Chapter 14 Business Law

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Which of the following is true of the intent by the offer or to be bound by an agreement?

The courts interpret the parties' words and actions the way a reasonable person would interpret them.

Which of the following can be considered an offer?

a bid

Which of the following is true of auctions?

If an auction is with reserve, the auctioneer may refuse to sell the item if he is not satisfied with the size of the highest bid

Which of the following must be present for an offer to have a legal effect?

Definiteness

Ben overhears Adam's offer to sell his cat to Shirley for $50. Under these circumstances

Ben cannot form a contract with Adam by accepting the offer to Shirley

In a(n) _____ contract, the offeree gives the offeror a piece of consideration in exchange for holding the offer open for the specified period of time.

option

An offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer is:

a counteroffer

Jason sends Sara a letter offering to mow her yard every week during the summer for the price of $20 per week. Sara tells Jason she would indeed like him to cut her grass every week this summer but will pay him only $15 each week. Sara makes a(n):

counteroffer

Which of the following would terminate an offer without the awareness of the termination event by the offeree?

Incapacity of the Offeror

Which of the following indicates that the terms of the acceptance must reflect the terms of the offer?

The mirror-image rule

Amy offers to paint Louis's house for $1000. The offer was complete and certain as to all material terms. The offer stated that acceptance by telephone was required. Within a reasonable time, Louis e-mailed Amy his acceptance. Which is a true statement about this situation?

Louis has not accepted as required by the offeror and there is no contract

Which of the following is true of the mailbox rule?

It provides that a revocation is effective only when the offeree receives it.

Which of the following is true of an authorized means of communication?

The means by which the offeree can communicate acceptance to the offeror can be expressly stated in the offer.

If the offer merely authorizes certain modes of acceptance but does not condition acceptance on the use of those modes, use of an unauthorized means of acceptance, the acceptance is:

not effective until it is received by the offeror

Sometimes a rejection is dispatched, but before it is received, the acceptance is communicated to the offeror. The rejection:

is not effective until it is received.

Courts interpret contracts using an objective standard.

True

Only the offeree to whom an offer is directed can accept the offer.

True

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

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

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

true

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

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

false

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

false

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

false

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

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?

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

Which of the following is the first element of a contract?

an agreement

Constance asks Kathy if Kathy will sell her used business book for $50. What is the status of the negotiation?

No offer has been made

If nothing is stated to the contrary in terms of an auction, an auction is presumed to be ________.

with reserve

In an auction ___________, the seller is treated as making an offer to accept the highest bid.

without reserve

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.

material

Which of the following terms would be considered material terms?

Subject matter, price, and quantity

In which of the following ways can an offer terminate?

Revocation by the offeror, rejection or counteroffer by the offeree, or destruction of the subject matter.

Which of the following refers to the right of an offeror to revoke an offer?

The offeror is the "master of his offer."

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.

Option

As a general rule, when is revocation effective?

When it is received by the offeree

Which of the following is true regarding the termination of an offer based on a rejection?

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

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 counteroffer

If a[n] __________ contract exists, the administrator of an offeror's estate must hold an offer open until it expires in accordance with the contract.

option

If the subject matter of an offer is destroyed, the offer _________.

Immediately terminates

If the subject matter of an offer becomes illegal, what is the result?

the offer immediately terminates

In the absence of a time condition in an offer, the offer will expire ___________.

After a reasonable amount of time

Which of the following is presumed to be a reasonable amount of time when considering whether an offer has expired?

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

Which of the following is a way in which an offeree can manifest intent to enter into a bilateral contract?

By performance or by a return promise

In which of the following ways may an offeree accept a unilateral contract?

By performance.

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?

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

When acceptance is examined under the common law, how do the basic requirements for a valid acceptance compare with those for a valid offer?

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

Which of the following is a requirement for a valid acceptance?

Manifestation of intent to be bound by the acceptance of the contract, agreement to the definite and certain terms of the offer, and communication of that to the offeror.

Which of the following is false regarding how the Japanese tend to view contracts?

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

Which of the following is true regarding the situation that occurs when a party has made a unilateral offer and another party has begun performance?

The offeror must give the offeree a reasonable time in which to complete the performance.

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?

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

Which of the following sets forth the common law rule that the terms of an acceptance must mirror the terms of an offer?

The Mirror-image Rule

Which of the following is generally true if no means of communicating an acceptance is specified in an offer?

Acceptance may be made by any reasonable means.

Which of the following provides that an acceptance is valid when it is placed in the mailbox?

The Mailbox Rule

Which of the following provides that a revocation is effective only when received by the offeree?

The Mailbox Rule

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 before she receives his rejection. Which of the following is true under the mailbox rule?

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

Which of the following is true regarding the Uniform Commercial Code?

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

Which of the following is true regarding distinguishing an offer from an invitation to negotiate?

Whether an offer in fact existed is a question of fact

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?

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

When buying software on the Internet, Molly clicks "OK" on an agreement governing the transaction and providing that disputes will be arbitrated. Which of the following is true regarding that type of agreement?

None of the above is true

Which of the following is true regarding the Uniform Electronic Transactions Act?

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

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