Question 1

Contract terms may not be implied from the parties' conduct.

Accepted Answer

Contract terms may be implied from the parties' conduct under certain circumstances, such as the course of dealing or industry custom.

Question 2

Frank is drunk and while laughing hysterically says to Hal "I'll sell you my truck for a buck". Frank has made a valid offer.

Accepted Answer

For an offer to be valid, it must be made seriously and with the intention to be bound by it. Frank's statement, made while drunk and laughing hysterically, does not demonstrate a serious intention to enter into a contract.

Question 3

Offers, acceptances of offers, and revocations of offers are all effective when mailed in a properly-addressed envelope bearing the proper amount of postage.

Accepted Answer

Offers and revocations of offers are generally not effective until received by the offeree, while acceptances are often effective upon dispatch if the mailbox rule applies, which varies by jurisdiction and specific circumstances.

Question 4

An output contract is too vague to be a legally-enforceable agreement.

Accepted Answer

An output contract, where a seller agrees to sell all of its production to a single buyer, can be legally enforceable if it contains clear terms regarding quantities, prices, and delivery schedules, making it sufficiently definite for enforcement.

Question 5

When it is claimed that a contract is too indefinite to be enforced, a court will do its best to find the intent of the parties and thereby reach the conclusion that the contract is not too indefinite.

Accepted Answer

Courts generally strive to enforce contracts and will make every effort to interpret vague or ambiguous terms in a way that gives effect to the parties' intentions. Therefore, if a court finds that a contract is too indefinite to be enforced, it is likely because the parties did not intend to create a binding agreement in the first place or because the terms of the contract are genuinely ambiguous. However, in most cases, courts will attempt to ascertain the intent of the parties and enforce the contract if at all possible.

Question 6

Generally, advertisements, catalog prices, and circulars are offers that can be accepted.

Accepted Answer

Advertisements, catalog prices, and circulars are generally considered invitations to offer or negotiate, not offers themselves, meaning they invite customers to make an offer to buy, which the seller can then accept or reject.

Question 7

An otherwise vague contract may be clarified by references in the contract to other documents or agreements.

Accepted Answer

References to other documents or agreements can provide additional context and detail to clarify terms in a contract.

Question 8

A revocation of an offer is ordinarily effective after the offer has been accepted.

Accepted Answer

A revocation of an offer is generally effective before the offer has been accepted. Once the offer has been accepted, a contract is formed, and revocation of the offer would not be valid.

Question 9

To make an offer, the offeror must appear to intend to create a binding obligation.

Accepted Answer

This statement is true. To create a valid offer, the offeror must demonstrate an intention to be legally bound by the terms of the offer. This means that the offer must be clear and definite, and the offeror must demonstrate a willingness to enter into a contract if the other party accepts the offer. Without this intention, the offer is not legally enforceable.

Question 10

If an offer is indefinite or vague or if an essential provision is lacking, no contract arises from an attempt to accept it.

Accepted Answer

This statement is true. For a contract to be formed, the offer must be specific and definite, and all essential terms must be included. If an offer is indefinite, vague or lacks an essential provision, an attempt to accept the offer will not result in the formation of a contract.

Question 11

An option contract is a binding promise to keep an offer open for a stated period of time or until a specified date.

Accepted Answer

An option contract is a legally binding agreement between two parties that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price within a specified period of time. The seller of the option is obligated to fulfill the terms of the contract if the buyer chooses to exercise their option. Therefore, an option contract does involve a binding promise to keep an offer open for a stated period of time or until a specified date.

Question 12

An option is itself a contract to refrain from revoking an offer.

Accepted Answer

An option is a contract in which the option holder (buyer) pays the option writer (seller) a premium in exchange for the right, but not the obligation, to buy or sell an underlying asset (such as a stock, commodity, or currency) at a predetermined price (strike price) within a specified time period. By purchasing an option, the option holder obtains the right to exercise the option or let it expire, but the option writer is obligated to fulfill the terms of the contract if and when the option holder chooses to exercise it. Therefore, an option itself is a contractual obligation to keep the offer open for a certain period of time, during which the option holder can decide whether to exercise it or not. This means that the option writer cannot revoke or withdraw the offer until the option expires or is exercised.

Question 13

A requirements contract is too vague to be a legally-enforceable agreement.

Accepted Answer

A requirements contract is a legally-enforceable agreement, although it may require more specificity and detail compared to other types of contracts to avoid ambiguity and disputes.

Question 14

If an offer is indefinite or vague, no contract arises from an attempt to accept it.

Accepted Answer

This is a basic principle of contract law, known as the "offer and acceptance" doctrine. For a contract to exist, there must be a clear and definite offer that is accepted by the other party. If the offer is unclear, imprecise, or open-ended, there cannot be a meeting of the minds and no contract is formed.

Question 15

A "best efforts" clause is always deemed too indefinite to be enforceable.

Accepted Answer

A "best efforts" clause can be enforceable, but it will depend on the specific language used in the clause and the overall context of the agreement. Courts will consider various factors, such as the parties' relative bargaining power and the nature of the obligations being undertaken, when determining whether the clause can be enforced.

Question 16

An offer gives the offeror the power to bind the offeree by contract.

Accepted Answer

An offer gives the offeree the power to accept and thereby bind the offeror to a contract, not the other way around.

Question 17

Advertisements that call for an act may be deemed to be a unilateral contract.

Accepted Answer

Advertisements that call for an act, such as "Bring this coupon to receive 20% off," may be considered a unilateral contract because the act of bringing the coupon creates a binding agreement between the advertiser and the consumer.

Question 18

An offer is effective only if it is communicated by the offeror in person.

Accepted Answer

An offer can be communicated by various means including phone, email, text, letter, etc. It does not have to be communicated in person.

Question 19

Contractual intention is determined by objective standards.

Accepted Answer

Contractual intention is determined by objective standards, meaning what a reasonable person would believe the parties intended based on their words and conduct. The subjective beliefs or intentions of the parties are not relevant.

Question 20

A firm offer is an offer that states that it is to be irrevocable, or irrevocable for a stated period of time.

Accepted Answer

A firm offer is an offer that cannot be revoked for a specified period of time, usually between three and six months.

Quiz 12: Formation of Contracts: Offer and Acceptance