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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
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
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
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
6. On Monday, Mick puts an offer in the mail to Sheri to sell his guitar for $50. Monday night when jamming with his
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
8. A letter of intent summarizes progress made during business negotiations, but more importantly, it creates a binding
contract.
a.
True
b.
False
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
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
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
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
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
15. In an option contract, the offeror may not revoke an offer during the option period.
a.
True
b.
False
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
a.
made an offer to anyone within hearing distance and will be bound by his offer to the first person who
produces $100.
b.
made a firm offer and will be bound by his offer for a reasonable period of time.
c.
made an acceptance to the first person who can produce $100.
d.
not made an offer because under the circumstances a reasonable person would not conclude that John had
intent to make an offer.
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
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.
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.
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
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.
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.
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.
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?
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.
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.
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.
protects both parties by ensuring the other side is serious and creates a binding agreement on the issues on
which the parties have agreed thus far.
b.
may or may not be an offer, depending on the exact language and whether the document indicates that the
parties have reached an agreement.
c.
has a legal binding effect concerning the issues outlined in the letter.
d.
courts will consider to be a valid offer which the other party must accept if offered in good faith.
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.
the contract may indicate a method for determining the price, without stating a definite price.
b.
Morales and Rolfes must depend on the UCC’s gap-filler provisions to determine a price since the fuel is a
“good” covered by Article 2 of the UCC.
c.
the contract price must remain the same for the entire three-year contractual period.
d.
their contractual requirements regarding definiteness would be the same under the UCC and the common law.
29. Jaime offered to buy Kevin's bike. Jamie is the
a.
offeree.
b.
offeror.
c.
mortgagor.
d.
trustee.
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.
No contract exists. The purported acceptance contains additional terms, so it is a counteroffer, which has not
been accepted.
b.
No contract exists. The terms materially alter the original offer.
c.
A contract exists. The additional terms are not material, they are part of the contract.
d.
A contract exists, but the additional terms are not part of the contract no matter what.
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.
Unless otherwise stated, the auctioneer had the right to withdraw the item before the fall of the hammer.
b.
Generally, the auctioneer must sell to the highest bidder. Vivian will get the lamp.
c.
Generally, the auctioneer is the offeror and the bidders are the offerees so there is a contract and Vivian will
get the lamp.
d.
Most auctions are without reserve and therefore the auctioneer cannot withdraw the lamp.
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
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.
The price will be the reasonable price based on the market value of the goods at the time of delivery or a price
established by a neutral party or agency.
b.
David has the freedom to set any price he wants considering George was foolish enough to enter into a
contract without a price established.
c.
George has the right to establish a price because he is the buyer. David should have taken steps to protect his
sales interest.
d.
None of the above. The contract is not valid because the terms are not definite and certain.
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.
unenforceable due to its vagueness.
b.
unenforceable due to the difficulty of devising an appropriate remedy for a breach.
c.
enforceable as long as both parties act in good faith and Bob doesn't suddenly demand more hay than what
was reasonably estimated.
d.
unenforceable unless state real estate law makes an exception.
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.
Elaine calls Travel Lines and states that she will buy the tickets.
b.
Elaine sends a fax to Travel Lines stating she will buy the tickets.
c.
Elaine sends a letter by USPS next-day service to Travel Lines stating that she will buy the tickets.
d.
All of the above responses will create a contract between Travel Lines and Elaine since they constitute
reasonable means of communication.
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.
Outdoor Times is guilty of “bait and swap.”
b.
Seth will prevail in his case, as Outdoor Times is responsible for having sufficient stock of advertised items.
c.
Seth will not prevail, as the advertisement was simply a request for offers.
d.
Outdoor Times must provide Seth with a raincheck, ensuring he can buy the same bag at the sales price at a
later date.
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.
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.
Jack has a deal. His offer was intended and contains definite terms.
b.
Jack has a deal. Joan should have responded saying she is not interested in the car if she didn't want to be
bound to the offer.
c.
Joan is not bound. Generally an offeree must say or do something to accept an offer.
d.
Joan is not bound. Ten days is not a reasonable amount of time to consider the offer and accept by mail.
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.
no contract can be created.
b.
the warranty term is a “different term,” and the majority of states hold that a contract can be formed but the
contradictory terms cancel each other out.
c.
the warranty term is an “additional term” that becomes part of the contract in most states.
d.
the warranty term is a “different term,” which in most states becomes part of the contract unless the seller
promptly objects.
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?
41. Briefly discuss how an offer can be accepted. Include in your answer the application of the mirror image rule.
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?
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
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.
