Question 1

Mr.Megabucks promises the Turtle Preservation Society of Victoria that he will give it $500,000,provided it names after him the new headquarters building it wants to erect.The president of the Society tells him that his generous donation will allow them to carry on their turtle preservation work while providing decent working conditions for their staff at the same time.At a ground-breaking ceremony soon after,the announcement is made that the building will be named after Mr.Megabucks.Four months later,Mr.Megabucks suffers severe business reversals and decides to withdraw his promise.

Accepted Answer

The answer of Mr.Megabucks promises the Turtle Preservation Society of...

Question 2

Busy Corp.sent a letter on January 12 to Slow Co.offering to sell its main office building for $250,000,stating that its offer was open only until January 20,and it must have a response from Slow Co.by then.Slow Co.received the letter on January 14 and prepared a letter of acceptance on that day,but did not mail it.The next morning Busy Corp.called and said that it has changed its mind and was withdrawing its offer.

Accepted Answer

According to the mailbox rule, an acceptance is effective upon dispatch. However, a revocation is only effective upon receipt by the offeree. Therefore, since Busy Corp. communicated the revocation before Slow Co. mailed its acceptance, the revocation was effective and there was no contract formed.

Question 3

Wade,an Ontario resident,ordered a customized motor bike on February 1 with delivery on June 1.On his 18th birthday,on May 1,Wade decided that he wanted a wind surfer instead,so he called the motorbike company the next morning and cancelled the contract.The payments would have been made on a 24-month basis.

Accepted Answer

Wade can repudiate the contract within a reasonable time after turning 18 as he would have been a minor at the time of entering the contract. As he cancelled the contract soon after his 18th birthday, it can be considered within a reasonable time. Therefore, Wade cannot be held to the contract.

Question 4

Janine,a dental student,does some dental work for a friend even though she is not yet licensed.Since the work,though not negligent,did not achieve the promised results,Janine's friend can sue her for breach of their contract.

Accepted Answer

Even though Janine is not licensed, she entered into a contract with her friend to provide dental work. Since the work did not achieve the promised results, Janine can be held liable for breach of contract. Negligence is not a requirement for breach of contract.

Question 5

"Public policy" can be defined as the bundle of rules that protect the interests of society.

Accepted Answer

Public policy refers to the set of laws, regulations, and actions that are implemented by governments and other organizations to address societal problems and promote the common good. These policies are designed to protect the interests of the public and ensure that resources are distributed fairly and efficiently.

Question 6

Johnson became a member of the Book-a-Month Club under an agreement by which members agree to pay for any monthly selection that they have not notified the Club they do not want.Johnson forgets to tell them when he decides he does not want "How to Cook Small Rodents" and the book arrives at his house.

Accepted Answer

Johnson must pay for the book because, by joining the Book-a-Month Club and agreeing to its terms, he consented to a contract where silence (not notifying the Club of his disinterest in the monthly selection) is treated as acceptance of the offer to purchase the book.

Question 7

Cyril owed Robert $12,000 but since he had lost his job,he could pay only $7,000.Reluctantly,Robert agreed,since they were old friends,to accept the lesser amount as full payment of the debt,and Cyril gave him the money.Now Robert has heard that Cyril has just won a huge amount in a lottery but Cyril will not pay him the rest of the debt."A deal's a deal," Cyril says.

Accepted Answer

The answer of Cyril owed Robert $12,000 but since he...

Question 8

Darryl,a non-swimmer,fell off a boat into the lake."Help!" he cried."$100 to the person who saves me!" Frances then jumped in and held Darryl's head above water until the boat's dinghy could reach them.

Accepted Answer

The answer of Darryl,a non-swimmer,fell off a boat into the...

Question 9

The Big Book Store just received a shipment of 100 copies of Contemporary Business Law: Principles and Cases at a wholesale price.The store contacted the local university to see if it was interested in purchasing the book.The book store faxed an offer asking for $5,000.00 for the 100 books.Due to a poor-quality fax transmission the last three zeros were not visible,so it appeared that the 100 books were on sale for $500.The university accepted the offer,received the books,and deposited $500 in the store's bank account.Upon receiving its bank statement,the store realized the error and decided to take action against the university.Will it succeed?

Accepted Answer

The inadequacy of consideration could render the transaction unenforceable. The court would consider whether the university paid an amount that would reasonably indicate acceptance of the store's offer. In this case, the university paid $500, which would not be considered reasonable for 100 copies of the book. Therefore, the store could argue that there was no meeting of the minds, and the contract should be considered unenforceable.

Question 10

A contract is a legal relationship between parties.The existence or validity of the contract is measured by conditions outlined by law.An indication of the intention to create a contract is built on certain premises.These premises are

Accepted Answer

Premises A and C are both correct and necessary for the formation of a valid contract. Premise B is incorrect as a meeting of the minds is required for all contracts, regardless of whether they involve personal services or commodities. Therefore, the correct answer is D, "All of these except b."

Question 11

A small company,Software Design Limited,was indebted $150,000 to a sole individual,with payment now due.This individual was an investor and former classmate of the firm's president,Angela.Owing to a reversal of fortunes for the company,Software Design could now repay only $100,000.With her investor chalking up the affair to experience,Angela intended the firm to repay what it could now,then she would wind up the company.A few weeks after paying off her creditor at $100,000,but before she could wind up the company,a new investor with both ideas and money approached her,and encouraged Angela to continue on in the business.Once Angela's former classmate heard of the new investor,she demanded the balance due on her loan.Angela briefly considered repaying more,but her new investor demanded a hard-line approach.Angela was holding the repaid note in her hands as her later investor said "Neither you nor she could see the future when she agreed to accept $100,000.But accept she did.Business is business."

Accepted Answer

This situation falls under the doctrine of accord and satisfaction, where a debtor offers to pay a smaller amount than what is owed, and the creditor accepts it as full payment. The acceptance of the $100,000 by the classmate constitutes a binding agreement, and she cannot later demand the balance due. Under statute law, this doctrine is recognized and hence, both common law and statute law allow the debtor (Software Design) to be relieved of the remaining balance.

Question 12

A computer software company advertised a new organizational program as one of the most "user-friendly" programs of its kind on the market.The Smallville police department used the program and,during operation,the program crashed,losing vital information related to the effectiveness of the department in carrying out its duties.Under the law of contract,what is the software company's position with respect to liability?

Accepted Answer

The company is not liable because advertising often involves "puffery," which is an exaggerated claim that is not meant to be taken literally. As long as no specific, factual misrepresentations were made in the contract, the company is not liable for the program's failure.

Question 13

Karen offers to sell her antique rocking chair to her friend Julie for $350.Julie has always loved the rocker but,since she is currently short of money,she says to Karen "I will buy the rocker from you,and I'll pay half now and half next month." Don,who has been listening,says "I've always wanted that rocker,too,Karen.I'll pay you $400 cash right now for it."

Accepted Answer

The answer of Karen offers to sell her antique rocking...

Question 14

Flavio states that he would like to buy Mike's motorbike for $3,000.Mike responds by saying that he would want $4,000,given the work he has put into it.Flavio says,"OK.I'll give you that.Here's $2,000,and I'll give a promissory note for the balance payable at $500 a month for the next 4 months." 
i.There is a contract.
Ii.There is no contract.
Iii.Flavio's first statement to Mike was an invitation to do business.
Iv.Mike's response was a counter-offer.
V.Flavio's final statement to Mike was an acceptance.

Accepted Answer

The answer of Flavio states that he would like to...

Question 15

The Queen's Wardrobe,a dressmaking boutique,agrees to make Rhonda's wedding dress for $2,000.The dress is to be ready for her wedding on June 1.On May 14,owner Jane called Rhonda to tell her that the dress would not be ready on time unless Rhonda agreed to pay an extra $500 so that Jane could hire someone to help her finish the lace embroidery.Rhonda is very upset and,feeling that she has no other choice,agrees.When she picks up the dress,she tells Jane that she does not think that it is fair that she should have to pay more than they had agreed upon and refuses to do so.

Accepted Answer

Since Jane was already obligated under the original contract to make the dress for $2,000, there is no new consideration for Rhonda's promise to pay more, making it unenforceable.

Question 16

Mary invites some friends to dinner and they accept.They purchase a much more expensive bottle of wine than they would normally drink and a beautiful bouquet of flowers.Mary calls them two hours before the dinner to tell them she has been invited out by the man of her dreams and is postponing the dinner.

Accepted Answer

Social invitations among friends are generally not considered legally binding contracts. There is no intention to create legal relations in such situations, and therefore, no party can sue another for breach of contract. The friends cannot claim compensation for the wine and flowers as there was no legally binding agreement in place.

Question 17

Dimitri wrote to Pat offering to sell his neo-expressionist painting "Red Sails in the Sunset" for $25,000.Pat replied that he could not really pay more than $18,000 for the painting.Dimitri replied that he was greatly hurt and deeply insulted by such an offer,especially from someone who was supposed to be a connoisseur of fine art,but that,since he was a little tight for cash,he would be willing to let it go to Pat for $13,000 for old times' sake.Pat immediately replied,saying that he accepted the painting at $13,000 and enquiring whether Dimitri wanted it in cash.Dimitri then realized that he had typed "$13,000" instead of "$23,000" in his second letter to Pat.

Accepted Answer

Based on the prior correspondence, it would be reasonable for Pat to realize that Dimitri had made a mistake in his second letter. Therefore, a court would likely not allow Pat to enforce the contract for $13,000 as it was not a real offer made by Dimitri.

Question 18

Mr.Madison went into a supermarket where he saw a new kind of toothpaste on a shelf,ticketed at $2.69.He decided to try it,so he took it to the checkout and placed it on the moving counter.The staff member at the checkout rang up the sale,took Mr.Madison's money,put the toothpaste in a bag,and handed it with the receipt and the change to Mr.Madison.A contract was formed when:

Accepted Answer

The contract was formed when the supermarket employee rang in the sale and took Mr. Madison's money. This is because at this point, both parties have agreed to the terms of the sale and have exchanged consideration (Mr. Madison's money for the toothpaste).

Question 19

On June 1 the Mega Marketing Research Firm sent out a mail survey to 5,000 potential customers of Mega's client company.The survey stated that everyone who completed the survey and mailed it back would receive a prize.Mega did not expect everyone to respond to the survey and had only 1,000 prizes on hand for the respondents.On July 14 Sam mailed back his response and eagerly awaited his prize.On July 15 Mega sent out the last prize it had.Sam's response arrived on July 16.It was the 1001st^, and Mega wrote back telling Sam that because all the prizes were gone,he would not be able to have one.

Accepted Answer

A valid contract was formed because Sam accepted the offer by completing and mailing back the survey, which was the method of acceptance specified by Mega. The offer did not lapse until the prizes were exhausted, and Sam's acceptance was within the time frame of the offer.

Question 20

As you are walking out of class one night,you discover a notebook,full of equations,belonging to a professor in your school.You write a note telling him who you are and where and when you found it,and you drop the note,in an envelope,into one of the university's internal mailboxes.The next day the campus is covered with notices that say "$100 REWARD.A notebook containing mathematical explanation of the meaning of life has been lost.If found,please return to Professor Doddering in Room A123."

Accepted Answer

The offer was made to the public at large, and the student did not accept it by mailing the note.

Quiz 3: Formation of a Valid Contract

Janine,a dental student,does some dental work for a friend even though she is not yet licensed.Since the work,though not negligent,did not achieve the promised results,Janine's friend can sue her for breach of their contract.

"Public policy" can be defined as the bundle of rules that protect the interests of society.

Darryl,a non-swimmer,fell off a boat into the lake."Help!" he cried."$100 to the person who saves me!" Frances then jumped in and held Darryl's head above water until the boat's dinghy could reach them.

A contract is a legal relationship between parties.The existence or validity of the contract is measured by conditions outlined by law.An indication of the intention to create a contract is built on certain premises.These premises are