1. When Olga asks Sven if he wishes to sell his Harley motorcycle, he replies that he would not sell it “for less than
$2,000.” Olga replies, “I accept,” and hands him $2,000. A contract exists.
a.
True
b.
False
2. Revocation is the withdrawal of an offer by the offeror.
a.
True
b.
False
True
Easy
3. April put an advertisement in the newspaper advertising the sale of her computer for $500. Simultaneously, six people
responded to the ad by mail with formal written acceptances. April is bound on all six contracts to sell her computer for
$500.
a.
True
b.
False
False
Moderate
4. You have placed an antique sofa up for auction and the auctioneer has not made any special announcements about the
sale. You can withdraw the sofa at any time before the auctioneer closes the sale by announcement or by the fall of the
hammer.
a.
True
b.
False
True
Easy
5. Regarding contracts, in seeking to determine whether there is a meeting of the minds, the courts look to how a
reasonable person would objectively view the language or actions of the parties.
a.
True
b.
False
True
6. On Monday, Mick puts an offer in the mail to Sheri to sell his guitar for $50. Monday night when jamming with his
False
Moderate
buddies, he decides he will really miss his old guitar and has second thoughts about selling it. Tuesday morning he puts a
revocation in the mail informing Sheri he has changed his mind and the guitar is no longer for sale. The revocation is
effective on Tuesday morning.
a.
True
b.
False
7. Vick Valve Company makes valves for plumbing fixtures. At the beginning of the year, it sends out a price list
addressing each one, “To our valued customers.” Honest Hank Hardware orders a variety of valves at the prices quoted on
the price list. Vick Valve must honor the prices on the list and sell the valves to Honest Hank.
a.
True
b.
False
False
Moderate
8. A letter of intent summarizes progress made during business negotiations, but more importantly, it creates a binding
contract.
a.
True
b.
False
False
Easy
9. According to the UCC, one or more open terms will not cause a sales contract to fail for indefiniteness as long as the
parties intended to make a contract and there is a reasonably certain basis for the court to determine the open terms.
a.
True
b.
False
True
Moderate
10. Nunnsky’s Retail sent out newspaper inserts advertising wool suits for $50. In fact, the store had only two, out–of-style
suits for sale at this price. Their other wool suits started at $175. This constitutes bad faith in its advertising, so consumers
may have protection through state consumer protection statutes.
a.
True
b.
False
True
Moderate
False
Moderate
11. Nella offers to sell her crop of strawberries, which have just been picked, to Morgan’s Market. Since Nella does not
specify a time limit for acceptance, Morgan’s can accept the offer at any point in time.
a.
True
b.
False
12. Candy, Inc. signed an agreement with Sweet Plantation. Under the contract, Candy, Inc. agreed to purchase all the
sugar cane Sweet Plantation grew during the coming season for $0.16 per pound. This contract will be unenforceable due
to its vagueness.
a.
True
b.
False
False
Moderate
Bloom’s: Application
13. If the offer does not specify a type of acceptance, the offeree may accept in any reasonable manner and method.
a.
True
b.
False
True
Easy
Bloom’s: Knowledge
14. Software clickwrap and shrinkwrap agreements limiting the manufacturer’s maximum responsibility to a refund of the
purchase price even if the software destroys your hard drive have generally been found to be binding against consumers.
a.
True
b.
False
True
Easy
Bloom’s: Knowledge
15. In an option contract, the offeror may not revoke an offer during the option period.
a.
True
b.
False
True
Easy
Bloom’s: Knowledge
16. John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky Derby. Prince Charming came
in last, much to John’s frustration and embarrassment. John exclaims in a loud voice, “I’m selling that horse to the first
person who hands me $100!” John has
False
Moderate
Bloom’s: Comprehension
a.
b.
c.
d.
17. Which of the following are generally considered to be legal offers?
a.
placing an item up for auction
b.
catalog advertisements
c.
price lists
d.
a note scribbled on a restaurant napkin that includes the details of the offer
Bloom’s: Comprehension
18. The intent of the offeror to extend an offer to the offeree is generally determined by reference to
a.
the beliefs of the offeror.
b.
the subjective intention of the offeror.
c.
the assumptions of the offeror.
d.
the words and conduct of the offeror.
Bloom’s: Knowledge
19. The Johnsons decided to sell their summer cabin on Beech Lake. They sent flyers out to all who previously had
expressed an interest in buying the cabin stating that they were planning on selling their cabin. The flyer described the
location of the property, the size of the lot, and the price. If one of the recipients responds by sending a letter accepting, an
agreement
a.
will not be formed because the flyer was sent out as an invitation to make an offer.
b.
will be formed because the first to respond gets the property.
c.
will be formed because the price is included.
d.
will not be formed because of the parol evidence rule.
Bloom’s: Application
20. Which term refers to whether an offeree accepts an offer by promising, by making a down payment or by performing?
a.
manner of acceptance
b.
method of acceptance
Bloom’s: Application
c.
definiteness
d.
intent
21. Floyd offers to sell his 1967 Ford Mustang convertible to Tim. Before they conclude their negotiations, Floyd dies.
Which of the following is true?
a.
Floyd’s heirs must sell the car to Tim.
b.
Floyd’s heirs must continue to negotiate the offer and sell the car, if a reasonable price can be determined.
c.
The offer terminates automatically upon Floyd’s death.
d.
There is a contract if Tim accepts before learning of Floyd’s death.
Bloom’s: Application
22. On January 8, Quastrar, Inc. sent Hylavian Company a letter offering to sell $10,000 in restaurant supplies. On
January 18, Hylavian mailed a letter to Quastrar accepting the offer. Quastrar received the acceptance letter on January 20.
On January 17, Quastrar sent a letter revoking the offer. Hylavian received this letter on January 21. A contract between
Quastrar and Hylavian
a.
was not formed because the revocation was effective before the acceptance was sent.
b.
was not formed because the revocation was effective before the acceptance was received.
c.
was formed on January 18.
d.
was formed on January 20.
Bloom’s: Application
23. Which of the following offers are considered to be irrevocable for a given period?
a.
Firm offers.
b.
Option contracts.
c.
A writing signed by a merchant offering to hold open an offer for the sale of goods for a stated period.
d.
All of the above.
Bloom’s: Comprehension
24. Collector Carl displays his beer can collection at the local swap meet. Mary sees the collection and is interested in
buying it. Carl says he will sell the collection for $1,500. Mary says she really likes the collection but is only willing to
pay $1,000. Which of the following is correct?
a.
Mary’s counteroffer terminates Carl’s offer of $1,500.
b.
If Carl rejects Mary’s counteroffer, she can still accept Carl’s offer of $1,500.
c.
Neither offer is valid. Who would ever pay $1,000 or $1,500 for a beer can collection?
Bloom’s: Knowledge
d.
Mary’s offer is an option contract and she cannot revoke the offer.
25. If an offer specifies no time limit in which to accept,
a.
the offeree has 30 days to respond.
b.
the offeree has 10 days to respond.
c.
the offer is not valid and therefore it does not matter when the offeree responds.
d.
the offeree has a reasonable period during which to accept.
Bloom’s: Knowledge
26. Dick offers to sell Jane his 1955 Thunderbird convertible. Before Jane can accept the offer, lightning strikes the car
and it is totally destroyed. Which of the following is true?
a.
Jane can still accept the offer and John must find a 1955 Thunderbird to sell.
b.
The offer is terminated by law.
c.
Dick can still revoke his offer so long as he does so before Jane accepts.
d.
Jane can still accept the offer. She will be entitled to the insurance proceeds.
Bloom’s: Application
27. Hensley and Boyer have been negotiating for several months over issues related to the purchase and sale of some real
estate. They draft a letter of intent that
a.
b.
c.
d.
Bloom’s: Comprehension
28. If Morales and Rolfes Supply negotiate for the purchase and sale of a supply of fuel for a three-year period for
Morales’ business,
a.
b.
c.
d.
Bloom’s: Application
29. Jaime offered to buy Kevin’s bike. Jamie is the
a.
offeree.
b.
offeror.
c.
mortgagor.
d.
trustee.
Easy
Bloom’s: Knowledge
30. Acme Co. offers to buy 1000 widgets from Widget World Co. The written offer provides for 1000 at $10 per widget,
to be delivered May 1. The offer has no other provisions. Widget World sends a written acceptance. However, the
acceptance also states that if any claim arises under this contract, Widget World must be notified within 10 days. Acme
does not object to this provision. Both parties are merchants. Which of the following best describes this situation?
a.
b.
c.
d.
Moderate
Bloom’s: Comprehension
31. Vivian goes to an auction and sees a rare antique lamp that is an identical match to one she already has. At the proper
time she bids on the lamp and is the highest bidder. Even though she is the highest bidder, the auctioneer refuses to accept
her bid and withdraws the lamp from the auction. Can the auctioneer do that?
a.
b.
c.
d.
Moderate
Bloom’s: Comprehension
32. Oxtron, Inc. sent the following price list to its customers.
Dispensers:
SBC-500J
$670.00
True TDD-1
$875.00
True TDD-2
$1,465.00
Moderate
Bloom’s: Comprehension
True TDD-3
$1,515.00
CO2 Tank and Regulator
$150.00
Which statement is correct?
a.
These price quotes would generally be considered offers.
b.
These price quotes would generally not be considered offers.
c.
These price quotes would generally be considered output contracts.
d.
These price quotes would generally be considered requirements contracts.
33. David and George have a contract wherein George agrees to buy sporting goods and equipment. Since the goods are
not to be delivered for several months, they left the price open. Under the UCC, which of the following will be true?
a.
b.
c.
d.
Bloom’s: Application
34. Bob signed an agreement with Joe under which Bob agreed to purchase all the hay that Joe grew during the coming
growing season. This contract will be
a.
b.
c.
d.
Bloom’s: Comprehension
35. Travel Lines offered to sell 10 round-trip tickets to Elaine. Travel Lines stated that the acceptance must be in writing
by USPS next-day service. Which of the following acceptances will create a contract between Travel Lines and Elaine?
a.
b.
c.
d.
Bloom’s: Application
36. Seth told the salesperson at Outdoor Times that he wanted the sleeping bag that was advertised in the Sunday paper;
one that would keep him comfortable if the temperature drops to 10 degrees Fahrenheit. The salesperson told Seth they
were sold out of that bag, but there were two other styles that would meet his needs and were the same price. Seth insisted
he wanted the advertised bag and threatened to sue for breach of contract. Which is true?
a.
b.
c.
d.
Bloom’s: Comprehension
37. Wally owns 200 acres of land. Wally offers to sell the land to Robert for $1,500 per acre. Robert replies that he does
not need 200 acres of land but would like to buy 40 acres at $1,500 per acre. Wally agrees to sell but does not identify
which 40 acres. Later, Wally refuses to sell any land to Robert. What is the result?
a.
Robert wins; this is an enforceable contract with complete and definite terms.
b.
Robert wins; the UCC will decide which 40 acres are to be sold.
c.
Wally wins; the original offer was not intended to be an offer but merely an invitation to negotiate.
d.
Wally wins; this agreement is too indefinite since it does not identify which 40 acres are to be sold.
Bloom’s: Application
38. Jack mails an offer to Joan that states, “I offer to sell you my car for $2000. If I don’t hear from you in 10 days, I will
assume you are willing to buy the car for the stated price.” Jack hears nothing by the deadline and assumes he has a deal.
What is the result?
a.
b.
c.
d.
Bloom’s: Comprehension
39. A seller’s form clearly states no warranty is included. The buyer’s form states that the seller warrants the goods for
one year. In this case
a.
b.
c.
Bloom’s: Application
d.
40. Spangel Fashions sends out its spring and summer catalog to Cindy. Cindy falls in love with the cute dress featured on
the front cover of the catalog. When Cindy calls to order the dress, she is informed that the company has sold out of the
dress. Cindy is upset and claims that the store is in breach of contract. She argues that the catalog presented an offer,
which she accepted when she called to order the dress. Is Cindy correct? Why/why not?
store would have accepted the offer if the merchandise had been in stock. As long as Spangel Fashions is
Bloom’s: Comprehension
41. Briefly discuss how an offer can be accepted. Include in your answer the application of the mirror image rule.
generally consider it a counteroffer. UCC Section 2-207 has modified this rule for the sale of goods by
providing that an acceptance that adds different or additional terms will often create a contract.
Bloom’s: Comprehension
42. Jerry knows that Lucy has coveted his classic car for quite some time. Finally willing to sell it, he sends a letter to
Lucy offering to sell the car for $15,000. Lucy responds by saying she needs time to arrange financing. Lucy offers Jerry
$100 to keep the offer open for two weeks. Jerry agrees, taking the $100. Three days later, Roberta contacts Jerry saying
she is interested in buying the car and has the cash to buy it outright. Jerry is concerned that if he doesn’t sell the car to
Roberta now, she may not be interested later. Furthermore, Lucy may never be able to arrange financing. Jerry is afraid he
may end up with no buyer at all. He comes to you for advice. What do you advise?
open. Jerry’s offer may not be revoked during the two-week option period.
Bloom’s: Knowledge
43. McCann Construction purchased a poured concrete form from Advance Concrete Forms, Inc. McCann purchased the
concrete form by placing a phone call to Advance in Madison, Wisconsin. Advance delivered the concrete form with an
invoice stating the terms of the sale required payment within 30 days and a 1 1/2 % interest per month finance charge
would be charged on accounts over 30 days. When McCann failed to pay the invoice on time, interest was charged
according to this rate. Later, McCann refused to pay the accumulated interest charge, claiming there was not a meeting of
the minds regarding the finance charge in any conversation prior to the sale. The trial court concluded that the finance
Bloom’s: Comprehension
charge was in fact an additional term added by Advance when it accepted McCann’s purchase order. Discuss Uniform
Commercial Code Section 2–207 in general and with regard to this situation. Does McCann owe the interest accrued?
44. What elements are necessary for an offer to be valid? Give two examples of nonoffers.
45. Discuss the effect of the Uniform Commercial Code on the law of sales contracts in the area of open terms.