REG 4 - Contracts 1 - Intro/Offer and Acceptance Flashcards Preview

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Flashcards in REG 4 - Contracts 1 - Intro/Offer and Acceptance Deck (13):
1

Mary offers to buy Hal's desktop computer for $400. Hal sends Mary an e-mail of acceptance. The $400 is to be paid upon Hal's delivery of the computer. Which of the following properly classifies this contract?
A. This is a bilateral, valid, executory contract.
B. This is a bilateral, valid, executed contract.
C. This is a unilateral, express, executory contract.
D. This is a unilateral, implied-in-fact, executed contract.

A. A bilateral contract is a promise in exchange for a promise creating a contract. Mary made the offer (promise) to buy Hal's desktop computer, and Hal accepted her offer by the promise to sell. The contract meets the four requirements for a valid contract; offer and acceptance, consideration (computer for $400), nothing to indicate either party lacks legal capacity, and selling and buying of a computer is a legal purpose. An executory contract is one not fully performed. Neither party has performed their part of the contract. Thus, this contract is classified as bilateral, valid, and executory.

2

Kay, an art collector, promised Hammer, an art student, that if Hammer could obtain certain rare artifacts within two weeks, Kay would pay for Hammer's post-graduate education. At considerable effort and expense, Hammer obtained the specified artifacts within the two-week period. When Hammer requested payment, Kay refused. Kay claimed there was no consideration for the promise. Hammer would prevail against Kay based on
A. Unilateral contract.
B. Unjust enrichment.
C. Public policy.
D. Quasi contract.

A. This is a unilateral contract because it can only be accepted by performing an act. By the terms of the offer, Hammer cannot accept with a promise. Instead, Hammer has to do an act, which results in total performance of the contract. A unilateral contract is formed if the required action is completed. Here, by presenting Kay with the artifacts, Hammer has accepted the offer and formed a valid contract.

3

Susan Worth has a lease for two years at the Bedford Arms apartment complex. Susan has the opportunity to study at Oxford for one year and has agreed to sublease her apartment to Karen Knight. Karen is to take over the lease on August 1, 2010, and finish the term of the lease, which ends May 31, 2011. Susan and Karen execute an agreement for the lease takeover. In January 2011, Karen misses her rent payment and then moves out of the apartment. The Bedford Arms owner wants to recover from Susan. This contract:
A. Is governed by common law.
B. Is governed by the UCC.
C. Is governed by neither because it is not a lease.
D. Any contract under the UCC.

A. Real property interests, including leases, are under common law.

A sublease is a form of an assignment and delegation and also covered under real property.

4

T/F: A contract for the sale of an office building is governed by UCC Article 2.

False.
Real estate contracts are governed by common law.

5

T/F: A contract for the sale of a mobile home is governed by common law.

False.
Because a mobile home is a "good" that is being sold, it is governed by the UCC Article 2.

6

T/F: A contract formed by the conduct of the parties is classified as an express contract.

False.
A contract formed by conduct of the parties or based on the factual circumstances would be an implied or implied-in-fact contract.

An express contract is formed wholly by oral and/or written words.

7

A contract imposed by the courts or by law when some performance has gone forward, even though there is no express or implied contract. The law creates a ______ contract for the parties to prevent unjust enrichment of one party by the other.

Quasi-contract or implied-in-law contract

8

On April 1, Fine Corp. faxed Moss an offer to purchase Moss' warehouse for $500,000. The offer stated that it would remain open only until April 4 and that acceptance must be received to be effective. Moss sent an acceptance on April 4 by overnight mail and Fine received it on April 5.

Which of the following statements is correct?
A. No contract was formed because Moss sent the acceptance by an unauthorized method.
B. No contract was formed because Fine received Moss' acceptance after April 4.
C. A contract was formed when Moss sent the acceptance.
D. A contract was formed when Fine received Moss' acceptance.

B. Although most acceptances of bilateral offers are sent by an authorized medium and effective when sent by the authorized medium, the offeror can condition acceptance to not be effective until received. Therefore, regardless of the medium used, the acceptance must be received before the offer terminates by lapse of time. This offer terminated at midnight on April 4, and the acceptance was not received until April 5, after the offer was terminated.

9

On February 12, Harris sent Fresno a written offer to purchase Fresno's land.
The offer included the following provision: "Acceptance of this offer must be by registered or certified mail, received by Harris no later than February 18 by 5:00 p.m. CST."
On February 18, Fresno sent Harris a letter accepting the offer by private overnight delivery service. Harris received the letter on February 19.

Which of the following statements is correct?
A. A contract was formed on February 19.
B. Fresno's letter constituted a counteroffer.
C. Fresno's use of the overnight delivery service was an effective form of acceptance.
D. A contract was formed on February 18 regardless of when Harris actually received Fresno's letter.

B. Normally, under the mailbox rule acceptances are valid as soon as they are mailed. However, in this case we have an exception, because the offeror specified the method of acceptance (registered or certified mail) AND a time by which offeror had to actually receive the acceptance. By the terms of the offer, the acceptance was not sent as authorized and arrived late. Therefore, it is a counteroffer, which Harris may now accept or reject.

10

On day 1, Jackson, a merchant, mailed Sands a signed letter that contained an offer to sell Sands 500 electric fans at $10 per fan. The letter was received by Sands on day 3. The letter contained a promise not to revoke the offer but no expiration date. On day 4, Jackson mailed Sands a revocation of the offer to sell the fans. Sands received the revocation on day 6. On day 7, Sands mailed Jackson an acceptance of the offer. Jackson received the acceptance on day 9. Under the Sales Article of the UCC, was a contract formed?
A. No contract was formed because the offer failed to state an expiration date.
B. No contract was formed because Sands received the revocation of the offer before Sands accepted the offer.
C. A contract was formed on the day Jackson received Sands' acceptance.
D. A contract was formed on the day Sands mailed the acceptance to Jackson.

D. The offer was accepted using the same means of communication and so is valid when sent on day 9.

(B)This was a merchant's firm offer and cannot be revoked because it is like an option. It has to remain open for a reasonable time, and day 9 would be a reasonable amount of time for nonperishable goods.

11

Opal offered, in writing, to sell Larkin a parcel of land for $300,000. If Opal dies, the offer will
A. Terminate prior to Larkin's acceptance only if Larkin received notice of Opal's death.
B. Remain open for a reasonable period of time after Opal's death.
C. Automatically terminate despite Larkin's prior acceptance.
D. Automatically terminate prior to Larkin's acceptance.

D. An offer, unless irrevocable, IS terminated immediately upon the death of the offeror, and thus no contract could be formed

12

T/F: A "firm" offer by a merchant offeror in the sale of goods under the Uniform Commercial Code is irrevocable even though no consideration is received by the offeror.

True

13

T/F: If you accept in writing the following written offer, "We offer to sell you our three-year-old speed boat," you would have a valid and enforceable contract under the Uniform Commercial Code.

True.
If it were under common law, there would need to be a price included to make the contract valid and enforceable.

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