Chapter 6: Offer and Acceptance

Mandy offered to sell her house to Danny for $175,000, to be paid in 80 days. Danny responded by offering to buy the house from Mandy for $160,000, payable in 60 days. Which of the following is true with regard to this scenario?

Danny's offer terminates the original offer. An offer must be accepted without any deviation in its terms. If the intended acceptance varies or qualifies the offer, this counteroffer rejects the original offer. This rejection terminates the offer. Review the section "Counteroffers" in Chapter 6.

Which of the following is not a requirement of a valid offer?

The offer must be made in person to the offeree. The offer does not need to be made in person to the offeree. A valid offer includes three requirements: The offer must be definite; the offer must appear to be seriously intented; and the offer must be communicated to the offeree. Review the section "Requirements of a Valid Offer" in Chapter 6.

Rebecca owns a boutique in the downtown area. She displayed a new collection of handbags, each priced at $250, in her store window. Which of the following statements is true with regard to this scenario?

This is an invitation to make an offer. This is an invitation to make an offer. The most common types of general invitations are advertisements, window displays, catalogs, price lists, and circulars. Review the section "Invitations to Make Offers" in Chapter 6.

A(n) _____ is an offeree's response that rejects an offer by varying or qualifying the terms of the offer.

counteroffer An offer must be accepted without any deviation of its terms. If the intended acceptance varies or qualifies the offer, this counteroffer rejects the original offer and terminates the offer. Review the section "Counteroffers" in Chapter 6.

A _____ is a merchant's signed, written offer to sell or purchase goods saying it will not be revoked during the stated time in the contract.

firm offer If the offer relates to the sale or purchase of goods by a merchant, a signed written offer to purchase or sell that states that it will be held open cannot be revoked during the time stated. If no time is stated, it cannot be revoked for a reasonable time, not to exceed three months. This type of offer is called a firm offer. Review the section "Duration of the Offer" in Chapter 6.

If an offeror receives something of value in return for a promise to hold an offer open, it is called a(n):

option. If the offeror receives something of value in return for a promise to hold the offer open, it is said to be an option, and this type of offer cannot be revoked. Review the section "Duration of the Offer" in Chapter 6.

In business, apparent offers are in fact often invitations to the public to make an offer at certain terms and prices. If a member of the public accepts the invitation and submits an offer matching the terms of the invitation, most businesses will accept the offer:

to maintain goodwill with the public. In business, apparent offers are in fact often invitations to the public to make an offer at certain terms and prices. If a member of the public accepts the invitation and submits an offer matching the terms of the invitation, most businesses will accept the offer as a practical matter and in the interest of maintaining goodwill with the public. Review the section "Invitations to Make Offers" in Chapter 6.

_____ is the assent to an offer that results in a contract.

Acceptance Acceptance is the assent to an offer that results in a contract. The acceptance must be communicated to the offeror, but no particular procedure is required. Review the section "The Acceptance" in Chapter 6.

Berry Wholesalers, Inc., a newcomer in the wholesale market for strawberries, is looking for a retailer to sell its produce. Strawberries are generally fragile, perishable, and delicate fruits. Berry Wholesalers contacted the Green Store and made an offer to sell the retailer 50 pints of strawberries. The retailer did not respond to the offer for two weeks after the offer was made. Which of the following is true in accordance with the scenario?

Berry Wholesalers will have to terminate the offer after a reasonable time. If no time is specified in the offer, it is terminated by a lapse of a reasonable time after being communicated to the offeree. A reasonable length of time varies with each case depending on the circumstances. Important circumstances are whether the price of the goods or services involved is fluctuating rapidly, whether perishable goods are involved, and whether there is keen competition with respect to the subject matter of the contract. Review the section "Duration of the Offer" in Chapter 6.

The band 88 Keys offered to play live music some time at the Appleton Restaurant. The restaurant owner was delighted and accepted the offer. However, a date was never set and the band did not play. Is the contract between 88 Keys and Appleton Restaurant enforceable?

No, because the offer was missing a key term—the date of performance—and was thus indefinite. The contract is unenforceable, because the date of the performance is a key term that was missing from the contract. The offer was thus indefinite, and a court would be unable to ascertain exactly what the parties agreed to. Review the section "Requirements of a Valid Offer" in Chapter 6.

Leslie owns a St. Bernard, which gave birth to five puppies. Leslie offered to sell one of these puppies to Ron for $650. Which of the following statements is true with regard to this scenario?

Ron is the offeree. With regard to the scenario, Ron is the offeree. The proposal to make a contract is the offer. The offeror is the person who makes the offer; the offeree is the person to whom the offer is made. Review the section "Requirements of a Valid Offer" in Chapter 6.

Sara is an avid art collector. An art dealer in New York offered to sell a valuable sculpture to Sara and as part of the offer, stipulated that "the acceptance must be sent by certified mail and be received by me in New York by noon on December 1 before the contract is complete." Sara emailed the art dealer that she accepted the offer. Which of the following is true of this scenario?

Sara's acceptance is not effective, because emailing her acceptance did not comply with the terms stipulated in the offer. In the given scenario, Sara's acceptance is not effective. An offeror may stipulate that the acceptance must be made in a certain manner and received by a specific date in order to be effective. If the acceptance does not comply with the terms of the offer, it will not be effective. Review the section "Manner of Acceptance" in Chapter 6.

Ricky drove to a nearby store to buy apples. An employee at the store who disliked Ricky, presented Ricky a box full of old stock without serious intent of selling them. Ricky, unaware of the employee's antipathy, inspected and bought the older apples. Which of the following statements is true with regard to this scenario?

The contract is binding as the offer was accepted, though the offer was not seriously intended The given scenario is entered by the offeror in anger but, the offeree is unaware of this fact and also the offer appears to be seriously intended. If an offer is accepted when an offer is not seriously intended, but the offeree has no way of knowing this, a binding contract results. Review the section "Requirements of a Valid Offer" in Chapter 6.

Sandra offered to sell Max four tickets to a baseball game for $50 a piece. Max responded by inquiring about the date and time of the game and asking Sandra if he can pick the tickets up in five days. What effect does Max's inquiry have on the offer?

The inquiry does not reject the offer. The original offer may still be accepted, if it has not been revoked in the meantime. In the given scenario, Max's inquiry does not reject the offer. The offeree may make an inquiry about terms that differ from the offer's terms without rejecting the offer. If the offeror says no, the original offer may still be accepted if it has not been revoked I the meantime. Review the section "Inquiries not Constituting Rejection" in Chapter 6.

Collectibles, Inc. leased store space in a strip mall from Landco, a commercial landlord. After significant turnover among other tenants, Collectibles, Inc. decided to relocate to another property across town. In accordance with the terms of the lease, Collectables, Inc. wrote Landco that it wanted to move and offered to let Landco terminate the lease. On February 1, Landco mailed Collectibles, Inc. a certified letter accepting the offer to terminate the lease. The next day, Collectibles, Inc. faxed Landco a revocation of its offer to terminate the lease. On February 5, Collectibles, Inc. received Landco's letter of acceptance. After Collectibles, Inc. refused the acceptance, Landco sued for a declaration that the lease was terminated. How should the court rule on this case?

The lease is terminated, because Landco's letter confirming acceptance of the offer was effective on mailing and the mailing occurred before Collectibles, Inc. attempted to revoke its offer. In this scenario, the lease is terminated, because Landco's letter confirming acceptance of the offer was effective on mailing and the mailing occurred before Collectibles, Inc. attempted to revoke its offer. The "mailbox rule" states that if there is no requirement of delivery, a properly mailed acceptance is effective when it is posted. Review the section "Manner of Acceptance" in Chapter 6.

Michael, a resident of Houston, owns a luxurious apartment in the city. He plans to lease out this property and seeks the assistance of a realtor. Michael offers $500,000 for a three-year term. The realtor gets Pamela to see the property. She likes the property and negotiates the lease with Michael. They finally make a contract for $450,000 for a term of three years. Michael also specifies in the contract that Pamela has the option to buy the property or renew the lease at the end of three years. Michael expressly states in the contract that he will not sell the property to anyone else during Pamela's lease term. Which of the following is true with regard to the scenario?

The offer to purchase the property cannot be revoked at will during the three year lease term. The given scenario is an example for an option. An option cannot be revoked at will. If the offeror receives something of value in return for a promise to hold the offer open, it is said to be an option, and this type of offer cannot be revoked. Review the section "Duration of the Offer" in Chapter 6.

Two essential elements of a contract are a(n):

offer and an acceptance. Two essential elements of a contract are: (1) an offer, either expressed or implied; and (2) an acceptance, either expressed or implied. Review the Introduction section in Chapter 6.

Ben, a used car dealer, agrees to sell a 2010 model Audi A4 to Nancy. He writes out an offer stating that he agrees to sell the 2010 Audi A4 to Nancy and that she has 15 days to accept the offer. He also states that he agrees not to cancel this offer or offer the car to anyone else during that time. This is an example of a(n):

firm offer. The given scenario is an example of a firm offer. If the offer relates to the sale or purchase of goods by a merchant, a signed written offer to purchase or sell that states that it will be held open cannot be revoked during the time stated. If no time is stated, it cannot be revoked for a reasonable time, not to exceed three months. Review the section "Duration of the Offer" in Chapter 6.

The rule which states that a properly mailed acceptance is effective when it is posted, if there is no requirement of delivery, is called the:

mailbox rule. The mailbox rule states that if there is no requirement of delivery, a properly mailed acceptance is effective when it is posted. This rule applies even though the offeror never receives the acceptance. Review the section "Manner of Acceptance" in Chapter 6.