Chapter 9
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
1. For an offer to be effective, the offeror must have a serious intention to become
bound by the offer.
2. An offer does not need to be communicated to the offeree to become effective.
3. An offer made in obvious anger is still an effective offer.
4. An expression of opinion—“this is perfect!”—is an effective offer as long as it is
not made in jest.
5. A seller’s price list is not an offer.
6. A circular letter—“Dear Mr. or Ms. Jones, This is our biggest sale ever!”—is not
evidence of an intent to enter into a contract.
7. In most cases, an offeror can revoke an offer as long as the revocation is
communicated before the offeree accepts.
8. Revocation is effective on dispatch.
9. In most states, revocation becomes effective on receipt.
10. If no time for acceptance is specified in an offer, the offer terminates after a
reasonable length of time.
11. The death of an offeree does not terminate an offer.
12. An offer that a statute makes illegal terminates only after a reasonable time.
13. An option contract is created when an offeror promises to hold an offer open for
a specified period of time in return for a payment given by the offeree.
14. The mirror image rule requires an acceptance to adhere exactly to an offer to
create a contract.
15. Some unilateral contracts do not require that an offeror be notified of
acceptance.
16. In a bilateral contract, communication of acceptance is necessary.
17. The mailbox rule applies to communication by phone and fax as well as the
mail.
18. If an offeror does not expressly specify a certain mode of acceptance, then
acceptance can be made by any reasonable means.
19. A forum-selection clause indicates the forum, or location, for the delivery of
goods purchased online.
20. The agreement resulting from a buyer clicking on a box containing the words “I
agree” is known as a click-on agreement.
21. A click-on agreement is an agreement whose terms are expressed inside a box
in which the goods are packaged.
22. A shrink-wrap agreement is an agreement whose terms are expressed inside a
box in which the goods are packaged.
23. Not all of the terms presented in shrink-wrap agreements have been enforced.
24. Browse-wrap terms are arguably not enforceable.
25. Browse-wrap terms require a user to affirmatively indicate his or her consent.
26. Under the Electronic Signatures in Global and National Commerce Act, a
signature may not be denied legal effect solely because it is in electronic form.
27. Under federal law, an electronic signature can be as valid as a signature on pa–
per.
28. Under federal law, an e-signature is enforceable only if the contracting parties
have agreed to use e-signatures.
29. Under the UETA, a typed name at the end of an email message is not
considered an e-signature.
30. A record is an interaction between two or more people relating to business,
commercial, or governmental activities.
31. The primary purpose of the Uniform Electronic Transactions Act (UETA) is to
remove barriers to e-commerce.
32. Under the UETA, a contract is unenforceable if it is solely in electronic form.
33. The E-SIGN Act does not preempt the uniform version of the UETA.
34. Under the UETA, an e-signature of a notary public is not sufficient to notarize a
document.
35. The UETA does not require the use of security procedures to verify changes to
electronic documents and to correct errors.
MULTIPLE CHOICE QUESTIONS
1. Fresh Fast Service, Inc., offers to deliver produce to Growers’ Market’s
customers for a certain price. Fresh’s intent to extend a serious offer to
Growers’ Market is determined by reference to
a. Fresh’s assumptions.
b. Fresh’s beliefs.
c. Fresh’s intentions.
d. what a reasonable person in Growers’ position would conclude Fresh’s
words and actions meant.
2. May tries to start her new car with no success. She yells that she will sell the
car to anyone for $10. Nick, a passerby who owns Nick’s Pre-owned Autos,
hands May $10. This is
a. a valid acceptance because May is seriously frustrated.
b. a valid acceptance because Nick is a car dealer.
c. not a valid acceptance because May does not seriously intend to sell.
d. not a valid acceptance because Nick is a car dealer.
3. Peter and Ray are riding their horses together. Peter jokingly tells Ray that
Ray’s horse is too slow. Ray laughs and jokingly responds “Yes, he is too slow!
I would sell him for $5!” Peter hands Ray $5. This is
a. a valid acceptance because Peter gave Ray the money in a reasonable
time.
b. a valid acceptance because there is consideration on both sides.
c. not a valid acceptance because Ray’s offer was made in jest.
d. not a valid acceptance because Ray’s horse is worth more than $5.
4. Jacqi tells Kenneth, who does not know how to perform comedy, that she will
tutor him in the subject for $500. As an offer, this is
a. effective.
b. not effective, because comedy is not a serious subject.
c. not effective, because Jacqi’s tutoring will be subjective.
d. not effective, because Kenneth has no knowledge of the subject.
5. Mary admires Julia’s collection of scarves. Julia says “I might sell you a few
someday, if I get tired of them.” Julia’s statement is
a. an effective offer.
b. not an effective offer because it has not been communicated to Mary.
c. not an effective offer because the Julia does not show a serious intent to
be bound.
d. an acceptance.
6. Beth goes to Dr. Carlton for surgery. Carlton says that Beth should be fully
healed within a week. Beth is not healed within a week. With respect to breach
of contract, Carlton is
a. liable.
b. not liable, because surgery is not a proper subject for a contract.
c. not liable, because the statement was an opinion.
d. not liable, but Beth is excused from paying Carlton.
7. Jon says to Kristy, “I would like to sell you my sports memorabilia collection.”
This is not an offer because it
a. does not describe the subject matter sufficiently.
b. does not include a price term.
c. only expresses an opinion.
d. only invites Kristy to negotiate.
8. Pastry Dough, Inc., sends its catalogue to Octavio and includes a “person-
alized” letter inviting him to buy any item in it at the advertised price. This is
a. an offer because of the “personalized” letter.
b. an offer because there is no room for price negotiation.
c. an offer only if Octavio previously bought items from Pastry Dough.
d. not an offer.
9. Laredo advertises a reward for the return of his lost dog. Mikayla, who does not
know of the reward, finds and returns the dog. Mikayla cannot recover the re–
ward, because she
a. did not confer a benefit on Laredo by returning the dog.
b. did not know of the reward when she found and returned the dog.
c. does not need the money.
d. returned the dog.
10. On May 1 Jill offers to sell Andrea a herd of sheep. On May 3 Jill mails Andrea
a letter revoking the offer. Andrea receives the letter on May 5. Jill’s revocation
of the offer to sell the sheep became effective on
a. May 1.
b. May 3.
c. May 4.
d. May 5.
11. Signe offers to sell Thomas her textbook but conditions the sale on Thomas ac–
cepting the offer by March 1. Signe may revoke the offer
a. before Thomas accepts the offer.
b. before March 1, whether or not Thomas has accepted the offer.
c. only after Thomas accepts the offer.
d. only after March 1.
12. Wally offers to sell a certain used forklift to Valu Lumber Outlet, but Wally dies
before Valu accepts. Most likely, Wally’s death
a. did not affect the offer.
b. shortened the time of the offer but did not terminate it.
c. extended the time of the offer.
d. terminated the offer.
13. Lovett County Bank offers to lend money to Kino, the owner of Java Stop, at 15
percent interest. Before Kino accepts, a state statute is enacted prohibiting
loans at rates greater than 12 percent. Kino and the bank have
a. have a contract for a loan at 15 percent interest.
b. have a contract for a loan at 12 percent interest.
c. have a contract for a loan at 0 percent interest.
d. no contract for a loan.
14. Jack offers to sell Ben a new car for $10,000. Ben accepts the offer and sells
his old car so that he will have money for the new one. Jack’s offer is probably
a. revocable because the terms of the offer were not definite.
b. irrevocable because Ben sold his old car because of justifiable reliance
on Jack’s offer to sell him a new car.
c. revocable because any offer is revocable.
d. irrevocable because Jack’s offer represents an opinion contract.
15. Liz offers to sell Jock her iPad for $500 without any accessories. Under the
mirror image rule, Jock’s response will be considered an acceptance if the
terms of the acceptance
a. exactly mirror those of the offer.
b. change the items offered, but do not change the price.
c. change the price, but do not change the items offered.
d. change both the price and the items offered.
16. Shasta offers to sell a used hay baler to Roberto, but receives a letter of accep–
tance from Quito, who has no relation to Roberto. A valid contract exists
between
a. Shasta and Roberto.
b. Shasta and Quito.
c. Roberto and Quito.
d. none of the choices.
17. Shelby offers to make digital copies of Relay Company’s business conference
videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule,
Relay’s acceptance by e-mail will be considered effective when
a. received.
b. sent.
c. followed up by a confirmation letter sent by regular mail.
d. composed on a Relay computer.
18. Crafted Iron Works, Inc., offers to design, make, and sell City Transit Agency
fourteen streetcars. Crafted authorizes a particular mode of communication, but
City Transit sends an acceptance via a substituted means. This acceptance is
effective when it is
a. in transit.
b. received.
c. sent.
d. written.
19. Quality Sales Corporation enters into contracts over the Internet. Quality can
protect itself against disputes involving these contracts by making important
terms
a. reasonably clear.
b. difficult to notice.
c. impossible to find.
d. standardized.
20. Mark is creating a Web site through which he will enter into contracts over the
Internet. Important terms to include in his offers include
a. provisions specifying the remedies if the contract is breached.
b. a detailed history of his business.
c. glowing reviews from former customers.
d. his educational background.
21. Deb buys a song through eSongs, an online music vendor. Before completing
the purchase and downloading the song, Deb must agree to a provision stating
that she will not 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 wrap-on agreement.
22. Over the Internet, Red & White Contractors, Inc., arranges to lease storage
space from Blue Services Company. To complete the deal, Red & White clicks
on a button that says, in reference to certain terms, “I agree.” Most likely, the
parties have
a. a binding contract that includes the terms.
b. a binding contract that does not include the terms.
c. an unenforceable contract that includes the terms.
d. an unenforceable contract that does not include the terms.
23. Hi-Lite Manufacturing, Inc., orders supplies online from Indigo Parts Company.
To complete the order, the buyer is required to click on a button that says, in
reference to certain terms, “I agree.” This is
a. a click-on agreement.
b. a default agreement.
c. an attribution agreement.
d. a shrink-wrap agreement.
24. Digital Products Company includes a shrink-wrap agreement in a transaction
with Eagle Engineering Corporation. A shrink-wrap agreement is an
agreement whose terms are expressed
a. in code at the end of a computer program .
b. inside a box in which goods are packaged.
c. in small print at the end of a paper contract signed by both parties.
d. on a computer screen.
25. Jared downloads some video games from the Internet. There is a page
indicating the terms of use, but nothing that requires Jared to affirmatively
indicate his consent before downloading the games. These terms are
a. a click-on agreement.
b. browse-wrap terms.
c. an attribution agreement.
d. a shrink-wrap agreement.
26. Vivian and Rob enter into a contract under which Vivian will clean Rob’s house
every week for a year. Under the E-SIGN Act, in order for e-signatures to be
enforceable for this contract
a. Vivian and Rob must both agree to use e-signatures.
b. only Vivian needs to agree to use e-signatures.
c. only Rob needs to agree to use e-signatures.
d. Vivian and Rob must both register their e-signatures with the federal
government.
27. Clean Health Insurance, Inc. sends Kathy a health insurance termination. The
health insurance termination is
a. governed by the E-SIGN Act.
b. not governed by the E-SIGN Act.
c. governed by Article 2 of the UCC.
d. governed by Article 2A of the UCC.
28. First Design Corporation, a business firm, and Glen, a consumer, make a deal
over the Internet that involves e-signatures. Under the E-SIGN Act, the e-
signatures
a. are as valid as signatures on a paper document.
b. must be
encrypted to be enforceable.
c. must have been inscribed on a digital tablet to be authenticated.
d. must relate to a partnering agreement.
29. Under the E-SIGN Act, Phillip may use an e-signature in all of the following
instances except
a. opening an account with a financial institution.
b. obtaining a mortgage.
c. buying insurance.
d. signing his will.
30. Fred’s Paper Shop frequently buys paper from Online Office Supplies, Inc.
Online Office Supplies and Fred’s Paper Shop decide to enter into a partnering
agreement. One of the advantages of entering into a partnering agreement is
that
a. the costs of all transactions will be reduced.
b. the likelihood that disputes will arise under their contract is reduced.
c. neither party will be able to file suit for breach of contract.
d. Fred’s Paper Shop will not be able to file suit for breach of contract.
31. Standard Purchasing Corporation and Total Sales, Inc., enter into a partnering
agreement. Under a partnering agreement, parties agree
a. in advance to terms that apply to their future e-transactions.
b. to become partners.
c. to conduct transactions solely in electronic form.
d. to resolve all disputes without involving a third party.
32. Kay and Leo enter into a contract that falls within the provisions of the UETA.
Under the UETA, “an electronic sound, symbol, or process attached to or
logically associated with a record and executed or adopted by a person with
the intent to sign the record” is
a. an e-document.
b. an e-signature.
c. an e-transaction.
d. a record.
33. Bill and Stacy enter into a contract that falls within the provisions of the UETA.
Under the UETA, “information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form”
is
a. an e-document.
b. an e-signature.
c. an e-transaction.
d. a record.
34. Michelle gives out a business card with an e-mail address on it. It is 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.
35. National Shipping Corporation and Office Software Company (OSC) make a
deal for OSCs products, communicating entirely online. Under the UETA, an
electronic record is considered sent
a. only at a midway point between the sender and recipient.
b. only on coming into the recipient’s control.
c. only on leaving the sender’s control.
d. when it leaves the sender’s control or comes into the recipient’s control.
ESSAY QUESTIONS
1. Creative Solutions Corporation (CSC) sells business application software—
accounting and bookkeeping programs, blank business forms, inventory control
functions, and the like—in different combinations, in different packages, at
different prices, downloadable online. To complete a deal, a purchaser clicks
on a button that, with reference to certain terms, states, “I agree.” What is this
sort of agreement called? Do the parties have a binding, enforceable contract
that includes the terms? Explain.
2. Beta Software Company and Gamma Sales Corporation agree to follow a
certain security procedure in transacting their business online. Beta fails to
follow the procedure, however. Due to this failure, Beta does not detect an
error in the deal, which will have a negative impact on Gamma’s interest in the
deal. Can Gamma avoid the effect of this error? How?
CHAPTER 9: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 19