Business Law Chapter 13 Multiple Choice

An offer that is indefinite may be clarified by reference to another writing through:

An offer that is indefinite may be clarified by reference to another writing through: a. incorporation. b. reference. c. annotation. d. indexing. ANS: A

A said to B, "I'll give you $100 for that bracelet." B replied, "$135." A said, "No thanks." B then said that B accepted the $100, but A was no longer interested and said there was no contract. B insists there is a contract. Result?

a. A's offer of $100 was open and accepted by B, thereby forming a contract. b. B's counteroffer of $135 terminated A's offer of $100. c. B's statement, "$135" was a negotiating statement that did not terminate A's original offer of $100. d. A's offer of $100 was irrevocable. ANS: B

A customer requested a price from a carpenter on a teak cabinet to be built according to the buyer's specifications. Because teak wood is difficult to obtain, the customer agreed to pay the cost of the wood plus $175 and the carpenter agreed to build it. Which of the following is correct?

a. Although the price is somewhat unclear, the parties have entered into a contract. b. This is an agreement to agree, and is not binding. c. This agreement fails for indefiniteness. d. The carpenter is bound by the agreement, but not the customer. ANS: A

Arthur made a bid at an auction by calling out the amount of $250. The auctioneer acknowledged Arthur's bid. There were no higher bids, and before the fall of the auctioneer's hammer, Arthur announced that he was withdrawing the bid. The auctioneer said that it was too late for Arthur to withdraw his bid, because the bid had already been acknowledged. What is the result?

a. Arthur's bid is an ordinary offer that can be revoked. b. Arthur's bid is firm and cannot be withdrawn. c. Since the auctioneer had in fact acknowledged Arthur's bid, the bid became an option exercisable at the election of the seller. d. Since the auctioneer had in fact acknowledged Arthur's bid, a contract had been formed by way of offer and acceptance; accordingly, Arthur's subsequent attempt to withdraw his bid was ineffective. ANS: A

At an auction sale, each bid is:

a. a counteroffer to the auctioneer's offer of the merchandise. b. an acceptance of the auctioneer's offer. c. an invitation to negotiate. d. an offer. ANS: D

In general, an acceptance occurs when:

a. a particular form of words is stated to the offeror. b. a particular mode of expression is made to the offeror. c. the offeree reserves the right to reject the offer. d. a clear expression of the offeree's agreement to be bound by the terms of the offer occurs. ANS: D

When an offer has been accepted:

a. a subsequent revocation of the offer may serve to nullify the resulting contract. b. a contract is formed, assuming that all of the other elements of a contract are present. c. either party may withdraw from the resulting contract without consent. d. the acceptance is executory. ANS: B

If an offeree accepts an offer before it is effectively revoked:

a. a void contract is formed. b. a voidable contract is formed. c. an unenforceable contract is formed. d. a valid contract is formed. ANS: D

Under the Uniform Commercial Code (UCC), a firm offer applies to:

a. a written, signed offer by a merchant to buy or sell goods. b. an unwritten but definite offer to buy or sell goods. c. a written, signed offer by anyone to buy or sell goods. d. an unlimited, stipulated period of time. ANS: A

A counteroffer is a(n):

a. acceptance of the original offer. b. rejection of the original offer. c. acceptance of the original offer and an invitation to further negotiate. d. a revocation of the original offer. ANS: B

If no termination date is specified for an offer, the offer will remain open:

a. for one year. b. for six months. c. for a reasonable period of time. d. until someone accepts the offer. ANS: C

If an offeree dies before the offer has been accepted, the offer:

a. may be rejected by the surviving spouse of the offeree. b. may be accepted by the surviving spouse of the offeree. c. is automatically revoked by the death of the offeree. d. may be accepted by the guardian appointed for any minor children of the offeree. ANS: C

If an offer requires that acceptance be communicated by a specific date and the acceptance is properly dispatched by the offeree on the final date,

a. no contract is formed, since the offeror will undoubtedly receive the dispatched acceptance after the deadline for acceptance. b. a contract is formed, but the contract is voidable at the election of the offeror. c. the acceptance is timely and a contract is formed, even though the offeror actually receives the acceptance well after the specified date has passed. d. the acceptance is timely and a contract is formed, but only if the offeror actually receives the acceptance by the deadline specified for acceptance. ANS: C

The willingness of an offeror to enter into a contractual agreement regarding a particular subject is expressed by a(n):

a. offer. b. acceptance. c. contract. d. agreement. ANS: A

If not an offer, the first statement made by one of two persons is most properly termed a(n):

a. option. b. acceptance. c. invitation to negotiate. d. contract. ANS: C

A(n) __________ contract is a contract to buy all requirements of the buyer from the seller.

a. output b. essentials c. necessaries d. requirements ANS: D

An agreement that consists of two or more parts and calls for corresponding performances of each part by the parties is called a:

a. partial contract. b. divisible contract. c. performance contract. d. divided contract. ANS: B

A customer went into a store and saw a beautiful leather jacket bearing a price tag of $29. The customer handed the cashier a $50 bill and said, "I accept. We have a deal." The cashier then noticed the price tag and told the customer an error had been made and that the price was $229. In this case:

a. the customer validly accepted the store's offer. b. the price tag was a firm offer. c. no contract was formed because the customer's offer was refused. d. the customer is the offeree. ANS: C

An offer is terminated upon rejection by the offeree unless:

a. the period of time for which the offeror agreed to keep the offer open has not yet expired. b. the offeror renews the offer. c. the offeree revokes the rejection. d. the offeree makes a counteroffer. ANS: B

In an auction __________, the auctioneer takes bids as agent for the seller with the understanding that no contract is formed until the seller accepts the transaction.

a. without reserve b. with reserve c. without preserve d. with preserve ANS: B