BUL chapter 9

A simple rejection of an offer will terminate it.

T

Acceptance is timely if it is made before an offer terminates.

T

If an offeree is silent, he or she can never be considered to have accepted an offer.

T

To be effective, an offer must be made with serious intent.

T

Julio offers to sell Christine a used iPad for $400. Which of the following replies would constitute an acceptance? "I accept. Please send a written contract." "I accept, if you send a written contract." "I accept, if I can pay in monthly installments." None of the above.

"I accept. Please send a written contract."

Icon Properties, Inc., makes an offer to Bob to sell a certain lot for $30,000, with the offer to stay open for thirty days. Bob would prefer to pay $25,000 if Icon would sell at that price. What should Bob reply to Icon to leave room for negotiation without rejecting the offer? "I will not pay $30,000." "Will you take $25,000?" "I will pay $25,000." "I will pay $27,500."

"Will you take $25,000?"

click-on agreement

"i agree" binding contract created

not an offer

-expression of opinion -request or invitation to negotiate -ads, catalogues, & circular letters (invitation to negotiate) -price lists (invitation) -live auction (bidder is offeror, auctioneer is offeree)

requirements of the offer

-intention -definiteness of terms -communication

Digit Electronics places an ad announcing a sale of its inventory at public auction. At the auction, Digit's auctioneer points to a seventy-five-inch 4K TV and asks, "What am I bid for this item?" Which of the following is true? The first bid is an acceptance if no other bid is received. Each bid is an acceptance if no higher bid is received. Each bid is an offer that may be accepted or rejected. Each bid is an offer that must be accepted if no higher bid is received.

Each bid is an offer that may be accepted or rejected.

A contract providing that Joe is to pay Bill "a fair share of the profits" will be enforced.

F

An offer terminates when the time specified in the offer has passed and the offeror has given one last chance to the offeree to accept.

F

Anyone who is aware of an offer can accept it and create a binding contract.

F

Offers that must be kept open for a period of time include advertisements.

F

The mirror image rule is an old rule that no longer applies.

F

Garfield Company agrees to sell software to Holly from its website. To complete the deal, Holly clicks on a button that, with reference to certain terms, reads, "I agree." The parties have a binding contract that does not include the terms. a binding contract that includes only the terms to which Holly later agrees. a binding contract that includes the terms. no contract.

a binding contract that includes the terms.

Mitch mails an offer to sell Cody his all-terrain vehicle on Monday and requests acceptance to his offer in the same mode of authorization as the offer. Cody receives the offer in the mail on Tuesday at 3 P.M. At 5 P.M., Cody sends Mitch a letter accepting his offer and places it in the mailbox. At 7 P.M., Mitch changes his mind and personally hand-delivers a letter to Cody terminating the offer. Is the contract terminated? a. No, because Cody accepted the offer before the offer was terminated. b. Yes, because Mitch terminated the offer before he received Cody's acceptance. c. Yes, because Cody should have notified Mitch of his acceptance in person, not by mail. d. Yes, because Cody should have used a different mode of acceptance.

a. No, because Cody accepted the offer before the offer was terminated.

Which of the following is not a requirement for an effective acceptance? a. The acceptance must be delivered in person. b. The acceptance must be communicated to the offeror. c. The acceptance must be accepted by the offeree, not by a third person. d. The acceptance must be unequivocal.

a. The acceptance must be delivered in person.

Ordinarily, contractual agreement is evidenced by: a. an offer plus an acceptance. b. an offer alone. c. a valid acceptance only. d. legal capacity.

a. an offer plus an acceptance.

Rico, Mike, and Julie go to a steakhouse for dinner. One of the menu items is a two-pound steak. Rico offers to pay for Julie's dinner if she orders and eats the entire two-pound steak. Julie is not interested, but Mike says that he accepts the offer. In this situation: a. no contract is formed. b. Rico must honor the contract with Mike. c. Mike offered unequivocal acceptance. d. Mike made a counteroffer.

a. no contract is formed.

mailbox rule

acceptance of an offer becomes effective on dispatch -when offeror sends it -not apply to face-face, phone, email

Nintendo of America, Inc. contacts Play 2 Win Games and offers to sell "one to twenty-five new gaming systems for $75 each. State number desired in acceptance." Play 2 Win agrees to buy twenty systems. This is a counteroffer. an enforceable contract. an invitation to negotiate. a revocable offer.

an enforceable contract.

destruction or death

automatically terminated if subject matter of the offer is destroyed before accepted, if one dies

To download software for his Internet connection, Nelson had to click on several boxes at the Web site that stated "I agree" or "I accept." Nelson did not read the accompanying text before clicking on the boxes. In the event of a dispute between Nelson and the service provider, the contract terms will: a. not be enforced. b. be considered the terms of a binding contract. c. become proposals for the terms of a binding contract. d. be enforced only if the service provider shows that Nelson read them.

b. be considered the terms of a binding contract.

Tina receives an offer to buy music CDs in the mail. The letter says that she will begin receiving CDs immediately and that she will be billed for all CDs sent. She must send written notice within seven days of receipt of the letter if she does not want to begin receiving CDs. Tina does not send a letter. Tina's silence: a. constitutes a revocation of the offer. b. does not constitute an acceptance of the offer. c. constitutes a counteroffer. d. constitutes acceptance of the offer.

b. does not constitute an acceptance of the offer.

William offers to sell Brenda a lawn mower for $100. While Brenda is considering the offer, her friend Jake replies that he will accept the offer and purchase the lawnmower. There is: a. a contract formed because Jake accepted William's offer. b. no contract formed because William made the offer only to Brenda. c. a contract formed because William made a valid offer. d. no contract formed because Jake is unable to accept an offer from William without Brenda's consent.

b. no contract formed because William made the offer only to Brenda.

Lee Calan Imports, Inc., advertised a Volvo sedan for sale on its Web site. The sales manager had instructed the IT administrator to advertise the price of the automobile as $37,795. Through an error on the part of the IT administrator, however, the price was listed as $7,795. No details about the automobile other than the erroneous price were given in the advertisement. Christopher O'Brien visited the car dealership, examined the automobile, and stated that he wished to purchase it for $7,795. One of the sales agents refused to sell the car for that price. O'Brien sued to purchase the automobile at the lower price. The court found that there was: a. no contract, because an advertisement is never an offer. b. no contract, because it lacked sufficient definiteness of terms to be an offer that could be accepted. c. a contract, because the advertisement contained an error on which O'Brien relied. d. a contract, because the advertisement constituted a valid offer.

b. no contract, because it lacked sufficient definiteness of terms to be an offer that could be accepted.

exception to mailbox rule

bilateral contracts- req completed communication

Chloe buys a product from the website of Good Times, Inc. The website lists various terms and conditions and has an "I agree" box on the webpage immediately below. Chloe clicks on an "I agree" box, receives the product, and then decides it is defective and sues Good Times. The terms: a. automatically made the contract void. b. were not a part of the contract because Good Times had not expressly agreed to them. c. automatically became part of the contract. d. were not a part of the contract because Chloe had not expressly agreed to them.

c. automatically became part of the contract.

123 Technology sells an application that provides detailed maps to consumers. As consumers are purchasing the app, the company lists its terms and conditions which include: "THE SERVICE IS PROVIDED ON AN 'AS IS' BASIS OR 'AS AVAILABLE' BASIS" and that 123 Technology "DISCLAIM[S] ANY AND ALL WARRANTIES FOR THE SERVICE WHETHER EXPRESS OR IMPLIED." Below the terms and conditions was a box where a consumer can click "I agree." Some subscribers experienced disruptions in service and filed a lawsuit in a New York state court against 123 Technology alleging breach of contract because the service was not as fast or dedicated as had been advertised. The court will most likely rule that 123 Technology: a. had not breached the contract, because terms and conditions presented online are not usually enforceable. b. had breached the contract, because the company's limitation of its liability was unfair to consumers. c. had not breached the contract, because 123 Technology had conspicuously stated the service limitations and had given buyers a 30-day period to rescind the contract. d. had breached the contract, because a click-on agreement is only enforceable if the merchant shows that the consumer actually read the language of the contract.

c. had not breached the contract, because 123 Technology had conspicuously stated the service limitations and had given buyers a 30-day period to rescind the contract.

Allison tells Rachel, "I think I'll sell that camping gear I bought for hiking the Pacific Trail for around $250. I'm never going to make that trip." This constitutes a: a. valid offer. b. agreement to agree. c. statement of future intent. d. counteroffer.

c. statement of future intent.

If an offeror specifies a certain type of mode of acceptance in the contract and the offeree uses a different mode of acceptance, then: a. the acceptance is effective as long as a faster mode of acceptance is used. b. the acceptance is still effective upon dispatch. c. the acceptance is effective when it is received by the offeror. d. the offer is terminated by operation of law.

c. the acceptance is effective when it is received by the offeror.

acceptance must be communicated to the offeror

in most situations -bilateral contracts: necessary

When deciding questions about the enforceability of terms in click-on agreements, a factor that a court may take into consideration is: a. the overall quality of the product governed by the click-on agreement. b. the overall durability of the product governed by the click-on agreement. c. whether the buyer learned of the click-on agreement terms before or after the parties entered into a contract. d. whether the buyer read the terms of the click-on agreement.

c. whether the buyer learned of the click-on agreement terms before or after the parties entered into a contract.

Vern offers to sell his car to Lee, stating that the offer will stay open for thirty days. Vern cannot revoke the offer for thirty days. can revoke the offer after any reasonable period of time. can revoke the offer any time before Lee accepts. can revoke the offer any time within thirty days, even after Lee accepts.

can revoke the offer any time before Lee accepts.

A rejection of an original offer and the simultaneous making of a new offer is called: a. an acceptance. b. the mirror image rule. c. a termination. d. a counteroffer.

counteroffer

Dave offers to buy Melanie's scooter for $30. Melanie responds by asking Dave if that is his best offer. A reasonable person would conclude that: a. Melanie rejected the original offer. b. Melanie has accepted Dave's offer. c. Melanie has now given Dave the power of acceptance. d. Melanie can still accept and bind Dave to his offer.

d. Melanie can still accept and bind Dave to his offer.

Daniel tells Jonathan that he will sell him one of his motorcycles at some time in the future. Jonathan eagerly accepts. Do they have a valid contract? a. Probably so. b. Definitely not, because Daniel failed to communicate the offer to the offeree. c. Definitely not, because the offeree did not accept the offer. d. Probably not, because the terms are not definite.

d. Probably not, because the terms are not definite.

When a buyer indicates his or her consent to be bound by the terms of an online agreement by clicking on a button that verifies the consent: a. an e-signature is formed. b. a shrink-wrap agreement is formed. c. a browse-wrap term is formed. d. a click-on agreement is formed.

d. a click-on agreement is formed.

Carrie contracts with Tyler to buy a car through an online auction service. All of their negotiations and transactions are conducted electronically. None of their communications ever mentions the Uniform Electronic Transactions Act (UETA), which was adopted by their state in 2001. Their contract is: a. covered by the UETA only if the transaction occurred after 2004. b. not covered by the UETA. c. covered by the UETA only if their contract involves computer information. d. covered by the UETA.

d. covered by the UETA.

James and Barbara Smith were engaged in negotiations over the purchase of a house. Their most recent offer was for $180,000. On June 6, the Smiths received a counteroffer from the seller containing several additional terms and conditions, with no change to the purchase price. The seller told the Smiths that if they wished to accept the counteroffer, they should sign it and return it immediately. The Smiths signed it, but changed the closing date to extend it by five days. At 10 A.M. on June 6, Barbara handed the sealed envelope to her company's mail clerk with instructions to mail it for her. The clerk did so the next day, June 7. On June 8, the seller received the document and called Barbara to tell her that the counteroffer was rejected. The Smiths sued the seller, claiming that they had accepted the counteroffer before it was revoked; they were confused as to how a seller could reject his own counteroffer. Barbara argued that she had placed the signed contract in the mail immediately after signing it. The seller contended that no contract had been formed, because the contract had been modified and the Smiths' contract constituted a counteroffer back to the seller. The court most likely held that the Smiths' acceptance was: a. not effective, because the acceptance was not immediate. b. effective, because the Smiths had accepted the counteroffer immediately. c. effective, because changing the closing date was only a minor revision. d. not effective, because the change to the closing date constituted a counteroffer to the seller.

d. not effective, because the change to the closing date constituted a counteroffer to the seller.

The requirement that an offer be communicated to the offeree means that the: a. offeror must tell the offeree about the offer in person. b. offeree must accept an offer within seven days. c. offeror must mail an offer to the offeree to make the communication valid. d. offeror must communicate the offer to the offeree resulting in the offeree's knowledge.

d. offeror must communicate the offer to the offeree resulting in the offeree's knowledge.

When an offeror specifies how acceptance should be made in the contract, such as FedEx overnight delivery: a. the contract is formed as soon as the offeree signs the contract. b. the offeree may use any reasonable means necessary to communicate the acceptance. c. the offeree may use e-mail to communicate the offer. d. the acceptance is effective when the offeree places the overnight delivery envelope with the FedEx driver.

d. the acceptance is effective when the offeree places the overnight delivery envelope with the FedEx driver.

ric receives a mail-order catalogue featuring a new style of water shoes that look perfect for river kayaking. He is excited to see that the price is within his budget. He calls to order a pair and is told that they are all sold out. Eric can now: a. file a lawsuit for breach of contract. b. file a lawsuit because the catalogue company improperly revoked its offer. c. file a lawsuit because the catalogue listing constituted a valid offer. d. try somewhere else; an advertisement in a mail-order catalogue is not an offer.

d. try somewhere else; an advertisement in a mail-order catalogue is not an offer.

supervening illegality

illegal

lapse of time

law- terminates automatically when the period of time specified in the offer has passed -begins to run when the offer is actually received by the offeree

intention

must be objectively clear- determined by what a reasonable person in the offeree's position would conclude that the offeror's words meant

communication

offer must be communicated to the offeree

mirror image rule

offeree's acceptance match the offeror's offer exactly -acceptance must mirror the offer

substitute method of acceptance

offeror authorizes a particular method of acceptance- offeree accepts by a different means

authorized means of acceptance

offeror specifies how acceptance should be made- contract isnt formed unless offeree uses that mode

Ed sends to Sax, Inc., a written order for software to be specially designed, offering a certain amount of money. If Sax does not respond, it can be considered to have accepted the offer after a reasonable time has passed. if Ed knows that Sax accepts all offers unless it sends notice to the contrary. only when Sax begins the work. in none of the above situations.

only when sax begins work

definiteness of terms

reasonable definite terms -names of parties -quantities of items -performance -payment details

An effective offer does not require: a. reasonably certain terms. b. communication to the offeree. c. a reasonable price. d. the offeror's serious, objective intent.

reasonable price

rejection

reject by words or conduct effective when received

counteroffer

rejection to OG offer & making a new offer -former offeror (now offeree) the power of acceptance *mirror image rule*

Uniform Electronic Transactions Act

supports the application of existing contract rules to electronic transactions -does not create new rules -each party must agree to do electronic

lapse of time- no time acceptance specified

terminates at the end of a reasonable period of time

when is communication of acceptance unnecessary

unilateral contracts: acceptance is evident

acceptance

voluntary act by offeree that shows assent to the offer -must be unequivocal-no doubt -silence does not make acceptance

Paul makes an offer to Lynn in a written purchase order, saying nothing about how her acceptance should be sent. Lynn indicates her acceptance by signing and returning the purchase order. Lynn's acceptance is effective when Lynn decides to accept. when Lynn sends the signed purchase order. when Paul receives the signed purchase order. in none of the above situations.

when Lynn sends the signed purchase order.

revocation

withdrawal of an offer by an offeror -must be communicated to the offeree *before acceptance* -becomes effective when the offeree *receives it*