bar codes and receive an all-inclusive trip to Mexico,but the contest ends after only two weeks.Barry realizes that six-packs of pudding are individually coded and are on sale 2-for-$1,so the trip will cost only $300.He buys the pudding,but when he redeems it,Theta says because he did not inform them of his participation,he isn't eligible for the trip.Which of the following is true?

A)If Barry eats the pudding,he can get the trip.
B)Barry accepted the contract by performance.
C)Theta is correct;acceptance is required for a contract to be created.
D)Barry cannot show proof that he had the intention of accepting the offer.
E)Because of the postal rule,Barry accepted when he mailed the bar codes in.

Question 63

If you insert a coin into a vending machine and receive a chocolate bar in exchange,have you entered into a contract? If so,is that contract unilateral or bilateral? Give reasons for your answer.

Question 64

Hare Corporation sends an offer to Tortoise Inc.to purchase a widget through the mail.Hare hasn't heard from Tortoise for two days,so when Fox Company calls them on the phone and offers them the widget at a better price,they accept.They then call Tortoise to revoke the offer,but find that they have already mailed an acceptance.Which of the following is true?

A)Hare only has to pay Fox because the contract was created first.
B)Hare only has to pay Tortoise because the postal rule takes precedence.
C)Hare has to pay both companies because they have created contracts with both.
D)Hare does not have to pay Tortoise because they revoked the contract before receiving the letter.
E)Hare does not have to pay Fox because their communication was non-instantaneous.

Question 65

Gigagar Inc manufactures computer components.It wants to develop a new line of product,but realizes that it cannot do so without a complicated device known as a "digital phalange finger." It has tried to design that devise itself,but has failed.It therefore sent a letter to Katenben Ltd,another high-tech company,that said: "We are willing to pay $100 000 for the design of a digital phalange finger." Katenben Ltd responded by saying that it believed that it might be able to design the device.However,it also indicated that it could not guarantee its results and said that it did not want to commit itself to a potentially impossible project.Gigagar Inc then wrote back in a letter that said: "We understand your concerns.We do not require any guarantee of success.We also appreciate that,given the complexity of the project,you may decide to drop the matter after some preliminary investigations.Nevertheless,our offer stands-we will pay $100 000 if you successfully design a digital phalange finger." Katenben Ltd spent the next six months and a great deal of money trying to design the device.As it neared successful completion,however,Gigagar Inc announced that its own engineers had experienced an unexpected breakthrough and had successfully created a digital phalange finger.Gigagar Inc therefore told Katenben Ltd that its offer of $100 000 was revoked.Three days later,Katenben Ltd also successfully produced a working digital phalange finger.It now demands payment of $100 000.Is it entitled to that money? Give reasons for your answer.

Question 66

You have developed a business proposal called the Law Book Club.Your intention is to send books to club members on a monthly basis.Under the proposal,each member would then be charged a price for the book unless they specifically indicated,within a one-week period,that they did not wish to purchase the selection.Discuss that proposal in terms of the rules regarding the acceptance of offers.

Question 67

How does the death of either the offeror or the offeree affect an offer? Provide examples to illustrate your answer.

Question 68

Mohammed wants to buy his friend Khurram's old computer,but he currently has no money.He offers to pay Khurram $300 in a month at which time Khurram will give Mohammed his computer.Khurram nods and says,"sure." Two weeks later,Mohammed is paid and buys a new computer.He then refuses to buy Khurram's computer.Which of the following statements is true?

A)Mohammed has breached the contract by refusing to buy Khurram's computer.
B)Mohammed has breached the contract by buying a new computer.
C)There was never a contract;Mohammed has simply revoked the offer.
D)Khurram's action did not constitute acceptance;he was too vague.
E)There was no breach because the computer was unsolicited.

Question 69

How is the concept of a meeting of the minds related to the concepts of offer and acceptance? Illustrate your answer by reference to the phenomenon of a cross-offer.

Question 70

It is presumed that people who create agreements in commercial contexts do intend to create legal relations,while people who create agreement in social or family contexts do not intend to create legal relations.Provide an explanation for each of those presumptions.

Question 71

On June 1,Maureen sent a letter to Joel that offered to sell 10 000 shares in Tadpole Inc (a computer software company)for $5 each.Her letter did not require Joel to respond by any particular date.On June 3,Tadpole Inc publicly announced that its engineers had perfected a new technology that would revolutionize the electronic commerce industry.By June 4,the price of a single share in the company had increased to $100.On June 6,Joel returned from his cottage and learned of both Maureen's offer and the price of Tadpole Inc shares.He promptly sent a letter to Maureen that said,"I accept your offer.I will pay a total of $50 000 for 10 000 shares in Tadpole Inc." Maureen obviously no longer wants to sell her shares under the price that she quoted in her offer.Discuss the factors that a court would consider in deciding whether or not she and Joel had created a contract.

Question 72

Rosie placed an advertisement in a newspaper that said: "Five purebred Siamese kittens for sale.$200 each.First come/first served.Respond in person or by email to [e-mail]." Gig saw the advertisement and immediately sent an email message that said,"I will pay $1000 for the five kittens." However,when Gig arrived at Rosie's door with the cash in hand,she refused to hand over the kittens.She explained that while Gig's message was the only reply that she had received in response to her advertisement,she had changed her mind and had decided to keep the kittens for herself.Provide an argument on behalf of Gig that would support the creation of a contract with Rosie.

Question 73

List five ways in which an offer can be terminated.

Question 74

From a risk management perspective,explain why it may be better for a business to use an invitation to treat,rather than an offer,when seeking someone to buy its product.

Question 75

In a normal tendering process,is Contract A a unilateral contract or a bilateral contract? Is Contract B a unilateral contract or a bilateral contract? Give reasons for your answer.

Question 76

As a matter of risk management,how can a business avoid becoming involved in a battle of the forms?

Question 77

Acme Corp is a widget manufacturer that carries on business in Edmonton.Until recently,it sold its products only within the province of Alberta.However,it now wants to sell to customers in Manitoba as well.It is concerned,however,about the effect of the Alberta Contracts Enforcement Act.That statute says that only specially licenced companies are entitled to sell widgets under "contracts that are made within the province of Alberta." Acme Corp is not specially licenced.The statute does not,however,affect contracts that are created outside of Alberta.Bearing in mind the general rules regarding offers and acceptances,suggest ways in which Acme Corp can go ahead with its proposal without violating the Contracts Enforcement Act.

Question 78

Explain what it means to say that the offeror is the "master of the offer." Provide examples to support your answer.