Question 1

If the offer specifies no time limit in which to accept:

Accepted Answer

If the offer specifies no time limit in which to accept, the courts will apply a reasonable time standard.

Question 2

Bill has voluntarily organized office birthday parties for the past 10 years because he enjoys making people happy. One day, Brenda, his boss, tells him that he's been doing such a great job that she's going to pay him an extra $200 next month. However, when Bill gets his check, it's the same amount that it has always been. Which of the following is correct?

Accepted Answer

Brenda's promise was based on performance by Bill prior to that promise. It is therefore past consideration.

Question 3

Bruno owns a French poodle that he advertises for sale. The dog has a history of viciously biting three neighborhood kids without provocation, as well as one of Bruno's kids. Marge is looking for a dog to be a playmate for her children. When she comes to Bruno's house to see the dog, she sees it playing with Bruno's kids and doesn't ask about the dog's past behavior. She tells Bruno that she's looking for a dog for her kids, and Bruno says nothing. Five minutes after the dog enters her house, it bites one of Marge's kids.

Accepted Answer

Bruno knew of the dog's propensity to bite and knew that Marge was seeking a gentle dog. He withheld important facts, creating a fraudulent misrepresentation.

Question 4

Most advertisements in the mass media are not offers because they:

Accepted Answer

Most advertisements appearing in the mass media, in store windows, or in display cases are not offers. Frequently, these advertisements do not constitute an offer because they do not contain a specific commitment to sell.

Question 5

Aiden says to Bob, "I'll sell you this rare book for $1,000." Aiden is the:

Accepted Answer

Aiden is the offeror and is promising to perform through a transfer of ownership rights to the book as long as Bob, as the offeree, counterpromises to perform by paying $1,000.

Question 6

An offer may be terminated in all but which of the following ways?

Accepted Answer

An offer may be terminated by action of the parties in one of three ways: (1) revocation, in which the offeror withdraws the offer prior to acceptance; (2) rejection, in which the offeree rejects the offer; and (3) counteroffer, in which the offeree rejects the original offer and proposes a new offer with different terms. Offers may also be terminated by operation of law.

Question 7

Which of the following promises ordinarily need not be in writing to be enforceable?

Accepted Answer

A contract with a personal trainer is for services and is not covered under the statute of frauds.

Question 8

Applying the parole evidence rule:

Accepted Answer

The parole evidence rule states that a written contract is the final expression of the party's agreement and may not be contradicted by oral or written agreements made prior to the writing. Oral or written agreements made prior to the writing may, however, be used to explain ambiguous terms in the written agreement.

Question 9

Bud calls Lou and says, "I'll sell you my car for a thousand bucks, interested?" Lou says, "I'll look it up on the Internet. If the Blue Book price is close, I'll pay you $1,000 in the morning." At sunrise Lou shows up with $1000.

Accepted Answer

Lou accepted when he showed up with the money and Bud had not yet revoked his offer.

Question 10

Big Time Appliance advertised 46-inch plasma TVs for $10 to the first 50 buyers on Friday. This ad is:

Accepted Answer

The advertisement is specific enough to constitute a valid offer.

Question 11

Franz asks Josef if he will paint his office building for $1,000. Josef says he will do the job for $2,000. Josef's response is:

Accepted Answer

Josef has made a counteroffer by rejecting the original offer and making a new offer.

Question 12

Jon works for a major bank. The revised employee handbook that he received 5 years ago says that all employees with 25 years of service will receive a retirement party. He is about to hit 25 years of service and has announced his retirement. His manager tells him that the company, on the basis of his years of service, will throw him a party and present him with a gold watch. Jon retires on his 25th anniversary, and his manager announces that the company will not throw the party or give him the watch.

Accepted Answer

It may be argued that Jon performed a legal detriment after receiving the party promise in the handbook; however, the watch is based on past performance and is not an enforceable promise as its basis is past consideration.

Question 13

Burns offers Realtor a commission of 10 percent of the sales price if Realtor can find a buyer for the Burns Building for $500,000. Realtor spends funds to research and obtain potential-buyer contact information and locates Walters, who is willing to accept the $500,000 offer to sell from Burns. Before any transaction takes place, Burns revokes his offer to Realtor and refuses to sell the property to Walters. Burns's revocation is:

Accepted Answer

Burns's revocation is not effective. Burns's promise to pay for a particular performance (a unilateral contract) was rendered irrevocable once Realtor performed by finding a buyer for the building.

Question 14

Robert is about to graduate college, and his parents tell him that because he is the first member of the family to graduate college, they want to buy him a new, but inexpensive, car. They have the money to buy the car, and Robert is excited about getting his gift. Robert owns a used car but has never owned a new car, so this will be his first. He decides to keep his used car because he had been promised a new car by his parents for his high school graduation and never got it. On graduation day, his parents tell him that they have decided to use the car money for a vacation and there will be no new car.

Accepted Answer

The promisee must rely on the promisor's promise and act to his detriment to make the promise enforceable under promissory estoppel rules.

Question 15

Aimee is a 21-year-old college student. Her parents are worried about her being away from home, so they tell her that if she goes through both the fall and spring semesters without drinking alcohol, they will buy her a new car. Aimee does in fact complete both semesters without drinking.

Accepted Answer

At 21, Aimee had the legal right to drink alcohol, so giving up that legal right supports valid consideration and legal detriment.

Question 16

Hillary is a nerdy bookworm couch potato who rarely goes out of her home except to go to her job as a deskbound CPA. She wears a sweater almost every day, including during the summer, and is always complaining about being cold. Edmund, a co-worker, tells Hillary that he will give her $1 million if she climbs Mt. Everest. Edmund doesn't believe that she'd even give the offer a second thought. Hillary, without saying anything to anyone, starts an intensive training program to whip herself into shape, and six months later, during her vacation, she climbs Mt. Everest. Upon returning to work, she presents Edmund a picture of herself on the summit of Mt. Everest and demands her $1 million. Edmund tells her that they never had a contract so he owes her nothing, and Hillary claims that the money is owed based on promissory estoppel.

Accepted Answer

Edmund could not have reasonably foreseen that his promise would be relied on by Hillary, which is required under promissory estoppel.

Question 17

To be valid, offers must meet all of the following criteria except:

Accepted Answer

Offers must be clear, serious, and communicated to be valid.

Question 18

Offers that the offeree partly performed or detrimentally relied on are:

Accepted Answer

Some offers are irrevocable, including offers that the offeree partly performed or detrimentally relied on.

Question 19

Josh is negotiating the sale of his car with Jonathan. Jonathan asks if the car has ever been in an accident, and Josh replies, "No, it has never been in an accident." In fact, the car was nearly totaled the year before when Sheila, Josh's girlfriend, was driving Josh's car, hit a wet spot, and skidded into a pole. She had the car repaired without telling him about the accident. Josh has committed:

Accepted Answer

Even though he thought he was telling the truth, he innocently made a fraudulent or untrue statement.

Question 20

Jonathan's Soccer Mart (JSM) advertises a pair of boots on sale. The normal price is $150 and the sale price should have been $135, but the advertisement says $15. Josh walks into the store, picks up a pair of the boots, and puts $15 on the counter, demanding to purchase the boots at the advertised price. Which of the following is correct?

Accepted Answer

Advertisements do not constitute offers but act to solicit offers from customers to buy at the advertised price.

Quiz 7: Contract Formation