Chapter 11
Agreement in Traditional
and E–Contracts
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
A1. An agreement is evidenced by a single event: an offer.
A2. An offeror must have a serious intention to become bound by the offer.
A3. An invitation to negotiate—“can you afford this?”—is an offer.
A4. An expression of opinion—“your customers will like this”—is an offer.
A5. An advertisement—“this property for sale”—is an offer.
A6. A statement of future intent—“I plan to sell my 700–pound sow”—is an offer.
A7. A counteroffer does not terminate but continues an offer.
A8. An offeree’s power of acceptance is terminated when the offeror dies unless the offer
is irrevocable.
A9. An acceptance subject to new conditions implicitly rejects the offer.
A10. Under the mailbox rule, an acceptance takes effect at the time it is sent.
A11. An acceptance sent by means not expressly or impliedly authorized is not effective
until it is received.
A12. If an offeror does not expressly authorize a certain mode of acceptance, then
acceptance may be made by any reasonable means.
A13. A “sale” of software generally involves only a right to use the software.
A14. A forum-selection clause indicates the place for the resolution of a dispute arising
under a contract.
A15. State e-signature laws are uniform.
A16. Under federal law, an electronic signature can be as valid as a signature on paper.
A17. The UETA covers only e-records and e-signatures relating to a transaction.
A18. Parties cannot opt out of the UETA.
A19. The UETA does not apply to a transaction unless the parties agreed to conduct the
transaction electronically.
A20. An e-record is considered received under the UETA only if a person is aware of its
receipt.
MULTIPLE CHOICE QUESTIONS
A1. Fanny tells Eden that she will sign a lease if it includes a clause permitting Fanny to ex–
tend the lease at the same amount of rent. Fanny’s intent to sign the lease is
determined by reference to Fanny’s
a. assumptions.
b. beliefs.
c. unspoken opinions.
d. words and action.
A2. Nate tells Opal, “I might sell the skis that I bought last fall since I haven’t used them
and the skiing season is almost over.” This is
a. an acceptance of an offer.
b. an invitation to accept an offer.
c. an offer.
d. a statement of future intent.
A3. Royal Properties, Inc., mails a flyer to hundreds of firms, advertising a building for sale.
Standard Manufacturing Company responds by saying, “We accept your offer.”
Between Royal and Standard, there is
a. a contract for the sale of the building.
b. a contract to consider the offer before any others.
c. a contract to negotiate a sale of the building.
d. no contract.
A4. Yvon asks Zack, “Do you want to buy one of my fishing rods?” This is
a. a valid offer.
b. not a valid offer because the terms are not definite.
c. not a valid offer because Yvon did not state an intent.
d. not a valid offer because Zack did not respond.
A5. Elmo advertises a reward for the return of his lost dog. Floyd, who does not know of
the reward, finds and returns the dog. Floyd cannot recover the reward because he
a. did not confer a benefit on Elmo by returning the dog.
b. did not know of the reward when he found and returned the dog.
c. does not need the money.
d. returned the dog.
A6. Interstate Coffee Brokers, Inc. (ICBI), offers to sell Java Roasters, Inc., fifty bags of
coffee beans. Java rejects the offer. The offer is
a. terminated.
b. valid for a reasonable time to give Java a “second chance.”
c. valid for the period of time prescribed by a state statute.
d. valid until ICBI revokes the offer.
A7. Bill offers to sell his Consumer Service Center business to Dina for $100,000. Dina
replies, “The price is too high. I will buy it for $90,000.” Dina has
a. accepted the offer.
b. made a counteroffer without rejecting the offer.
c. rejected the offer and made a counteroffer.
d. rejected the offer without making a counteroffer.
A8. Grant offers to sell his Honda Civic for $10,000 to Ivy. Referring to the prices for
similar Hondas, Ivy says, “I’ll pay no more than $5,000.” Grant says, “Forget it.”
Grant’s offer was terminated by
a. Grant.
b. Honda.
c. Ivy.
d. no one—Grant’s offer is still open.
A9. Quik Fix-It, Inc., offers Pam a job as a plumber. No time for acceptance is specified in
the offer. The offer will terminate
a. after a reasonable period of time.
b. after a typical work week (five business days).
c. after a usual month (thirty calendar days).
d. never.
A10. Alan offers to transfer Beth’s DVDs to digital flash drives for $150 plus the cost of the
drives. The mailbox rule will not apply if Beth accepts the offer by
a. e-mail.
b. messenger.
c. regular mail.
d. telegram.
A11. Tomato Farms (TF) offers to sell Unified Grocers, Inc., a boxcar load of tomatoes. The
offer is sent via overnight delivery because an acceptance is required urgently. It
would be most reasonable for Unified to accept via
a. a fax, a letter, or a phone call to TF within two weeks.
b. a fax sent to TF as soon as the offer is received.
c. a letter mailed to TF within two days.
d. a phone call to TF within five business days.
A12. Deepwater Mining Corporation offers to sell East China Refining, Inc., a certain
quantity of unrefined oil. If East China sends an acceptance via Deepwater’s
authorized mode of communication, it will be effective when it is
a. in transit.
b. received.
c. sent.
d. written.
A13. Flem, a user of GameCenter.com’s Web site, can download gaming software for free if
he first clicks on “I accept” after viewing certain terms. This is
a. a contract that does not include the terms.
b. a contract that includes the terms.
c. not a contract but the terms are enforceable.
d. unenforceable.
A14. Deb buys a song through eSongs, an online music vendor. Before completing the
purchase and downloading the song, Deb must agree to a provision not to make and
sell copies of the song. This provision is
a. a browse-wrap term.
b. a click-on agreement.
c. a shrink-wrap agreement.
d. a choice-of-law clause.
A15. Magic Math Corporation makes business accounting software, which is packaged with
a shrink-wrap agreement. National Distribution Company distributes the software to
retailers, including an Office Stuff store, where Peg buys a package of it. The parties to
the shrink-wrap agreement are
a. Magic Math and National Distribution only.
b. Magic Math and Peg only.
c. Magic Math, National Distribution, Office Stuff, and Peg.
d. Office Stuff and Peg only.
A16. Lightspeed Corporation makes computers, each of which is packaged with a shrink–
wrap agreement. Milo buys a Lightspeed desktop. The terms of the shrink-wrap
agreement are most likely enforceable if
a. Milo buys the computer directly from Lightspeed.
b. Milo uses the computer after reading the terms.
c. Milo pays for the computer before reading the terms.
d. the terms concern warranties.
A17. Howie enters into a contract with Ida over the Internet to buy soybeans as a hedge
against falling prices in corn. Neither party prints out a hard copy. Under the
Electronic Signatures in Global and National Commerce Act (E-SIGN Act), this contract
can
a. be “denied legal effect” if it falls under the UCC’s Statute of Frauds.
b. be “denied legal effect” unless a hard copy is printed.
c. be “denied legal effect” until it is executed.
d. not be “denied legal effect” because it is only in electronic form.
A18. Michelle gives out a business card with an e-mail address on it. According to the
comments that accompany the UETA, it may be reasonable to infer that Michelle has
consented to
a. transact business electronically.
b. submit to the jurisdiction of any selected forum.
c. accept and respond to any correspondence sent to that address.
d. nothing.
A19. Somethin’-in-the-Oven Corporation and Cookin’ Good, Inc., transact a deal under the
UETA. Other state law applies to a dispute between the parties relating to
a. attributing a party’s e-signature.
b. the formation of the parties’ contract.
c. the sending and receiving of e-records.
d. the legal effect of the parties’ e-signatures and e-records.
A20. Beyond-the–Sea Corporation and Homeport Company make a deal for Homeport’s
products, via e-records. Under the UETA, an e-record is considered sent when it
a. is signed and encrypted, and will be sent without changes.
b. is stored in the sender’s back-up system.
c. is composed on the sender’s computer.
d. leaves the sender’s control.
ESSAY QUESTIONS
A1. On May 1, Brand Name Industries, Inc. (BNI), sent Carol a letter, via overnight delivery,
offering to employ her to audit BNI’s financial statements for the current year for
$1,000. In the letter, BNI stated that Carol had ten days to accept. On May 5, Carol
sent BNI a fax that stated, “The price for the audit seems too low. Would you consider
paying $1,200?” BNI received the fax. The next day, Dan offered to conduct the audit
for $800. On learning of Dan’s offer, Carol immediately e-mailed BNI, agreeing to do
the work for $1,000. BNI received this e-mail on May 7. Explain why BNI and Carol do,
or do not, have a contract.
A2. Omega, Inc., sells business application software—accounting and bookkeeping
programs, blank business forms, inventory control functions, and so on—in different
combinations, in different packages, at different prices. Each package includes a
shrink-wrap agreement that limits warranties and remedies. Precision Engineering
Associates (PEA) buys an Omega package and uses the product. Later, PEA files a suit
against Omega, claiming that the software is flawed and that the flaws caused PEA to
suffer business losses. PEA asks for relief that exceeds the limits in the shrink-wrap
agreement. What are shrink-wrap agreements? Are these agreements always
enforced? Under what circumstances is a court likely to enforce this agreement?