Deck 10: Mutual Assent

Question 1

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 1

True

Question 2

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.

Answer 2

False

Question 3

Both the Code and the Restatement provide that, unless the language of the offer or the circumstances indicate otherwise, an authorized means of accepting an offer is any reasonable means of communication.

Answer 3

True

Question 4

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 5

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

Question 6

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 7

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 8

Silence can never be an acceptance.

Question 9

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.

Question 10

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

Question 11

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

Question 12

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

Question 13

When the method used by an offeree to accept is unauthorized, the traditional rule is that the acceptance is effective when received by the offeror, provided that it is received within the time during which the authorized means would have arrived.

Question 14

An acceptance is generally effective upon dispatch.

Question 15

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 16

An offer is effective as soon as it is dispatched.

Question 17

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 18

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

Question 19

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 20

The intent of an offer is determined by a subjective standard.

Question 21

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

Question 22

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

Question 23

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 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

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

Question 26

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 27

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

Question 28

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

Question 29

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 seller 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 30

Amber asked Trent, "Would you be interested in buying my quarter horse for $650?" If Trent replies that he would, a contract has been formed.

Question 31

An offer is an indefinite proposal made by one person to another indicating willingness to enter into a contract.

Question 32

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 33

A counteroffer operates as a rejection of the original offer.

Question 34

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

Question 35

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 36

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

Question 37

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

Question 38

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 39

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 40

An offer may be made to the general public.

Question 41

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.

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 42

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 the above.
E)None of the above.

Question 43

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 44

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 the above.

Question 45

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 46

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 47

"B2C" transactions on the Internet:

A)are transactions between two businesses.
B)cannot contain warranty disclaimers.
C)are more complex for services than for goods.
D)are enforceable only if the buyer has had an opportunity to review the proposed terms by way of an automatic screen, but are unenforceable if the buyer had to review the proposed terms by way of a link.

Question 48

Will offers to sell his bike to Stan.Will has seemingly offered to sell his motorcycle, but he intended to and believes he is offering his 10-speed bike.If Stan accepts the offer, reasonably believing it was for the motorcycle:

A)no contract has been formed because there is no mutual assent.
B)subjectively Will and Stan are in agreement, so a contract has been formed.
C)objectively Will and Stan are in agreement, so a contract has been formed.
D)no contract can be formed because the offer was not sufficiently definite.

Question 49

An offer that is made by a merchant under the UCC and is irrevocable even though no consideration is given to keep it open is known as a(n)

A)option.
B)firm offer.
C)requirements contract.
D)output contract.

Question 50

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 51

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

A)After 24 hours.
B)After 48 hours.
C)After two weeks.
D)After a reasonable period of time.

Question 52

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 53

Elvis makes an offer to Fred, but before Fred can accept, the state supreme court decides a case that makes Elvis's offer illegal.What is the effect of the court's decision on the offer?

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

Question 54

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 55

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.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)is promissorily estopped from revoking his offer to Fred.

Question 56

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 57

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 58

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 59

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 60

Albert read ElectroCorp's ad in the local newspaper advertising a flat-screen TV for $89.Albert rushed to the store to buy the TV only to be told by the salesperson that the ad was a misprint and the price should have been $389.Albert gave the salesperson $89 plus sales tax and demanded the TV.

A)The ad is a firm offer by the merchant and the TV 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 TV for $89 plus sales tax.

Question 61

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 62

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 63

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 the above, (b) and (c).

Question 64

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 65

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

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

Question 66

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 67

The UCC battle of the forms rule:

A)changes the mirror image rule.
B)may yield different results depending on whether the parties are merchants.
C)may result in formation of a contract quite different from the terms of the offer.
D)All of the above.

Question 68

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 the above are revocable offers.

Question 69

The mirror image rule applies to:

A)an offer.
B)a rejection.
C)an acceptance.
D)a revocation.

Question 70

Lyle offers to sell his house to Dennis for $75,000.Dennis responds, "I will pay you $75,000 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 71

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 yards of carpet at $20 per 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 yards of Saxony "heather blue" carpeting at the rate of $20 per 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 yards of carpeting.
B)There is a contract for 100 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 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 $15.00.Alice threatens to sue Michelle for breach of contract.

A)This is a valid contract, and Alice will win if she sues.
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 the above.

Question 73

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.

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 74

A __________ is the refusal to accept an offer.

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

Question 75

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 76

Material terms in a contract include all but which of the following?

A)The parties.
B)Shipping method.
C)Quality.
D)Time of performance.

Question 77

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.

Question 78

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 the above would be merchants.
E)None of the above would be merchants.

Question 79

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 80

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.