chapter 12
terminated offer
an offer that can never be accepted
In an option contract, the offeror may not revoke an offer during the option period.
true
In general, an offeror can revoke an offer any time before it has been accepted.
true
Floyd offers to sell his 1967 Ford Mustang convertible to Tim. Before they conclude their negotiations, Floyd dies. Which of the following is true?
the offer terminates automatically upon Floyd's death
option contract
an interested purchasers buys the right to have the offer held open for a certain period of time
On Monday, Mick puts an offer in the mail to Sheri to sell his guitar for $50. Monday night when jamming with his buddies, he decides he will really miss his old guitar and has second thoughts about selling it. Tuesday morning he puts a revocation in the mail informing Sheri he has changed his mind and the guitar is no longer for sale. The revocation is effective on Tuesday morning.
false
A letter of intent summarizes progress made during business negotiations, but more importantly, it creates a binding contract.
false
April put an advertisement in the newspaper advertising the sale of her computer for $500. Simultaneously, six people responded to the ad by mail with formal written acceptances. April is bound on all six contracts to sell her computer for $500.
false
In assessing the validity of a contract, the court will consider
how the parties' conduct would be interpreted by a reasonable person
If Morales and Rolfes Supply negotiate for the purchase and sale of a supply of fuel for a three-year period for Morales' business,
the contract may indicate a method for determining the price, without stating a definite price.
The Uniform Commercial (UCC) code makes
the law of sales more flexible
Collector Carl displays his beer can collection at the local swap meet. Mary sees the collection and is interested in buying it. Carl says he will sell the collection for $1,500. Mary says she really likes the collection but is only willing to pay $1,000. Which of the following is correct?
Mary's counteroffer terminates Carl's offer of $1,500
Which of the following are generally considered to be legal offers?
a note scribbled on a restaurant napkin that includes the details of the offer
output contract
obligates a seller to sell all of his output to the buyer, who agrees and accepts it
requirements contract
obligates the buyer to obtain all of his needed goods from the seller
firm offer
offer, signed in writing by a merchant, that promises to remain open for a period up to three months; offeree need not pay for the option to remain open
If an auction receives no offers, it means
the auction received no bids
On January 8, Quastrar, Inc. sent Hylavian Company a letter offering to sell $10,000 in restaurant supplies. On January 18, Hylavian mailed a letter to Quastrar accepting the offer. Quastrar received the acceptance letter on January 20. On January 17, Quastrar sent a letter revoking the offer. Hylavian received this letter on January 21. A contract between Quastrar and Hylavian
was formed on January 18
revoked offer
when the offeror "takes it back" before the offeree accepts
Vick Valve Company makes valves for plumbing fixtures. At the beginning of the year, it sends out a price list addressing each one, "To our valued customers." Honest Hank Hardware orders a variety of valves at the prices quoted on the price list. Vick Valve must honor the prices on the list and sell the valves to Honest Hank.
false
When Olga asks Sven if he wishes to sell his Harley motorcycle, he replies that he would not sell it "for less than $2,000." Olga replies, "I accept," and hands him $2,000. A contract exists.
false
Clickwrap terms are never binding.
false clickwrap agreement: a common type of agreement often used in connection with software licenses
To form a meeting of the minds
one party must make an offer and the other must take an acceptance
Select the two questions that determine whether a statement is an offer:
1. do the offeror's words and actions indicate an intention to make a bargain? 2. are the terms of the offer definite?
Under the UCC, in which of the following circumstances would additional terms in an acceptance not become a part of the contract?
1. if the terms materially alter the contract 2. if the offer promptly rejects the new terms 3. if the offer insisted on its new terms
Which of the following are ways in which an offer can be rejected?
1. rejection 2. counteroffer
On Monday, Billy receives an offer from Andrew to buy Billy's house for $500,000. On Tuesday Billy mails Andrew a reply, "I'll sell it to you for $600,000 and not a penny less." On Wednesday, Billy reconsiders so he mails Andrew the following note: "I accept your offer for $500,000, the house is yours." On Thursday, Andrew receives Billy's first note. On Friday, Andrew receives Billy's second note. What result?
Billy and Andrew have a contract for $500,000
Dick offers to sell Jane his 1955 Thunderbird convertible. Before Jane can accept the offer, lightning strikes the car and it is totally destroyed. Which of the following is true?
The offer is terminated by law
Oliver found some cozy-looking winter gloves for a great price in a catalog. He decided to purchase a pair for himself and additional pairs for every member of his extended family. He mailed in the order form, along with a check. Two weeks later the catalog company informed Oliver that it had run out of gloves and would not charge him. Oliver sues. What result?
Oliver will lose as long as the company can show it was acting in good faith
Stanley's Shoelaces sends its brochure to a dozen local shoe stores. The brochure lists all of its products and lists prices. Based on this information, the Shoe Dump orders 500 pairs of laces. ________ has/have made an offer(s).
The Shoe Dump
Which of the following offers are considered to be irrevocable for a given period?
all of the above: - option contracts - a writing signed by a merchant offering to hold open an offer for the sale of goods for a stated period - firm offers
On Friday, Billy mails Andrew an offer, which Andrew receives on Monday. On Tuesday, Billy mails Andrew a revocation, which Andrew does not receive until Thursday. Andrew takes no action when he receives the revocation. Meanwhile Andrew mailed Billy an acceptance on Wednesday that Billy receives on Friday. Is a contract formed, and if so, on what day?
a contract was formed when Andrew mailed his acceptance on Wednesday
Generally, an advertisement is _________. If an advertisement includes ________ it can be considered an offer.
a request for offers very specific terms
Contracts made under the UCC _________; offers under the common law ________.
can be indefinite must be definite
Under the ________, the ________ rule means that an acceptance that adds to or contradicts an offer is generally considered a(n) _________ and it _________ the original offer.
common law mirror-image counteroffer rejects
Peter says to Carolina: "My property is about 2 acres, and I'll need you to clean it up. I pay the going rate. Start work at some point next week." This job offer probably
is not valid because it is not definite
You are considering joining an online club. Before continuing to the membership page, the site presents you with hundreds of lines of dense legalistic text and asks you agree to them. You click the "I agree" box. Will you be bound by the terms?
it depends on what state you are in
The town of Sanford, Maine, decided to auction off a plot of land owned by the town. The town advertised that it would accept bids through the mail, up to a specified date. Arthur and Arlene mailed in a bid that turned out to be the highest of all the bids the town received. When the town refused to sell them the lot, they sued. Who will win?
it will depend on whether the auction was with or without a reserve, or minimum price
Which term refers to whether an offeree accepts an offer by promising, by making a down payment or by performing?
manner of acceptance
Hensley and Boyer have been negotiating for several months over issues related to the purchase and sale of some real estate. They draft a letter of intent that
may or may not be an offer, depending on the exact language and whether the document indicates that the parties have reached an agreement
While staying overnight at Lily's house, Martin indicates that he would like to buy her car. Lily says she'll think it over. The next day Martin finds a note on the kitchen counter from Lily that reads, "I might be able to sell the car for about $22,000." Martin writes her a check for $22,000, takes the car keys off the hook by the front door and drives off in the car. Have Lily and Martin formed a binding contract?
no, Lily's note was an invitation to bargain, not an offer
TuffGrip ran an advertisement for its brake pads in several national automotive industry journals. The ad listed a range of prices for the brake pads and a few technical specifications. At the bottom, the ad stated that TuffGrip had no liability in the event of a malfunction. Three large mechanic chains purchased the brake pads after seeing the ad, and signed standard TuffGrip purchase orders. Many of the brake pads that these mechanic chains installed in customers' cars failed, causing severe injuries to drivers who could not stop their cars. TuffGrip claimed it had no liability to the mechanic chains. Is TuffGrip correct?
no, TuffGrip is liable unless the purchase orders also included the limitation of liability
Jackie offers to sell Mel a concert ticket for $50, and Mel replies, "I'll give you $40." Jackie refuses to sell at the lower price, and Mel says, "OK, OK, I'll pay you $50." Has a contract been formed? At what price?
no. mel made a counter-offer, which Jackie rejected
In Specht v. Netscape Communications Corporation, the plaintiffs were
not bound by the clickwrap agreement because a reasonably prudent offeree would not necessarily know all the terms
John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky Derby. Prince Charming came in last, much to John's frustration and embarrassment. John exclaims in a loud voice, "I'm selling that horse to the first person who hands me $100!" John has
not made an offer because under the circumstances a reasonable person would not conclude that John had intent to make an offer
The person to whom an offer is made is the _________. The person who made the offer is the _________ .
offeree offeror
Polyquan, Inc. emails a dozen companies, offering to sell them 100 sweatshirts in either blue, red, orange, black, or green. The sweatshirts are $6 each. Shirts-A-Lot Clothing emails back, "We accept your offer of 100 sweatshirts for $6 each. No orange sweatshirts." Bespoke Tourism emails back, "We accept your offer of 100 sweatshirts for $6 each on the condition that you do not include any orange sweatshirts." Does Polyquan have a contract with either company?
polyquan has a contract with Shirts-A-Lot but not with Bespoke Tourism
gap-filler provisions
rules for supplying missing contract terms
An offeree accepts by saying or doing ________.
something that a reasonable person would understand to mean that he wants to take the offer
Letters of intent are _______ binding.
sometimes
Mariposa Middle School is in need of more sports equipment, so a school administrator contacts Kiko's Sporting Goods. The administrator speaks to Kiko herself, and Kiko offers Mariposa 15 percent off its order. Kiko tells the administrator she can order whenever she is ready and still enjoy the discount. Kiko faxes the administrator a handwritten note that reads "Pursuant to our conversation, I hereby grant Mariposa Middle School a 15% discount off the final sales price of their purchase. Offer good for one use only. Offer open for the next 5 months. Signed, Kiko" The administrator tries to use the discount four months later but Kiko says she has revoked the offer. What result?
the offer will not be enforced because the offer is open too long
If an offer specifies no time limit in which to accept,
the offeree has a reasonable period during which to accept
If the offer specifies no time limit
the offeree has a reasonable period in which to accept
If an item is being sold at auction without reserve:
the seller must sell it to the highest bidder, even if it means selling the item for significantly less than it is worth
The intent of the offeror to extend an offer to the offeree is generally determined by reference to
the words and conduct of the offeror
The majority of states hold that if a seller's form contract and a buyer's form contract contradict one another
there is a contract and the contradicting terms cancel each other out
According to the UCC, one or more open terms will not cause a sales contract to fail for indefiniteness as long as the parties intended to make a contract and there is a reasonably certain basis for the court to determine the open terms.
true
Nunnsky's Retail sent out newspaper inserts advertising wool suits for $50. In fact, the store had only two, out-of-style suits for sale at this price. Their other wool suits started at $175. This constitutes bad faith in its advertising, so consumers may have protection through state consumer protection statutes.
true
Regarding contracts, in seeking to determine whether there is a meeting of the minds, the courts look to how a reasonable person would objectively view the language or actions of the parties.
true
Revocation is the withdrawal of an offer by the offeror.
true
Software clickwrap and shrinkwrap agreements limiting the manufacturer's maximum responsibility to a refund of the purchase price even if the software destroys your hard drive have generally been found to be binding against consumers.
true
The law assumes that an auction is with reserve unless the auctioneer clearly states otherwise.
true
To form a contract, there must be a meeting of the minds.
true
To validly accept an offer, a party must agree to the terms unconditionally.
true
Under the UCC, two parties can make a contract for the sale of goods and omit the price and the contract will still be upheld.
true
You have placed an antique sofa up for auction and the auctioneer has not made any special announcements about the sale. You can withdraw the sofa at any time before the auctioneer closes the sale by announcement or by the fall of the hammer.
true
The Johnsons decided to sell their summer cabin on Beech Lake. They sent flyers out to all who previously had expressed an interest in buying the cabin stating that they were planning on selling their cabin. The flyer described the location of the property, the size of the lot, and the price. If one of the recipients responds by sending a letter accepting, an agreement
will not be formed because the flyer was sent out as an invitation to make an offer
The Tufte family leased a 260-acre farm from the Travelers, Inc. Toward the end of the lease, Travelers mailed the Tuftes an option to renew the lease. The option arrived at the Tuftes' house on March 30 and stated that they had until April 14 to accept. On April 13, the Tuftes signed and mailed their acceptance, which Travelers received on April 19. Travelers claimed there was no lease and attempted to evict the Tuftes from the farm. May the Tuftes stay?
yes, because under the mailbox rule, an acceptance is generally effective when mailed
