Chapter 10. Mutual Assent
1. On Tuesday morning John sends a letter to Arlene rejecting her offer, but later the same day John changes his mind
and sends a letter of acceptance to Arlene. The letter of acceptance will be effective only if it is received by Arlene
before she receives the rejection.
a. True
b. False
2. An offer is effective as soon as it is dispatched.
a. True
b. False
3. An offer must be communicated to the offeree in order for the offer to be effective.
a. True
b. False
4. An advertisement is usually an offer to sell.
a. True
b. False
5. A valid offer may be in the form of an act for a promise, which is an offer to enter into an inverted unilateral
contract.
a. True
b. False
6. A contract cannot be formed unless it is possible to determine the exact moment at which it was made.
a. True
b. False
7. The common law “mirror image” rule applies to an offer and the acceptance of that offer in a contract for the sale of
goods.
a. True
b. False
8. If no time limit is stated, an offer will not terminate until both parties agree.
a. True
b. False
9. If Bill tells Sara that he will give her two days to decide if she wants to buy his car, he cannot sell it to anyone else
during that time.
a. True
b. False
10. If a promisor intends her promise as a joke, whether or not the promisee as a reasonable person should understand it
to be such, the promise is not an offer.
a. True
b. False
11. Ron offers to sell Pete his stamp collection. Pete gives Ron $10 to induce him to keep his offer open for a week. If
Ron decides on day four of the week that he really does not want to sell to Pete, he can revoke his offer without
fear of a breach of contract lawsuit being filed against him.
a. True
b. False
12. In general, an acceptance is effective upon dispatch.
a. True
b. False
13. George offered to paint Catherine’s barn for $4,000. Catherine said she would accept the offer if George would paint
the woodshed, too. At this point, they have made a valid and enforceable contract.
a. True
b. False
14. Under the UCC, an acceptance must always be identical to an offer for a valid contract to be formed.
a. True
b. False
15. A contract exists when an offer has been accepted.
a. True
b. False
16. Both the Code and the Restatement provide that, unless the offer or circumstances indicate otherwise, an authorized
means of accepting an offer is any reasonable means of communication.
a. True
b. False
17. If the offer specifies it MUST be accepted by telegram, a letter will not be a valid means of acceptance.
a. True
b. False
18. If an offer states that a reply must be received by a certain date, the contract is formed at the time the offeree sends
or dispatches the acceptance.
a. True
b. False
19. Silence can never be an acceptance.
a. True
b. False
20. An auctioneer is the offeror and each bid is a counteroffer until a final bid is accepted.
a. True
b. False
21. When a bid is made at an auction, it can be revoked if the auctioneer has not yet accepted the bid because the
auctioneer has the power of acceptance.
a. True
b. False
22. There is no necessity to distinguish language which constitutes an offer from that which merely solicits or invites
offers.
a. True
b. False
23. The person to whom an offer is made is an offeree.
a. True
b. False
24. The Code’s firm offer rule applies only to offers in writing that are made by a merchant offeror.
a. True
b. False
25. In order for an offer to end by lapse of time, the offeror must specify the time within which the offer is to be
accepted.
a. True
b. False
26. The law applies a subjective standard of intent in determining whether there was the requisite intent to enter into a
contract.
a. True
b. False
27. An offer must be in one particular form to have legal effect.
a. True
b. False
28. The UCC and the Restatement make no provision for supplying terms omitted by the parties’ contract.
a. True
b. False
29. In an output contract, the seller can operate a factory on a 24–hour-a–day schedule and insist that the buyer take all
of the output when that buyer had operated only eight hours a day at the time the contract was made and the buyer
had knowledge of the eight-hour-a-day operating schedule.
a. True
b. False
30. Death or insanity of either the offeror or the offeree ordinarily terminates the offer.
a. True
b. False
31. If an offeror makes an offer to an offeree by letter and it is lost in the mail, no legally sufficient offer has been made.
a. True
b. False
32. An offer can be communicated by words or by conduct.
a. True
b. False
33. Ricardo posts a sign in his neighborhood offering $50 for the return of his Saint Bernard. Alicia, who knows nothing
of the reward, finds the dog and returns it to Ricardo. Alicia is entitled to the reward.
a. True
b. False
34. Hugh recently purchased a motorcycle for $4,000 but has had extensive problems starting the motor. In disgust at
not being able to start the motorcycle, Hugh shouts to his friends, “Any of you want to buy this thing for $20?” A
contract will be formed if a friend gives Hugh a twenty-dollar bill.
a. True
b. False
35. On June 1, a civic club made an offer of $500 to a beer distributor to have ten kegs delivered to the city park for a
July 4th fund-raising event. On June 30, the city passed a new law prohibiting consumption of alcohol in the city
park. The civic club‘s offer is terminated on June 30.
a. True
b. False
36. An auctioneer is free to withdraw the goods from sale if the sale is advertised or announced in explicit terms to be
without reserve.
a. True
b. False
37. An implied contract is not an enforceable contract.
a. True
b. False
38. An offer is an indefinite proposal made by one person to another.
a. True
b. False
39. If Thomas seemingly offers to sell to Raquel his Toro lawnmower but he intends to offer and believes he is offering
her his Murray mower, and she accepts the offer, reasonably believing it was for the Toro, no contract has been
formed because there is no mutual assent.
a. True
b. False
40. An agreement of a seller to supply a buyer with all of the buyer’s requirements for certain goods is known as:
a. an output contract.
b. a requirements contract.
c. a firm offer.
d. promissory estoppel.
41. Elmer wrote a letter to his friend Fred offering to sell Fred an 80–acre farm for $200,000. After mailing the letter,
Elmer learns that the farm is actually worth $300,000 and changes his mind about selling. Elmer:
a. has made a firm offer to Fred which cannot be revoked.
b. can revoke his offer at any time before acceptance, because there is no consideration to keep the offer open.
c. must keep the offer open, because this is an option contract.
d. is prohibited from revoking his offer to Fred under the doctrine of promissory estoppel.
42. If no time is specified for the acceptance of an offer, the offer terminates after:
a. 24 hours.
b. 48 hours.
c. two weeks.
d. a reasonable period of time.
43. Albert read Gem City‘s ad in the local newspaper advertising a one–quarter carat diamond ring for $89. Albert
rushed to the store to buy the ring, only to be told by the salesperson that the ad was a misprint and the price should
have been $289. Albert gave the salesperson $89 plus sales tax and demanded the ring. In this case:
a. the ad is a firm offer by the merchant, and the ring must be sold for $89.
b. the ad is a contract and the store must abide by terms stated in the contract.
c. the store must accept the price stated in the ad, but only if Albert has a copy of the ad with him.
d. Albert is merely making an offer to Gem City to buy the ring for $89 plus sales tax.
44. An offer under Article 2 of the UCC that is irrevocable even though no consideration is given to keep it open is
known as a(n):
a. option.
b. firm offer.
c. requirements contract.
d. output contract.
45. Elvis makes an offer to Miguel, but before Miguel can accept, the state supreme court decides a case that makes the
offer illegal. The court decision:
a. automatically terminates the offer.
b. has no effect on the offer.
c. acts as a condition on the offer.
d. acts as a rejection of the offer by the offeree.
46. Jesse makes an offer to Ike, and Ike accepts; then the state legislature passes a law that makes performance of the
contract illegal. What is the effect of the new statute on the contract?
a. The contract is severed; any portions that are legal must still be performed and any portions that have been
made illegal must not be performed.
b. The statute has no effect on the contract.
c. The statute acts as a condition on the contract.
d. The statute discharges the obligations of both parties under the contract.
47. Maxine offered to sell her video camera to Tom for $200 and also stated to Tom, “I will give you two weeks to
accept my offer.” One week later Tom learned that Maxine had sold the video camera to Cindy. Maxine:
a. has revoked her offer to Tom.
b. must sell Tom a video camera for $200 because she made a firm offer to him.
c. must get the camera back from Cindy if Tom accepts within two weeks.
d. Both (b) and (c) are appropriate alternatives in this case.
48. The Rogers family has always wanted to buy the beautiful house at the top of the hill. The owners of the house, the
Thompsons, decided to sell and called Mr. Rogers. Before he could get back in touch with Mr. Thompson, Mr.
Rogers suffered a heart attack and died. Mr. Rogers’ adult daughter, to whom the Thompsons had not spoken, still
wants the house. She may:
a. not accept since the offer is terminated.
b. not accept because she does not have the capacity.
c. accept since the contract offer is assignable.
d. accept since the offer cannot be revoked without notice.