Chapter 6: Offer and Acceptance
1. The person to whom an offer is made is termed the offeror.
2. All contracts have to be in writing to be enforceable.
3. A store display of a MP3 player marked $121.00 would be an offer.
4. The right to withdraw an offer before it is accepted is known as the right of redemption.
5. A clear rejection terminates an offer.
6. If the offeree gives the offeror something of value in return for a promise to keep the offer open, this
agreement is itself a binding contract and is called a counteroffer.
7. The requirement that the acceptance must exactly match the offer for an agreement to be legally effective is
known as the reverse image rule.
8. While an implied-in-fact contract does not have its terms expressly stated the terms can be inferred from the
parties’ acts or conduct.
10. Unlike other methods of acceptance, a mailed acceptance is effective only when received by the offeror.
11. If a person finds and returns a watch for which a reward is offered but does not know of the reward offer,
the person is still entitled to the reward.
C. capacity
D. consideration
13. Which of the following is a test that a valid offer must pass?
A. Is contractual intent present in the offer?
B. Are the essential terms of the offer complete and definite?
14. An unaccepted offer may be terminated by
A. a counteroffer.
B. a reasonable length of time.
15. Which of the following statements about a firm offer is not true?
A. It is good for the stated time but no longer than three months.
B. It is binding whether or not the offeree paid anything to hold it open.
16. Which of the following circumstances might render an acceptance invalid?
A. The offer is accepted by someone other than the offeree.
B. The acceptance does not match the offer.
17. A contract in which performance alone is acceptance is termed a(n) ____________________.
C. multilateral contract
D. none of these
18. Capacity to contract means that the person
A. has a genuine need for the goods or services purchased.
B. has ample room to store goods that are purchased.
19. A(n) ____________ contract is not really a contract but a legal fiction created by the law to allow the
enforcement of a contractual remedy where justice alone warrants such a remedy.
A. executed
B. executory
20. In a _______________ the offeror promises something in return for the offeree’s performance and indicates
that this performance is the way acceptance is to be made.
C. matching offer contract
D. mirror image rule
21. If the court requires that the terms of the acceptance exactly match the terms contained in the offer in order
for the contract to be legally enforceable, the court is imposing the
A. unilateral rule.
B. bilateral rule.
22. Advertisements in newspapers, radio, television, and direct mailings are considered to be
A. valid offers.
B. contracts.
23. Reward offers are always the basis for a(n)
C. constructive contract.
D. none of the above
24. The Uniform Commercial Code makes firm offers binding for the stated period of time in the offer but not
to exceed
C. six months.
D. one year.
25. Nearly all offers must, at a minimum, identify
C. the subject matter, date of closing, and quantity.
D. the price, quantity, and date of closing.
26. The withdrawal of an offer before it is accepted is known as a(n)
C. counteroffer.
D. termination.
27. A contract between the offeree and the offeror where the offeree gives something of value in return for a
promise to keep the offer open is known as a(n)
A. consolidation.
B. counteroffer.
28. Generally, when nothing is said in the offer about how long it will remain open, it will end after
C. the offeree rejects it.
D. none of the above.
29. When current market price is not specified in a contract between merchants for the sale of goods, but the
current market price is understood to be the basis of the contract, the price term is said to be
A. clear.
B. essential.
30. Generally defined ______________ are agreements between two or more parties that create obligations.
C. treaties
D. agendas
C. contract.
D. none of the above.
32. Shawna offers to type Philip’s research paper at the price of $6 per page. Philip’s paper will be 20 pages long
and will cost him a total of $120. Shawna wants a deposit of $60 before she agrees to begin typing. Philip does
not know if he has enough money to pay Shawna and states that he will contact her tomorrow regarding her
offer. Shawna has second thoughts regarding Philip’s ability to pay her for the services. Shawna calls Philip and
withdraws her offer before Philip accepts it. She is able to do this because she has the right of
____________________.
33. What the promisor demands and generally must receive in order to make his or her promise legally
enforceable against him or her is called ____________________.
34. Individuals who regularly deal in the goods, or tangible personal property, being bought or sold are labeled
____________________.
35. After an offer is rejected, unless renewed by the original ____________________, the offeree can no
longer accept the original offer.
36. Dalia owns a dress shop in town; she purchases much of the merchandise for her store from Wholesale
Clothiers, Inc. Wholesale offers to sell Dalia 20 various prom dresses at a price of $65 each and agrees to keep
this offer open for 30 days. Both parties sign a document agreeing to the timeframe of the offer. Their
arrangement is best described as a(n) ____________________.
37. Victor places a sign in his pickup truck stating, “Truck for Sale.” Alfredo notices the sign and discusses the
matter with Victor. Victor offers to sell his truck to Alfredo for $1,200 agreeing that Alfredo can pay him $600
now and make two $300 payments on the 30th of the next two months. Alfredo thinks about the offer and
proposes to pay $600 now and then $200 payments on the 30th of the next three months. Alfredo’s proposal to
Victor is considered a(n) ____________________.
38. When the specific subject matter of an offer is destroyed before the offer can be accepted, the offer is
automatically ____________________.
39. Miquel wants to go to college this fall. Although he is working and placing money in his savings account for
that purpose, he realizes that he will need another $4,000. He places an advertisement in a local newspaper
offering to sell his motorcycle for $4,000. Several prospective buyers answer Miquel’s ad including his friend,
Ricardo, who has always admired Miquel’s motorcycle. Ricardo discusses purchasing it with Miquel. Miquel
agrees to take $2,000 from Ricardo and promises to keep open the offer to purchase the motorcycle to Ricardo
only. This agreement would be legally described as a(n) ____________________.
40. Rhonda’s favorite cat disappeared one day from her backyard. In an attempt to find her cat, Rhonda placed
pictures of her cat throughout the neighborhood offering $50 to anyone who finds her cat and returns it to her.
Within two days, a neighbor located the cat and returned it to Rhonda to claim the reward. Rhonda gladly paid
her neighbor the agreed upon sum. This is a good example of a(n) ____________________ contract.
41. Dick had a verbal agreement with the Jones brothers to repair the barn for a specified amount. The
agreement was for half the money to be paid up front, so supplies could be purchased, and the other half to be
paid when the work was finished. After receiving the first payment, buying materials, and doing some initial
layout work, the Jones brothers left the worksite and never returned. Is a verbal agreement a valid contract
under which Dick could sue and recover his payment?
42. List and give a quick explanation of each of the six requirements for a legally enforceable contract.
1. Offer and acceptance—a valid offer and a matching acceptance are required to form the basis of the contract
2. Genuine assent—the agreement must not be based on one party’s deceiving another, on an important
43. Why are only merchants and not casual buyers and sellers able to make firm offers?
44. List the three tests that an offer must pass to be considered valid.
The three tests of the offer are: