Chapter 3. Formation Of Contracts—Mutual Assent (17-70)

Question 1

A, B, C and D enter into a written contract by which A makes certain promises to B, other promises to C, and other promises to D. In return B, C and D promise a single performance to A, or each promises A a separate performance. Is there a contract?

Answer 1

In either case there is a contract, and numerous variations may be made from this illustration in regard to the number of parties and the various promises which they may make. Restatement 2d of Contracts § 9(b)

Question 2

A promises to convey a tract of land to his three sons , B, C and D. In return B and C promise to build and maintain a home for A. D promises to live with A and to support and care for him. B, C and D promise that A will receive $200 a year. Who has what duty?

Answer 2

As to the home , B is the principal obligor for his share and C for his. B is C’s surety for C’s share and C is B’s surety for B’s share. Similarly, as to the $200, each is principal as to a third and surety for each of the others. D alone is bound to furnish care and support. Restatement 2d of Contracts § 10(b)

Question 3

A becomes a member of an unincorporated society, and by so doing promises to pay dues to the society. Is there a contract?

Answer 3

He is bound by a contract. Restatement 2d of Contracts § 11(a)

Question 4

A , a trustee of an estate jointly with B, enters into a written agreement by which he individually promises to buy and A and B as trustees promise to sell a piece of land belonging to the trust. Is there a contract?

Answer 4

This is a contract, and, though it is voidable by the beneficiaries if made without either their consent or the authority of a court, it is enforceable unless the beneficiaries elect to avoid it. Restatement 2d of Contracts § 11(a)

Question 5

A, under guardianship by reason of mental illness, buys an old car from B for $300, giving a promissory note for that amount. A subsequently abandons the car. Who is liable?

Answer 5

A is not liable on the note. B may reclaim the car or, if the car is found to be a necessary, has a claim for having furnished it to A. Restatement 2d of Contracts § 13(b)

Question 6

Shortly after commitment to a hospital for the insane and while still confined, A conveys land to B, taking back a purchase-money mortgage. Subsequently C is appointed guardian of A’s property. On A’s behalf, C ratifies the conveyance and sues to enforce the mortgage by foreclosure. Is it enforceable?

Answer 6

B has no defense: since A was not under guardianship, the conveyance and mortgage were voidable, not void. See § 15. Restatement 2d of Contracts § 13(c)

Question 7

A, a school teacher, is a member of a retirement plan and has elected a lower monthly benefit in order to provide a benefit to her husband if she dies first. At age 60 she suffers a “nervous breakdown,” takes a leave of absence, and is treated for cerebral arteriosclerosis. When the leave expires she applies for retirement, revokes her previous election, and elects a larger annuity with no death benefit. In view of her reduced life expectancy, the change is foolhardy, and there are no other circumstances to explain the change. She fully understands the plan, but by reason of mental illness is unable to make a decision based on the prospect of her dying before her husband. The officers of the plan have reason to know of her condition. Two months after the changed election she dies. Is it enforceable?

Answer 7

The change of election is voidable. Restatement 2d of Contracts § 15(b)

Question 8

A, an incompetent not under guardianship, contracts to sell land to B, who does not know of the incompetency. A continues to be incompetent. Is it enforceable?

Answer 8

On discovering the incompetency, B may refuse to perform until a guardian is appointed, and if none is appointed within a reasonable time may obtain a decree canceling the contract. Restatement 2d of Contracts § 15(d)

Question 9

A, an incompetent not under guardianship, contracts to buy land for a fair price from B, who does not know of the incompetency. Shortly after transfer of title to A and part payment by A, A dies. What can A’s representative do?

Answer 9

A’s personal representative may recover A’s part payment on reconveying the land to B. Restatement 2d of Contracts § 15(e)

Question 10

A, an incompetent not under guardianship, contracts to buy land for a fair price from B, who does not know of the incompetency. Shortly after transfer of title to A and part payment by A, A dies. C, with knowledge of A’s incompetency, renders legal services to A in the transaction. After learning of A’s incompetency, B pays $500 to C pursuant to the contract. Can B demand reimbursement?

Answer 10

A’s personal representative need not reimburse B for the payment. Restatement 2d of Contracts § 15(e)

Question 11

A, an incompetent spouse not under guardianship, mortgages land on fair terms to B, a bank which has no knowledge or reason to know of the incompetency , for a loan of $2,000. At A’s request the money is paid to the other spouse, C, who absconds with it. Is the contract voidable?

Answer 11

The contract is not voidable. Restatement 2d of Contracts § 15(f)

Question 12

A, an incompetent not under guardianship, lives on a homestead with his mother B and brother C. A also holds a mortgage on a second tract of land owned by C. To prevent foreclosure of a mortgage on the homestead, A, B and C join in borrowing money from D on a mortgage of both tracts on fair terms. D acts in good faith but has reason to know of A’s incompetency. A dies, leaving B his sole heir. Is the mortgage voidable?

Answer 12

The mortgage to D is not voidable for the benefit of B. Restatement 2d of Contracts § 15(f)

Question 13

A, while in a state of extreme intoxication, signs and mails a written offer on fair terms to B, who has no reason to know of the intoxication. B accepts the offer. Is there a contract?

Answer 13

A has no right to avoid the contract. Restatement 2d of Contracts § 16(b)

Question 14

A is ill and confined to his bed. B, knowing that the illness is incurable, plies A with intoxicating liquor for a week and then purports to treat him by rubbing him with oil. While intoxicated, A executes by mark a contract to sell land to B for a grossly inadequate consideration. Six days later A dies. Is there a contract?

Answer 14

A’s heirs may avoid the contract. Restatement 2d of Contracts § 16(b)

Question 15

A has been drinking heavily. B, who has also been drinking, meets A, offers to buy A’s farm for $50,000, a fair price, and offers A a drink which A accepts. In drunken exhilaration A, as a joke, writes out and signs a memorandum of agreement to sell, gets his wife to sign it, and delivers it to B, who understands the transaction as a serious one. Is there a contract?

Answer 15

A’s intoxication is no defense to B’s suit for specific performance. Restatement 2d of Contracts § 16(b)

Question 16

A buys a barber shop from B for $650. Shortly afterward, A, helplessly drunk and evidently not aware of what he is doing, sells the shop back to B for $200. On recovering his senses, A cannot remember the transaction and cannot find out what happened to the $200. Is there a contract?

Answer 16

On prompt disaffirmance, A may recover the shop without repaying the $200. Restatement 2d of Contracts § 16(c)

Question 17

A owes B $50. In exchange for A’s payment of the debt B makes a promise. Is there consideration?

Answer 17

Under the rule stated in §73, B’s promise is without consideration. Restatement 2d of Contracts § 17(d)

Question 18

A lives in B’s home and renders services to B over a period of years, and after B’s death claims the value of the services. By statute A is incompetent to testify to transactions with B, and there is no evidence of a verbal promise. What should we consider in order to determine if A’s services were gratuitous?

Answer 18

Among the factors relevant to a determination whether the services were gratuitous are the following: a request by B that A render the services, the relation between A and B, the value of the services to B, the alternatives foregone and hardship suffered by A, the financial circumstances of the parties, the relation between B and his legatees or distributees, and their connection with A’s services. Restatement 2d of Contracts § 19(a)

Question 19

A offers to sell B his library at a stated price, forgetting that his favorite Shakespeare, which he did not intend to sell, is in the library. B accepts the offer. Does A’s contract include the Shakespeare?

Answer 19

There is a contract including the Shakespeare, unless B knows or has reason to know of A’s temporary forgetfulness. Whether the contract is voidable for mistake depends on the rules stated in Chapter 6. Restatement 2d of Contracts § 19(c)

Question 20

A writes an offer to B, which he encloses in an envelope, addresses and stamps. Shortly afterwards, he decides not to send the offer, but by mistake he deposits it in the mail. It is delivered to B, who accepts the offer. Is there a contract?

Answer 20

There is a contract unless B knows or has reason to know of A’s error. Whether the contract is voidable for mistake is governed by the rules stated in Chapter 6. Restatement 2d of Contracts § 19(c)

Question 21

A offers to sell B goods shipped from Bombay ex steamer “Peerless”. B accepts. There are two steamers of the name “Peerless”, sailing from Bombay at materially different times. Is there a contract?

Answer 21

If both parties intend the same Peerless, there is a contract, and it is immaterial whether they know or have reason to know that two ships are named Peerless. Restatement 2d of Contracts § 20(d)

Question 22

A offers to sell B goods shipped from Bombay ex steamer “Peerless”. B accepts. There are two steamers of the name “Peerless”, sailing from Bombay at materially different times. A means Peerless No. 1 and B means Peerless No. 2. Is there a contract?

Answer 22

If neither A nor B knows or has reason to know that they mean different ships, or if they both know or if they both have reason to know, there is no contract. Restatement 2d of Contracts § 20(d)

Question 23

A offers to sell B goods shipped from Bombay ex steamer “Peerless”. B accepts. There are two steamers of the name “Peerless”, sailing from Bombay at materially different times. A knows that B means Peerless No. 2 and B does not know that there are two ships named Peerless. Is there a contract?

Answer 23

There is a contract for the sale of the goods from Peerless No. 2, and it is immaterial whether B has reason to know that A means Peerless No. 1. If A makes the contract with the undisclosed intention of not performing it, it is voidable by B for misrepresentation (see §§ 159-64). Conversely, if B knows that A means Peerless No. 1 and A does not know that there are two ships named Peerless, there is a contract for the sale of the goods from Peerless No. 1, and it is immaterial whether A has reason to know that B means Peerless No. 2, but the contract may be voidable by A for misrepresentation. Restatement 2d of Contracts § 20(d)

Question 24

A offers to sell B goods shipped from Bombay ex steamer “Peerless”. B accepts. There are two steamers of the name “Peerless”, sailing from Bombay at materially different times. Neither party knows that there are two ships Peerless. A has reason to know that B means Peerless No. 2 and B has no reason to know that A means Peerless No. 1. Is there a contract?

Answer 24

There is a contract for the sale of goods from Peerless No. 2. In the converse case, where B has reason to know and A does not, there is a contract for sale from Peerless No. 1. In either case the question whether the contract is voidable for mistake is governed by the rules stated in §§ 151-58. 5. A says to B, “I offer to sell you my horse for $100.” B, knowing that A intends to offer to sell his cow for that price, not his horse, and that the word “horse” is a slip of the tongue, replies, “I accept.” The price is a fair one for either the horse or the cow. There is a contract for the sale of the cow and not of the horse. If B makes the contract with the undisclosed intention of not performing it, it is voidable by A for misrepresentation. See §§ 159-64. Restatement 2d of Contracts § 20(d)

Question 25

A draws a check for $300 payable to B and delivers it to B in return for an old silver watch worth about $15. Both A and B understand the transaction as a frolic and a banter, but each believes that he would be legally bound if the other dishonestly so asserted. Is there a contract?

Answer 25

There is no contract. Restatement 2d of Contracts § 21(a)

Question 26

A orally promises to sell B a book in return for B’s promise to pay $5. A and B both think such promises are not binding unless in writing. Is there a contract?

Answer 26

Nevertheless there is a contract, unless one of them intends not to be legally bound and the other knows or has reason to know of that intention. Restatement 2d of Contracts § 21(a)

Question 27

A, an employer, issues to B, an employee , a “certificate of benefit”, promising stated sums increasing yearly, payable to a named beneficiary if B dies while still in A’s employ. The certificate provides that it “constitutes no contract” and “confers no legal right.” Is there a contract?

Answer 27

The quoted language may be read as reserving a power of revocation only until B dies. Restatement 2d of Contracts § 21(b)

Question 28

A and B, two business corporations, have a contract by which B is the exclusive distributor in a certain territory of goods made by A. By a detailed written agreement they agree to continue the distributorship for three years. The writing provides that it is not to be a legal agreement or subject to legal jurisdiction in the law courts. Is there a contract?

Answer 28

The written agreement may be read and given effect to terminate the prior contract and to prevent any legal duty arising from the making of the agreement or from the acceptance of orders under it. But, it does not excuse B from paying for goods delivered under it. Restatement 2d of Contracts § 21(b)

Question 29

A invites his friend B to dinner in his home, and B accepts. Is there a contract?

Answer 29

There is no contract. If A promised B a fee for attending and entertaining other guests, and B did so, there would be a contract to pay the fee. Restatement 2d of Contracts § 21(c)

Question 30

A, a husband, is living in harmony with his wife, B. Before A leaves on a trip, A and B assess B’s financial needs and agree that A will remit a fixed sum per month to support her. Is there a contract?

Answer 30

There is no contract. Restatement 2d of Contracts § 21(c)

Question 31

A, a general contractor preparing a bid on a government construction contract, receives a bid by a proposed subcontractor, B, in a given amount. A names B as a subcontractor in A’s bid, but after A receives the government contract, A unsuccessfully asks B to reduce its bid, and also unsuccessfully seeks permission from the Government to replace B as a subcontractor. Pursuant to A’s instructions, B proceeds with the work, but refuses to accept a work order from A which recites that A is still seeking permission to replace B. No new work order is issued. A does issue “change orders” using B’s bid as the base “contract amount.” B completes the job, but A refuses to pay the full amount, contending that B is entitled only to restitutionary damages because there never was a contract. Is there a contract?

Answer 31

There is an enforceable contract based upon A’s assent to B’s bid, as manifested by A’s conduct, and B is entitled to the amount it bid, as modified by the change orders. Restatement 2d of Contracts § 22(b)

Question 32

A advertises in a large New York newspaper that he will pay a specified reward to anyone who will give him certain information within one year. B sees a copy of this advertisement in a Tokyo newspaper, correctly translated into Japanese, and sends A the information within the year. Is there a contract?

Answer 32

There is a contract. Restatement 2d of Contracts § 23(a)

Question 33

A advertises that he will give a specified reward for certain information, or writes B a similar proposal. B gives the information in ignorance of the advertisement, or without having received the letter. Is there a contract?

Answer 33

There is no contract enforceable as a bargain. Restatement 2d of Contracts § 23(c)

Question 34

A city ordinance provides that a standing reward of $1000 will be paid for information leading to the arrest and conviction of anyone guilty of arson within the city limits. A furnishes such information. Is there a contract?

Answer 34

A is entitled to the reward whether or not he knew of the reward or was motivated by hope of reward. Restatement 2d of Contracts § 23(c)

Question 35

Cross offers. Cases have occurred in which identical offers have crossed in the mails. Such an A sends B an offer through the mail to sell A’s horse for $500. While this offer is in the mail, B, in ignorance thereof, mails to A an offer to pay $500 for the horse. Is there a contract?

Answer 35

There is no contract. Restatement 2d of Contracts § 23(d)

Question 36

After negotiations through a broker, A writes B a letter purporting to confirm a contract for the sale of cloth. A’s letter crosses in the mail a similar letter from B, which differs as to quantity and time of payment. A replies insisting on the quantity stated in his first letter but otherwise agreeing. B replies insisting on the time of payment stated in his first letter but otherwise agreeing. The two replies cross in the mail. Is there a contract?

Answer 36

There is a contract. Restatement 2d of Contracts § 23(d)

Question 37

A offers by letter to sell goods to B, stating no definite time limit for acceptance . B accepts by letter after what might or might not be more than a reasonable time. The acceptance crosses a letter from A stating that he has not heard from B and that A’s offer will terminate if B does not reply by return mail. Is there a contract?

Answer 37

There is a contract. Restatement 2d of Contracts § 23(d)

Question 38

A sends to B an offer to sell a specified lot for $5,000, also stating terms as to time of payment, mortgage security, taxes and insurance. B is so anxious to buy the lot that, without reading any of these additional terms, he sends to A an unconditional acceptance. Is there a contract?

Answer 38

There is a contract on the terms stated in A’s offer. Restatement 2d of Contracts § 23(e)

Question 39

A says to B, “That book you are holding is yours if you promise to pay me $5 for it.” Is there an offer?

Answer 39

This is an offer empowering B, by making the requested promise, to make himself owner of the book and thus complete A’s performance. In that event there is also an implied warranty of title made by A. See Uniform Commercial Code §§ 2-312, 2-401. Restatement 2d of Contracts § 24(a)

Question 40

A promises B $100 if B goes to college. Is there an offer?

Answer 40

If the circumstances give B reason to know that A is not undertaking to pay B to go to college but is promising a gratuity, there is no offer. Restatement 2d of Contracts § 24(a)

Question 41

A promises B under seal or in return for $100 paid or promised by B that A will sell B 100 shares of stock in a specified corporation for $5,000 at any time within thirty days that B selects. Is there a contract?

Answer 41

There is an option contract under which B has an option. Restatement 2d of Contracts § 25(a)

Question 42

A offers to sell B Blackacre for $5,000 at any time within thirty days. Subsequently A promises under seal or in return for $100 paid or promised by B that the offer will not be revoked. Is there a contract?

Answer 42

There is an option contract under which B has an option. Restatement 2d of Contracts § 25(a)

Question 43

A, a clothing merchant, advertises overcoats of a certain kind for sale at $50. Is there an offer?

Answer 43

This is not an offer, but an invitation to the public to come and purchase. The addition of the words “Out they go Saturday: First Come First Served” might make the advertisement an offer. Restatement 2d of Contracts § 26(b)

Question 44

A advertises that he will pay $5 for every copy of a certain book that may be sent to him. Is there an offer?

Answer 44

This is an offer, and A is bound to pay $5 for every copy sent while the offer is unrevoked. Restatement 2d of Contracts § 26(b)

Question 45

A writes to B, “I can quote you flour at $5 a barrel in carload lots.” Is there an offer?

Answer 45

This is not an offer, in view of the word “quote” and incompleteness of the terms. The same words, in response to an inquiry specifying detailed terms, would probably be an offer. If A added “for immediate acceptance” the intent to make an offer would be unmistakable. Restatement 2d of Contracts § 26(c)

Question 46

A writes B, “I am eager to sell my house. I would consider $20,000 for it.” B promptly answers, “I will buy your house for $20,000 cash.” Is there a contract?

Answer 46

There is no contract. A’s letter is a request or suggestion that an offer be made to him. B has made an offer. Restatement 2d of Contracts § 26(d)

Question 47

A publishes an advertisement saying that he will sell his household goods at public auction at a specific time and place. Is there an offer?

Answer 47

This in no way affects his legal relations. Rst. 28(b)

Question 48

A publishes an advertisement saying that he will sell his household goods at public auction at a specific time and place. A’s auctioneer, at the specified time and place holds up a chattel and says, “How much am I bid for this?” After each bid is made he urges others to bid higher. Is there an offer?

Answer 48

Each bidder makes an offer to the auctioneer, but he makes no offer to them. Restatement 2d of Contracts § 28(b)

Question 49

A advertises, “I offer my farm Blackacre for sale to the highest cash bidder and undertake to make conveyance to the person submitting the highest bid received at the address below within the next thirty days.” Is there an offer?

Answer 49

This is an offer, and each bid operates as an acceptance creating rights and duties conditional on no higher bid being received within thirty days. Restatement 2d of Contracts § 28(c)

Question 50

The United States Navy Department advertises for bids on a naval station, the bids to be opened on June 6. Several prospective bidders, including A, request B to submit a “quotation” for the electrical work. B submits to A an “estimate”, stating “If our estimate used wire us collect prior to June 6 or else same is withdrawn.” A sends the requested telegram and submits a bid which turns out to be low on June 6. Is there an offer?

Answer 50

Whether or not the advertisement reserved the right to reject all bids, the Navy has that right. B has made an offer which A can accept or reject after the Navy awards the contract to him. Restatement 2d of Contracts § 28(c)

Question 51

A advertises a sale of his household furniture without reserve. An article is put up for sale without contrary announcement and B is the highest bidder. But, A, dissatisfied with the bidding, either accepts a higher fictitious bid from an agent employed for the purpose, or openly withdraws the article from sale. Is there a contract?

Answer 51

A is bound by contract to sell the article to B. Neither B nor the others attending the auction have legal ground for complaint if A withdraws the remaining furniture from sale before it is actually put up. Restatement 2d of Contracts § 28(d)

Question 52

A publishes an offer of reward to whoever will give him certain information. There is no indication that A intends to pay more than once. Is there an offer?

Answer 52

Any person learning of the offer has power to accept (see Comments a and c to § 23), but the giving of the information by one terminates the power of every other person. Restatement 2d of Contracts § 29(b)

Question 53

A, a bank, issues a traveler’s letter of credit promising to repay anyone who makes advances to a named beneficiary, up to a certain amount, the amounts advanced to be noted on the letter of credit. Is there an offer?

Answer 53

This creates a power of acceptance in anyone to whom the letter is presented, but only if the notation is made and only so long as the noted amounts do not exceed the maximum. See Uniform Commercial Code § 5-108. Restatement 2d of Contracts § 29(b)

Question 54

A, the proprietor of a medical preparation, offers $100 to anyone who contracts a certain disease after using the preparation as directed. B, C and D use it as directed. Is there a contract?

Answer 54

Each has made a contract independent of the others, and is entitled to the $100 if he later contracts the disease. Restatement 2d of Contracts § 29(b)

Question 55

A sends a letter to B stating the terms of a proposed contract. At the end he writes, “You can accept this offer only by signing on the dotted line below my own signature.” A replies by telegram, “I accept your offer.” Is there a contract?

Answer 55

There is no contract. Restatement 2d of Contracts § 30(a)

Question 56

A offers to deliver to B at any time during the next 30 days any amount of coal, up to 100 tons, for which B will promise to pay $15 a ton. Is there an offer?

Answer 56

Yes, but in order to accept this offer B must specify the amount of coal he desires and must promise to pay $15 a ton for it. An order for 50 tons by B concludes a definite agreement. Restatement 2d of Contracts § 30(c)

Question 57

A orally offers to sell and deliver to B 100 tons of coal at $20 a ton payable 30 days after delivery. B replies, “I accept your offer.” Is there acceptance?

Answer 57

B has manifested assent in a sufficient form, even though A neither suggested nor required that form. Restatement 2d of Contracts § 30(d)

Question 58

A makes a bid at an auction sale. How should acceptance be manifested?

Answer 58

By the usual custom at auctions, the auctioneer may accept by letting the hammer fall, by saying “Sold”, or by any words manifesting acceptance. Restatement 2d of Contracts § 30(d)

Question 59

A offers B, a railway company, such quantities of certain goods as B’s storekeeper may order from time to time during the next twelve months. How should acceptance be manifested?

Answer 59

In the absence of a revocation, each order of B’s storekeeper during that period creates a separate contract for the quantity ordered. Restatement 2d of Contracts § 31(c)

Question 60

A offers B to sell and deliver to him during the following year any quantity of goods between 4000 and 6000 pounds in amount, acceptance to specify the total quantity. How should acceptance be manifested?

Answer 60

B must within a reasonable time specify a particular amount of not less than 4000 pounds and not more than 6000 pounds in order to create a contract. And, there can be but one acceptance and one contract. Restatement 2d of Contracts § 31(c)

Question 61

A offers B to sell him in monthly installments the coal which B may require in his business during the next six months, not exceeding one hundred tons in any one month. B has an established manufacturing business which has used an average of 75 tons of coal a month for several years. What are the terms of the offer? What will they require?

Answer 61

The offer is one for a single contract under which B promises not to buy coal elsewhere during the six months unless he has excess requirements. Restatement 2d of Contracts § 31(c)

Question 62

A writes B, “If you will mow my lawn next week, I will pay you $10.” How should acceptance be manifested?

Answer 62

B can accept A’s offer either by promptly promising to mow the lawn or by mowing it as requested. Restatement 2d of Contracts § 32(a)

Question 63

A says to B: “If you finish that table you are making and deliver it to my house today, I will give you $100 for it.” B replies, “I’ll do it.” Is there a contract?

Answer 63

There is a contract. B could also accept by delivering the table as requested. Restatement 2d of Contracts § 32(a)

Question 64

A publishes the following offer: “I will pay $50 for the return of my diamond bracelet lost yesterday on State Street.” B sees this advertisement and at once sends a letter to A, saying “I accept your offer and will search for this bracelet.” Is there acceptance?

Answer 64

There is no acceptance. Restatement 2d of Contracts § 32(b)

Question 65

A writes to B, his nephew aged 16, that if B will refrain from drinking, using tobacco, swearing, and playing cards or billiards for money until he becomes 21 years of age, A will pay B $5,000. B makes a written reply promising so to refrain. Is there a contract?

Answer 65

There is probably no contract. But if B begins to refrain, A may be bound by an option contract under § 45. And, if B refrains until he becomes 21, A is bound to pay him $5,000. Restatement 2d of Contracts § 32(c)

Question 66

A mails a written order to B, offering to buy specified machinery on specified terms. The order provides, “Ship at once.” B immediately mails a letter to A, saying “I accept your offer and will ship at once.” Is there acceptance?

Answer 66

This is a sufficient acceptance to form a contract. See Uniform Commercial Code § 2-206(1). Restatement 2d of Contracts § 32(c)

Question 67

A mails a written order to B, offering to buy specified machinery on specified terms. The order provides, “Ship at once.” B immediately ships the machinery as requested. Is there acceptance?

Answer 67

This is a sufficient acceptance to form a contract. If the machinery is defective, the shipment is both an acceptance forming a contract and a breach of that contract, unless B promptly notifies A that the shipment is offered only as an accommodation to A. See Uniform Commercial Code § 2-206(1). Restatement 2d of Contracts § 32(c)

Question 68

A agrees to sell and B to buy goods for $2,000, $1,000 in cash and the “balance on installment terms over a period of two years,” with a provision for liquidated damages. Is this enforceable?

Answer 68

If it is found that both parties manifested an intent to conclude a binding agreement, the indefiniteness of the quoted language does not prevent the award of the liquidated damages. Restatement 2d of Contracts § 33(b)

Question 69

A agrees to sell and B to buy a specific tract of land for $10,000, $4,000 in cash and $6,000 on mortgage. A agrees to obtain the mortgage loan for B or, if unable to do so, to lend B the amount, but the terms of loan are not stated, although both parties manifest an intent to conclude a binding agreement. Is this enforceable?

Answer 69

The contract is too indefinite to support a decree of specific performance against B, but B may obtain such a decree if he offers to pay the full price in cash. Restatement 2d of Contracts § 33(b)

Question 70

A and B promise that certain performances shall be mutually rendered by them “immediately” or “at once,” or “promptly,” or “as soon as possible,” or “in about one month.” Is there a contract?

Answer 70

All these promises are sufficiently definite to form contracts. Restatement 2d of Contracts § 33(d)

Question 71

A promises B to sell certain goods to him, and B promises to pay a specified price therefor. No time of performance is fixed. What should be the timefame for performance (i.e., delivery and payment)?

Answer 71

The time for delivery and payment is a reasonable time. Uniform Commercial Code §§ 2-309(1), 2-310(a). What is a reasonable time depends on the nature, purpose and circumstances of the action to be taken. Uniform Commercial Code § 1-204(2). Rst. 33(d)

Question 72

A offers to employ B for a stated compensation as long as B is able to do specified work, or as long as a specified business is carried on, and B accepts the terms offered. Is there a contract?

Answer 72

The length of the engagement is sufficiently definite for the formation of a contract. Restatement 2d of Contracts § 33(d)

Question 73

A promises B to serve B as chauffeur, and B promises to pay him $100 a month. Nothing further is stated as to the duration of the employment. Is there a contract? If so, for how long?

Answer 73

There is at once a contract for one month’s service. At the end of the first month, in the absence of revocation, there is a contract for a second month. But circumstances may show that such an agreement merely specifies the rate of compensation for an employment at will. Restatement 2d of Contracts § 33(d)

Question 74

A promises to sell and B to buy goods “at cost plus a nice profit.” Is there a contract?

Answer 74

The quoted words strongly indicate that the parties have not yet concluded a bargain. Restatement 2d of Contracts § 33(e)

Question 75

A promises to do a specified piece of work and B promises to pay a price to be thereafter mutually agreed. Is this enforceable? What is required to happen?

Answer 75

The provision for future agreement as to price strongly indicates that the parties do not intend to be bound. If they manifest an intent to be bound, the price is a reasonable price at the time for doing the work. Restatement 2d of Contracts § 33(e)

Question 76

A promises B to execute a conveyance in fee or a lease for a year of specified land and B promises to make specified payments therefor. Is this enforceable?

Answer 76

Although the terms of leases and conveyances vary, the promises are interpreted as providing for documents in the form in common local use, and are sufficiently definite to form contracts. Restatement 2d of Contracts § 33(f)

Question 77

A promises to sell and B to buy all goods of a certain character which B shall need in his business during the ensuing year. Is this enforceable?

Answer 77

The quantity to be sold is sufficiently definite to provide a basis for remedy, since the promises are interpreted to refer to B’s actual good-faith requirements. Uniform Commercial Code § 2-306. Restatement 2d of Contracts § 33(f)

Question 78

A promises B to construct a building according to stated plans and specifications, and B promises A to pay $30,000 therefor. It is also provided that the character of the window fastenings shall be subject to further agreement of the parties. Is there a contract?

Answer 78

Unless a contrary intention is manifested, the indefiniteness of the agreement with reference to this matter will not prevent the formation of a contract. Restatement 2d of Contracts § 33(f)

Question 79

A and B have a settlement of accounts, and A promises to pay B a stated balance, “errors and omissions excepted.” Is this enforceable?

Answer 79

A’s promise is reasonably certain in the absence of a showing of error or omission, but it may be corrected on such a showing. Restatement 2d of Contracts § 33(f)

Question 80

A promises B to give him any one of a number of specified things which A shall choose, and B promises A to pay a specified price. Is there a contract?

Answer 80

The agreement is sufficiently definite to be a contract. A method is provided for determining what A is to give. Although, what he gives is subject to his choice, he must give some one of the things specified. Restatement 2d of Contracts § 34(a)

Question 81

A agrees to sell and B to buy 50,000 pounds of white worsted yarn on a basis which enables the parties to compute 48 prices for 48 styles and sizes. Is there a contract?

Answer 81

The agreement is sufficiently definite to be a contract. Unless otherwise agreed specifications relating to assortment of the goods are at the buyer’s option, but if B does not make a seasonable specification, A may proceed to perform in any reasonable manner. Uniform Commercial Code § 2-311. Restatement 2d of Contracts § 34(a)

Question 82

A promises B to do specified work or to transfer certain goods or land and B promises A to make specified payments if the work or property is satisfactory to B in specified respects. Is there a contract?

Answer 82

These promises are sufficiently definite to form contracts, since B’s duty depends not on his mere whim but on his exercise of an honest judgment, or in some cases of a reasonable judgment. See § 228. Restatement 2d of Contracts § 34(b)

Question 83

A says to B: “I will employ you for some time at $10 a day.” Is there a contract?

Answer 83

An acceptance by B either orally or in writing will not create a contract. But if B serves one or more days with A’s assent A is bound to pay $10 for each day’s service. Restatement 2d of Contracts § 34(d)

Question 84

A agrees to sell and B to buy a specific house and lot for $10,000, mortgage terms to be agreed. At B’s request, reinforced by a threat not to perform, A makes certain alterations in the house, which add nothing to its value. B then repudiates the agreement without reference to mortgage terms. What can A do?

Answer 84

A may recover the cost of the alterations. See § 349. Restatement 2d of Contracts § 34(d)

Question 85

A leases land to B for three years, giving B an option to buy the land for $10,000 “on terms to be agreed on.” B occupies the land for three years, making extensive improvements, and seeks to exercise the option, offering to pay “either in cash or upon such terms as A may impose.” What can B do?

Answer 85

B may obtain a decree of specific performance. See Illustration 2 to § 362. Restatement 2d of Contracts § 34(d)

Question 86

A leases land to B, giving B an option to purchase the land for $10,000 in cash during the term of the lease. Misinterpreting the lease, B attempts to exercise the option by tendering a mortgage for $10,000. A refuses to accept the mortgage. What can B do?

Answer 86

B retains power to exercise the option by a tender conforming to the terms of the lease. Restatement 2d of Contracts § 37(b)

Question 87

A leases land to B, giving B an option to purchase the land for $10,000 in cash during the term of the lease. A receives an offer from C to purchase the land and so informs B. B states that he will not exercise the option and A conveys the land to C. What can B do?

Answer 87

Nothing. B’s power to exercise the option is terminated. See §§ 89, 273-85. Restatement 2d of Contracts § 37(b)

Question 88

A makes an offer to B and adds: “This offer will remain open for a week .” B rejects the offer the following day, but later in the week purports to accept it. Is there a contract?

Answer 88

There is no contract unless the offer was itself a contract. B’s purported acceptance is itself a new offer. Restatement 2d of Contracts § 38(a)

Question 89

A makes an offer to sell water rights to B, and states, “You may accept this offer by applying to the appropriate authority for a permit to use the water.” B rejects the offer, obtains water rights elsewhere, and later applies for the permit contemplated by the offer. Is there a contract?

Answer 89

There is no contract. Even if A’s offer was a binding option, B has not exercised it. Restatement 2d of Contracts § 38(a)

Question 90

A offers B to sell him a parcel of land for $5,000, stating that the offer will remain open for thirty days. B replies, “I will pay $4,800 for the parcel,” and on A’s declining that, B writes, within the thirty day period, “I accept your offer to sell for $5,000.” Is there a contract?

Answer 90

There is no contract unless A’s offer was itself a contract (see § 37), or unless A’s reply to the counter-offer manifested an intention to renew his original offer. Restatement 2d of Contracts § 39(a)

Question 91

A offers B to sell him a parcel of land for $5,000, stating that the offer will remain open for thirty days. B replies, “Won’t you take less?” A answers, “No.” Is there still an offer?

Answer 91

An acceptance thereafter by B within the thirty-day period is effective. B’s inquiry was not a counter-offer, and A’s original offer stands. Restatement 2d of Contracts § 39(b)

Question 92

A offers B to sell him a parcel of land for $5,000, stating that the offer will remain open for thirty days. B replies, “I am keeping your offer under advisement, but if you wish to close the matter at once I will give you $4,800.” A does not reply, and within the thirty-day period B accepts the original offer. Is there a contract?

Answer 92

B’s acceptance is effective. Restatement 2d of Contracts § 39(c)

Question 93

A makes B an offer by mail. B immediately after receiving the offer mails a letter of rejection. Within the time permitted by the offer B accepts. Is there a contract?

Answer 93

This acceptance creates a contract only if received before the rejection, or if the power of acceptance continues under §§ 37-39. Restatement 2d of Contracts § 40(b)

Question 94

A publishes an offer of reward for information leading to the arrest and conviction of the person guilty of a specified murder. B, intending to obtain the reward, gives the requested information a year after the publication of the offer. Is there acceptance?

Answer 94

The acceptance is timely. Restatement 2d of Contracts § 41(c)

Question 95

After a series of incendiary attempts, a city publishes each day for a week an offer of reward for information leading to the arrest and conviction of any person who shall set fire to any building within the city. The responsible city officials serve for one year terms. Would a fire occurring three years after the last publication be within the terms of the offer?

Answer 95

No. A fire set three years after the last publication is not within the terms of the offer. Restatement 2d of Contracts § 41(c)

Question 96

A bank posts in its office an offer of reward for information leading to the arrest and conviction of any person who robs any bank which is a member of an association of banks in the same county. After several years the poster is removed. Would a robbery occurring three years after the removal of the poster be within the terms of the offer?

Answer 96

Yes. A robbery three years after the removal may be found to be within the terms of the offer. Restatement 2d of Contracts § 41(c)

Question 97

While A and B are engaged in conversation, A makes B an offer to which B then makes no reply, but on meeting A again a few hours later B states that he accepts the offer. Is there a contract?

Answer 97

There is no contract unless the offer or the circumstances indicate that the offer is intended to continue beyond the immediate conversation. Restatement 2d of Contracts § 41(d)

Question 98

A makes B an offer by mail to sell goods. B receives the offer at the close of business hours and accepts it by letter promptly the next morning. Is there acceptance?

Answer 98

The acceptance is timely. Restatement 2d of Contracts § 41(e)

Question 99

A sends B an offer by mail to sell a piece of farm land. B does not reply for three days and then mails an acceptance. Is there acceptance?

Answer 99

Possibly. It is a question of fact under the circumstances of the particular case whether the delay is unreasonable. Restatement 2d of Contracts § 41(f)

Question 100

A sends B a telegraphic offer to sell oil 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. Is there acceptance?

Answer 100

The acceptance is too late if a fixed price was offered, but may be timely if the price is market price at time of delivery. Restatement 2d of Contracts § 41(f)

Question 101

A sends B an offer by mail to sell at a fixed price corporate stock not listed on an exchange. B waits two days after receiving the offer and then sends a telegraphic acceptance after learning of a sharp rise in the price bid over-the-counter. Is there acceptance?

Answer 101

The acceptance may be too late even though it arrives before a prompt acceptance by mail would have arrived. Restatement 2d of Contracts § 41(f)

Question 102

A makes a written offer to B to sell him a piece of land. The offer states that it will remain open for thirty days and is not subject to countermand. The next day A orally informs B that the offer is terminated. Can B still accept the offer?

Answer 102

B’s power of acceptance is terminated unless the offer is a contract under § 25. Restatement 2d of Contracts § 42(a)

Question 103

A sends B an offer by mail to buy a piece of land for $5000. The next day A sends B a letter stating that unless B has already accepted A revokes the offer and makes a new offer to buy the same land for $4800. B receives A’s second letter after he has duly mailed a letter of acceptance, but promptly sells the land to C without further communication with A. Has a contract been breached?

Answer 103

The sale is a breach of contract by B. Restatement 2d of Contracts § 42(a)

Question 104

A sends B an offer by mail to buy a piece of land. The next day A sends B a letter stating that A has changed his mind and will not buy the land even if B has already accepted the offer. B receives A’s second letter after he has duly mailed a letter of acceptance, but promptly sells the land to C. Does B have a duty?

Answer 104

B’s duty of performance is discharged. See Comment a to § 283. Restatement 2d of Contracts § 42(c)

Question 105

A makes an offer to buy goods from B, and later requests B not to deliver the goods until A is in a better condition to handle them. Is there an offer?

Answer 105

The request does not revoke the offer. Restatement 2d of Contracts § 42(d)

Question 106

A makes an offer to B, and later says to B, “Well, I don’t know if we are ready. We have not decided, we might not want to go through with it.” Is there an offer?

Answer 106

The offer is revoked. Restatement 2d of Contracts § 42(d)

Question 107

A offers a parcel of land to B at a stated price, and gives B a week in which to consider the proposal. Within the week A contracts to sell the parcel to C, and B is informed of that fact by a tenant of the premises. B nevertheless sends a formal acceptance which is received by A within the week. Is there a contract?

Answer 107

There is no contract between A and B. Restatement 2d of Contracts § 43(b)

Question 108

A offers to employ B to replace C, an employee of A who has given A a month’s notice of intention to quit. A gives B a week to consider the proposal. C changes his mind and makes a contract with A for continued employment for a year. B asks C about his duties, and C informs B of the new contract. B immediately mails a letter of acceptance to A, which arrives within the week allowed for acceptance. Is there a contract?

Answer 108

There is no contract between A and B. Restatement 2d of Contracts § 43(c)

Question 109

A offers to sell B a hundred shares of stock at a fixed price, and states that the offer will not be revoked for a week. Within the week C offers A a higher price for the same stock, and B learns of the higher offer. Is there still acceptance by B?

Answer 109

B’s power of acceptance is not terminated, since he is entitled to assume that A will honor his commitment regardless of its legal effect. Restatement 2d of Contracts § 43(c)

Question 110

A offers to buy Blackacre from B for $10,000 and deposits $500 to be forfeited in the event of revocation. A revokes the offer before acceptance, and the market value of the land at the time for conveyance fixed in the offer is $9,000. Is there still acceptance by B?

Answer 110

B’s power of acceptance is terminated, but B may retain the $500. Restatement 2d of Contracts § 44(a)

Question 111

B owes A $5000 payable in installments over a five-year period. A proposes that B discharge the debt by paying $4,500 cash within one month, but reserves the right to refuse any such payment. Is there an offer?

Answer 111

A has not made an offer. A tender by B in accordance with the proposal is an offer by B. Restatement 2d of Contracts § 45(b)

Question 112

A, an insurance company, issues a bulletin to its agents, entitled “Extra Earnings Agreement,” providing for annual bonus payments to the agents varying according to “monthly premiums in force” and “lapse ratio,” but reserving the right to change or discontinue the bonus, individually or collectively, with or without notice, at any time before payment. Is there an offer or promise?

Answer 112

There is no offer or promise. Rst. 45(b)

Question 113

A promises B to sell him a specified chattel for $5, stating that B is not to be bound until he pays the money. B tenders $5 within a reasonable time, but A refuses to accept the tender. Has a contract been breached?

Answer 113

There is a breach of contract. Restatement 2d of Contracts § 45(c)

Question 114

A offers a reward for the return of lost property. In response to the offer, B searches for the property and finds it. A then notifies B that the offer is revoked. B makes a tender of the property to A conditional on payment of the reward, and A refuses. Has a contract been breached?

Answer 114

There is a breach of contract by A. Restatement 2d of Contracts § 45(d)

Question 115

A, a magazine, offers prizes in a subscription contest. At a time when B has submitted the largest number of subscriptions, A cancels the contest. A has broken its contract with B. 6. A writes to her daughter B, living in another state, an offer to leave A’s farm to B if B gives up her home and cares for A during A’s life, B remaining free to terminate the arrangement at any time. B gives up her home, moves to A’s farm, and begins caring for A. Is there a contract?

Answer 115

A is bound by an option contract. Restatement 2d of Contracts § 45(d)

Question 116

A offers to sell a piece of land to B, and promises that if B incurs expense in employing experts to appraise the property the offer will be irrevocable for 30 days. B hires experts and pays for their transportation to the land. Is there a contract?

Answer 116

A is bound by an option contract. Restatement 2d of Contracts § 45(d)

Question 117

In January A, an employer, publishes a notice to his employees, promising a stated Christmas bonus to any employee who is continuously in A’s employ from January to Christmas. B, an employee hired by the week, reads the notice and continues at work beyond the expiration of the current week. Is there a contract?

Answer 117

A is bound by an option contract, and if B is continuously in A’s employ until Christmas a notice of revocation of the bonus is ineffective. Restatement 2d of Contracts § 45(d)

Question 118

A makes a written promise to pay $5000 to B, a hospital, “to aid B in its humanitarian work.” Relying upon this and other like promises, B proceeds in its humanitarian work, expending large sums of money and incurring large liabilities. Is there a contract?

Answer 118

Performance by B has begun, and A’s offer is irrevocable. Restatement 2d of Contracts § 45(f)

Question 119

A , a newspaper, publishes an offer of prizes to the 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 his 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. Does B have a duty?

Answer 119

Unless the original offer provided otherwise, B is not bound by the later notice, since A could have given B personal notice. Restatement 2d of Contracts § 46(b)

Question 120

The United States Government publishes an offer of reward for the arrest of a named fugitive. Seven months later the President publishes a proclamation revoking the offer, which is given the same publicity as the offer. Five months after the proclamation, A, who has been in Italy continuously and who learned indirectly of the offer but not of the revocation, arrests the fugitive in Italy. Is there a contract?

Answer 120

There is no contract. Restatement 2d of Contracts § 46(b)

Question 121

A offers to guarantee the payment of all bills of exchange drawn by B and discounted by C. C discounts one such bill. A is bound to pay it. A then notifies C that the guaranty is withdrawn. Does A still have a duty?

Answer 121

A is not bound to pay bills subsequently discounted. Restatement 2d of Contracts § 47(a)

Question 122

A offers B to sell him five tons of steel daily, and tenders five tons at once. B accepts the tender. The same amount is furnished daily for a number of days. A then states to B that he revokes the offer. Is there a contract?

Answer 122

A contract is formed each day that steel is furnished, but the revocation prevents the formation of any contracts thereafter. Restatement 2d of Contracts § 47(a)

Question 123

A offers to buy from B at the market price 100 tons of steel per month for the next 12 months, promising that in consideration of the delivery of the first installment B is to have an option to sell any or all of the other eleven installments. B delivers the first 100 tons as requested. Is there still an offer by A?

Answer 123

There is an irrevocable offer to buy the eleven undelivered installments. Restatement 2d of Contracts § 47(c)

Question 124

A sends B a misdirected offer which is delayed in delivery, as is apparent from the date of the letter or the postmark on the envelope, so that the offeree does not receive the offer until some time later than he would have received it had the direction been correct. Can the offeree accept?

Answer 124

The offeree cannot accept the offer unless he can do so within the time which would have been permissible had the offer arrived seasonably. Restatement 2d of Contracts § 49

Question 125

A, who is about to leave on a month’s vacation, tells B that A will pay B $50 if B will paint A’s porch while A is away. B says he may not have time, and A says B may decide after A leaves. How could acceptance be manifested?

Answer 125

If B begins the painting, there is an acceptance by performance which operates as a promise to complete the job. See §§ 32, 62. Restatement 2d of Contracts § 50(b)

Question 126

A, who is about to leave on a month’s vacation, tells B that A will pay B $50 if B will paint A’s porch while A is away. B says he may not have time, and B also expresses doubt whether he will be able to finish the job, and it is agreed that B may quit at any time but will be paid only if he finishes the job during A’s vacation. How could acceptance be manifested?

Answer 126

If B begins the painting, there is an acceptance by performance creating an option contract. See § 45. Restatement 2d of Contracts § 50(b)

Question 127

A sends to B plans for a summer cottage to be built on A’s land in a remote wilderness area, and writes, “If you will undertake to build a cottage in accordance with the enclosed plans, I will pay you $5,000.” How could acceptance be manifested?

Answer 127

B cannot accept by beginning or completing performance, since A’s letter calls for acceptance by promise. See § 58. Restatement 2d of Contracts § 50(c)

Question 128

A mails a written order to B, offering to buy on specified terms a machine of a type which B regularly sells from stock. The order provides, “Ship at once.” B immediately mails a letter of acceptance. Is there acceptance?

Answer 128

This is an acceptance by promise, even though––under § 32––B might have accepted by performance. Restatement 2d of Contracts § 50(c)

Question 129

A gives an order to B Company’s traveling salesman which provides, “This proposal becomes a contract without further notification when approval by an executive officer of B Company is noted hereon at its home office.” Is there acceptance?

Answer 129

The notation of approval is an acceptance by promise. See §§ 56, 69 as to the requirement of notification. Restatement 2d of Contracts § 50(c)

Question 130

A offers a reward for the apprehension and delivery into police custody of a criminal. Before learning of the reward, B arrests the criminal. After learning of the reward, B delivers the criminal into police custody. What can B claim?

Answer 130

B is entitled to the reward. Restatement 2d of Contracts § 51(b)

Question 131

A posts a notice on his bulletin board offering a specified bonus to any employee who remains in A’s employment for four months. B, one of the employees, continues to work for one month before learning of the offer. Thereafter, B completes the four-month period of employment. What can B claim?

Answer 131

B is entitled to the bonus. Restatement 2d of Contracts § 51(b)

Question 132

A makes an offer to B, who dies after receiving it. Is there still an offer that the executor may claim?

Answer 132

His executor, though acting within the permitted time, cannot accept. Restatement 2d of Contracts § 52(a)

Question 133

A offers to guarantee payment for goods delivered to B by C. Can the offer be accepted if delivered by D rather than C?

Answer 133

D cannot accept by delivering goods to B. Restatement 2d of Contracts § 52(a)

Question 134

A promises B that A will sell and deliver a set of books to B if B’s father C will promise to pay $150 for the set. B is the promisee of A’s promise. C is the offeree of A’s offer. Who can accept the offer?

Answer 134

Only C can accept the offer by making the return promise invited by A. Restatement 2d of Contracts § 52(b)

Question 135

A sends B an order for goods. C, from whom A has previously refused to buy such goods, has purchased B’s business. Without notifying A of the change of proprietorship, C ships the goods as ordered. Is there acceptance by any party?

Answer 135

Neither B nor C has accepted A’s offer. Restatement 2d of Contracts § 52(b)

Question 136

A sends B an order for goods. C, from whom A has previously refused to buy such goods, has purchased B’s business. Without notifying A of the change of proprietorship, C ships the goods as ordered. A, before using the goods, discovers that they have come from C. Is there a contract?

Answer 136

A’s retention or use of them is an acceptance of an offer from C, and a contract arises. Restatement 2d of Contracts § 52(b)

Question 137

A offers a reward for information leading to the conviction of a criminal. B, a friend of the criminal, knows of the reward and gives the information voluntarily. What can B claim?

Answer 137

B is entitled to the reward even though he acts because he thinks he is about to die and wants both to ease his conscience and to revenge himself for a beating received from the criminal. Restatement 2d of Contracts § 53(c)

Question 138

A offers a reward for information leading to the conviction of a criminal. B, a friend of the criminal, is interrogated by the police and threatened with arrest as an accomplice of the criminal. During the interrogation, without any mention of the reward, B is tricked into giving the information to clear himself. What can B claim?

Answer 138

B is not entitled to the reward. Restatement 2d of Contracts § 53(c)

Question 139

B, a friend of the criminal, knows of the reward and gives the information voluntarily. B states after giving the information that he does not claim the reward. What can B claim?

Answer 139

B is not entitled to the reward. Restatement 2d of Contracts § 53(c)

Question 140

A, an elderly widow apparently in dire poverty, promises B, a distant relative of her deceased husband, that she will pay for board and lodging in B’s home. B furnishes board and lodging to A for a year without requesting or receiving any payment, and on A’s death states that nothing is due to B. What can B claim?

Answer 140

It is a question of fact on all the circumstances whether B has manifested an intention not to seek payment even if A is found to have left a substantial bank account. Restatement 2d of Contracts § 53(c)

Question 141

A mails a written order to B for goods to be manufactured specially for A, and requests B to begin at once since manufacture will take several weeks. How should acceptance be manifested?

Answer 141

Under § 62 acceptance is complete when B begins, but A’s contractual duty is discharged and he may treat the offer as having lapsed before acceptance unless within a reasonable time B sends notification of acceptance or unless the offer or a prior course of dealing indicates that notification is not required. Restatement 2d of Contracts § 54(b)

Question 142

A, the proprietor of a medical preparation, offers $100 to anyone who contracts a certain disease after using the preparation as directed. B uses it as directed. Is there acceptance?

Answer 142

B has accepted the offer, and is entitled to the $100 if she later contracts the disease. No notification to A is required until after B has contracted the disease. Restatement 2d of Contracts § 54(c)

Question 143

A, a newspaper , requests B to discontinue distribution of a rival newspaper, and offers to pay B $10 per week as long as B abstains from such distribution. B discontinues the distribution. Is there acceptance?

Answer 143

B has accepted the offer, and no notification to A is required. Restatement 2d of Contracts § 54(c)

Question 144

A, the president of a corporation, agrees to guarantee payment for goods to be sold to the corporation by B. B sells and delivers the goods. Is there acceptance?

Answer 144

B has accepted A’s offer, and no notification of acceptance is necessary. Restatement 2d of Contracts § 54(d)

Question 145

A writes an informal letter to B, a friend in another country, saying, “If you will let my brother C have $100, I will guarantee its repayment.” Promptly on receiving the letter, B advances the money to C, but B takes no steps to notify A, and A does not learn of the advance for a year. Is this enforceable?

Answer 145

B cannot enforce the guaranty if C fails to pay the debt. Restatement 2d of Contracts § 54(d)

Question 146

A writes an informal letter to B, a friend in another country, saying, “If you will let my brother C have $100, I will guarantee its repayment.” Promptly on receiving the letter, B advances the money to C. Then, B receives a letter of revocation from A an hour after advancing the money. B promptly mails a letter notifying A of the advance. Is this enforceable?

Answer 146

The guaranty is binding even though the letter never arrives. Restatement 2d of Contracts § 54(d)

Question 147

A applies to B, an insurance company, for a policy of life insurance, and pays the first premium on an understanding that the insurance must be approved at B’s home office. Is there a contract?

Answer 147

B’s notification that the approval has been given is an acceptance of A’s offer and forms a contract of insurance. Restatement 2d of Contracts § 55(b)

Question 148

A offers to lend B $100 on specified terms and tenders the money to B. Is there a contract?

Answer 148

B’s acceptance of the tender forms a contract on the terms specified. Restatement 2d of Contracts § 55(b)

Question 149

A, the owner of a horse in B’s possession, offers to sell the horse to B for $100 payable in thirty days. Is there a contract?

Answer 149

On B’s promise to pay in accordance with the offer, ownership of the horse is transferred to him and there is a contract. Uniform Commercial Code § 2-401( 3). Restatement 2d of Contracts § 55(b)

Question 150

A, a real estate broker, without authority from B, the owner of property, obtains from C an offer to purchase the property from B on terms which include the payment of a specified commission by B to A. A then presents C’s offer to B. Is there a contract?

Answer 150

B’s acceptance of C’s offer also accepts A’s offer of services and forms a contract between A and B. Restatement 2d of Contracts § 55(b)

Question 151

A gives an order to B Company’s traveling salesman for a $2000 machine “to purify water of the character shown by sample to be submitted,” shipment to be made in one month. The order provides: “This proposal becomes a contract when approved by an executive officer of B Company at its home office.” Is there acceptance?

Answer 151

Notation of such approval on the order is an acceptance by promise without any notification, but A’s duty to perform is conditional on reasonable notification to send the sample. Restatement 2d of Contracts § 56(a)

Question 152

A makes written application for life insurance through an agent for B Insurance Company, pays the first premium, and is given a receipt stating that the insurance “shall take effect as of the date of approval of the application” at B’s home office. Is there acceptance?

Answer 152

Approval at the home office in accordance with B’s usual practice is an acceptance of A’s offer even though no steps are taken to notify A. Restatement 2d of Contracts § 56(a)

Question 153

A gives an order for goods to B’s traveling salesman, subject to approval by B at his home office. B sends a letter to A stating that the order has been received and will receive B’s attention. A promptly sends a letter of revocation to B, which B receives before doing anything further. Is there a contract?

Answer 153

There is no contract. Restatement 2d of Contracts § 57(b)

Question 154

A gives an order for goods to B’s traveling salesman, subject to approval by B at his home office. B sends a letter to A stating that the order has been received and will receive B’s attention. A does not revoke, but after two months, when it is too late for A to procure substitute goods, B writes a letter to A stating that “it is necessary to cancel this order.” Has a contract been breached?

Answer 154

B has broken a contract with A. Restatement 2d of Contracts § 57(b)

Question 155

Pursuant to the terms of a lease from A to B, A writes to B that he is about to sell the premises and that B may have the option to purchase by meeting an offer of $37,000. B replies, “I tender you $37,000 in exercise of my option rights. I demand that I be notified concerning your acceptance or rejection of my offer within ten days.” Within ten days, A notifies B that A has decided not to sell. Is there a contract?

Answer 155

There is no contract. Restatement 2d of Contracts § 57(b)

Question 156

A writes to B offering to extend a lease for two years. B replies, “I accept your offer, but I am assigning my interest to C, and have had a lease drawn up from you to C. C has signed it in duplicate, and when you sign it will be complete. Keep one copy and mail the other to me for C. If this is not satisfactory let me know.” A’s letter of revocation crosses B’s letter in the mail. Is there a contract?

Answer 156

There is no contract. Restatement 2d of Contracts § 57(b)

Question 157

A offers to sell a book to B for $5 and states that no other acceptance will be honored but the mailing of B’s personal check for exactly $5. B personally tenders $5 in legal tender, or mails a personal check for $10. Is there a contract?

Answer 157

There is no contract. Restatement 2d of Contracts § 58(a)

Question 158

A offers to pay B $100 for plowing Flodden field, and states that acceptance is to be made only by posting a letter before beginning work and before the next Monday noon. Before Monday noon B completes the requested plowing and mails to A a letter stating that the work is complete. Is there a contract?

Answer 158

There is no contract. Restatement 2d of Contracts § 58(a)

Question 159

A makes an offer to B, and B in terms accepts but adds, “This acceptance is not effective unless prompt acknowledgement is made of receipt of this letter.” Is there a contract?

Answer 159

There is no contract, but a counter-offer. Restatement 2d of Contracts § 59(a)

Question 160

A makes a written offer to sell B a patent in exchange for B’s promise to pay $10,000 if B’s adviser X approves the purchase. B signs the writing in a space labelled “Accepted:” and returns the writing to A. B has made a conditional promise and an unconditional acceptance. Is there a contract?

Answer 160

There is a contract, but B’s duty to pay the price is conditional on X’s approval. Restatement 2d of Contracts § 59(b)

Question 161

A makes a written offer to B to sell him Blackacre. By usage the offer is understood as promising a marketable title. B replies, “I accept your offer if you can convey me a marketable title.” Is there a contract?

Answer 161

There is a contract. Restatement 2d of Contracts § 59(b)

Question 162

A mails an offer to B in which A says, “I must receive your acceptance by return mail.” How should acceptance be manifested?

Answer 162

An acceptance sent within a reasonable time by any other means, which reaches A as soon as a letter sent by return mail would normally arrive, creates a contract on arrival. As to what is a reasonable time, see Illustration 8 to § 41. Restatement 2d of Contracts § 60(a)

Question 163

A makes an offer to B and adds, “Send your office boy around with an answer to this by twelve o’clock.” The offeree comes himself before twelve o’clock and accepts. Is there a contract?

Answer 163

There is a contract. Restatement 2d of Contracts § 60(a)

Question 164

A offers to sell his land to B on certain terms, also saying: “You must accept this, if at all, in person at my office at ten o’clock tomorrow.” How could acceptance be manifested?

Answer 164

B’s power is strictly limited to one method of acceptance. Restatement 2d of Contracts § 60(a)

Question 165

A offers to sell his land to B on certain terms, also saying: “You may accept by leaving word at my house.” How could acceptance be manifested?

Answer 165

This indicates one operative mode of acceptance. But, B’s power is not limited to that mode alone. A personal statement to A would serve just as well. Restatement 2d of Contracts § 60(a)

Question 166

A makes an offer to B and adds, “my address is 53 State Street.” This is a business address. B sends an acceptance to A’s home which A receives promptly. Is there a contract?

Answer 166

Unless the circumstances indicate that A has made a positive requirement of the place where the acceptance must be sent, there is a contract. Restatement 2d of Contracts § 60(a)

Question 167

A offers to sell B 100 tons of steel at a certain price. B replies, “I accept your offer. I hope that if you can arrange to deliver the steel in weekly installments of 25 tons you will do so.” Is there a contract?

Answer 167

There is a contract, but A is not bound to deliver in installments. Restatement 2d of Contracts § 61(a)

Question 168

A offers to sell specified hardware to B on stated terms. B replies: “I accept your offer. ship in accordance with your statement. Please send me also one No. 5 hand saw at your list price.” Is there still an offer?

Answer 168

The request for the saw is a separate offer, not a counter-offer. Restatement 2d of Contracts § 61(a)

Question 169

A, a merchant, mails B, a carpenter in the same city, an offer to employ B to fit up A’s office in accordance with A’s specifications and B’s estimate previously submitted, the work to be completed in two weeks. The offer says, “You may begin at once,” and B immediately buys lumber and begins to work on it in his own shop. The next day, before B has sent a notice of acceptance or begun work at A’s office or rendered the lumber unfit for other jobs, A revokes the offer. Is this an enforceable revocation?

Answer 169

The revocation is timely, since B has not begun to perform. Restatement 2d of Contracts § 62(d)

Question 170

A, a regular customer of B, orders fragile goods from B which B carries in stock and ships in his own trucks. Following his usual practice, B selects the goods ordered, tags them as A’s, crates them and loads them on a truck at substantial expense. Is this an enforceable revocation?

Answer 170

Performance has begun, and A’s offer is irrevocable. See Uniform Commercial Code § 2-206 and Comment 2. Restatement 2d of Contracts § 62(d)

Question 171

A makes B an offer , inviting acceptance by telegram, and B duly telegraphs an acceptance. A purports to revoke the offer in person or by telephone or telegraph, but the attempted revocation is received by B after the telegram of acceptance is dispatched. Is this an enforceable revocation?

Answer 171

There is no effective revocation. Restatement 2d of Contracts § 63(a)

Question 172

A offers to buy cotton from B, the operator of a cotton gin, B to accept by specifying the number of bales in a telegram sent before 8 p.m. the same day. B duly sends a telegram of acceptance and ships the cotton, but the telegram is not delivered. Is there a contract?

Answer 172

There is a contract, and A is bound to take and pay for the cotton. Restatement 2d of Contracts § 63(b)

Question 173

A mails to B an offer to lease land, stating, “Telegraph me Yes or No. If I do not hear from you by noon on Friday, I shall conclude No.” B duly telegraphs “Yes,” but the telegram is not delivered until after noon on Friday. Is there a contract?

Answer 173

Any contract formed by the telegraphic acceptance is discharged. Restatement 2d of Contracts § 63(b)

Question 174

A offers to buy cattle for B, on an understanding that if B telegraphs “ Yes” A will notify B of the amount of money needed and B will supply it. B’s “Yes” telegram is duly dispatched but does not arrive within a reasonable time. Is there a contract?

Answer 174

Any contract formed by the dispatch of the telegram is discharged. Restatement 2d of Contracts § 63(b)

Question 175

A mails to B a note payable by C with instructions to collect the amount of the note and remit by mailing B’s own check. At C’s request B mails his own check as instructed. Subsequently, at C’s request, B recovers his letter and check from the post office. Is there a contract?

Answer 175

The recovery does not discharge the contract formed by the mailing of B’s check. But if B is a bank, its remittance may be provisional under Uniform Commercial Code § 4-211. Restatement 2d of Contracts § 63(c)

Question 176

A mails to B a note payable by C with instructions to collect the amount of the note and remit by mailing B’s own check. B recovers his letter and check from the post office because he has learned that C is insolvent and cannot reimburse B. Is there a contract?

Answer 176

B is entitled to rescind the contract for mistake. See §§ 153-54. compare Uniform Commercial Code § 4-212. Restatement 2d of Contracts § 63(c)

Question 177

A mails an offer to B to appoint B A’s exclusive distributor in a specified area. B duly mails an acceptance. Thereafter B mails a letter which is received by A before the acceptance is received and which rejects the offer and makes a counter-offer. On receiving the rejection and before receiving the acceptance, A executes a contract appointing C as exclusive distributor instead of B. Is there a contract?

Answer 177

B is estopped to enforce the contract. Compare § 40. Restatement 2d of Contracts § 63(c)

Question 178

The Government mails to A an offer to pay the amount quoted by him for the manufacture of two sets of ship propellers, and A mails an acceptance. A then discovers that by mistake he has quoted the price for a single set, and so informs the Government by a telegram which arrives before the acceptance. Is there a contract?

Answer 178

A’s mailing the acceptance created a contract. The question whether the contract is voidable for mistake is governed by the rules stated in §§ 153-54. Restatement 2d of Contracts § 63(d)

Question 179

A mails to B an offer to buy goods, and B mails an acceptance. The application of a new tax statute depends on when title to the goods passes to A, and under Uniform Commercial Code § 2-401(3)(b) title passes at the time of contracting. At what point was the time of contracting between A and B?

Answer 179

The time of contracting is the time when B’s acceptance is mailed. Restatement 2d of Contracts § 63(d)

Question 180

A offers to insure B’s house against fire, the insurance to take effect upon actual payment of the premium, and invites B to reply by mailing his check for a specified amount. B duly mails the check. While B’s letter is in transit, the house burns. Is there a contract?

Answer 180

The loss is within the period of insurance coverage. Restatement 2d of Contracts § 63(e)

Question 181

A makes B an offer by mail, or messenger, and B promptly sends an acceptance by his own employee. Is there a contract?

Answer 181

There is no contract until the acceptance is received by the offeror. As to receipt, see § 68. Restatement 2d of Contracts § 63(e)

Question 182

A, for consideration, gives B an option to buy property, written notice to be given on or before a specified date. Can B exercise the option if he doesn’t receive the notice until after the specified date?

Answer 182

Notice dispatched before but not received until after that date is not effective to exercise the option. Restatement 2d of Contracts § 63(f)

Question 183

A submits a bid to supply goods to the Government, which becomes irrevocable when bids are opened. Within a reasonable time the Government mails a notice of award of the contract to A. Is there a contract?

Answer 183

Until A receives the notice, there is no contract binding on the Government. Restatement 2d of Contracts § 63(f)

Question 184

A makes an offer to B by telephone. The telephone connection is then broken, but B speaks an acceptance in ignorance of the break. A’s failure to answer gives B reason to know of the break. Is there a contract?

Answer 184

There is no contract. Restatement 2d of Contracts § 64(b)

Question 185

A makes an offer to B by teletype. B transmits an acceptance, and A knows that a reply has been transmitted. But, a mechanical failure at A’s end, unknown to B, prevents A from learning the contents of the reply. Is there a contract?

Answer 185

There is a contract. Restatement 2d of Contracts § 64(b)

Question 186

By telegram A in Oklahoma orders two car-loads of potatoes from B in Wisconsin. B wires back an acceptance “if you will give us time to fill.” Immediately on receiving B’s reply A mails a confirming letter stating “we wish if possible you would ship at once” and giving shipping instructions. Is there acceptance?

Answer 186

A has accepted B’s counter-offer by a reasonable medium of acceptance. Restatement 2d of Contracts § 65(c)

Question 187

A makes an offer to B by telegram on Monday, requesting a reply by telegram to be sent no later than Thursday noon. B mails an acceptance on Monday which A will receive on Thursday morning. If A or B change their mind, will a revocation of the offer or acceptance by telephone be effective?

Answer 187

Even if the mail is an unreasonable medium of acceptance under the circumstances, a revocation of the offer by A by telephone on Tuesday, or a revocation of the acceptance by B by telephone, is ineffective. Restatement 2d of Contracts § 67(a)

Question 188

A sends B by mail an offer dated from A’s house and states as a condition of the offer that an acceptance must be received within three days. B mails an acceptance which reaches A’s house and is delivered to a servant or is deposited in a mail box at the door within three days. But, A has been called away from home and does not personally receive the letter for a week. Is there a contract?

Answer 188

There is a contract. Restatement 2d of Contracts § 68(a)

Question 189

A sends B by mail an offer, but later, desiring to revoke the offer, telegraphs B to that effect. The messenger boy carrying the telegram from the receiving office meets C, B’s neighbor, who volunteers to carry the telegram to B, and accordingly is given it by the messenger boy. C forgets to deliver it to B until the following morning. Could there still be a contract?

Answer 189

An acceptance by B mailed prior to this time creates a contract. Restatement 2d of Contracts § 68(a)

Question 190

A gives several lessons on the violin to B’s child, intending to give the child a course of twenty lessons, and to charge B the price. B never requested A to give this instruction but silently allows the lessons to be continued to their end, having reason to know A’s intention. Is this enforceable?

Answer 190

B is bound to pay the price of the course. Restatement 2d of Contracts § 69(b)

Question 191

A offers by mail to sell to B a horse already in B’s possession for $250, saying: “I am so sure that you will accept that you need not trouble to write me. Your silence alone will operate as acceptance.” B makes no reply, but he does not intend to accept. Is there a contract?

Answer 191

There is no contract. Restatement 2d of Contracts § 69(c)

Question 192

A offers by mail to sell to B a horse already in B’s possession for $250, saying: “I am so sure that you will accept that you need not trouble to write me. Your silence alone will operate as acceptance.” B replies by return mail, saying: “I accept your offer.” Is there a contract?

Answer 192

There is a contract. Restatement 2d of Contracts § 69(c)

Question 193

A offers by mail to sell to B a horse already in B’s possession for $250, saying: “I am so sure that you will accept that you need not trouble to write me. Your silence alone will operate as acceptance.” B makes no reply and remains inactive with the intention of thereby expressing his acceptance. Is there a contract?

Answer 193

There is a contract. Restatement 2d of Contracts § 69(c)

Question 194

A, through salesmen , has frequently solicited orders for goods from B, the orders to be subject to A’s personal approval. In every case A has shipped the goods ordered within a week and without other notification to B than billing the goods to him on shipment. A’s salesman solicits and receives another order from B. A receives the order and remains silent. B relies on the order and forbears to buy elsewhere for a week. Is this enforceable?

Answer 194

A is bound to fill the order. Restatement 2d of Contracts § 69(d)

Question 195

A has for years insured B’s property against fire under annual policies. At the expiration of one policy, in accordance with the usual practice, A sends B a renewal policy and a bill for the premium. B retains the policy for two months and then refuses to pay the premium on demand. Does B have a duty?

Answer 195

B is liable for the premium accrued prior to his rejection. Restatement 2d of Contracts § 69(d)

Question 196

A sends B a one-volume edition of Shakespeare with a letter, saying, “If you wish to buy this book send me $6.50 within one week after receipt hereof, otherwise notify me and I will forward postage for return.” B examines the book and without replying makes a gift of it to his wife. Does B have a duty?

Answer 196

B owes A $6.50. Restatement 2d of Contracts § 69(e)

Question 197

A sends B a one-volume edition of Shakespeare with a letter, saying, “If you wish to buy this book send me $6.50 within one week after receipt hereof, otherwise notify me and I will forward postage for return.” B examines the book and without replying carefully lays it on a shelf to await A’s messenger. Is there a contract?

Answer 197

There is no contract. Restatement 2d of Contracts § 69(e)

Question 198

A sends B a one-volume edition of Shakespeare with a letter, saying, “If you wish to buy this book send me $6.50 within one week after receipt hereof, otherwise notify me and I will forward postage for return.” B examines the book and uses it or gives it to his wife, writing A at the same time that he has taken the book, but that it is worth only $5 and that he will pay no more. What can A do?

Answer 198

A may at his option treat B as a tortfeasor or as contracting to pay $6.50. Restatement 2d of Contracts § 69(e)

Question 199

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 he will charge A $50 a day for every day on which A takes water from his land. Is this enforceable?

Answer 199

Even after it is adjudicated that A’s right is nonexistent, A does not accept B’s terms by taking water. Restatement 2d of Contracts § 69(e)

Question 200

A offers by mail to sell B 100 acres of land “for $15 per acre cash and give you till July 18 to accept.” On July 1 A receives from B a purported acceptance not accompanied by the cash. A waits until after July 18 and then notifies B that his acceptance was ineffective because the price was not paid by July 18. Is there a contract?

Answer 200

There is a contract. Any ambiguity in the quoted language is resolved against A in view of his failure to object to B’s interpretation. Restatement 2d of Contracts § 70(a)

Question 201

A invites B to make an offer to buy hay in A’s barn. On Friday B inspects the hay and mails A an offer which is received the following day. The following Thursday A mails B an acceptance which is received the following day, and B then employs a third party to haul the hay. Is there a contract?

Answer 201

There is a contract. Restatement 2d of Contracts § 70(b)