ACCT 324 Chapter 14

If an acceptance is received after a rejection is received, the acceptance is still valid

false

If an offeree makes a misake and sends an acceptance to the wrong address, there is an acceptance upon dispatch

false

If the subject matter of an offer is destroyed, the offer terminates after 10 days or notice of the death to the offeree, whichever comes first

false

Courts interpret contracts using an objective standard

true

There are a limited number of circumstances under which silence can be an acceptance

true

Under the Mailbox Rule, a valid contract has been formed if a rejection is dispatched, but before it is received, the acceptance is communicated to the offeror.

true

only the offeree to whom an offer is directed can accept the offer

true

41. Which of the following is generally true if no means of communicating an acceptance is specified in an offer? A. The acceptance must be in writing. B. The acceptance must be made verbally either by telephone or in person. C. No valid contract may be entered into because the offer must specify a means by which to accept. D. Acceptance may be made by any reasonable means. E. Acceptance must be made orally or in writing within twenty-four hours.

D. Acceptance may be made by any reasonable means.

28. If the subject matter of an offer is destroyed, the offer _______. A. Immediately terminates B. Is extended for seven days C. Is extended for fourteen days D. Is extended for twenty-one days E. Is extended for thirty days

A. Immediately terminates

34. Gretchen offers $100 to anyone who can return her lost dog, Sparky. Haley returns the dog and requests the money. Gretchen says that there is no binding contract. Which of the following is true regarding Gretchen's statement? A. Gretchen is incorrect because there is a binding bilateral contract. B. Gretchen is incorrect because there is a binding unilateral contract which Haley accepted by performing. C. Gretchen is correct because there is no binding bilateral contract. D. Gretchen is correct because there is no binding unilateral contract. E. Gretchen is correct because Haley acted incorrectly by her manner of attempted acceptance.

B. Gretchen is incorrect because there is a binding unilateral contract which Haley accepted by performing.

33. In which of the following ways may an offeree accept a unilateral contract? A. By making a counteroffer or by a signed writing. B. By signed writing only. C. By either verbal acceptance or a signed writing. D. By performance only. E. By performance, by a verbal acceptance, or by a signed writing.

D. By performance only.

23. If a person wishes to ensure that an offer will in fact be held open for a set period of time, the person may do so by entering into a[n] ______________ contract with the offeror. A. Clear B. Explicit C. Irrevokable D. Option E. Adhesion

D. Option

42. Which of the following provides that an acceptance is valid when it is placed in the mailbox? A. The Acceptance Rule B. The Contract Rule C. The Reasonable Rule D. The Mailbox Rule E. The Contract Legality Rule

D. The Mailbox Rule

40. Which of the following sets forth the common law rule that the terms of an acceptance must mirror the terms of an offer? A. The Matching Rule B. The Complete Rule C. The Mirror Image Rule D. The Exact Rule E. The Parallel Rule

C. The Mirror Image Rule

27. If a[n] __________ contract exists, the administrator of an offeror's estate must hold the offer open until it expires in accordance with the contract. A. Bilateral B. Unilateral C. Complete D. Option E. Controlled

D. An Option

39. Inez, wishing to sell a used business law book, calls Janice and tells her that if she does not hear from her within twenty-four hours, she will assume that Janice wishes to purchase the book for $50. Which of the following is correct regarding the status of the proposed book sale? A. There is no contract because in this situation silence cannot be used to form a contract. B. There can be no contract because the offer was not made in person. C. There can be no contract because the offer was not made in writing. D. Janice can avoid there being a contract only if she can prove by preponderance of the evidence that she did not hear about the offer before the stated expiration time. E. Janice can avoid there being a contract only if she can prove beyond a reasonable doubt that she did not hear about the offer before the stated expiration time.

A. There is no contract because in this situation silence cannot be used to form a contract.

58. Which of the following is correct regarding the final status of the negotiations between Charles and Constance? A. Charles made an offer which was rejected by Constance when she made a counteroffer for $400. B. Charles had made an offer which was still outstanding even though Constance had made a counteroffer for $400. C. Charles had made an offer but it was revoked because Constance did not immediately accept it. D. Charles had made an offer, and it was still outstanding because he did not revoke it before ending his initial conversation with Constance in which she offered $400. E. No binding offer was ever made because an insufficient material term involving who would move the hot tub was omitted.

A. Charles made an offer which was rejected by Constance when she made a counteroffer for $400.

57. What is the likely result in the lawsuit Barry brought against Chris? A. Chris will win because he properly revoked his bid before it was accepted. B. Chris will win because bids made at an auction may be revoked at anytime within ten days after the auction. C. Chris will win because bids made at an auction may be revoked at anytime within five days after the auction. D. Chris will win because bids made at an auction may be revoked at anytime within one day after the auction. E. Barry will win because Chris had no right to revoke the bid.

A. Chris will win because he properly revoked his bid before it was accepted.

38. What have most states done with regard to unsolicited merchandise received from a seller? A. Most states have passed laws providing that unsolicited merchandise does not have to be returned and the recipient may keep it as a gift, with no contract being formed. B. Most states have passed laws providing that unsolicited merchandise must be returned to the seller within 7 days. C. Most states have passed laws providing that unsolicited merchandise must be returned to the seller within 10 days. D. Most states have passed laws providing that unsolicited merchandise must be returned to the seller within 30 days. E. Most states have passed laws providing that unsolicited merchandise must be returned to the seller within 60 days.

A. Most states have passed laws providing that unsolicited merchandise does not have to be returned and the recipient may keep it as a gift, with no contract being formed.

14. Constance asks Kathy if Kathy would consider selling her car for $2,000. What is the status of the negotiation? A. No offer has been made. B. An offer has been made, but it may be revoked prior to acceptance. C. An offer has been made that may not be revoked prior to acceptance. D. A contract has been entered into. E. A contract has been entered into, but it may be set aside at the option of either party.

A. No offer has been made.

49. Which doctrine may courts use to estop, or prevent, an offeror from revoking an offer based on a party's taking steps in reasonable reliance on an offer? A. Promissory estoppel B. Consideration reliance C. Contract enforcement D. Ethical reasoning E. True to form

A. Promissory estoppel

25. Which of the following is true regarding the termination of an offer based on a rejection? A. Regardless of how long an offeror states that an offer will be held open, once the offeree rejects it, the offer is terminated. B. Even on rejection, an offer is not terminated until the expiration of the time period for which it was originally to remain open. C. An offer must remain open for at least two days before it is terminated following a rejection by an offeree. D. An offer must remain open for at least three days before it is terminated following a rejection by an offeree. E. An offer must remain open for at least one day before it is terminated following a rejection by an offeree.

A. Regardless of how long an offeror states that an offer will be held open, once the offeree rejects it, the offer is terminated.

29. If the subject matter of an offer becomes illegal, what is the result? A. The offer immediately terminates. B. There is no effect as long as the offer was made at least one day before the subject matter of the offer became illegal. C. There is no effect as long as the offer was made at least ten days before the subject matter of the offer became illegal. D. There is no effect as long as the offer was made at least fifteen days before the subject matter of the offer became illegal. E. There is no effect as long as the offer was made at least thirty days before the subject matter of the offer became illegal.

A. The offer immediately terminates.

59. Which of the following is correct regarding the final status of the negotiations between Donna and Charles? A. Donna rejected Charles' offer by making a counteroffer. B. Donna did not reject Charles' offer because she merely made an inquiry. C. Donna cannot accept Charles' offer because he already sold the personal watercraft, and that terminated the offer to her. D. Donna cannot accept Charles' offer because it was revoked when he sold the hot tub to Everett. E. Donna cannot accept Charles' offer because she did not do so in her initial conversation with Charles.

B. Donna did not reject Charles' offer because she merely made an inquiry.

35. When acceptance is examined under the common law, how do the basic requirements for a valid acceptance compare with those for a valid offer? A. The basic requirements for a valid acceptance are materially different from those for a valid offer. B. The basic requirements for a valid acceptance parallel those for a valid offer. C. The basic requirements for a valid acceptance are different from those for a valid offer only because an offer must be in writing. D. The basic requirements for a valid acceptance are different from those for a valid offer only because an acceptance must be in writing. E. The basic requirements for a valid acceptance are different from those for a valid offer only because an offer must be revoked immediately but acceptance can be withheld for a reasonable period of time.

B. The basic requirements for a valid acceptance parallel those for a valid offer.

22. Which of the following refers to the right of an offeror to revoke an offer? A. The offeror is the "controller of his offer." B. The offeror is the "master of his offer." C. The offeror is the "proponent of his offer." D. The offeror is the "adjudicator of his offer." E. The offeror is the "arbiter of his offer."

B. The offeror is the "master of his offer."

24. As a general rule, when is revocation effective? A. When it is mailed by the offeror. B. When it is received by the offeree. C. One day after it is made. D. Two days after it is made. E. Three days after it is made.

B. When it is received by the offeree.

46. Which of the following is true regarding distinguishing an offer from an invitation to negotiate? A. Whether an offer in fact existed is a question of law. B. Whether an offer in fact existed is a question of fact. C. Whether an offer in fact existed is a mixed question of law and fact. D. Whether an offer in fact existed depends solely on whether the alleged offer included a specific price. E. Whether an offer in fact existed depends solely on whether an acceptance of the alleged offer was made immediately so that the offeror knew he or she was bound.

B. Whether an offer in fact existed is a question of fact.

26. Which of the following is an offer made by an offeree to an offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer? A. A revocation B. An acceptance C. A counteroffer D. A cross offer E. A bilateral offer

C. A counteroffer

18. The __________ terms of a contract are those terms that would allow a court to determine what the damages would be in the event that one of the parties breaches the contract. A. Important B. Significant C. Material D. Adequate E. Identifiable

C. Material

11. Which of the following was the result in Alexander v. Lafayette Crime Stoppers Inc., the case in the text in which the plaintiffs sued for collection of reward money offered to catch a serial killer by the defending publications, and the publications defended on the basis that the plaintiffs failed to provide notice as required by the reward offers because the plaintiffs provided relevant information to law enforcement, not the defendants? A. That the plaintiffs accepted the reward offers by performance when they provided information to law enforcement and were, therefore, entitled to recover. B. That the plaintiffs were entitled to prevail because by law they were required to contact law enforcement, not the defendants. C. That defendants did not receive acceptance of the reward offer and that, therefore, no contract was formed. D. That defendants revoked the reward offer before it was accepted and that, therefore, no contract was formed. E. That reward offers cannot constitute offers and that, therefore, no contract was formed.

C. That defendants did not receive acceptance of the reward offer and that, therefore, no contract was formed.

17. In an auction _________, the seller is treated as making an offer to accept the highest bid. A. Without controls B. With controls C. Without reserve D. With reserve E. Without qualifications

C. Without reserve

50. Which of the following is true regarding the Uniform Electronic Transactions Act? A. It eliminates all effects of the mailbox rule. B. It provides that offers may not be accepted electronically but otherwise retains aspects of the mailbox rule. C. It provides that acceptances may not be made electronically but otherwise retains aspects of the mailbox rule. D. It seems to create an electronic version of the mailbox rule. E. It delays the effect of the mailbox rule by 8 hours.

D. It seems to create an electronic version of the mailbox rule.

56. What is the likely result in the lawsuit brought by Mary against Barry for the table? A. Barry will win because Mary was simply making an offer that he was free to decline. B. Barry will win because the price was clearly insufficient for the table. C. Barry will win because no acceptance occurred. D. Mary will win because the auction was without reserve, and Barry had agreed to accept the highest bid. E. Barry will win because he did not inform attendees in writing that the auction was without reserve.

D. Mary will win because the auction was without reserve, and Barry had agreed to accept the highest bid.

52. What is the most likely result in Walter's lawsuit against Sally in which he claims that she must pay $3,000 for the car at issue? A. Walter will win because Sally made an offer that he properly accepted. B. Walter will win because Sally agreed to pay a reasonable amount for the vehicle. C. Sally will win because the agreement was not put into written form and signed by both parties. D. Sally will win because she merely expressed interest and did not make an offer. E. Sally will win because she was not provided sufficient time in which to consider the offer.

D. Sally will win because she merely expressed interest and did not make an offer.

48. Prudence, a mean business law teacher, offers $50 to any student who will mow her lawn. Sam goes right over and begins mowing. Just before he finishes, Prudence goes over and tells him that she revokes her offer. Which of the following is true regarding Sam's entitlement to payment? A. Sam is not entitled to payment because a bilateral contract was involved that could only be accepted by full performance prior to revocation. B. Sam is not entitled to payment because a unilateral contract was involved that could only be accepted by full performance prior to revocation. C. Sam is entitled to only a proportional recovery based on the amount of work he had done prior to the revocation because Prudence always retained the right to validly revoke. D. Sam is entitled to recover because a unilateral contract was involved, and he was entitled to a reasonable amount of time to complete the job. E. Sam is entitled to recover because a bilateral contract was involved, and he was entitled to a reasonable amount of time to complete the job.

D. Sam is entitled to recover because a unilateral contract was involved, and he was entitled to a reasonable amount of time to complete the job.

43. Which of the following provides that a revocation is effective only when received by the offeree? A. The Acceptance Rule B. The Contract Rule C. The Reasonable Rule D. The Mailbox Rule E. The Contract Legality Rule

D. The Mailbox Rule

21. Which of the following is true when an offer authorizes a certain mode of acceptance but does not require it, and an offeree attempts to accept the offer through a method other than the authorized means? A. The acceptance becomes a counteroffer that the original offeror may or may not accept. B. There is no contract, and the attempted acceptance is of no effect. C. There is a contract only if the acceptance is received by the time that acceptance through the authorized means would have been received. D. The contract is not formed until the acceptance is received by the offeror. E. Authorizing but not requiring a certain type of acceptance has no effect, and the mailbox rule applies.

D. The contract is not formed until the acceptance is received by the offeror.

13. What was the result in the case in the text Lucy v. Zehmer involving whether allegations of joking prevented the formation of the contract involved? A. The court ruled that the contract would not be enforced because one of the parties was subjectively joking. B. The court ruled that the contract would not be enforced because one of the parties was joking, and a reasonable person should have known that. C. The court ruled that the contract would not be enforced because the parties had been drinking although they were not intoxicated. D. The court ruled that the agreement would be enforced because under the applicable standard, it was not apparent that joking was involved. E. The court ruled that the contract would be enforced because of what the parties verbally said regardless of whether an objective person would have thought joking was involved.

D. The court ruled that the agreement would be enforced because under the applicable standard, it was not apparent that joking was involved.

16. If nothing is stated to the contrary in the terms of an auction, an auction is presumed to be ______. A. Without controls B. With controls C. Without reserve D. With reserve E. Without qualifications

D. With Reserve

30. In the absence of a time condition in an offer, the offer will expire _________. A. In forty-eight hours B. In seven days C. In ten days D. In forty-five days E. After a reasonable amount of time

E. After a reasonable amount of time

54. What is the most likely result in the lawsuit brought by Barbara against Walter? A. Walter will win because he was only engaged in preliminary negotiations. B. Walter will win because the advertisement was simply inviting customers, such as Barbara, to make an offer. C. Walter will win because he properly revoked the offer. D. Barbara will win because the ad would be treated as an offer that she properly accepted. E. Barbara will win because she properly made an offer that was accepted by Walter when she did the hula hooping.

E. Barbara will win because she properly made an offer that was accepted by Walter when she did the hula hooping.

60. What effect does the accidental destruction of the personal watercraft have on the deal between Charles and Joan? A. Charles is in breach of contract and must pay Joan damages because she accepted before he could tell her about the fire. B. Charles is in breach of contract and must purchase a similar watercraft to transfer to Joan. C. Charles is not in breach of contract because an insufficient material term involving who would move the watercraft was omitted. D. Charles is not in breach of contract because the offer was not sufficiently definite. E. Charles is not in breach of contract because of destruction of the subject matter.

E. Charles is not in breach of contract because of destruction of the subject matter.

55. In the lawsuit in which Barry sues Helen for return of the $5,000, which of the following is the most likely result? A. Barry will win because when an auction is held without reserve, the auctioneer is entitled to repossess any item at will. B. Barry will lose only because he was not the actual seller. He was only selling at auction for someone else. The seller, however, would win in an action against Helen. C. Barry would win because Helen made an insufficient offer. D. Helen will win only if she can show that Barry had knowledge that cash was in the drawer before he sold it. E. Helen will win because the auction was without reserve, and she properly bid on and bought the cash register with everyone knowing that the cash drawer was stuck.

E. Helen will win because the auction was without reserve, and she properly bid on and bought the cash register with everyone knowing that the cash drawer was stuck.

32. Which of the following is true regarding acceptable means of acceptance if no means of communicating an acceptance is specified in an offer? A. If no means of communicating an acceptance is specified in an offer, acceptance must be done through the U.S. mail system. B. If no means of communicating an acceptance is specified in an offer, acceptance must be done either in person or through telephone communication. C. If no means of communicating an acceptance is specified in an offer, acceptance must be done either through the U.S. mail or through fax transmittal. D. If no means of communicating an acceptance is specified in an offer, acceptance must be done either through U.S. mail or through e-mail. E. If no means of communicating the acceptance is specified, any reasonable means is generally acceptable.

E. If no means of communicating the acceptance is specified, any reasonable means is generally acceptable.

47. Which of the following was the result in the case in the text Adone v. Paletto involving the rejection of a purported acceptance of an offer of compromise because it was not made within the time limit of 10 days specified in the offer? A. Rejection of the acceptance was unjustified because offers of compromise may not contain time limits. B. Rejection of the acceptance was unjustified because allowing only 10 days for acceptance is unreasonable. C. Rejection of the acceptance was unjustified because of the plaintiff's severe injuries. D. Rejection of the acceptance was enforceable because a trial had already been held. E. Rejection of the acceptance was enforceable because the 10 days in which the other party had to accept had expired.

E. Rejection of the acceptance was enforceable because the 10 days in which the other party had to accept had expired.

51. Which of the following is the most likely result in the lawsuit brought by Sam complaining that Walter ran out of cars available for a rebate? A. Sam will win because Walter was required to have sufficient cars on hand for anyone who requested one. B. Sam will win because a rebate was involved. C. Sam will win because Walter should have run another ad revoking the offer. D. Sam will lose because he did not properly accept the offer. E. Sam will lose because a court would interpret the intent of Walter as being to invite readers to make an offer that Walter was free to reject.

E. Sam will lose because a court would interpret the intent of Walter as being to invite readers to make an offer that Walter was free to reject.

45. Which of the following is true regarding the Uniform Commercial Code? A. It does not affect the making of an agreement and only applies after an agreement is formed. B. It applies only in situations not addressed at all by the common law. C. It applies only to clarify common law in situations in which the common law is unclear. D. It applies in all situations involving agreements. E. Some elements of a contract under the common law have been modified under the UCC for contracts for the sale of goods.

E. Some elements of a contract under the common law have been modified under the UCC for contracts for the sale of goods.

19. Which of the following terms would be considered material terms? A. Subject matter but not price, quantity, quality, or parties B. Price and subject matter, but not quantity, quality or parties C. Quantity, quality, and subject matter, but not price or parties D. Subject matter, quality, and price, but not quantity or parties E. Subject matter, price, parties, quality, and quantity

E. Subject matter, price, parties, quality, and quantity

37. Which of the following is false regarding how the Japanese tend to view contracts? A. The Japanese tend to view contracts as ongoing relationships. B. The Japanese tend to view contracts as relationships in which parties work with each other to smooth out any problems that arise in performance. C. The Japanese tend to be suspicious of long, detailed contracts. D. The Japanese have a preference for flexible contracts. E. The Japanese do not desire that any terms be left to be decided later.

E. The Japanese do not desire that any terms be left to be decided later.

44. Tina tells Barry that she will mow his yard for the summer for $800. Barry thinks about it and drops a note in the mail to Tina telling her that he rejects her offer. He thinks about it, however, and calls her to tell her that he accepts the offer before she receives his rejection. Which of the following is true under the mailbox rule? A. The offer was no longer outstanding because of the rejection. B. Barry could not accept verbally. C. Barry validly accepted, but his acceptance was revoked when Tina received the rejection. D. The acceptance was invalid because the mailbox rule requires that the time of payment be specifically set forth before an acceptance is formalized. E. The acceptance is valid, and the rejection has no effect.

E. The acceptance is valid, and the rejection has no effect.

36. Trudy signs a contract with ABC Book Club without reading it. The contract provides that new books will be sent to her eBook reader every month unless she sends notification rejecting the receipt of new books. Which of the following is true regarding whether the contract is binding? A. The contract is not binding because it illegally attempts to enforce acceptance by silence. B. The contract is binding but only if the parties have extensive previous dealings whereby acceptance by silence became an accepted form of business. C. The contract is not binding unless Trudy pays for at least one month's supply of books thereby indicating her intent to be bound. D. The contract is not binding because transmittal using electronics is involved. E. The contract is binding.

E. The contract is binding.

15. What was the result in the case nugget, Lefkowitz v. Great Minneapolis Surplus Store Inc., involving an advertisement for the sale of fur coats? A. The court ruled that the advertisement was not an offer because it involved a luxury good. B. The court ruled that the advertisement was an offer but that the customer who was suing had not properly accepted. C. The court ruled that the advertisement was not an offer because it was a ridiculously low offer which the plaintiff should have known was not to be taken seriously. D. The court ruled that the ad was not an offer because ads are never offers, only invitations for customers to make an offer. E. The court ruled that the ad was an offer and that the plaintiff properly accepted it.

E. The court ruled that the ad was an offer and that the plaintiff properly accepted it.

20. What was the result in the case discussed in the text Andrus v. State Department of Transportation, and City of Olympia in which the plaintiff sued because a job offer was allegedly revoked? A. The plaintiff won because the city had validly offered him a job and had no right to revoke it. B. The plaintiff won because, while there was no contract, the court ruled that the city was not allowed to mislead him on equitable grounds and also on grounds of unlawful discrimination. C. The defendant won because it had truly received a bad reference. D. The defendant won because the plaintiff had not specifically accepted the job. E. The defendant won because the purported job offer contained insufficient information to be considered reasonably certain in regard to its terms.

E. The defendant won because the purported job offer contained insufficient information to be considered reasonably certain in regard to its terms.

12. What was the result in the Opening Case in which the plaintiff attempted to buy a jet from Pepsi for Pepsi points and some additional funds? A. The plaintiff prevailed, and Pepsi had to sell the jet as offered because Pepsi failed to specifically reserve details of the offer to a separate writing. B. The plaintiff prevailed, and Pepsi had to sell the jet as offered because Pepsi's advertisement was considered an offer which the plaintiff validly accepted. C. The plaintiff prevailed, and Pepsi had to provide the jet as offered because Pepsi did not revoke the offer soon enough. D. The plaintiff did not prevail because the jet was unobtainable as a military aircraft. E. The plaintiff did not prevail because Pepsi reserved the details of the offer to a separate writing, and Pepsi had the authority to reject the plaintiff's offer to purchase.

E. The plaintiff did not prevail because Pepsi reserved the details of the offer to a separate writing, and Pepsi had the authority to reject the plaintiff's offer to purchase.

31. Which of the following is presumed to be a reasonable amount of time when considering whether an offer has expired? A. Forty-eight hours. B. Seven days. C. Ten days. D. Forty-five days. E. There is no set amount of time, and what constitutes a reasonable amount of time varies depending upon the subject matter of the offer.

E. There is no set amount of time, and what constitutes a reasonable amount of time varies depending upon the subject matter of the offer.

53. What is the most likely result in the lawsuit brought by Walter against Zack? A. Walter will win because Zack properly made an offer that Walter accepted. B. Zack will win because he was merely expressing possible interest. C. Zack will win because Walter did not properly accept. D. Zack will win because under a subjective standard he was joking. E. Zack will win because under an objective standard, it appears he was joking.

E. Zack will win because under an objective standard, it appears he was joking.

An "instructed authorization" occurs if the means by which an acceptance can be communicated to the offeror is expressly stated in the offer.

false

An offer by a retailer to purchase seasonal goods from a wholesaler would not lapse sooner than an offer to purchase goods that could easily be sold all year long

false

once an offer is made, an offeror has no right to terminate it before receiving a reply

false