Contracts 6 / 3

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Contracts 6 / 3 - Quiz

Mutual Assent - Offer and Acceptance


Questions and Answers
  • 1. 

    A owned a $15 harness that was stolen from him. While in a state of wrath and in a boastful and blustering manner, A in the presence of a crowd, including P, promised to pay $100 to anyone who recovered the harness. P finds and returns the harness and sues for the reward. P, in fact, believed that A was serious, but a reasonable person in P's position would conclude otherwise. P cannot recover.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    The answer is supplied by the statement that a reasonable person in P's position would conclude that A was not serious. Under the objective theory of contracts and the reasonable person approach, there is no contract.

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  • 2. 

    P was in the business of manufacturing automobile parts. P's customers were major auto manufacturers. P wished to sell to other buyers such as Midas Muffler but believed that this would displease the auto manufacturers. To achieve secrecy,P set up a subsidiary to distribute its products. P and E, a trusted employee, signed a document which stated that E had bought the business of the subsidiary for $250,000. It was orally agreed between the parties that, despite the agreement, E was acting as an agent of P. E sues on the written agreement to compel P to transfer the business. E may not recover.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    The parties here clearly agreed that this was a sham arrangement and therefore intended that no legal consequences would attach to the writing.

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  • 3. 

    Mrs. Stewart conceived at the age of 37. After two previous stillbirths, she was convinced that she could not have a normal delivery. Consequently, when she and her husband consulted with' D, a doctor, they demanded that a Caesarean section be performed.  D agreed. D's medical opinion was that a Caesarean would not be necessary, and so D later refused to perform a Caesarean when Mrs. Stewart had labor pains. The birth was stillborn. Mrs. Stewart does not have a cause of action for breach of contract against D.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    If a doctor promises to follow a certain procedure, the doctor has made an enforceable commitment. On the facts, the doctor appears to have made such a promise. If so, she has a cause of action. The most that can be argued on the other side is that this is a question of fact.

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  • 4. 

    The Chicago Tribune, a daily newspaper, publishes a booklet called "General Advertising Rates," which lists its charges for advertisements, and another booklet called "The Chicago Tribune Advertising Guide" which indicates that the Tribune will refuse advertising which is dishonest, indecent or illegal. P, a labor union, tendered to the Tribune an advertisement urging readers not to patronize a certain department store because of its policy of featuring imported clothing made by low wage foreign labor. It was conceded that the tendered advertisement was not dishonest, indecent or illegal. The union also tendered sufficient funds to pay for the advertisements in accordance with the "General Advertising Rates." The Tribune refused to print the advertisement. P has a cause of action for breach of contract against the Tribune.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    This is similar to the cases involving ads for the sale of goods. First, it is doubtful if there is language of commitment. The fact that the Tribune will refuse certain types of advertisements does not mean that it will accept all others. In any event, there is no statement of quantity. Thus, an offer was not made.

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  • 5. 

    D caused circulars to be distributed to dealers throughout the country announcing that an auction would be conducted without reserve of the famous Smith collection of antiques. P flew from California to New York, the announced site of the auction. On arrival P discovered that the auction had been canceled because of a recession in the antiques market. P does not have an action for breach of contract against D.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    As a common law proposition an announcement that an auction will be held is deemed to be a statement of intention. Under the Uniform Commercial Code, even after the goods have been put up for sale, the auctioneer may withdraw the goods from sale except where the auction is "without reserve" and a bid is received within a reasonable time.

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  • 6. 

    P asked D whether D would consider selling certain property. D stated that, if P made an offer,D would consider it. P named a sum and D refused. P then stated, "Will you accept $49,0007/1 D answered "I will not sell it for less than $56,000./1 P said, "I accept." There was a contract.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    P's first communication was only an inquiry. D then asked for an offer.When P named a sum P made an offer. But this was rejected by D. P then made an additional inquiry. D's statement is not language of promise or commitment. Rather D is saying that an offer for less than $56,000would not be
    considered. Thus, the only offer that is made is P's offer to pay $56,000which was made when P said "I accept". This offer was not accepted.

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  • 7. 

    A offered a $100 reward to anyone who finds and returns A's lost watch. B never learned of the reward offer but returned the watch knowing it belonged to A because of engraved material on the back.  B may not recover for the sole reason that B was legally bound to return the watch.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    Although Bmay have been legally bound to return the watch so that there is no consideration, there is an additional reason why Bmay not recover. B did not know of the offer or intend to accept.

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  • 8. 

    In the above question, assume that B knew of the offer before B found and returned the watch and that Bhad no legal duty to return the watch.  Assume further that when B returned the watch, B did not mention the reward. Boffers testimony that Bintended to accept and did not say anything about the reward because of embarrassment. As a matter of law, B may not recover the reward.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    B clearly knew of the offer. The issue is intent to accept. Under one view, the offeree may testify to his or her state of mind. If B testifies to having a subjective intent to accept and is believed, B will prevail. Under a second view,
    there is a presumption that Bintended to accept, and B is not permitted to testify as to subjective intention. The presumption is rebuttable. On the facts, whether the presumption is rebutted is probably a question of fact.

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  • 9. 

    A, a newspaper, requests B to discontinue publication of a rival newspaper, and offers to pay $100 per week as long as B abstains from such publication. One must conclude that A had made an offer looking to a series of contracts.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    Although a reasonable person could conclude that this was an offer looking to a series of unilateral contracts, it could also be concluded that the act called for was the discontinuance of publication and that there was one unilateral contract with a series of performances. In either event, abstaining from publication for a week is a condition precedent to A's obligation to pay $10 each week.
    The main difference is that if A's words amounted to an offer looking to a series of unilateral contracts, A would be free to revoke prospectively. This is not true under the second analysis.

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  • 10. 

    A the owner of an unimproved piece of realty, spent the summer in Europe. When A returned there was a beautiful house where the empty lot had been. As A was about to enter, B informed A that B had caused the structure to be built and that, if A used the house, A would be contractually obligated to pay for it. B is correct.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    A is not contractually bound under the rules of acceptance by silence because A did not have a reasonable opportunity to reject the services. In addition under the rules of property law A would not be guilty of an act of wrongful
    dominion by occupying the house because the structure is A's.

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  • 11. 

    A was seriously injured in an accident. B, a doctor, came on the scene and treated A while A was unconscious. B is entitled to a contractual recovery from A.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    Since A was unconscious, A did not expressly or impliedly agree to anything. Bis entitled to a quasi-contractual recovery measured by the reasonable value of B's services.

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  • 12. 

     A invited a number of brokers to submit proposals for fire and theft insurance. Later, on A's request, B, one of the brokers, revised the bid several times. A then awarded the contract to another. Bsues to recover the cost incurred in preparing the bid and its various revisions. B may recover.

    • A.

      TRUE

    • B.

      FALSE

    • C.

      DEPENDS

    Correct Answer
    C. DEPENDS
    Explanation
    It depends upon whether a reasonable person in the position of A would conclude that Bexpected to be paid for the work to be done prior to the contract or that B was doing the preliminary work in hopes of obtaining the
    contract. The custom of the trade might supply the answer.

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  • 13. 

    Under a claim of right made in error but in good faith, A digs a well on B's unused land and takes water therefrom which has no market value and no value to B, doing no injury to the value of the land. B notifies A that B will charge $500 a day for every day on which A takes water from the land. If A takes water, A is bound to pay $500 per day.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    Although there seems to be an offer and an acceptance by an act of dominion, the Restatement, Second, states that the offeree is not bound by the offered terms where, as here, they are manifestly unreasonable. If there is no contract there is a conversion and A should have the option of suing in contract, tort, or quasi-contract, but nevertheless the Restatement takes the position that A should be limited to a reasonable value recovery in this contractual action.

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  • 14. 

    A sends an offer by mail to B,who promptly sends what amounts to a counter-offer the next day. This letter is lost. The following day, B at 2:00PM. sends a letter of acceptance which was also lost. On the same day, at 1:00 P.M., A hands a notice of revocation to an independent messenger service which. This notice is hand delivered to B at 5:00 PM. Under the majority view there is a contract.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    Because the counter offer is effectivewhen it is received, and was lost, it does not act as a rejection. The letter of acceptance is authorized (reasonable)and is effective when sent (2 P.M.) even though it was lost. Under the majority
    view, a revocation is effective when it is received. Therefore, there is a contract. Under the minority view that a revocation is effective when sent, the result would
    be different.

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  • 15. 

    A sent to B an offer to sell certain realty stating all material terms and added, "this offer is not subject to revocation for thirty days." B immediately rejected the offer, and A then stated that A withdrew the offer. At this point the offer had been effectively terminated.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    Despite the quoted language, the offer is revocable. There is no consideration to support the promise of irrevocability. Uee § 2-205 does not apply, because the case involves real property. The rejection terminated the
    revocable offer as did the revocation.

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  • 16. 

    A sends a telegraphic offer to sell oil at a fixed price which at the time is subject to rapid fluctuations in price. The offer is received near the close of business hours, and a telegraphic acceptance is sent the next day after the offeree has learned of a sharp price rise. There is a contract.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    Because no time period is stated, the offer is open for a reasonable time. Because the offer is to sell at a fixed price in a fluctuating market, it is clear that the offer should be open for a relatively short period-long enough to give the offeree a reasonable opportunity to consider the offer.This time had long since elapsed when the attempted acceptance occurred.

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  • 17. 

    0 offered a reward of $200 for information leading to the conviction of the person who set a specific fire. Three years and two months later, the culprit was convicted as a result of information supplied by P three months before the trial. P may not recover because the offer has lapsed.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    The manifest purpose of the offeror is the conviction of the criminal. This can happen until the statute of limitations expires. When this happens depends upon the law of a particular jurisdiction, but under the facts it is clear that it had not.

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  • 18. 

    A makes an offer to Bsaying that it is to remain open for two weeks but is to end at once if A's factory is destroyed by fire. If the factory burns down two days later and Baccepts the next day, not knowing that the factory burned down, there is a contract.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    The offeror may stipulate in the offer that the power of acceptance shall terminate upon the happening of a certain event. If the event happens before the acceptance, the power of acceptance lapses even though the offeree is not
    informed that the event has occurred.

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  • 19. 

    A in a telephone conversation makes an offer to Bto which B did not reply. After the conversation ends, B sends a letter of acceptance. There is no contract.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    When an offer is made in a face to face or telephone conversation or in any situation where there are direct negotiations, the offer is deemed, in the absence of a manifestation of a contrary intention, to be open only while the parties are conversing.

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  • 20. 

    A made an offer to B looking to a series of unilateral contracts pursuant to which A guarantied payment of the B's deliveries of building supplies to Apex Construction Co. After B made the first delivery, A was adjudicated an incompetent and a guardian of A's property was appointed. B had no knowledge of this fact and continued to make deliveries. Under the majority view, B may recover contractually for all deliveries.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    A revocable offer looking to a series of contracts may be terminated prospectively. Under the majority view, an adjudication of incompetency followed by the appointment of a guardian terminated the offer even though B was unaware of what transpired. Under this view,Ais liable only for the first delivery.

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  • 21. 

    A, a newspaper, publishes an offer of prizes to persons who procure the largest number of subscriptions as evidenced by cash or checks received by a specified time. B completes and mails an entry blank giving B's name and address, which is received by A. Thereafter during the contest, A publishes a notice that personal checks will not be counted. B does not see the notice. Assume that the offer continued to be revocable. B is bound by the notice.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    The II equal publicity" doctrine does not apply because A knew of B's existence and address. A was bound to personally notify B.

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  • 22. 

    A makes an offer to B to sell Bleak House for $100,000.B, at A's request, pays A $100to keep the offer open for one week. Two days later, B tells A that B will purchase but at a price of $85,000.  A declines. The next day B manifests an intent to buy at the original price and tenders $100,000. Under the modern view, there is a contract.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    The payment of $100 makes the offer irrevocable. Under the modem view, the counter offer does not terminate the original offer. Therefore it can still be accepted by B.

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  • 23. 

    A makes a written and signed offer to sell goods to B which states,  "This offer is for one week." The letter was dated and sent on Jan. 2. It was received on Jan. 3. B sent a letter of acceptance on Jan. 9. This letter was received on Jan. 12. There is a contract.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    A. TRUE
    Explanation
    Whether the 7 days are measured from Jan. 2 or Jan. 3, an acceptance sent on Jan. 9 is timely if sent in an authorized (reasonable) manner, which is the case here. In computing 7 days, the day from which the computation is made is not ordinarily considered.

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  • 24. 

    A, a manufacturer, agrees to sell to B, a retailer, 5,000 widgets. A's offer stated prices which varied according to the size of the widgets.  B accepted. Before anything else happened, A "withdrew the offer." There is no contract.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    Under the provisions of UCC § 2-311 there is a contract.

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  • 25. 

    A and B enter into an employment arrangement for a period of one year. They agree that the salary to be paid should be determined by them "in a cooperative effort" at the end of each month. There is no contract.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    The traditional common law rule is that an agreement to agree as to a material term renders the agreement too vague and indefinite to be enforced (void). But here the quoted words indicate that the parties have agreed to make a good faith effort to reach agreement. Abreach of that promise will amount to a breach of contract.

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  • 26. 

    A publishes an offer of a reward of $10,000for information leading to the arrest and conviction of the murderer of her child. B had such information but made no effort to accept the offer until he was stricken with a disease that appeared to be fatal. At which point B gave such information to the authorities, and disclaimed any intention to collect the reward. When he recovered from his illness and after the information he supplied resulted in the arrest and conviction of the murderer, he claimed the reward. B is entitled to recover.

    • A.

      TRUE

    • B.

      FALSE

    Correct Answer
    B. FALSE
    Explanation
    Although there are two views on the intention to accept an offer to a unilateral contract such as a reward offer, under either view B cannot recover. Under the older view it is clear that Bdid not subjectively intend to accept. Under the newer view of the Restatement (Second), if Bmanifests an intent not to accept prior to A's Performance, B is not entitled to recover.

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