Contracts 5
CONTRACTS - MUTUAL ASSENT
- 1.
Thompson's Dry Goods Store published the following advertisement in the Silver City Morning News on Monday, March 12, 2008. "8 brand new STETSON COWBOY HATS Beaver Felt, selling for $72.50...out they go...Sat. Mar 17, Each....$5.00 1 Navajo Turquoise Necklace....worth $123.00, now selling for $40.00... "FIRST COME, FIRST SERVEDOn the following Saturday, Roy was the first person to arrive at the store and demanded the n ecklace. The store clerk refused to sell it to him because it was a "house rule" that the sale was intended for women only.If Roy brings suit against Thompson's Dry Goods Store for its refusal to sell him the necklace, Roy will:
- A.
Lose, since the advertisement was only intended as an invitation to make an offer.
- B.
Lose, since Roy did not notify the Store in writing that he intended to accept the offer.
- C.
Win, because the advertisement should be construed as a binding offer.
- D.
Win, even if Roy was not the first customer to appear at the store to purchase the necklace.
Correct Answer
C. Win, because the advertisement should be construed as a binding offer.Explanation
As a general rule, advertisements, circular letters, price lists, and price tags are construed asproposals inviting offers. However, if the advertisement is definite in its terms, leaves nothing to negogiate, seems objectively reasonable, and is unlikely to be overaccepted. a court may find the advertisement is an enforceable offer.Rate this question:
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- 2.
Same scenario as aboveIn evaluating the relationship between Roy and the Dry Goods Store, the court would most likely find that
- A.
Roy's acceptance created a bilateral contract.
- B.
Roy's acceptance created a unilateral contract.
- C.
Under the resulting contract, both parties had a right and a duty of performance.
- D.
The "house rule" of selling to women only would preclude Roy from becoming a party to a contract with the store.
Correct Answer
B. Roy's acceptance created a unilateral contract.Explanation
Roy's acceptance created a unilateral contract, one in which the offer requested actual performance rather than a promise to perform.Rate this question:
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- 3.
On friday, February 13, Orlando dispatched the following letter to Juan: "Dear Juan, My volvo hasn't been running very well lately. I'll pay you $275 if you will change the oil, replace the oil filter, and adjust the carburetors. /s/ OrlandoJuan received Orlando's letter on Monday, February 16. That same day, he telephoned Pep Boy's Auto Supply Co. and ordered the necessary materials to perform the repair work. Two days later, however, Orlando met Juan at a party and this conversation took place: Orlando: "Disregard the letter that I sent you last week." Juan: "No way, man I ordered the materials on Monday from Pep Boys." Orlando: "Sorry, man, but I sold the volvo yesterday to Leon, so forget the repair work."IF JUAN INITIATES SUIT FOR BREACH OF CONTRACT, WHCIH OF THE FOLLOWING IS ORLANDO'S STRONGEST ARGUMENT THAT NO ENFORCEABLE CONTRACT WAS FORMED BETWEEN HIM AND JUAN?
- A.
Juan had not completed performance before Orlando revoked his offer.
- B.
Orlando's offer could only be accepted by a return promise.
- C.
Since Orlando made his offer by letter, Juan could accept only in the same manner.
- D.
Although Juan was preparing to perform the repair work, he had not begun the requested acts of acceptance when Orlando revoked the offer.
Correct Answer
D. Although Juan was preparing to perform the repair work, he had not begun the requested acts of acceptance when Orlando revoked the offer.Explanation
A unilateral offer can only be accepted by performance, not by a return promise. Additionally,mere preparation for performance, no matter how dertimental to the offerree, is not enough to count as an acceptance. Here, Orlando asked for Juan to change the oil, replace the oil filer, and adjust the carburetors. By getting supplies from Pep Boys, Juan has only prepared to perform.Rate this question:
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- 4.
Same scenario as aboveIF JUAN INITIATES SUIT FOR BREACH OF CONTRACT, WHICH OF THE FOLLOWING IS HIS STRONGEST ARGUMENT THAN AN ENFORCEABLE CONTRACT WAS FORMED BETWEEN HIM AND ORLANDO?
- A.
Since Juan had a reasonable time to accept the offer, Orlando's wrongful revocation would be ineffective.
- B.
Since Juan was a merchant, Orlando's written offer was irrevocable for a period not exceeding three months.
- C.
Because Orlando's offer invited a return promise as acceptance, Juan manifested his intent to perform by ordering the materials.
- D.
After Juan obtained the materials for the repair work, he went over to Orlando's and changed the oil on the Volvo.
Correct Answer
D. After Juan obtained the materials for the repair work, he went over to Orlando's and changed the oil on the Volvo.Explanation
A unilateral offer becomes irreplaceable as soon as the offeree has started to perform the act. Once Juan starts the three requested acts. Orlando can no longer revoke his offer.Rate this question:
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- 5.
Andy Toney, a third year student at Delaware Law School, was the captain of the law school rugby club. One evening, Toney and a few of his rugby teammates were drinking beer at Pete's Pub, a favorite Delaware Law School handout. They were worried that the rugby club, known as the "Leatherballs", would be forced to disband because the Law School had withdrawn its sponsorship. While Andy was discussing the problem with his teammate, Pete Maravich. the owner of the tavern, approached the players. He indicated that he was interested in sponsoring the rugby club becuase he felt it would help business at the pub. During their ensuing discussion, Pete agreed to sponsor the rugby club. The parties then orally agreed that Pete 'would pay for all the usual sponsorship fees" incurred by the club.Pete had understood the agreement to mean that he would pay for the rugby shirts and supply the keg of beer following each "home" game that the "Leatherballs" played. Conversely, Andy thought that Pete would be reimbursing the team for (a) the shirts (b) the keg of beer (following "home" games and (c) transportation for "away" games and (d) equipment expenses.ASSUME FOR THE PURPOSES OF THIS QUESTION ONLY THAT IT WAS THE CUSTOMARY PRACTICE OF THE RUGBY TEAMS IN THE COMMUNITY TO HAVE THE SPONSORS PAY FOR (A) THE SHIRTS (B) THE BEER. BEFORE THE "LEATHERBALLS" WERE TO PLAY THEIR FIRST GAMEUNDER PETE'S SPONSORSHIP, WHICH OF THE FOLLOWNG IS THE MOST ACCURATE STATEMENT REGARDING THE LEGAL RELATIONSHIP BETWEEN THE PARTIES.
- A.
A contract exists on the terms understoof by Pete.
- B.
A contract exists on the terms understoof by Andy.
- C.
A contract exists on the terms are customary for the other teams in the community.
- D.
No contract exists.
Correct Answer
D. No contract exists.Explanation
To create a contract, the parties must manifest their mutual assent to the same bargain at the same time.Rate this question:
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- 6.
Assume for the purposes of this question only that Yardley did not sell the motorcycle to Stokes. Instead, Yardley offered to sell the motorcycle to Dugan for $1,000. After receiving Yardley's offer, Dugan responded, "Let me think it over." Yardley then said, "If you say so." The next day, Yardley sold the motorcycle to Elgin for $1,000. Thereafter, Dugan sought to accept Yardley's offer, but learned that the motorcycle had been sold to Elgin. If Dugan sues Yardley for breach of contract, judgement for
- A.
Yardley, because the offer to Dugan terminated when he learned of the sale to Elgin.
- B.
Yardley, because he acted in good faith when he sold the motorcycle to Elgin.
- C.
Dugan, because the offer became irrevocable for a reasonable time when Yardley allowed Dugan to "think it over."
- D.
Dugan, if, but only if, he is a merchant.
Correct Answer
A. Yardley, because the offer to Dugan terminated when he learned of the sale to Elgin.Explanation
An offeree's power of acceptance s terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect. Thus, Yardley's offer was effectively revoked when Dugan learned that the motorcycle had been sold to Elgin.Rate this question:
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- 7.
Hymie Hendrix owned Meadowlands, a sixtyacre tract located just outside West Grove in Oxford County. Meadowlands included a large family home which was a restored antebellum mansion, complete with tennis court, stables, and a small carriage-house. Hendrix rented the carriage-house to Janet Iopland for $250 per month. On September 3, Hendrix mailed the following letter to Iopland: "September 2 Dear Ms. Jopland: In consideration of one dollar, receipt of which is acknowledged, I hereby give you an option for 20 days from the above date to sign a two-year lease at $225 per month, provided you pay two months rent in advance. f sf Hymie Hendrix" Iopland received Hendrix's letter of September 4, but did not read it until September 5. On September 13, Iopland met with Carla Cass, an adjoining landowner, and inquired about renting a cottage on her property. No agreement was reached between [opland and Casso On September 18, however, Hendrix was informed by Greta Gossip that Jopland was interested in renting a cottage from Casso.On September 23, Iopland telephoned Hendrix and said, "I want to give you the $450 and sign the two-year lease as soon as possible:' Hendrix replied, "Get stuffed, I heard about your conversation with Cass" Hendrix then abruptly hung up the telephone. On the morning of September 25, Jopland went to Hendrix's home and told him that she wanted to accept his offer and sign the two-year lease. Hendrix responded, "The option's expired. Moreover, I want you to vacate the carriagehouse immediately" At no time after receiving Hendrix's letter on September 4 did Iopland pay him the one-dollar consideration. Did Hendrix's letter constitute an effective offer for a two-year lease?
- A.
Yes,because it manifested a willingness to enter into a specific bargain.
- B.
Yes,because consideration for the option can be inferred from the previous month-to-month lease.
- C.
No, unless Iopland paid or tendered to Hendrix the one-dollar consideration.
- D.
No, unless Iopland paid or tendered to Hendrix the one-dollar consideration.
Correct Answer
A. Yes,because it manifested a willingness to enter into a specific bargain.Explanation
According to the Restatement (Second) of Contracts, Section 24, ''An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and
will conclude it:' Clearly, Hendrix's letter manifested such a present contractual intent.Rate this question:
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- 8.
Same scenario as above question Assume for the purposes of this question only that Hendrix's letter created in Jopland a valid power of acceptance. Was that power terminated when Hendrix learned from Gossip of Iopland's conversation with Cass?
- A.
Yes,if Gossip gave factually accurate information to Hendrix.
- B.
Yes,because it gave Hendrix reasonable grounds to believe that Iopland had rejected his offer.
- C.
No, because the indirect communication to Hendrix was oral.
- D.
No, because Iopland's conversation with Cass did not constitute a rejection.
Correct Answer
D. No, because Iopland's conversation with Cass did not constitute a rejection.Explanation
Rejection of an offer by the offeree terminates the offer. As a general rule,rejection is the offeree's refusal to accept the offer as made, and it must be communicated to the offeror. Here, the mere fact that Iopland talked to Cass
(re: renting a cottage) is not a clear indication that she intended to reject Hendrix's offer.Rate this question:
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- 9.
Kirby Construction Co., in preparing its bid for the construction of a new hospital, received a quote of $120,000 from Kat's Interior Inc to do the kitchen work in the new hospital. This bid was $30,000 lower than Kirby's next lowest bid for the kitchen work. As a result, Kirby used Kat's bid and lowered its bid by $20,000 before submitting it to the hospital board. After Kirby was awarded the construction bid, Kat's president discovered that in his preparation of the quote, he had overlooked some subsidiary kitchen installments required by the plans. Immediately thereafter, Kat's Interiors brings suit for rescission of the contract. It should
- A.
Succeed, because of Kat's unilateral mistake.
- B.
Not succeed, unless Kirby knew or should have known of Kat's error.
- C.
Succeed, because the mistake was an essential element of the bargain.
- D.
Not succeed, since the computation mistake was antecedent to acceptance of the bid.
Correct Answer
B. Not succeed, unless Kirby knew or should have known of Kat's error.Explanation
In all unilateral mistake situations, if the offeree knows or has reason to know of the offeror's mistake when he or she accepts, then the offeror is not bound. In other words, if the nonmistaken party is or should have been aware of the mistake, he or she cannot "snap up" the offer. Here, since Kirby neither knew nor should have known of Kat's error, the contract was enforceable.Rate this question:
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- 10.
After the murder of his brother, Marvin Fish published the following notice in the Vicksburg Courier on June 7, 2008: "REWARD Any person who supplies information leading to the arrest and conviction of the murderer of Melvin Fish will be paid $5,000:' Don Archer, an amateur detective, without knowledge of the reward notice, began investigating the matter as a result of his own curiosity kindled by the sensationalism surrounding Melvin's murder. On November 6, 2008, Archer secured information that led to the arrest and conviction of the murderer. After the trial, Archer found out about the reward and demanded the $5,000 from Marvin Fish.A court will likely find that the June 7, 2008, reward notice in the Vicksburg Courier proposed a
- A.
Unilateral contract only.
- B.
Unilateral contract only.
- C.
Unilateral contract or bilateral contract, at the offeree's option.
- D.
Unilateral contract that ripened into a bilateral contract when Archer supplied the information leading to the murderer's conviction.
Correct Answer
A. Unilateral contract only.Explanation
A reward offer requires acceptance by actual performance; consequently, acceptance of the offer creates a unilateral contract.Rate this question:
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- 11.
Same scenario as above question. In an action by Archer to recover the $5,000 reward, he will
- A.
Succeed, because his apprehension of the murderer created a contract implied in law.
- B.
Succeed, even though he was unaware of the offer.
- C.
Not succeed, because he did not know about the reward.
- D.
Not succeed, because his investigation was not a bargained-for exchange.
Correct Answer
C. Not succeed, because he did not know about the reward.Explanation
A person cannot accept an offer unless he or she acts with knowledge of the offer. Here, if Archer did not know about the reward, he cannot claim he is entitled to it for providing information leading to the murderer's conviction. See Restatement (Second) of Contracts, Sections 23 & 53.Rate this question:
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- 12.
Zelda Zellman went to Dr. Dreck, a dermatologist, for treatment of an abnormal growth on the back of her right shoulder. Under a written contract, Dr. Dreck agreed to surgically remove the growth for $750. As Zelda subsequently recalled, the parties orally agreed that if any additional medical procedures were required during surgery, they would be included in the $750 fee. Dr. Dreck, however, has no recollection of any such oral agreement.As agreed, the surgery was performed on an out-patient basis at Dr. Dreck's office. He applied a localized anesthesia that enabled Zelda to remain conscious during surgery. While the operation was being performed, Dr. Dreck noticed a brown mole on Zelda'sback. As Dr. Dreck subsequently recalled, he informed Zelda about the mole and asked whether she wanted it removed as well. According to Dr. Dreck's account, Zelda orally agreed to have the mole removed for an additional $150. Zelda has no recollection of any such oral agreement. Dr. Dreck performed both removal procedures satisfactorily. Following the surgery, Zelda paid Dr. Dreck $750, but refused to pay any additional money for the mole removal. After unsuccessfully attempting to collect the $150, Dr. Dreck brought suit against Zelda to recover the additional fee. At trial, Dr. Dreck objects to the introduction of testimony regarding any oral agreement made before the written contract was signed. Bythe same token, Zelda objects to the introduction of testimony concerning any oral agreement made during surgery. Which of the following considerations is most important to a judicial ruling on Zelda's objection?
- A.
Dr. Dreck's removal of the mole conferred a clear benefit on Zelda.
- B.
The proffered oral agreement regarding payment of the additional $150 occurred after the written agreement had been signed.
- C.
The written agreement was for services rather than the sale of goods.
- D.
The proffered oral agreement regarding payment of the additional $150 concerned a new medical procedure that was unrelated to the subject matter of the prior written contract.
Correct Answer
B. The proffered oral agreement regarding payment of the additional $150 occurred after the written agreement had been signed.Explanation
The parol evidence rule states that once the parties have reduced their agreement to a writing, evidence of any prior oral or written, or contemporaneous oral agreements is inadmissible to alter, vary, or contradict the terms of the writing. However, the parol evidence rule does not prevent proof of an oral or written agreement that varies or ontradicts the terms of a prior written contract. Since
the oral agreement, which Dr. Dreck claims took place during the operation, occurred at a point in time after the written contract, Dr. Dreck will contend that the parol evidence rule is not applicable as applied to a subsequent oral agreement. Choice (B) correctly states this consideration. Choice (A) is incorrect because the conferral of a clear benefit would be relevant to recovery in quasicontract for the value of services rendered; however, quasi-contract recovery isRate this question:
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- 13.
On September 1, 2008, Stolper Products, a manufacturer of portable drinking fountains, mailed to Sparklets,adrinking fountain retailer, a signed offer: "Have200water bubblers (drinking fountains) available at $100 each for October delivery. Be advised that this offer will remain open until October 1, 2008:' On September 30, 2008, Sparklets mailed the following letter, which was received by Stolper on October 1, 2008: "Youroffer is hereby accepted, but request delivery of 100 water bubblers in October and 100water bubblers in November:' Assume for the purposes of this question only that Stolper sent an email to Sparklets on September 29,2008, revoking its offer. This revocation is
- A.
Valid, unless Sparklets had changed its position in reliance on the offer.
- B.
Valid, because there was no consideration to support an option contract.
- C.
Not valid, because Sparklets had 90 days in which to accept.
- D.
Not valid, because Stolper gave assurance that the offer would remain open until October 1.
Correct Answer
D. Not valid, because Stolper gave assurance that the offer would remain open until October 1.Explanation
According to UCC 2-205, "an offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror:' Under this "firm offer" rule, Stepler's offer would remain open until October 1.Rate this question:
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- 14.
Tex was a well-known rodeo performer who lived in Ft.Worth. One day,Barnum approached Tex and said, "If you will ride my bucking bronco for one minute, I will pay you $500:' Tex then went and purchased a special saddle for the bronco ride. After saddling Barnum's bronco, Tex mounted the horse and started to ride. Barnum suddenly yelled, "I hereby revoke my offer!" If Tex thereafter goes ahead and rides the bronco for one minute, will he recover the $500?
- A.
No, because Barnum's revocation was effective since Tex had not completed performance.
- B.
Yes,because there was an offer for a unilateral contract that became irrevocable prior to Barnum's attempted revocation.
- C.
Yes,under the doctrine of estoppel in pais.
- D.
Yes,under the doctrine of quasi -contract.
Correct Answer
B. Yes,because there was an offer for a unilateral contract that became irrevocable prior to Barnum's attempted revocation.Explanation
An offer which invites performance of an act as acceptance, rather than a return promise, becomes irrevocable as soon as the offeree has started to perform the act. However, keep in mind that mere preparation is not enough. Consequently, it was important that Tex actually started to ride the bronco; merely acquiring the saddle was not enough.Rate this question:
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- 15.
On August 10th, The Clip Joint, a retail stationery store, sent the following purchase order to American Office Supply Company, a wholesaler of office supply quipment: "Please ship immediately 24 pairs (two dozen) 3-1/2 inch, right-handed scissors at your current list price of $4 per pair:' American received this purchase order on August 12.The next day, Sam Shipley, American's shipping clerk, ascertained that there were only 18 pairs of 3-1/2 inch, right-handed scissors in stock. Shipley, however, found that American had 6 pairs of 3-1/2 inch, left-handed scissors in stock. Without notifying The Clip Joint, Shipley went ahead and shipped the 18 pairs of right-handed scissors along with the 6 pairs of left-handed scissors to the stationery store. The Clip Joint was aware that the wholesale price for the left-handed scissors was $3 per pair, or $1 less than the list price for the right-handed scissors. Was an enforceable contract formed when American shipped the 24 pairs of scissors to The Clip Joint?
- A.
Yes,because American's shipment constituted acceptance of the offer, and there was no notification by American to The Clip Joint that the shipment was made for accommodation only.
- B.
Yes,because American acted in "good faith" in making the shipment in reliance on The Clip Joint's offer.
- C.
No, because American could accept The Clip Joint's offer only by a prompt promise to ship the goods ordered.
- D.
No, because acceptance by performance of an offer for immediate or prompt shipment is not legally binding unless the nonconforming goods are reasonably resalable.
Correct Answer
A. Yes,because American's shipment constituted acceptance of the offer, and there was no notification by American to The Clip Joint that the shipment was made for accommodation only.Explanation
UCC 2-206( 1)(a) provides that offers generally invite acceptance "in any manner and by any medium reasonable in the circumstances:' Generally,an offer may call for acceptance by either (1) a return promise or (2) a specified act. Here, the Clip Joint's offer expressly called for American to ship immediately the scissors.
Thus, this is an example of acceptance byperformance. Here, although American shipped nonconforming goods (by shipping sixleft-handed scissors), a contract is still formed, although The Clip Joint can sue for breach of contract.Rate this question:
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