Quinn Hecker
Professor Karen Kukla, Instructor
LPP 255 (Spring 2017)
3/14/17
Midterm
Question 1
On May 1, Corporate Business, Inc. (CBI), sent Pearce & Pearce a letter, via
overnight delivery, offering to employ them to audit CBI’s financial statements for the
current year for $5,000. In the letter, CBI stated that Pearce & Pearce had ten days to
accept. On May 5, Pearce & Pearce sent CBI a fax that stated, “The price for the audit
seems too low. Would you consider paying $7,500?” CBI received the fax that same
day. The following morning (May 6), Yardley & Yardley offered to conduct the audit for
$4,500. On learning of Yardley & Yardley’s offer, Pearce & Pearce immediately e–
mailed CBI, agreeing to do the work for $4,500.
Discuss whether CBI has a contract with either Pearce & Pearce or Yardley &
Yardley.
Corporate Business, Inc. does not have a contract with Pearce and Pearce. On
May 1, they offered to employ Pearce and Pearce for $5,000, giving them ten days to
accept. On May 5, four days later, Pearce and Pearce sent CBI a fax with a counter
offer of $7,500, rendering the original offer obsolete. Shortly after that, Pearce & Pearce
learned that another company offered to perform the audit for $4,500, which was less
than the original asking price. Worried about losing the deal, Pearce & Pearce
immediately e-mailed CBI agreeing to do the work for the same $4,500. Unfortunately
for Pearce & Pearce there is no contract to agree to, since the original offer was counter
offered, and CBI is able to do business with whomever they choose. CBI does not have
a contract with Yardley and Yardley either, since all that occurred was the initial offer
from Yardley & Yardley to CBI. This leaves CBI in a great position of being on the
receiving end of a bidding war between Pearce &Pearce and Yardley and Yardley.
Question 2
Garrett was a commercial tour boat operator on the northern coast of Kauai, Hawaii. He
was licensed by the state of Hawaii to operate his boat in Hanalei Bay. The U.S.
Department of Transportation and the U.S. Coast Guard also granted Garrett an
