Business Law Ch 12

To make an offer, the offeror must appear to intend to create a binding obligation.

True

When it is claimed that a contract is too indefinite to be enforced, a court will do its best to find the intent of the parties and thereby reach the conclusion that the contract is not too indefinite.

True

An offer is effective only if it is communicated by the offeror in person.

False

An output contract is too vague to be a legally-enforceable agreement.

False

At an auction sale, a statement made by the auctioneer to draw forth bids constitutes an offer.

False

Contract terms may not be implied from the parties' conduct.

False

Frank is drunk and while laughing hysterically says to Hal "I'll sell you my truck for a buck". Frank has made a valid offer.

False

If an offer does not state how long it shall remain open, it remains open for ten days.

False

If no time is stated for the duration of an offer, it continues indefinitely if the offer relates to durable goods or land.

False

If an offer is indefinite or vague or if an essential provision is lacking, no contract arises from an attempt to accept it.

True

Offers, acceptances of offers, and revocations of offers are all effective when mailed in a properly-addressed envelope bearing the proper amount of postage.

True

The fact that there has been a series of contracts between the parties and that one party's offer has always been accepted before by the other does not create any legal obligation to continue to accept subsequent offers.

True

A "best efforts" clause is always deemed too indefinite to be enforceable.

False

A party to an existing contract can modify the agreement without the other party's actual acceptance or approval.

False

A requirements contract is too vague to be a legally-enforceable agreement.

False

A revocation of an offer is ordinarily effective after the offer has been accepted.

False

A firm offer is an offer that states that it is to be irrevocable, or irrevocable for a stated period of time.

True

A properly mailed acceptance takes effect when mailed, even if it never is received by the offeror.

True

Acceptance of an offer to form a unilateral contract need not be communicated to the offeror to be effective.

True

Advertisements that call for an act may be deemed to be a unilateral contract.

True

An acceptance must be absolute and unconditional.

True

An offer gives the offeror the power to bind the offeree by contract.

True

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.

a. a written, signed offer by a merchant to buy or sell goods.

The first statement made by one of two persons can be anyone of the following except: a. acceptance. b. preliminary discussion. c. invitation to negotiate. d. a survey.

a. acceptance.

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

a. incorporation.

Under the _______, acceptance of an offer takes place when a properly addressed postage paid mail acceptance is placed in the hands of US Postal Service. a. mailbox rule b. mail carrier rule c. dispatch rule d. acceptance by mail rule

a. mailbox rule

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.

a. the period of time for which the offeror agreed to keep the offer open has not yet expired.

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.

b. B's counteroffer of $135 terminated A's offer of $100.

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

b. with reserve

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.

c. for a reasonable period of time.

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.

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.

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.

d. a clear expression of the offeree's agreement to be bound by the terms of the offer occurs.

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.

d. a valid contract is formed.

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.

d. an offer.

An option contract is a binding promise to keep an offer open for a stated period of time or until a specified date.

True

An option is itself a contract to refrain from revoking an offer.

True

An otherwise vague contract may be clarified by references in the contract to other documents or agreements.

True

Contractual intention is determined by objective standards.

True

Generally, advertisements, catalog prices, and circulars are offers that can be accepted.

True

If an offer is indefinite or vague, no contract arises from an attempt to accept it.

True

If either the offeror or offeree dies or becomes mentally incompetent before the offer is accepted, the offer is automatically terminated.

True

If the offeree purports to accept an offer but in so doing makes any change to the terms of the offer, such action is a counteroffer that rejects the original offer.

True

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.

a. Although the price is somewhat unclear, the parties have entered into a contract.

50. 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.

a. Arthur's bid is an ordinary offer that can be revoked.

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.

b. a contract is formed, assuming that all of the other elements of a contract are present.

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.

b. divisible contract.

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.

b. rejection of the original offer.

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.

c. is automatically revoked by the death of the offeree.

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.

c. no contract was formed because the customer's offer was refused.

A(n) __________ contract is a contract to buy all requirements of the buyer from the seller. a. output b. essentials c. necessaries d. requirements

d. requirements