Illustrations (to 54)

Question 1

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.

Answer 1

The change of election is voidable (15. Mental Illness or defect)

Question 2

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

Answer 2

B’s promise is without consideration (17. Requirement of a Bargain)

Question 3

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.

Answer 3

There is a contract unless B knows or has reason to know of A’s error (19. Conduct as Manifestation of Assent)

Question 4

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.

Answer 4

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 (20. Effect of Misunderstanding)

Question 5

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 1 and B means Peerless 2.

Answer 5

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 (20. Effect of Misunderstanding)

Question 6

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 2 and B does not know that there are two ships named Peerless.

Answer 6

There is a contract for the sale of the goods from Peerless 2, and it is immaterial whether B has reason to know that A means Peerless 1. If A makes the contract with the undisclosed intention of not performing, it is voidable by B for misrepresentation. (20. Effect of Misunderstanding)

Question 7

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 named Peerless. A has reason to know that B means Peerless 2 and B has no reason to know that A means Peerless 1.

Answer 7

There is a contract for the sale of goods from Peerless 2 (20. Effect of Misunderstanding)

Question 8

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.

Answer 8

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 (20. Effect of Misunderstanding)

Question 9

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

Answer 9

There is no contract (23. Necessity that Manifestations Have Reference to Each Other)

Question 10

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.

Answer 10

There is a contract on the terms stated in A’s offer (23. Necessity that Manifestations Have Reference to Each Other)

Question 11

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 B selects.

Answer 11

There is an option contract under which B has an option (25. Option Contracts)

Question 12

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.

Answer 12

There is an option contract under which B has an option (25. Option Contracts)

Question 13

A, a clothing merchant, advertises overcoats of a certain kind for sale at $50.

Answer 13

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 (26. Preliminary Negotiations)

Question 14

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

Answer 14

This is an offer, and A is bound to pay $5 for every copy sent while the offer is unrevoked (26. Preliminary Negotiations)

Question 15

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

Answer 15

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; and if A added “for immediate acceptance” the intent to make an offer would be unmistakable (26. Preliminary Negotiations)

Question 16

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.”

Answer 16

There is no contract. A’s letter is a request or suggestion that an offer be made to him. B has made an offer (26. Preliminary Negotiations)

Question 17

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 accepted your offer.”

Answer 17

There is no contract (30. Form of Acceptance Invited)

Question 18

A writes B, “If you will mow my lawn next week, I will pay you $10.”

Answer 18

B can accept A’s offer either by promptly promising to mow the lawn or by mowing it as requested (32. Invitation of Promise or Performance)

Question 19

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.”

Answer 19

There is a contract. B could also accept by delivering the table as requested (32. Invitation of Promise or Performance)

Question 20

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.”

Answer 20

There is no acceptance (32. Invitation of Promise or Performance)

Question 21

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 promise so to refrain

Answer 21

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

Question 22

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.”

Answer 22

This is a sufficient acceptance to form a contract. See UCC 206 (32. Invitation of Promise or Performance)

Question 23

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.

Answer 23

This is 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 (32. Invitation of Promise or Performance)

Question 24

A promises B to cell certain goods to him, and B promises to pay a specified price therefor. No time of performance is fixed.

Answer 24

The time for delivery and payment is a reasonable time. What is a reasonable time depends on the nature, purpose, and circumstances of the action to be taken (33. Certainty)

Question 25

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.

Answer 25

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 (33. Certainty)

Question 26

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.

Answer 26

There is no contract unless the offer was itself a contract. B’s purported acceptance is itself a new offer (38. Rejection)

Question 27

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.”

Answer 27

There is no contract unless A’s offer was itself a contract, or unless A’s reply to the counter-offer manifested an intention to renew his original offer (39. Counter-Offers)

Question 28

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.”

Answer 28

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 still stands (39. Counter-Offer)

Question 29

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.

Answer 29

B’s acceptance is effective (39. Counter-Offers)

Question 30

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

Answer 30

This acceptance creates a contract only if received before the rejection, or if the power of acceptance continues under 37-39 (40. Time when Rejection or Counter-Offer Terminates the Power of Acceptance)

Question 31

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.

Answer 31

There is no contract unless the offer of the circumstances indicate that the offer is intended to continue beyond the immediate conversation (41. Lapse of Time)

Question 32

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.

Answer 32

The acceptance is timely (41. Lapse of Time)

Question 33

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.

Answer 33

It is a question of fact under the circumstances of the particular case whether the delay is unreasonable (41. Lapse of Time)

Question 34

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 subjected to countermand. The next day A orally informs B that the offer is terminated.

Answer 34

B’s power of acceptance is terminated unless the offer is an option contract (42. Revocation by Communication from Offeror Received by Offeree)

Question 35

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.

Answer 35

The request does not revoke the offer (42. Revocation by Communication from Offeror Received by Offeree)

Question 36

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.”

Answer 36

The offer is revoked (42. Revocation by Communication from Offeror Received by Offeree)

Question 37

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.

Answer 37

There is no contract between A and B (43. Indirect Communication of Revocation)

Question 38

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.

Answer 38

There is no contract between A and B (43. Indirect Communication of Revocation)

Question 39

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.

Answer 39

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 (43. Indirect Communication of Revocation)

Question 40

B owes A $5,000 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.

Answer 40

A has not made an offer. Tender by B in accordance with the proposal is an offer by B (45. Option Contract Created by Part Performance or Tender)

Question 41

A, an insurance company, issues a bulletin to its agent, 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.

Answer 41

There is no offer of promise (45. Option Contract Created by Part Performance or Tender)

Question 42

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.

Answer 42

There is a breach of contract (45. Option Contract Created by Part Performance or Tender)

Question 43

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.

Answer 43

There is no contract (46. Revocation of General Offer)

Question 44

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.

Answer 44

If B begins the painting, there is an acceptance by performance which operates as a promise to complete the job (50. Acceptance of Offer Defined; Acceptance by Performance; Acceptance by Promise)

Question 45

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.

Answer 45

This is an acceptance by promise, even though under 32 B might have accepted by performance (50. Acceptance of Offer Defined; Acceptance by Performance; Acceptance by Promise)

Question 46

A makes an offer to B, who dies after receiving it.

Answer 46

His executor, though acting within the permitted time, cannot accept (52. Who May Accept an Offer)

Question 47

A sends B an offer 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.

Answer 47

Neither B nor C has accepted A’s offer (52. Who May Accept an Offer)

Question 48

A sends B an offer 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. Before using the goods, A discovers that they have come from C.fff

Answer 48

A’s retention or use of them is an acceptance of an offer from C, and a contract arises (52. Who May Accept an Offer)

Question 49

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.

Answer 49

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 (54. Acceptance by Performance; Necessity of Notification to Offeror)

Question 50

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.

Answer 50

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 (54. Acceptance by Performance; Necessity of Notification to Offeror)

Question 51

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 distribution.

Answer 51

B has accepted the offer, and no notification to A is required (54. Acceptance by Performance; Necessity of Notification to Offeror)