CL 610- Contracts Quizzes Flashcards
G, a general contractor, solicited bids for a project from subcontractors, including S. S replied “I can’t give you a bid, because I don’t trust your specifications. But it should be about $2.00 per cubic foot. It’s fine with me if you want to use my quote or if you don’t.” G used the quote from S in preparing her bid, and was awarded the contract. Because of this, G claims that S has a duty to perform at a rate of $2.00 per cubic foot. Is the quote from S an offer?
Because S’s response included the words “I can’t give you a bid,” S’s response is not an offer.
What jurisdiction’s law is used to determine the outcome in Texaco, Inc. v. Pennzoil, Co.?
New York law, because the court found New York law to be controlling.
Which of the cases that were included in the assigned reading for Module 1 based its holding in part on the rule that an unreasonable meaning attached by one party to a specific assertion will control only if that unreasonable meaning is known to the other party?
Lucy v. Zehmer.
Which of the following statements best describes the Restatement of Contracts?
It does not have the force of law, but is highly persuasive authority.
Which of the following correctly states the Restatement (Second) definition of offer?
The manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.
Which of the following is not an important factor in determining whether a communication is or is not an offer?
The manner used to communicate the potential offer.
Which of the following statements regarding estimates is most accurate?
An estimate can be an offer if it is sent in response to an invitation to bid.
An estimate can be an offer if it is sent in response to an invitation to bid.
Communications by one party are to be interpreted from the vantage point of a reasonable person in the position of the other party.
In Hawkins v. McGee, the court found that Dr. McGee’s statement about making the injured hand a “100% good hand” was a:
guarantee
In an auction, generally the auctioneer: I. makes an offer, which the bidder can accept or reject. II. makes an invitation to bid, then the bidder makes the offer. III. can accept the offer. IV. can seek another offer.
II., III., and IV.
Alice cannot find her $800 set of china table settings. Some months later, while at a party for connoisseurs of fine china, and after consuming an adult beverage, Alice proclaims in front of the entire group that she will gladly pay $2,000 to anyone who locates and returns the china to her. Percy locates and returns the china to Alice and demands $2,000. Alice refuses to pay. Percy files suit to recover the $2,000. It is most likely that Percy will:
prevail, if a reasonable person would conclude from the statement Alice made that she intended to enter into a contract.
(c) is correct. The “objective theory” of contracts (the majority rule) is that the subjective intent of the parties is not relevant when determining whether a party has given assent to enter into a contract. Pursuant to this theory, a party’s intent is determined by examining what a reasonable person, standing in the other party’s position, would conclude the party intended based on the words, conduct and demeanor of that party. This principle is true regardless of what the party actually intended. Choice (d) is incorrect because there are insufficient facts to determine whether Percy knew or should have known Alice was overstating the value of the china. Even if Percy had such knowledge, that alone would not be sufficient to establish Alice’s statement was not reasonably intended to enter into a contract. She may have stated a higher price to induce Percy to take immediate action to find the missing china. If you missed this question, please review Section 2.2 of the Hornbook (6th Edition) pages 23–24; pages 26–27 (7th Edition).
Anne and Bob were co-owners of a small, very successful restaurant. Anne was interested in opening a second location in a nearby town and asked Sam (a regular customer of the restaurant) if he would be willing to sell Anne and Bob a particular parcel of land Sam owned in the nearby town of Greenville for $100,000. Sam said “Sounds great…let’s do it.” However, unknown to Anne and Bob, Sam had serious doubts about selling the land and was considering developing the land himself to build and operate a restaurant. When Anne attempted to hand Sam the $100,000, Sam refused to take the money and told Anne he would not sell Anne and Bob the land. Anne and Bob sued Sam for breach of contract. Sam alleged he never intended to sell the land to Anne and Bob.At trial, the following three statements were offered: (1) Bob testified that he and Anne had “no definite plan to ever open a second restaurant, and that Sam was aware of this.” (2) Sam testified that he “never really intended to sell the property to Anne and Bob.” (3) Anne testified that she was very surprised when Sam so quickly agreed to sell because Sam was always joking about “how you should buy my land in Greenville and open a second restaurant there so I wouldn’t have to drive so far for breakfast.” Which of the statements will the court consider important to determine if a valid contract was formed?
Statements 2 and 3 only.
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(d) is correct. Under the “objective theory” of contracts, the subjective intent of either party is not a factor when determining whether the parties were serious about intending a contract or that a contract was formed. Instead, it is the objective, reasonable interpretation by someone in the position of the contracting parties (based on their words and conduct) that will determine whether the intent to enter into a contract exists. Thus, the evidence in statement 2 that Sam “never intended to sell the property to Anne and Bob” would not be important because that is merely the subjective undisclosed intent of a party. However, both statements 1 and 3 would be important. Statement 1 is evidence that Bob and Anne were not seriously planning to open a second restaurant and thus unlikely (as reasonable parties to a potential agreement) to consider any statement by Sam as an “acceptance” of any inquiry made regarding the possible purchase of his parcel of land. Statement 3 is also important because it shows that a reasonable person in Anne and Bob’s position would not have interpreted Sam’s statement as an offer because he was “always joking” about selling the land to them. If you missed this question, please review Section 2.2 of the Hornbook (6th Edition) pages 23–24; pages 26–27 (7th Edition).
Harry and Sandra have been happily married since 1866. Harry needs to go to England to write a play and before he leaves, in order to maintain domestic tranquility, he agrees to pay Sandra $5000 per week for her support. They both agree that Sandra has financial needs and that she has always worked hard at maintaining the house. Has an enforceable contract been formed?
No. There is a presumption that the parties did not intend to create a contract.
(a) is correct. The general rule applicable is that if the parties do not intend to be bound or do not intend legal consequences, there will be no contract. There was a presumption in the 19th century (and perhaps even today) that when a husband and wife are living together amicably, an agreement between them with respect to a housekeeping allowance will not be enforced as a contract. (b) and (c) are incorrect, as they are not part of the requirements for forming a contract; (d) is incorrect as it misstates the law. If you missed this question, please review Section 2.5 of the Hornbook (6th Edition) page 27; page 29 (7th Edition).
Pat agrees to buy Dana’s car for $10,000. The contract between Pat and Dana will be:
governed by the Uniform Commercial Code.
(c) is correct. The general rule is that contracts are governed by the common law. The exception is a contract for the sale of goods, which will be governed by the Uniform Commercial Code (UCC). (a) is incorrect because it misstates the law; (b) is incorrect, because contracts for the sale of goods are governed by the UCC; (d) is incorrect because merchant status does not determine the controlling law. If you missed this question, please review Section 2.10 of the Hornbook (6th Edition) pages 57–58; page 59–60 (7th Edition).
Retailer placed a notice in a trade journal stating that it had men shoes in various sizes available for sale at a price of $75 per pair. When Customer went to Retailer’s store to purchase a pair of men’s shoes at the advertised price, Retailer refused to sell Customer the shoes for $75. If Customer brings an action in court, which of the factors listed below will the court LEAST LIKELY consider as important when determining whether Retailer’s notice in the trade journal constitutes a valid offer?
Whether Retailer intended the notice to be an offer to sell shoes to Customer.
(c) is correct. Under the objective theory of contracts (the majority rule), a party’s intent to enter into a contract will be judged solely based on what that party says or does, rather than any subjective and undisclosed intent. In addition, a notice in a trade journal will generally not be considered as an offer to sell the items listed in the notice unless promissory language is used demonstrating a willingness to be bound and a sufficient description of the quantity and quality of goods offered for sale. (a), (b), and (d) are incorrect, as they are all factors that a court would consider when determining a party’s intent under the objective theory of contracts. If you missed this question, please review Section 2.2 of the Hornbook (6th Edition) pages 23–24; pages 26–27 (7th Edition) (objective theory of contract) and Section 2.6(g) of the Hornbook (6th Edition) page 40; (7th Edition) page 43 (factors to be considered in determining whether a communication is an offer).
Widget Company manufactures widgets and had a number of clients who sold products to consumers. Widget wanted to compete with some of its clients, but believed that its clients would be displeased and might cease doing business with Widget. In order to keep this new business activity secret, Widget set up a subsidiary company to distribute its products and formalized its agreement with Paul in writing, which stated that Paul agreed to purchase all shares of the subsidiary for $10,000 and Widget agreed to sell the shares at that price. Widget and Paul had an oral, side agreement that the stock purchase agreement would not be carried out. The parties carried on business for many years without a transfer of the shares or payment of the money. For all appearances, Paul was the sole owner of the distribution business. However, Paul always acted as a loyal employee of Widget. Widget decided to end its arrangement with Paul and to let it be known to the trade that it was operating the distribution business. Paul tendered $10,000 to Widget and demanded that Widget transfer the shares of stock pursuant to the written agreement. Widget refused and sued Paul for a declaratory judgment to the effect that the written agreement is not binding. Will Widget succeed?
Yes, because Widget and Paul never intended to enter into an agreement.
(c) is correct because Widget and Paul both intended their agreement to have no binding legal effect, and thus understanding was expressed between them. As a result, there is no valid contract and Widget need not sell the shares to Paul. (a) and (b) are incorrect, although these factors could point to a validly formed contract, the fact that the parties intent not to form a contract will control over other factors suggesting contract formation; (d) is incorrect, because it does not address a requirement for contract formation. If you missed this question, please review Section 2.4 of the Hornbook (6th Edition) page 26; page 28 (7th Edition).
A contract in which one or more of the parties has the power to terminate the legal relations created by the contract is best referred to as:
a voidable contract.
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(b) is correct. Rewards are offers for unilateral contracts, and can only be accepted by performance. (a) is incorrect, as there is no requirement that notice of the intent to perform be given before accepting by performance where the offeror will become aware of the performance in the normal course of that performance; (c) is incorrect, because rewards are not offers for bilateral contracts, and cannot be accepted by promising to perform; (d) is incorrect, because City’s announcement has required information in sufficient detail to function as a valid offer.
City posted this announcement on its website: “The City will pay $2,000 to anyone with information leading to the arrest and conviction of the person or persons responsible for vandalizing City Park last weekend.” Anne saw it all happen, and knows the names of the people who did it. If she wants to receive the reward:
Anne can accept the offer by providing the information to City.
(a) is correct, because, although statements in catalogs are generally not considered offers, but are instead invitations for offers, when Marie appeared, completed the application and paid the lot fee, her offer implicitly included the conditions expressed in the catalog. When Marie proved that Stargell failed to comply with the criteria in the catalog, she stated a cause of action for breach of contract. (c) is incorrect because the conditions expressed were an offer; (b) is incorrect because acceptance can be based on such factors, if so stated; (d) is incorrect, because it has no bearing on whether or not the conditions expressed were an offer. If you missed this question, please review Section 2.6(d) of the Hornbook (6th Edition) page 33; page 36 (7th Edition).
Marie read the following statement in a Stargell’s catalog: “Lots available for $20,000. First come, first served. Appear in person, complete application and tender funds.” The catalog also stated the physical location of the real estate. Marie went to the physical location, completed the application and tendered $20,000 in cash that was accepted by Stargell. Subsequently, Stargell mailed Marie a cashier’s check for $20,000 with a note stating that Marie’s application was “rejected.” At trial, Marie proved that Stargell’s had lots available, but only sold to prominent people who endorse Stargell’s company. Does Marie prevail on a claim for breach of contract?
Yes, because Stargell accepted Marie’s offer to purchase the lot according to the terms expressed in Stargell’s catalog.
John had read many newspaper and Internet news articles suggesting that the fillings commonly used by dentists to fill teeth contained dangerously high levels of mercury. John decided that he would have all his fillings removed and replaced with another safer alternative. He consulted with Dr. Decay, his dentist, and requested removal of all his fillings. Dr. Decay stated that he was not comfortable performing the oral procedure, but that he would make sure that Dr. Abcess would perform the oral procedure. In Dr. Decay’s informed medical opinion, removal of John’s fillings is not medically required. If Dr. Decay fails to retain Dr. Abcess to perform the oral procedure, will John have an action for breach of contract against Dr. Decay?
No, unless John reasonably concluded that Dr. Decay expressly promised him that Dr. Abcess would perform the procedure.
(c) is correct. While it is true that a doctor is not ordinarily liable in contract for breach of an implied promise to provide a reasonable level of medical competency, a doctor is liable in contract for failure to honor an express promise, which is why (a) is incorrect. (b) is incorrect, because retaining Dr. Abcess is a promise, not an express condition; (d) is incorrect, because it has no bearing on whether the retention of Dr. Abcess is a condition or a promise. If you missed this question, please review Section 2.6(a) of the Hornbook (6th Edition) page 28–30; pages 31–32 (7th Edition).
A large daily newspaper publishes and distributes two booklets, one regarding general advertising rates, and the other regarding advertisements that will not be accepted. These booklets state that the newspaper will refuse advertising that is “dishonest, indecent or illegal.” A labor union presented an advertisement to the newspaper that urged readers not to patronize certain businesses because those businesses featured imported clothing that was manufactured by low-wage, foreign labor. The union also paid the appropriate advertising rate in accordance with general advertising rates, but the newspaper refused to print the advertising. Assume that the advertisement was not dishonest, indecent, or illegal. Will the union prevail against the newspaper for breach of contract?
No, the Defendant’s booklet containing its “General Advertising Rates” is only a statement of intention to sell or invitation for offers.
(c) is correct. When an advertisement does not contain a quantity term or language of commitment, it will only be construed as a preliminary proposal and an invitation for offers, rather than an offer. Note: just because something is not actionable in contract does not mean that a remedy cannot be pursued under other areas of law. (a) is incorrect, as the “dishonest, indecent or illegal” criteria are not the only bases for refusing an offer, if an offer had been made; (b) and (d) are incorrect, as no offer has been made. If you missed this question, please review Section 2.6(c) of the Hornbook (6th Edition) pages 31–32; page 34 (7th Edition).
Which of the following is the most accurate statement?
Article 2 of the Uniform Commercial Code represents majority law to be used to determine the outcome of disputes involving a contract for the sale of goods.
(b) is correct, the UCC has been adopted by all 50 states and governs the sale of goods in both commercial and non-commercial contracts. (a), (c), and (d) are incorrect, as they misstate the status and coverage of the UCC. See Hornbook Section 1.7.
How can an offer to buy goods be effectively accepted?
by either a shipment of conforming or non-conforming goods or a promise to ship the goods.
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(c) is correct, such contracts are called voidable. (a) and (b) are incorrect, as they both refer to methods of communication used in forming contracts and do not speak to whether a contract can be terminated by one or both parties; (d) is incorrect, as quasi-contract is an equitable remedy imposed by a court in order to prevent unjust enrichment. See Hornbook Section 1.8(c).
In a sale of goods contract, how will the courts respond to a failure of the parties to specify a quantity of goods?
Courts will not enforce the contract because it is missing a material term.
(d) is correct, all three methods of acceptance listed are effective under the UCC. (a), (b), and (c) are incorrect, as they leave out one or more of the ways to effectively accept an offer to buy goods under the UCC. See Hornbook Section 2.10(b).
Which of the following is the most accurate statement as to the role of a judge and jury in a court of law?
A judge is to determine questions of law and a jury is to determine questions of fact.
(a) is correct, as it accurately states the roles of a judge and a jury in a jury trial (note: when a judge sits without a jury, the judge determines both questions of law and questions of fact). (b), (c), and (d) are incorrect, as they misstate the roles of a judge and a jury in a jury trial. See Hornbook Section 2.7.
If an offer is unclear as to the proper mode of acceptance, how can the offer be accepted?
In any manner reasonable under the circumstances.
(d) is correct, as it states the law accurately. (a) is incorrect, as it addresses methods of communication, not the proper mode of acceptance, and is too narrow in any event; (b) and (c) are incorrect, as they do not accurately state the proper modes of acceptance when an offer is unclear as to the proper mode of acceptance. See Hornbook Section 2.10(a).
Each provision of the Uniform Commercial Code is followed by official comments. What is the legal effect of the official comments?
While most states have enacted into law the provisions of the UCC, most have not enacted into law the official comments.
Where there is no language in a contract addressing duration, the contract will:
run for a reasonable time.
(d) is correct, as it allows the court to determine the length of the contract based on the intent of the parties. (a) is incorrect, as duration is not a material term; (b) and (c) are incorrect, as they both provide outcomes that are not able to be adjusted to reflect the intent of the parties. See Haines v. City of New York.
If an offer has no quantity term:
a) no contract can be formed.
b) but does commit the purchaser to buy the amount the purchaser requires, a contract can be formed.
(d) is correct. The general rule is that no contract can be formed, per (a); however, courts have recognized an exception to this rule where the offer is to purchase all of a certain good that is “required,” per (c). (b) is incorrect, as courts will not impose quantity terms where there is no express language indicating either an amount or the intent of the parties for the contract to be for the amount required. See Sylvan Crest Sand & Gravel Co. v. United States.
An illusory promise:
is unenforceable.
(c) is correct, illusory promises are not enforceable. (a) and (d) are incorrect, because there is no way to make an illusory promise enforceable. (b) is incorrect, because a promise that is supported by consideration is not illusory. See Strong v. Sheffield.
A contract is called a “hybrid” contract if it involves the sale of both goods and services. What is the most accurate statement regarding the test most courts will apply to determine whether UCC Article 2 or the common law should apply to a “hybrid” contract?
Whether the contract’s predominant factor–the thrust, the purpose, reasonably stated–is the rendition of service, with good incidentally involved; or is a transaction of sale, with labor incidentally involved.
(c) is correct. Where a hybrid contract is not divisible, courts will determine the predominant factor in order to decide whether the UCC or the common law will control. (a), (b), and (d) are not correct, as none of them represent the test that the court uses to determine the controlling law in hybrid contract involving goods and services. See BMC Industries, Inc. v. Barth Industries, Inc.
Pearl has lost her prize-winning cat, Mr. Whiskers. On the website where she chronicles the competitions in which she enters Mr. Whiskers, Pearl offers a $2,000 reward for the return of her beloved cat, which (elsewhere on the website) she claims is worth at least $10,000. When Diego returns the cat, Pearl refuses to pay. When Diego sues to recover the $2,000, it is most likely that Diego will:
prevail, if a reasonable person would conclude from the statement on Pearl’s website that she intended to enter into a contract.
(b) is correct. The “objective theory” of contracts (the majority rule) is that the subjective intent of the parties is not relevant when determining whether a party has given assent to enter into a contract. This principle is true regardless of what the party actually intended. (a) is incorrect, because rewards are not always enforceable, they still have to meet the requirements for a valid offer, regardless of whether they are in the form of a reward. (c) is incorrect, because they contradict the objective theory of contracts. (d) is incorrect because there are insufficient facts to determine whether Diego knew or should have known Pearl was overstating the value of the cat. Even if Diego had such knowledge, that alone would not be sufficient to establish that Pearl’s statement was not reasonably intended to enter into a contract. She may have stated a higher price to induce Diego to take immediate action to find the missing cat. If you missed this question, please review Section 2.2 of the Hornbook (6th Edition) pages 23–24; pages 26–27 (7th Edition).
Max and Sam have been business partners for years, with Max being the managing partner and Sam being a passive investor. Max needs to go to Canada to settle the estate of his uncle and before he leaves, in order to keep the business open, Max agrees to pay Sam $20,000 per month for his services managing the business while Max is away. They both agree that the business cannot run itself, and Sam needs to protect both of their investments. Has an enforceable contract been formed?
No, if there is a presumption that the parties did not intend to create a contract.
Marta read this statement on Developer’s website: “Condominiums available for $120,000. First come, first served. Appear in person at our office, complete our application, and tender 10% down payment.” The website included the physical location of the condominium and the unit numbers of the condominiums that were available. Marta went to Developer’s office, completed the application and tendered $12,000 in cash that was accepted by Developer. A few days later, Developer mailed Marta a letter informing her that her application had been rejected. Enclosed with the letter was a cashier’s check for $12,000. At trial, Marta proved that Developer had units available for sale, but only sold to prominent people who would endorse Developer’s projects. Can Marta prevail on a claim for breach of contract?
Yes, because Developer accepted Marta’s offer to purchase the condominium according to the terms stated on Developer’s website.
(b) is correct. Although statements on websites are generally not considered offers, but are instead invitations for offers, when Marta appeared, completed the application and paid the down payment, her offer implicitly included the conditions expressed on the website. When Marta proved that Developer failed to comply with the criteria listed on its website, she stated a cause of action for breach of contract. (a) is incorrect because the conditions expressed were an offer; (c) is incorrect because acceptance can be based on such factors, if so stated; (d) is incorrect, because it has no bearing on whether or not the conditions expressed were an offer. If you missed this question, please review Section 2.6(d) of the Hornbook (6th Edition) page 33; page 36 (7th Edition).
Sir Henry Magazine derives a great deal of income from the sale of advertising. It publishes a “rate sheet” as well as an “Advertising Guidelines” brochure. The Advertising Guidelines brochure states, “Sir Henry reserves the right to refuse to print advertising for untruthful copy.” A nonprofit political action group presented an advertisement stating that a local political figure had used political contributions for personal use. The group paid the advertising rate in accordance with the rate sheet, but the magazine refused to print the advertising even though it admitted the advertisement was truthful. Will the political action group prevail against the magazine?
No, the magazine’s rate sheet is only a statement of intention to sell or invitation for offers.
(c) is correct. When an advertisement does not contain a quantity term or language of commitment, it will only be construed as a preliminary proposal and an invitation for offers, rather than an offer. (a) is incorrect, because the magazine had not made a valid offer (likewise, a proposed contract term cannot be enforced if no contract has been formed), but even if it was, there is nothing to indicate that this is the only reason for which the ad could be refused. (b) and (d) are incorrect, as the magazine had not made a valid offer. If you missed this question, please review Hornbook (6th Edition) page 32–33; pages 35–36 (7th Edition).
Buyer and Seller want to do business together, but they would like to have a relatively informal arrangement. They prepare a written “Gentlemen’s Agreement,” but state in the agreement that it is not binding. It also states, “This writing is only an expression of our intention to work honorably together. We have always worked well together, therefore, we do not wish to be bound by this document.” When the business relationship ends there are $100,000 worth of orders pending, but not delivered by Seller. Seller refuses to ship the orders and Buyer sues. Does Buyer prevail?
No, because this was just a “gentlemen’s agreement” and was not intended to have legal effect.
(c) is correct, because when the parties expressly state that they do not intend to be bound by their so called “gentlemen’s agreement,” the courts conclude that a contract does not arise. (a) is incorrect, the actions of the parties do not negate their intent to not form a contract. (b) is incorrect, a “gentlemen’s agreement” can be valid. (d) is incorrect, because it is possible to create just such an agreement (as was done here). If you missed this question, please review Hornbook (6th Edition) page 26; page 28 (7th Edition).
Arthur calls Betty and says: “I am in a real fix and I must sell my house. I am so motivated that I would consider $100,000 for it.” Immediately Betty says: “I’m sorry about your predicament. I will buy your house for $100,000.” Is there a contract?
No, because Arthur never accepted Betty’s offer.
(c) is correct, because while Arthur stated that Arthur “must sell” and “would consider” taking $100,000, Arthur never made an offer to sell the house to Betty. Arthur’s statements were merely preliminary negotiations and were not intended as an offer to sell the house to Betty for $100,000. (a) is incorrect; many material terms can be gap-filled, allowing a contract to be formed where the intent to form a contract is clear (as is the case here). (b) and (d) are incorrect, because Arthur has not made a valid offer that would give Betty the power of acceptance. If you missed this question, please review Hornbook (6th Edition) pages 38–40; pages 41–43 (7th Edition).
Review the following conversation:
Kathy: “Jerry, will you consider buying my cabin in Aspen? If you will make me an offer, I will consider it.”
Jerry: “Okay, $5.00.”
Kathy: “No, that is not enough.”
Jerry: “Will you accept $85,000?”
Kathy: “I won’t sell it for less than $95,000.”
Jerry: “I accept.”
Was there a contract?
No, because Kathy never offered to sell the property for $95,000.
(b) is correct, because Kathy stated that Kathy would consider an offer made by Jerry, not that Kathy was making Jerry an offer to sell the property. When Jerry asked for a price, Kathy responded with a price quotation. However, Kathy never made an offer to sell the property to Jerry. (a) is incorrect, because Kathy never made an offer to sell the property to Jerry. (b) is incorrect, having a reasonable time within which to revoke is not required for an offer to be valid (or for an acceptance to be valid). (d) is incorrect, Kathy’s intent to form a contract is not clear (which is what prevented Kathy from making a valid offer). If you missed this question, please review Hornbook (6th Edition) pages 38–40; pages 41–43 (7th Edition).
Benson owned a golf course. Benson was approached by the Magson Railroad Company, that asked for a right of way across Benson’s land that was adjacent to his golf course. Benson agreed to the right of way in exchange for the railroad’s promise to build “a really cool railway station” at a specified spot near the golf course. The railroad was built on the right of way, but Magson did not build the station. Benson sues Magson for the station. Will Benson prevail in this lawsuit?
es, because the parties agreed that Magson would build a station near the golf course in exchange for the right of way.
(d) is correct, because it expresses the intentions of the parties to enter into a contract as well as its specific terms. (a) and (b) are incorrect, as neither of these issues have any bearing on whether the agreement would be enforceable. (c) is incorrect, because the concept of mitigation of damages impacts the amount of damages awarded, not whether a contract is enforceable. If you missed this question, please review Hornbook (6th Edition) pages 41–43; pages 44–47 (7th Edition).
A agrees to remodel B’s home pursuant to specific plans and specifications. The price for the job is $8,500. The plans do not specify the materials that A must use. Is the contract void?
Yes, if the omission of the terms describing the materials to be used cannot be implied due to lack of objective standards.
(a) is the best answer, because the courts will not imply a missing term in a contract if the court lacks objective standards to determine what term would be appropriate to fill the gap in the agreement of the parties; this answer choice addresses a fundamental requirement that can prevent a contract from being formed. (b) is incorrect, because the courts will not imply a missing term in a contract if the court lacks objective standards to determine what term would be appropriate to fill the gap in the agreement of the parties. (c) is incorrect, as there is no requirement that the contract must specify the materials to be used. (d) is not incorrect (as this is the standard that will guide the builder’s action), but it is not the best answer among the choices offered, because it assumes that a valid contract has been formed as opposed to addressing the more fundamental issue, as seen in (a), of whether the missing term will prevent a contract from being formed. If you missed this question, please review Hornbook (6th Edition) page 46–48; pages 51–53 (7th Edition).
Jill says to Dave, “If you ride your bike from San Diego to New York City by September, I promise to pay you $10,000.” Dave promises to ride. Is there a contract?
No, because Dave did not accept Jill’s offer.
(d) is correct, because in order to accept Jill’s offer, Dave must do the act requested by Jill, not simply promise to perform as requested. (a) and (c) are incorrect, because this is a unilateral contract and cannot be accepted by a promise. (b) is incorrect, the reasonableness of the terms is irrelevant to determining whether the offer was accepted. If you missed this question, please review Hornbook (6th Edition) pages 56–58; pages 61–63 (7th Edition).
Buyer telephoned seller and made the seller a valid offer to buy goods from the seller. Assume that the seller did not accept the offer during the telephone call. Absent any manifestation of contrary intent by either party, at what time will most courts find that the buyer’s offer lapsed?
After the phone call came to an end.
(a) is correct, unless there is a manifestation of intent to the contrary, the offer will lapse (terminate) when the phone call comes to an end (because that is a reasonable amount of time under the circumstances). (b) and (c) are incorrect, neither party expressed such an intent, which would be required for the offer to remain open for either period of time. (d) is incorrect, because the offeree’s subjective intent does not control the duration of an offer. See Hornbook Section 2.20(a).
Offeror mailed a valid offer to an intended offeree and then died of a heart attack the next morning. The offeree received the offer at noon and, not knowing of the offeror’s death, mailed an acceptance of the offer that same afternoon. Is there a valid contract under the majority view?
No, the offeror’s death terminated the offeree’s power of acceptance.
(d) is correct, an offer that has not been accepted terminates upon the death of the offeror. (a) is incorrect, mailing does not make an offer irrevocable. (b) is incorrect, regardless of the subject matter, all offers that have not been accepted terminate upon the death of the offeror. (c) is incorrect, the offeree’s knowledge of the death of the offeror has no impact of the offer’s termination upon the death of the offeror. See Hornbook Section 2.20(c).
Offeror posts on a Web page an offer that can be accepted by any viewer. If the offeror wants to revoke the offer, the offeror must do which of the following?
Must post a revocation of the offer on the Web page.
(d) is correct. To be effective, a revocation of a public offer must be communicated in the same manner as the public offer. (a) is incorrect, there is no time delay requirement. (b) is incorrect. This could only be an effective way of revoking a public offer, if you could determine which members of the general public were aware of the public offer (which is impossible in most circumstances). (c) is incorrect, public offers posted on the internet can be accepted. See Hornbook Section 2.20(d).
Which one of the following statements best describes the earliest time an offeror’s written revocation of an offer will take effect under the majority rule?
(c) is correct. The general rule for business communications (including revocations) is that they are effective upon receipt, which is why (b) is incorrect. (a) is incorrect, the offeror’s manifestation of intent must be communicated to the offeree to take effect. (d) is incorrect, as the revocation will be effective upon receipt, whether the offeree reads it or not. See Hornbook Section 2.20(d).
When the revocation is received by the offeree.
Assume that an offeree learns from a reliable source that land that has been offered to her by a seller, has also been offered by the seller to another interested party who had not yet accepted. Which one of the following statements most accurately describes the offeree’s rights?
The offeree may accept the offer.
(a) is correct. The offer is open and the offeree has the power of acceptance; the fact that another party also has the power to accept does not prevent the offeree from accepting. (b) is incorrect, no such inquiry is required. (c) is incorrect, the potential for such exposure does not restrict the offeree’s power of acceptance, since the offeror is the one that created the situation in the first place. (d) is incorrect, granting the power to accept to multiple offerees does not revoke the offer. See Hornbook Section 2.20(d).
An offeree responds to an offer with a proposal for a similar but different contract, but also notes that the offeree will keep the original offer under advisement. Offeree’s proposal is best understood as:
a counter offer.
(b) is correct, offeree has created a new offer while expressly keeping the old offer open, which is why (c) is incorrect. (a) is incorrect, since there is already an offer between the parties, offeree’s response creates a counter offer. (d) is incorrect, offeree has been careful not to reject the old offer. See Hornbook Section 2.20(e).
A submits an offer in writing to provide B with a service. B quickly responds in writing stating that she accepts the offer, but includes somewhat different terms. Most likely B’s response is:
a counteroffer and rejection of the offer.
(c) is correct. At common law, B has created a new offer, which acts as a counter offer; without expressly keeping the old offer open, the counter offer will also revoke the prior offer, which is why (b) and (d) are incorrect. (a) is incorrect, most likely B’s response will not be an acceptance. See Hornbook Section 2.21(a).
