National American University

BUSINESS L 3100

Chapter 13-FORMATION OF CONTRACTS: OFFER AND ACCEPTANCE

TRUE/FALSE

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

 

                                           

 

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

 

                                           

 

3. Social invitations can be offers.

 

                                           

 

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

 

                                           

 

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

 

                                           

 

6. Contractual intention is determined by objective standards.

 

                                           

 

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

 

                                           

 

8. An agreement cannot be enforced if it does not set forth every contractual detail.

 

                                           

 

9. Contract terms may not be implied from conduct.

 

                                           

 

10. 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.

 

                                           

 

11. A “best efforts” clause is always deemed too indefinite to be enforceable.

 

                                           

 

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

                                           

 

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

 

                                           

 

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

 

                                           

 

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

 

                                           

 

16. A revocation of an offer is ordinarily effective only when it is communicated to the offeree.

 

                                           

 

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

 

                                           

 

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

 

                                           

 

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

 

                                           

 

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

 

                                           

 

21. If the offeree purports to accept an offer but in so doing makes any change to the terms of the offer, such action is a counteroffer that rejects the original offer.

 

                                           

 

22. If no time is stated for the duration of an offer, it continues indefinitely if the offer relates to durable goods or land.

 

                                           

 

23. If an offer does not state how long it shall remain open, it remains open for ten days.

 

                                           

 

24. If either the offeror or offeree dies or becomes mentally incompetent before the offer is accepted, the offer is automatically terminated.

                                           

 

25. An acceptance must be absolute and unconditional.

 

                                           

 

26. The fact that there has been a series of contracts between the parties and that one party’s offer has always been accepted before by the other does not create any legal obligation to continue to accept subsequent offers.

 

                                           

 

27. A party to an existing contract can modify the agreement without the other party’s actual acceptance or approval.

 

                                           

 

28. Acceptance of an offer to form a unilateral contract need not be communicated to the offeror to be effective.

 

                                           

 

29. A properly mailed acceptance takes effect when mailed, even if it never is received by the offeror.

 

                                           

 

30. At an auction sale, a statement made by the auctioneer to draw forth bids constitutes an offer.

 

                                           

 

MULTIPLE CHOICE

 

1. The willingness of an offeror to enter into a contractual agreement regarding a particular subject is expressed by a(n):
   1. offer.
   2. acceptance.
   3. contract.
   4. agreement.

                                           

 

2. If not an offer, the first statement made by one of two persons is most properly termed a(n):
   1. option.
   2. acceptance.
   3. invitation to negotiate.
   4. contract.

                                           

 

3. A customer went into a store and saw a beautiful leather jacket bearing a price tag of $29. The customer handed the cashier a $50 bill and said, "I accept. We have a deal." The cashier then noticed the price tag and told the customer an error had been made and that the price was $229. In this case:
   1. the customer validly accepted the store’s offer.
   2. the price tag was a firm offer.

1. 3. no contract was formed because the customer's offer was refused.
   4. the customer is the offeree.

                                           

 

4. A customer requested a price from a carpenter on a teak cabinet to be built according to the buyer's specifications. Because teak wood is difficult to obtain, the customer agreed to pay the cost of the wood plus $175 and the carpenter agreed to build it. Which of the following is correct?
   1. Although the price is somewhat unclear, the parties have entered into a contract.
   2. This is an agreement to agree, and is not binding.
   3. This agreement fails for indefiniteness.
   4. The carpenter is bound by the agreement, but not the customer.        
5. An offer that is indefinite may be clarified by reference to another writing through:
   1. incorporation.
   2. reference.
   3. annotation.
   4. indexing.

                                           

 

6. An agreement that consists of two or more parts and calls for corresponding performances of each part by the parties is called a:
   1. partial contract.
   2. divisible contract.
   3. performance contract.
   4. divided contract.

                                           

 

7. If an offeree accepts an offer before it is effectively revoked:
   1. a void contract is formed.
   2. a voidable contract is formed.
   3. an unenforceable contract is formed.
   4. a valid contract is forme

                                           

 

8. A(n)                           contract is a contract to buy all requirements of the buyer from the seller.
   1. output
   2. essentials
   3. necessaries
   4. requirements

                                           

 

9. Under the Uniform Commercial Code (UCC), a firm offer applies to:
   1. a written, signed offer by a merchant to buy or sell goods.
   2. an unwritten but definite offer to buy or sell goods.
   3. a written, signed offer by anyone to buy or sell goods.
   4. an unlimited, stipulated period of time.           

10. A counteroffer is a(n):
    1. acceptance of the original offer.
    2. rejection of the original offer.
    3. acceptance of the original offer and an invitation to further negotiate.
    4. a revocation of the original offer.

                                           

 

11. A said to B, "I'll give you $100 for that bracelet." B replied, "$135." A said, "No thanks." B then said that B accepted the $100, but A was no longer interested and said there was no contract. B insists there is a contract. Result?
    1. A's offer of $100 was open and accepted by B, thereby forming a contract.
    2. B's counteroffer of $135 terminated A's offer of $100.
    3. B's statement, "$135" was a negotiating statement that did not terminate A’s original offer of $100.
    4. A's offer of $100 was irrevocable.

                                           

 

12. An offer is terminated upon rejection by the offeree unless:
    1. the period of time for which the offeror agreed to keep the offer open has not yet expired.
    2. the offeror renews the offer.
    3. the offeree revokes the rejection.
    4. the offeree makes a counteroffer.

                                           

 

13. If no termination date is specified for an offer, the offer will remain open:
    1. for one year.
    2. for six months.
    3. for a reasonable period of time.
    4. until someone accepts the offer.

                                           

 

14. If an offeree dies before the offer has been accepted, the offer:
    1. may be rejected by the surviving spouse of the offeree.
    2. may be accepted by the surviving spouse of the offeree.
    3. is automatically revoked by the death of the offeree.
    4. may be accepted by the guardian appointed for any minor children of the offeree.     
15. In general, an acceptance occurs when:
    1. a particular form of words is stated to the offeror.
    2. a particular mode of expression is made to the offeror.
    3. the offeree reserves the right to reject the offer.
    4. a clear expression of the offeree’s agreement to be bound by the terms of the offer occurs.
16. When an offer has been accepted:
    1. a subsequent revocation of the offer may serve to nullify the resulting contract.
    2. a contract is formed, assuming that all of the other elements of a contract are present.
    3. either party may withdraw from the resulting contract without consent.
    4. the acceptance is executory.

                                           

 

17. If an offer requires that acceptance be communicated by a specific date and the acceptance is properly dispatched by the offeree on the final date,
    1. no contract is formed, since the offeror will undoubtedly receive the dispatched acceptance after the deadline for acceptance.
    2. a contract is formed, but the contract is voidable at the election of the offeror.
    3. the acceptance is timely and a contract is formed, even though the offeror actually receives the acceptance well after the specified date has passed.
    4. the acceptance is timely and a contract is formed, but only if the offeror actually receives the acceptance by the deadline specified for acceptance.

                                           

 

18. In an auction                         , the auctioneer takes bids as agent for the seller with the understanding that no contract is formed until the seller accepts the transaction.
    1. without reserve
    2. with reserve
    3. without preserve
    4. with preserve

                                           

 

19. At an auction sale, each bid is:
    1. a counteroffer to the auctioneer's offer of the merchandise.
    2. an acceptance of the auctioneer's offer.
    3. an invitation to negotiate.
    4. an offer.

                                           

 

20. Arthur made a bid at an auction by calling out the amount of $250. The auctioneer acknowledged Arthur's bid. There were no higher bids, and before the fall of the auctioneer’s hammer, Arthur announced that he was withdrawing the bid. The auctioneer said that it was too late for Arthur to withdraw his bid, because the bid had already been acknowledged. What is the result?
    1. Arthur's bid is an ordinary offer that can be revoked.
    2. Arthur's bid is firm and cannot be withdrawn.
    3. Since the auctioneer had in fact acknowledged Arthur’s bid, the bid became an option exercisable at the election of the seller.
    4. Since the auctioneer had in fact acknowledged Arthur’s bid, a contract had been formed by way of offer and acceptance; accordingly, Arthur’s subsequent attempt to withdraw his bid was ineffective.

                                           

 

CASE

 

1. Mary offered to sell Mike several pieces of rare Chinese art at a very good price because they were duplicates in her own collection. Mike could not accept the offer at that time, but he did give Mary

$500 in return for her promise to keep her offer open for three (3) weeks. Mike returned with the agreed-upon balance two weeks later to find that Mary already had sold the pieces she had offered to sell to him. Mary explained that she had been able to get a better price from another buyer. She offered to return Mike's $500 and insisted that this was all she was obligated to do. Is Mary right?