Question 1

A contract to keep an offer open for a specified time in return for a sum of money is referred to as an option.

Accepted Answer

This is correct. A contract to keep an offer open for a specified time in return for a sum of money is called an option.

Question 2

A offers in writing to sell his truck to B for $8000.00.The offer goes on to state that acceptance must be hand-delivered in writing to A.However,B decides to send A a fax in which he accepts A's offer.In this case

Accepted Answer

A's offer clearly stated that acceptance must be hand-delivered in writing. B's acceptance by fax does not satisfy this requirement and therefore is not a proper acceptance of A's offer. The offer has not been accepted yet.

Question 3

Silence can be a sufficient method of acceptance

Accepted Answer

Silence can be considered a sufficient method of acceptance if the parties involved have previously established a pattern or habit of using silence as a means of communicating assent. This is because their past behavior has set a precedent that silence can be interpreted as acceptance within the context of their dealings.

Question 4

Mary places a notice in a local variety store.The notice reads as follows: "I shall pay $1000 for the return of my dog,Mundo." Jim sees the notice.Jim finds the dog and returns it to her.Which of the following is TRUE?

Accepted Answer

Mary's notice is considered an offer, and Jim's act of finding and returning the dog can be considered as acceptance. According to the doctrine of acceptance by performance, acceptance can be implied by actions, and communication of acceptance is not required. Therefore, Mary is obliged to pay Jim the $1000 reward as he has fulfilled the conditions of the offer.

Question 5

An offer must be communicated to the offeree.

Accepted Answer

For an offer to be valid, it must be communicated to the offeree, either explicitly or implicitly.

Question 6

When an offeror invites acceptance by mail,it is possible for the offeror to state in the offer that the offer will only become a contract once acceptance is actually received by the offeror.That is,the postal rule does not apply even though an invitation to acceptance by mail was given.

Accepted Answer

This is known as the "mailbox rule exception," where the offeror can choose to specify that acceptance is only effective upon receipt rather than upon dispatch, as per the traditional postal rule.

Question 7

On January 1,A offers to sell his property to B for $175 000.00 and gives B an option to purchase the property until July 1.The option reads: "The said option shall be exercisable by notice in writing to the seller at any time within 6 months from the date of the option." B mails his acceptance to A on February 12,but the letter never reaches A.In this situation

Accepted Answer

The option specifies that it is exercisable by notice in writing to the seller. Since the acceptance never reached the seller, it cannot be considered as notice to the seller, and therefore, B's acceptance by mail does not constitute acceptance of the option.

Question 8

Within a standard form contract there always exists the ability to bargain the terms of the contract.

Accepted Answer

Standard form contracts are non-negotiable and typically offered on a take-it-or-leave-it basis with no ability for the consumer or party with less bargaining power to negotiate the terms.

Question 9

Margaret finds a stray cat and takes it in.The following day she is speaking to some friends and learns that Kelly,a woman who lives some distance away,has lost a cat.She goes around to the home of Kelly,leaves the cat in the yard and leaves a note for Kelly.The next day she gets a voice mail message from Kelly thanking her.A few days later Margaret sees a notice in which Kelly offers to pay $500 to anyone who returns her cat.Margaret,who needs some cash,returns to Kelly's home and demands the $500 reward.Which of the following is TRUE?

Accepted Answer

Margaret did not know of the offer before she returned the cat, so there was no initial agreement between Kelly and Margaret. Therefore, Margaret could not have been accepting the offer when she returned the cat, and no contract arose. Kelly is not obliged to pay the $500 reward to Margaret.

Question 10

An invitation to do business is a commitment to enter into a contract upon acceptance.

Accepted Answer

An invitation to do business, such as an advertisement, is generally not considered a binding offer to enter into a contract but rather an invitation for others to make an offer.

Question 11

John and Edward are negotiating the sale and purchase of one of John's very expensive paintings.In the course of the negotiations,John says,"I'll sell it to you for $20 000.00,to which Edward replies,"That is a little too much for me; I'll give you $14 500.00." John thinks about this for a moment and says,"No,but I'll take $17 500.00.Edward says,"That is still too much; I'll buy it for $15 500.00.John looks at the painting and replies,"You know it is worth more than that.Why don't you give me $16 500.00 and we'll call it a day." Edward responds with,"I only have $16 000.00 so that is all I will pay for it," to which John replies,"Done." In this case

Accepted Answer

The final agreed upon price was $16 000.00, which is the amount that Edward stated he was willing to pay. Therefore, the contract is for $16 000.00.

Question 12

Bilateral contracts are usually made up of two stages-promises by both parties to perform and later,performance or fulfillment of the promises.When one of the parties to a bilateral contract does NOT receive the performance as promised

Accepted Answer

When one party does not receive the performance as promised in a bilateral contract, the other party has a cause of action recognized at law giving them the right to sue for damages for breach of contract. This allows the promisee to seek legal remedies to recover any losses or damages incurred due to the other party's failure to fulfill their promises.

Question 13

Where is a contract said to be formed?

Accepted Answer

A contract is said to be formed at the place where the acceptance becomes effective, which may vary depending on the mode of communication used for acceptance. For example, if acceptance is made by mail, the contract is formed at the time and place when the acceptance is posted, not when it is received.

Question 14

Like acceptance,revocation of an offer by mail is valid and binding once the letter of revocation is placed in the mailbox.

Accepted Answer

Revocation of an offer is generally not effective until it is received by the offeree, unlike acceptance, which can be effective upon dispatch if the parties have agreed to such terms or if it aligns with the mailbox rule.

Question 15

When an offer is proposed to an interested party,the form of acceptance does not matter even if a preferred method of communication is stipulated within the offer.

Accepted Answer

The form of acceptance does not matter even if a preferred method of communication is stipulated within the offer.

Question 16

An acceptance must always be communicated to the offeror for a valid contract to arise.

Accepted Answer

The answer of An acceptance must always be communicated to...

Question 17

We study business contract law in order to

Accepted Answer

The answer of We study business contract law in order...

Question 18

When the offeror specifically states in the contract that acceptance can be given by performing an act,direct verbal communication of acceptance is not needed to make the contract binding.

Accepted Answer

This is known as acceptance by performance or performance acceptance, and is a valid form of acceptance if the offeror has specified it in the contract.

Question 19

Goods displayed on shelves in a store constitute an offer.

Accepted Answer

Goods displayed on shelves in a store are an invitation to treat, meaning they are an invitation for the customer to make an offer to purchase them. The actual offer is made when the customer presents the item at the checkout and offers to pay for it. The store can then accept or reject the offer.

Question 20

A promisor is a party who has the right to performance according to the terms of a contract.

Accepted Answer

A promisor is the party in a contract who has made a promise to perform or do an act/service for the promisee, not the one who has the right to performance.

Quiz 6: Formation of a Contract: Offer and Acceptance