Contract Law Learning Questions - Set 2 Flashcards
A letter of revocation of an offer becomes effective at the moment it is __________.
A
Dispatched by the offeror
B
Received by the offeree
C
Read by the offeree
D
Signed by the offeror
B
A letter of revocation of an offer is effective when it is received by the offeree. At common law, a written communication is considered to have been “received” when it comes into the possession of the person addressed (or of someone authorized by him to receive it) or when it is deposited in some place authorized as the place for this or similar communications to be deposited. Similarly, under the UCC, a person receives notice when it comes to his attention, or it is delivered at a place of business through which the contract was made or another location held out by that person as the place for receipt of such communications. An organization receives a communication at the time it is brought (or should have been brought) to the attention of the individual conducting the transaction.
Thus, the written revocation need not be actually read by the offeree to be effective.
A revocation generally is effective when received while, in contrast, an acceptance generally is effective when dispatched (i.e., the mailbox rule). Under the mailbox rule, if the offeree dispatches an acceptance before he receives a revocation sent by the offeror, a contract is formed.
At common law, a written communication revoking an offer is considered “received” by an offeree at the moment:
A
The offeree reviews the contents of the revocation
B
It comes into the offeree’s physical possession
C
The offeror dispatches the communication, provided that the mail is properly addressed and stamped
D
The offeror relinquishes possession of the communication
B
A written revocation of an offer is effective when it is received by the offeree. At common law, a written communication is considered to have been “received” as soon as it comes into the physical possession of the person addressed (or of someone authorized by him to receive it) or when it is deposited in some place authorized as the place for this or similar communications to be deposited.
The offeree need not review the contents of the revocation for it to be effective.
The rule for revocation is different from the rule for acceptance, which generally creates a contract at the moment of dispatch, provided that the mail is properly addressed and stamped.
Which of the following statements regarding revocation and acceptance of contract offers is correct?
A
A revocation generally is effective when dispatched, and an acceptance generally is effective when dispatched.
B
A revocation generally is effective when received, and an acceptance generally is effective when dispatched.
C
A revocation generally is effective when dispatched, and an acceptance generally is effective when received.
D
A revocation generally is effective when received, and an acceptance generally is effective when received.
B
A revocation generally is effective when received and an acceptance generally is effective when dispatched (i.e., the mailbox rule). Under the mailbox rule, if the offeree dispatches an acceptance before he receives a revocation sent by the offeror, a contract is formed.
A recent nursing school graduate mailed a letter to a classmate on July 1 telling her that she was moving to take a nursing position in another city and asking her whether she wanted “the stuff in my house” for $2,500.
The classmate received the letter on July 2, and on July 3 she sent the newly minted nurse a letter accepting the offer. The next day the classmate changed her mind, called the nurse, and told her to forget the deal. Later that same day, the nurse received the letter that her classmate had sent on July 3.
Is there a contract between the nurse and her classmate?
A Yes, because the contract is for the sale of goods for more than $500 and the classmate’s attempted rejection is oral.
B Yes, because the classmate’s letter of acceptance was effective when she mailed it.
C No, because the classmate’s rejection was communicated to the nurse before her letter of acceptance was received.
D No, because the description of the subject matter as “the stuff in my house” is not sufficiently definite and certain.
B
The classmate accepted the nurse’s offer when she mailed the letter on July 3; thus, a contract was formed. Under the mailbox rule, acceptance of an offer by mail creates a contract at the moment the acceptance is posted, properly stamped, and addressed. If the offeree sends both an acceptance and a rejection, whether the mailbox rule will apply depends on which the offeree sent first, the acceptance or the rejection. If the offeree first sends an acceptance and later sends her rejection, the mailbox rule does apply. Thus, even if the rejection arrives first, the acceptance is effective upon mailing (and so a contract is formed) unless the offeror changes his position in reliance on the rejection. Here, the classmate first sent an acceptance, then called with her rejection. The mailbox rule applies, and because there is nothing in the facts to show that the nurse relied on the rejection, a contract was formed. (A) is wrong because it implies that a rejection must be in writing. There is no such requirement. Also, the rejection (absent detrimental reliance) has no effect on the contract because the offer had already been accepted and the contract formed. (C) is wrong because, as stated above, under the mailbox rule the fact that the rejection was received before the acceptance is irrelevant (unless there has been detrimental reliance on the rejection, which was not the case here). The contract was formed when the classmate sent her acceptance. (D) is wrong because the description, although somewhat ambiguous, can be made reasonably certain by evidence of the subjective understanding of the parties and extrinsic evidence of what was in the house, which a court will consider to clarify an ambiguous term.
A photography buff wrote a letter to his brother-in-law offering to sell him his camera for $1,500, because he knew that he had admired it for a long time. The day after the brother-in-law received the letter, he mailed a letter back to the photography buff agreeing to purchase the camera equipment for $1,500. The next day, after describing the camera to a friend who was very knowledgeable about photographic equipment, the brother-in-law learned that the camera was second-rate and not worth more than $1,200. He immediately telephoned the photography buff and told him that he had no interest in buying the camera. The photography buff received his brother-in-law’s letter agreeing to purchase the camera equipment a day after receiving the phone call.
If the photography buff brings an action against his brother-in-law for breach of contract, and the brother-in-law defends on the grounds that no contract was formed, how should the court rule?
A For the brother-in-law, because the description of the subject matter of the contract was too indefinite to be enforced.
B For the brother-in-law, because the photography buff received the telephone call before he received the letter.
C For the photography buff, because his brother-in-law’s letter accepting the offer was effective when mailed.
D For the photography buff, because the contract is for the sale of goods over $500 in value and his brother-in-law’s attempted rejection of the offer was oral.
C
A contract was formed because the brother-in-law’s acceptance was effective on dispatch. Under the “mailbox rule,” acceptance by mail or similar means creates a contract at the moment of posting, properly addressed and stamped, unless: (i) the offer stipulates that acceptance is not effective until received; or (ii) an option contract is involved. Here, the brother-in-law dispatched first an acceptance and then a rejection of the photography buff’s offer. The mailbox rule applies because the photography buff’s offer did not specify that acceptance was not effective until receipt, nor is an option contract involved. Because the brother-in-law dispatched his acceptance before he called with his rejection, the mailbox rule applies. Thus, the brother-in-law’s acceptance was effective, thereby creating a contract at the moment it was mailed, and his attempted rejection was ineffective. (B) is incorrect because once the acceptance was effective, the fact that the photography buff received the “rejection” by telephone before he received the acceptance letter has no effect on the formation of the contract. (A) is incorrect because the letter from the photography buff indicates that the subject matter of the contract was his camera that the brother-in-law had admired for some time. This description on its face appears to be sufficiently definite that a court would be able to determine with reasonable accuracy which camera is subject to the photography buff’s offer to sell. (D) is incorrect even though it is true that, pursuant to the Statute of Frauds, a contract for the sale of goods of $500 or more is not enforceable unless evidenced by a writing. There is no requirement that a rejection of an offer to enter into such a contract must be in writing.
The owner of a stationary bicycle wrote a letter to her friend offering to sell her stationary bicycle to him for $150. The friend received the letter on January 18. On January 19, he mailed a letter back saying that he was not interested in purchasing the bike because he had just purchased a gym membership. However, the friend changed his mind the next day and mailed a letter to the owner accepting her offer to sell the bicycle and enclosing a certified check for $150. The owner received the friend’s rejection letter on January 21 but put it aside without reading it. The next day, she received the friend’s acceptance letter, which she opened and read immediately.
Do the parties have a contract?
A Yes, because under the mailbox rule an acceptance is effective on dispatch, while a rejection is effective on receipt.
B Yes, because the friend paid for the bicycle when he accepted the offer to buy it.
C No, because the acceptance was dispatched after the rejection.
D No, because the mailbox rule does not apply—whichever is received first controls.
D
No because the mailbox rule does not apply, whichever is received first controls.
A doll collector knew that an acquaintance from her doll collectors’ club coveted one particular doll that she owned. The doll collector mailed a letter to the acquaintance on May 3 offering to sell the doll to her for $750. Her letter arrived on May 4. On May 5, the doll collector changed her mind and immediately mailed a revocation to the acquaintance. This revocation arrived on May 7. As the mail carrier handed it to her, the acquaintance simultaneously handed to the mail carrier her own letter to the doll collector, unequivocally accepting her offer.
What is the result of the actions here?
A The revocation was effective upon mailing, and the acceptance would be treated as a counteroffer.
B The acceptance was effective, as long as the acquaintance had no knowledge of the contents of the doll collector’s letter when she handed her letter to the mail carrier.
C The outcome would turn on the court’s determination as to whether the doll collector’s letter had been received by the acquaintance before she had entrusted the letter of acceptance to the mail carrier.
D Handing a letter to a mail carrier is not a proper posting of the acceptance, and hence the acquaintance’s purported acceptance is not timely.
C
The outcome would turn on the court’s determination as to whether the doll collector’s letter had been received by the acquaintance before she had entrusted the letter of acceptance to the mail carrier. At common law, an acceptance is effective upon dispatch (e.g., upon mailing a properly addressed and stamped letter) under the mailbox rule. The mailbox rule does not apply to revocations, however—revocations are effective only upon receipt. Receipt does not require knowledge of the revocation, but merely possession of it. The communication need not be read by the recipient to be effective. [See Restatement (Second) of Contracts §68] The facts here present a close question as to whether there has been a dispatch of the acceptance before the receipt of the revocation. The outcome of this question will depend on the court’s determination as to what came first (the posting of the acceptance or receipt of the revocation). This will decide the existence or nonexistence of the contract. (A) is incorrect because, as indicated above, revocation is effective only upon receipt, not mailing. (B) is incorrect because whether the acceptance is effective depends on whether the revocation was received before the acceptance was dispatched, and whether the revocation was received first is not dependent on whether the acquaintance had knowledge of its contents, but rather it depends on whether she had possession of it. (D) is incorrect because the mailbox rule makes an acceptance effective upon posting, and there is no reason to hold that handing a properly addressed, stamped letter to a mail carrier is not a valid posting.
On July 1, a cattle rancher offered to sell his ranch to a dairy farmer for $150,000. The dairy farmer paid the cattle rancher $1,000 to hold the offer open for a period of 30 days. On July 10, the dairy farmer wrote to the cattle rancher, telling him that he could not pay more than $100,000 for the ranch, and that if he would not agree to accept that amount, he would not go through with the deal. The dairy farmer received no reply from the cattle rancher.
On July 29, the dairy farmer mailed a letter to the cattle rancher telling him that he accepted his offer to sell the ranch and enclosed a check for $150,000. The cattle rancher received this letter on August 1.
Has a contract been formed between the parties for the sale of the ranch?
A No, because the dairy farmer’s letter of July 10 terminated the cattle rancher’s offer.
B No, because the cattle rancher did not accept the dairy farmer’s counteroffer of $100,000.
C No, because the cattle rancher did not receive the dairy farmer’s acceptance within 30 days.
D Yes, because the dairy farmer dispatched his acceptance of the cattle rancher’s offer prior to the expiration of 30 days.
C
No contract was formed because the cattle rancher did not receive the dairy farmer’s acceptance within 30 days. Under the mailbox rule, acceptance by mail or similar means creates a contract at the moment of dispatch. However, the mailbox rule does not apply to option contracts. An acceptance under an option contract is effective only upon receipt. [Restatement (Second) of Contracts §63] Here, an option contract existed because the dairy farmer paid the cattle rancher $1,000 to hold the offer open for 30 days. The dairy farmer mailed his acceptance within 30 days but it was not received by the cattle rancher within the 30-day period, so the acceptance was not effective. The option specified the period of time during which the offer would remain open, after which the offer terminated. Thus, (C) is correct, and (D) is wrong. (A) and (B) are wrong because an option contract is irrevocable for the time period stated. Thus, not even the dairy farmer himself could revoke the offer within the 30-day period.
