Chapter 12: Agreement

Question 1

Agreement is evidenced by two events:

Answer 1

1. an offer
2. an acceptance

Question 2

the party making an offer is called the

Answer 2

offeror

Question 3

the party to whom the offer is made is called the

Answer 3

offeree

Question 4

Under the common law, what are the three elements necessary for an offer to be effective?

Answer 4

1. the offeror must have a serious intention to become bound by the offer
2. the terms of the offer must be reasonably certain, or definite, so that the parties and court can ascertain the terms of the contract
3. the offer must be communicated to the offeree

Question 5

A preliminary agreement is binding if:

Answer 5

the parties have agreed on all essential terms and no disputes remain unresolved

Question 6

The specific terms required in a contract are based on the ________ of contract.

Answer 6

type

Question 7

Generally, a contract must include what 4 terms?

Answer 7

1. Identification of the parties
2. The identification of the object or subject matter of the contract (also the quantity, when appropriate), including the work to be performed, with specific identification of such items as goods, services, and land)
3. The consideration to be paid
4. The time of payment, delivery, or performance.

Question 8

The power of acceptance that an offeree holds can be terminated by what two things?

Answer 8

1. Action of the parties
2. Operation of law

Question 9

An offer can be terminated by action of the parties in any of three ways: revocation, by rejection, or by counteroffer.

Answer 9

by revocation, by rejection, or by counteroffer.

Question 10

the withdrawal of an offer by an offeror

Answer 10

revocation

Question 11

unless an offer is _______, the offeror usually can revoke the offer, as long as the revocation is communicated to the offeree before the offeree accepts

Answer 11

irrevocable

Question 12

in most states, a revocation becomes effective when :

Answer 12

the offeree or offeree’s agent actually receives it

Question 13

a contract under which the offeror cannot revoke his or her offer for a stipulated time period and the offeree can accept or reject the offer at any time during this period. the offeree must give consideration for the option to be enforceable.

Answer 13

option contract

Question 14

option contracts are frequently used in conjunction with the sale or lease of:

Answer 14

real estate

Question 15

an offeree’s response to an offer in which the offeree rejects the original offer and at the same time makes a new offer

Answer 15

counteroffer

Question 16

a common law rule that requires, for a valid contractual agreement, that the terms of the offeree’s acceptance adhere exactly to the offeror’s offer

Answer 16

mirror image rule

Question 17

The power of the offeree to transform the offer into a binding legal obligation can be terminated by operation of law through the occurrence of any of the following four events:

Answer 17

1. Lapse of Time
2. Destruction of the specific subject matter of the offer
3. Death or incompetence of the offeror or offeree
4. Supervening illegality of the proposed contract

Question 18

(1) In contract law, the offeree’s notification to the offeror that the offeree agrees to be bound by the terms of the offeror’s proposal. (2) In negotiable instruments law, the drawee’s signed agreement to pay a draft when presented.

Answer 18

acceptance

Question 19

T or F: Silence can constitute an acceptance when the offeree has had prior dealings with the offeror.

Answer 19

True

Question 20

Whether the offeror must be notified of the acceptance depends on the:

Answer 20

nature of the contract

Question 21

The general rule is that acceptance in a bilateral contract is timely if it is:

Answer 21

made before the offer is terminated

Question 22

a rule providing that an acceptance of an offer becomes effective on dispatch

Answer 22

mailbox rule

Question 23

e-mail is considered sent when it either leaves the control of the sender or is received by the recipient. What act is this?

Answer 23

Uniform Electronic Transactions Act

Question 24

When an offeror specifies how acceptance should be made (for instance, by overnight delivery), ________ __________ is said to exist.

Answer 24

express authorization

Question 25

When is acceptance by a substitute method effective?

Answer 25

When the acceptance is received by the offeror

Question 26

a contract that is entered into in cyberspace and is evidenced only by electronic impulses (such as those that make up a computer’s memory), rather than, for example, a typewritten form.

Answer 26

e-contracts

Question 27

a provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract

Answer 27

forum-selection clause

Question 28

a clause specifying that any contract dispute will be settled according to the law of a particular jurisdiction, such as a state or country.

Answer 28

choice-of-law clause

Question 29

an agreement that arises when a buyer, engaging in a transaction on a computer, indicates his or her assent to be bound by the terms of an offer by clicking on a button that says “I agree” or “I accept”

Answer 29

click-on agreement

Question 30

an agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged

Answer 30

shrink-wrap agreement

Question 31

terms and conditions of use that are presented to an Internet user at the time a product, such as software, is downloaded but that need not be agreed to before the the product is installed or used

Answer 31

browse-wrap terms

Question 32

an agreement between a seller and buyer who frequently do business with each other on the terms and conditions that will apply to all subsequently formed electronic contracts

Answer 32

a partnering agreement

Question 33

Two important laws affecting online contracts include:

Answer 33

1. the federal Electronic Signatures in Global and National Commerce Act (E-SIGN Act)
2. the Uniform Electronic Transactions Act (UETA)

Question 34

T or F: An e-signature is as valid as a signature on paper

Answer 34

True

Question 35

What makes an e-signature enforceable?

Answer 35

The contracting parties must have agreed to use electronic signatures.

Question 36

What act declares that a signature may not be denied legal effect or enforceability solely because it is in electronic form.

Answer 36

The UETA

Question 37

The UETA covers only electronic records and signatures relating to a ___________.

Answer 37

transaction

Question 38

T/F: Consideration (think value) is the respect you pay the other person in a contract.

Answer 38

False

Question 39

T or F: An agreement exists when one party offers a certain bargain to another party.

Answer 39

False

Question 40

T or F: An expression of opinion can indicate an intent to enter into a binding agreement.

Answer 40

False

Question 41

T or F: A request to negotiate is an offer.

Answer 41

False

Question 42

T or F: The power of acceptance continues forever.

Answer 42

False

Question 43

T or F: In effect, a counteroffer converts the original offeror into an offeree with the power of acceptance.

Answer 43

True

Question 44

T or F: An offer terminates automatically when the period of time specified in the offer has passed.

Answer 44

True

Question 45

T or F: An offer can be accepted by the offeree or any third party.

Answer 45

False

Question 46

T or F: Acceptance may consist of words or conduct.

Answer 46

True

Question 47

T or F: Acceptance of an e-contract must show that the offeree voluntarily assented to the offer’s terms.

Answer 47

True

Question 48

Larry advertises a reward for the return of his lost dog. Miguel does not learn of the reward, but finds and returns the dog. With respect to Miguel, Larry’s ad is not an offer because it lacks the element of:
a. communication.
b. none of the choices.
c. serious intent.
d. definite terms

Answer 48

a. communication

Question 49

Simone offers Tom a dozen guitar lessons for a certain price per lesson but conditions the deal on Tom accepting the offer by April 1. Simone may revoke the offer:
a. only after Tom accepts it.
b. only after April 1.
c. before Tom accepts it.
d. before April 1, whether or not Tom has accepted it.

Answer 49

c. before Tom accepts it.

Question 50

Coffee Beans Inc. offers to buy Brewing Company’s roasting services for a certain price. Brewing responds that the price is too low and thereby rejects the offer. The offer is:
a. valid until Coffee Beans revokes the offer.
b. terminated.
c. valid for the period of time prescribed by a state statute.
d. valid for a reasonable time.

Answer 50

d. terminated

Question 51

Gaia tells Franco that she will pay him $50 to haul lawn debris from her property. Franco’s acceptance is complete
a. once he starts to work.
b. only after he hauls away the debris.
c. as soon as he says he will do the job.
d. when he hears the offer.

Answer 51

b. only after he hauls away the debris.

Question 52

Charter Company offers to provide an air-conditioned bus to Denny’s tour group for $1,500 plus the cost of the fuel. The mailbox rule applies if Denny accepts the offer by
a. e-mail.
b. phone.
c. any of the choices.
d. regular mail.

Answer 52

d. regular mail

Question 53

Vida, a user of phone-app.com’s website, can download apps for free by first clicking on “I accept” after viewing certain terms. This is
a. a contract that includes the terms.
b. unenforceable.
c. not a contract but the terms are enforceable.
d. a contract that does not include the terms.

Answer 53

a. a contract that includes the terms.