ANSWERS TO PROBLEMS
Ames, seeking business for his lawn maintenance firm, posted the following notice in the meeting
room of the Antlers, a local lodge: “To the members of the Antlers—Special this month. I will resod
your lawn for two dollars per square foot using Fairway brand sod. This offer expires July 15.” The
notice also included Ames’s name, address, and signature and specified that the acceptance was to
be in writing.
Bates, a member of the Antlers, and Cramer, the janitor, read the notice and became interested.
Bates wrote a letter to Ames saying he would accept the offer if Ames would use Putting Green
brand sod. Ames received this letter July 14 and wrote to Bates saying he would not use Putting
Green sod. Bates received Ames’s letter on July 16 and promptly wrote Ames that he would
accept Fairway sod. Cramer wrote to Ames on July 10, saying he accepted Ames’s offer.
By July 15, Ames had found more profitable ventures and refused to resod either lawn at the
specified price. Bates and Cramer brought an appropriate action against Ames for breach of
contract. Decisions on the claims of Bates and Cramer?
Answer: Counteroffer. Ames wins both cases. The first letter from Bates was not an acceptance
because it did not correspond with the terms of the offer. It was a counteroffer, as it called for
Ames to use a different brand sod, and therefore constituted a rejection of the original offer which
terminated the original offer. After Ames had rejected the counteroffer, Bates wrote on July 16 an
Garvey owned four speedboats named Porpoise, Priscilla, Providence, and Prudence. On April 2,
Garvey made written offers to sell the four boats in the order named for $4,200 each to Caldwell,
Meens, Smith, and Braxton, respectively, allowing ten days for acceptance. In which, if any, of the
following four situations described was a contract formed?
(a) Five days later, Caldwell received notice from Garvey that he had contracted to sell Porpoise
to Montgomery. The next day, April 8, Caldwell notified Garvey that he accepted Garvey‘s offer.
(b) On the third day, April 5, Meens mailed a rejection to Garvey which reached Garvey on the
morning of the sixth day. But at 10:00 A.M. on the fourth day, Meens sent an acceptance by
overnight letter to Garvey, who received it at noon on the fifth day.
(c) Smith, on April 3, replied that she was interested in buying Providence but declared the price
asked appeared slightly excessive and wondered if, perhaps, Garvey would be willing to sell the
boat for $3,900. Five days later, having received no reply from Garvey, Smith, by letter, accepted
Garvey’s offer and enclosed a certified check for $4,200.
(d) Braxton was accidentally killed in an automobile accident on April 9. The following day, the
executor of Braxton’s estate mailed an acceptance of Garvey’s offer to Garvey.
Answer: Revocation, Rejection. (a) No contract. Where the offeror, after making an offer for sale,
Alpha Rolling Mill Corporation, by letter dated June 8, offered to sell Brooklyn Railroad Company
2,000 to 5,000 tons of fifty-pound iron rails upon certain specified terms, adding that, if the offer
was accepted, Alpha Corporation would expect to be notified prior to June 20. Brooklyn Company,
on June 16, by fax, referring to Alpha Corporation’s offer of June 8, directed Alpha Corporation to
enter an order for 1,200 tons of fifty-pound iron rails on the terms specified. The same day, June 16,
Brooklyn Company, by letter to Alpha Corporation, confirmed the fax. On June 18, Alpha
Corporation, by fax, declined to fill the order. Brooklyn Company, on June 19, wrote Alpha
Corporation: “Please enter an order for 2,000 tons rails as per your letter of the eighth. Please
forward written contract. Reply.” In reply to Brooklyn Company’s repeated inquiries regarding
whether the order for 2,000 tons of rails had been entered, Alpha denied the existence of any
contract between Brooklyn Company and itself. Thereafter, Brooklyn Company sued Alpha
Corporation for breach of contract. Decision?
Answer: Counteroffer. Decision for Alpha Rolling Mill Corporation and against Brooklyn Railroad
Company. The offer was for a quantity of between 2,000 to 5,000 tons of iron rails. When the
railroad company ordered 1,200 tons, it was not accepting the offer but making a counteroffer.
On April 8, Burchette received a telephone call from Bleluck, a truck dealer, who told Burchette that
a new model truck in which Burchette was interested would arrive in one week. Although Bleluck
initially wanted $10,500, the conversation ended after Bleluck agreed to sell and Burchette agreed to
purchase the truck for $10,000, with a $1,000 down payment and the balance upon delivery. The
next day, Burchette sent Bleluck a check for $1,000, which Bleluck promptly cashed.
After notifying Bleluck that she will not cash the check, Burchette sues Bleluck for damages.
Should Burchette prevail? Explain.
Answer: Definiteness. Decision for Burchette. The agreement made in the course of a telephone
conversation between Burchette and truck dealer Bleluck was for the sale by Bleluck to Burchette
at an agreed price of $10,000 for a new model truck. The trade description of the truck was
known to both parties, as Burchette was interested in it, and dealer Bleluck had apparently
ordered the new truck from the manufacturer as he told Burchette that he expected to receive
On November 15, I. Sellit, a manufacturer of crystalware, mailed to Benny Buyer a letter stating that
Sellit would sell to Buyer 100 crystal “A” goblets at $100 per goblet and that “the offer would
remain open for fifteen (15) days.” On November 18, Sellit, noticing the sudden rise in the price of
crystal “A” goblets, decided to withdraw her offer to Buyer and so notified Buyer. Buyer chose to
ignore Sellit’s letter of revocation and gleefully watched as the price of crystal “A” goblets
continued to skyrocket. On November 30, Buyer mailed to Sellit a letter accepting Sellit’s offer to sell
the goblets. The letter was received by Sellit on December 4. Buyer demands delivery of the goblets;
what result?
Answer: Firm Offers Under the Code. Buyer prevails. Sellit’s offer of Nov. 15, constituted a firm
offer–it is a signed writing by a merchant promising to hold open an offer for 3 months or less (15
days in this case) and therefore cannot be revoked prior to Nov. 30. Thus, Sellit’s revocation of
On May 1, Melforth Realty Company offered to sell Greenacre to Dallas, Inc., for $1,000,000. The
offer was made by a letter sent by overnight delivery and stated that the offer would expire on May
15. Dallas decided to purchase the property and sent a letter by registered first-class mail to
Melforth on May 10, accepting the offer. Due to unexplained delays in the postal service, Melforth
did not receive the letter until May 22. Melforth wishes to sell Greenacre to another buyer, who is
offering $1,200,000 for the tract of land. Has a contract resulted between Melforth and Dallas?
Answer: Effective Moment: Acceptance By Dispatch. Under the Restatement, Second, Dallas’
acceptance, via first-class mail, is a reasonable means of acceptance and is effective upon
dispatch. Thus, Dallas’ acceptance, mailed on May 10, would have been effective prior to the
offer’s termination on May 15.
Rowe advertised in newspapers of wide circulation and otherwise made known that she would pay
$5,000 for a complete set consisting of ten volumes of certain rare books. Ford, not knowing of the
offer, gave Rowe all but one volume of the set of rare books as a Christmas present. Ford later
learned of the offer, obtained the one remaining book, tendered it to Rowe, and demanded the
$5,000. Rowe refused to pay. Is Ford entitled to the $5,000?
Answer: Intent. Ford is not entitled to the $5,000, as he did not accept Rowe’s offer and therefore no
contract was formed. The gift of the nine books by Ford to Rowe was not an acceptance because
Scott, manufacturer of a carbonated beverage, entered into a contract with Otis, owner of a baseball
park, whereby Otis rented to Scott a large signboard on top of the center field wall. The contract
provided that Otis should letter the sign as Scott desired and would change the lettering from time to
time within forty-eight hours after receipt of written request from Scott. As directed by Scott, the
signboard originally stated in large letters that Scott would pay $1,000 to any ballplayer hitting a
home run over the sign.
In the first game of the season, Hume, the best hitter in the league, hit one home run over the
sign. Scott immediately served written notice on Otis instructing Otis to replace the offer on the
signboard with an offer to pay $500 to every pitcher who pitched a no-hit game in the park. A
week after receipt of Scott’s letter, Otis had not changed the wording on the sign. On that day,
Perry, a pitcher for a scheduled game, pitched a no-hit game while Todd, one of his teammates,
hit a home run over Scott’s sign.
Scott refuses to pay any of the three players. What are the rights of Scott, Hume, Perry, and
Todd?
Answer: Offer/Acceptance. Batter Hume is entitled to recover $1,000 from Scott who by his large
signboard on top of the center field wall promised to pay that amount to any hitter who would hit
a home run over the signboard. When Hume performed the act requested, a unilateral contract
was formed.
Pitcher Perry cannot recover from Scott. No offer was publicly made to any pitcher for a no-hit
game, nor was any offer made to pitcher Perry.
Barnes accepted Clark’s offer to sell to him a portion of Clark’s coin collection. Clark forgot that his
prized $20 gold piece at the time of the offer and acceptance was included in the portion that he
offered to sell to Barnes. Clark did not intend to include the gold piece in the sale. Barnes, at the
time of inspecting the offered portion of the collection, and prior to accepting the offer, saw the gold
piece. Is Barnes entitled to the $20 gold piece?
Answer: Objective Standard for Intent. Yes. Mutual assent to the formation of a contract is
operative as to the extent it is manifested. If the manifestation is at variance with the mental
intent, the objective expression is controlling. It was Clark’s intention to sell that particular
Small, admiring Jasper’s watch, asked Jasper where and at what price he had purchased it. Jasper
replied: “I bought it at West Watch Shop about two years ago for around $85, but I am not certain as
to that.” Small then said: “Those fellows at West are good people and always sell good watches. I’ll
buy that watch from you.” Jasper replied: “It’s a deal.” The next morning Small telephoned Jasper
and said he had changed his mind and did not wish to buy the watch.
Jasper sued Small for breach of contract. In defense, Small has pleaded that he made no
enforceable contract with Jasper (a) because the parties did not agree on the price to be paid for
the watch, and (b) because the parties did not agree on the place and time of delivery of the
watch to Small. Are either, or both, of these defenses good?
Answer: Definiteness of Acceptance. The first defense has merit, especially when combined with
the second defense. The second defense will not stand alone, but when coupled with the lack of
agreement as to price, it is less likely they intended to form a contract. Small’s comments
regarding the watch were not definite and certain. (a) Section 2-305, U.C.C., provides:
Jeff says to Brenda, “I offer to sell you my PC for $900.” Brenda replies, “If you do not hear
otherwise from me by Thursday, I have accepted your offer.” Jeff agrees and does not hear from
Brenda by Thursday. Does a contract exist between Jeff and Brenda? Explain.
Answer: Silence as Acceptance. Yes, there is a contract. Brenda’s statement to Jeff is a conditional
. On November 19, Hoover Motor Express Company sent to Clements Paper Company a written
offer to purchase certain real estate. Sometime in December, Clements authorized Williams to
accept. Williams, however, attempted to bargain with Hoover to obtain a better deal, specifically that
Clements would retain easements on the property. In a telephone conversation on January 13 of the
following year, Williams first told Hoover of his plan to obtain the easements. Hoover replied, “Well,
I don’t know if we are ready. We have not decided, we might not want to go through with it.” On
January 20, Clements sent a written acceptance of Hoover’s offer. Hoover refused to buy, claiming it
had revoked its offer through the January 13 phone conversation. Clements then brought suit to
compel the sale or obtain damages. Did Hoover successfully revoke its offer?
Answer: Revocation. Yes, the offer was revoked. Express notice of revocation before acceptance of
an offer is not required. The offeror may implicitly revoke his offer through acts or
communications to the offeree that are inconsistent with its continuance. If the offeree has
Walker leased a small lot to Keith for ten years at $1,000 a month, with a right for Keith to extend
the lease for another ten-year term under the same terms except as to rent. The renewal option
provided:
“Rental will be fixed in such amount as shall actually be agreed upon by the lessors
and the lessee with the monthly rental fixed on the comparative basis of rental values
as of the date of the renewal with rental values at this time reflected by the comparative
business conditions of the two periods.”
Keith sought to exercise the renewal right and, when the parties were unable to agree on the rent,
brought suit against Walker. Who prevails? Why?
Answer: Option Contract. Decision for Walker. The renewal option provision did not constitute an
option contract or any agreement giving Keith a unilateral right to accept the new contract for a
The Brewers contracted to purchase Dower House from McAfee. Then, several weeks before the May
7 settlement date for the purchase of the house, the two parties began to negotiate for the sale of
certain items of furniture in the house. On April 30, McAfee sent the Brewers a letter containing a
list of the furnishings to be purchased at specified prices; a payment schedule, including a request
for a $3,000 payment, due on acceptance; and a clause reading: “If the above is satisfactory, please
sign and return one copy with the first payment.”
On June 3, the Brewers sent a letter to McAfee stating that enclosed was a $3,000 check; that the
original contract had been misplaced and could another be furnished; that they planned to move
into Dower House on June 12; and that they wished the red desk to be included in the contract.
McAfee then sent a letter dated June 8 to the Brewers, listing the items of furniture purchased.
The Brewers moved into Dower House in the middle of June. Soon after they moved in, they tried
to contact McAfee at his office to tell him that there had been a misunderstanding relating to their
purchase of the listed items. They then refused to pay him any more money, and he brought this
action to recover the balance outstanding. Will McAfee be able to collect the additional money
from the Brewers?
Answer: Mirror Image Rule. Here, McAfee did not indicate in his April 30 letter to the Brewers
that a particular manner of acceptance was required. Therefore, the Brewer’s letter of June 3,
The Thoelkes were owners of real property located in Orange County, which the Morrisons agreed
to purchase. The Morrisons signed a contract for the sale of that property and mailed it to the
Thoelkes in Texas on November 26. The next day the Thoelkes executed the contract and placed it in
the mail addressed to the Morrisons’ attorney in Florida. After the executed contract was mailed but
before it was received in Florida, the Thoelkes called the Morrisons’ attorney in Florida and
attempted to repudiate the contract. Does a contract exist between the Thoelkes and the Morrisons?
Discuss.
Answer: Deposited Acceptance Rule. Yes, a contract exists and thus decision for the Morrison’s.
Under the deposited acceptance rule, an unqualified offer was accepted when the letter was
Lucy and Zehmer met while having drinks in a restaurant. During the course of their conversation,
Lucy apparently offered to buy Zehmer’s 471.6-acre farm for $50,000 cash. Although Zehmer claims
that he thought the offer was made in jest, he wrote the following on the back of a pad: “We hereby
agree to sell to W. O. Lucy the Ferguson Farm complete for $50,000, title satisfactory to buyer.”
Zehmer then signed the writing and induced his wife Ida to do the same. She claims, however, that
she signed only after Zehmer assured her that it was only a joke. Finally, Zehmer claims that he was
“high as a Georgia pine” at the time but admits that he was not too drunk to make a valid contract.
Decision?
Answer: Offers/Objective Standard of Intent/Contractual Capacity. Judgment for Lucy. An
agreement or mutual assent is essential to the formation of a valid contract. The mental assent of
the parties is not requisite, however, unless one party’s undisclosed intentions are not made
known to the other party. If they are not, then the words and undisclosed intentions are judged by
Lee Calan Imports advertised a used Volvo station wagon for sale in the Chicago Sun-Times. As
part of the information for the advertisement, Lee Calan Imports instructed the newspaper to print
the price of the car as $1,795. However, due to a mistake made by the newspaper, without any fault
on the part of Lee Calan Imports, the printed ad listed the price of the car as $1,095. After reading
the ad and then examining the car, O’Brien told a Lee Calan Imports salesman that he wanted to
purchase the car for the advertised price of $1,095. Calan Imports refuses to sell the car to O’Brien
for $1,095. Is there a contract? If so, for what price?
Answer: Offers/Invitations, Offer. No contract. A newspaper ad is an invitation to make an offer,
not an offer. Judgment for Lee Calan Imports. “Advertisements are not offers because (1) they
On May 20 cattle rancher Oliver visited his neighbor Southworth, telling him, “I know you’re
interested in buying the land I’m selling.” Southworth replied, “Yes, I do want to buy that land,
especially since it adjoins my property.” Although the two men did not discuss the price, Oliver told
Southworth he would determine the value of the property and send that information to him, so that
Southworth would have “notice” of what Oliver “wanted for the land.” On June 13, Southworth
called Oliver to ask if he still planned to sell the land. Oliver answered, “Yes, and I should have the
value of the land determined soon.” On June 17, Oliver sent a letter to Southworth listing a price
quotation of $324,000. Southworth then responded to Oliver by letter on June 21, stating that he
accepted Oliver’s offer. However, on June 24 Oliver wrote back to Southworth, saying “There has
never been a firm offer to sell, and there is no enforceable contract between us.” Oliver maintains
that a price quotation alone is not an offer. Southworth claims a valid contract has been made. Who
wins? Discuss.
Answer: Essentials of an Offer/Intent. Southworth is correct, there is a valid and enforceable
contract to sell the property. Despite the general rule that a price quotation alone is insufficient to
constitute an offer, “there may be circumstances under which a price quotation, when considered
On December 23, Wyman, a lawyer representing First National Bank & Trust (defendant), wrote to
Zeller (plaintiff) stating that he had been instructed to offer a building to Zeller at a price of
$240,000. Zeller had previously expressed an interest in purchasing the building for $240,000. The
letter also set forth details concerning interest rates and loan fees.
After receiving the letter, Zeller instructed his attorney, Jamma, to send Wyman a written
counteroffer of $230,000 with interest and loan arrangements varying from the terms of the
original offer. Jamma sent the written counteroffer as instructed on January 10. On the same day,
Jamma telephoned Wyman and informed him of the counteroffer. Subsequently Jamma sent an
acceptance of the original offer to Wyman. When Wyman refused to sell the property to him,
Zeller brought an action to seek enforcement of the alleged contract. Decision?
Answer: Counteroffer. Judgment for First National Bank. In order for an acceptance to create a
binding contract, it must comply strictly with the terms of the offer. An acceptance requesting
First Development Corporation of Kentucky (FDCK) sought to purchase a fifteen-acre parcel of
riverfront property owned by Martin Marietta. On May 9, FDCK made an offer to purchase the
property for $300,000, which it submitted to Coldwell Banker, Martin Marietta’s real estate agent.
This offer was accompanied by an earnest money deposit evidenced by a $1,000 check payable to
Coldwell Banker. The deposit was fully refundable if transfer of title to FDCK was not completed for
any reason except FDCK’s failure to perform. After this offer expired without being accepted, FDCK
asked Don Gilmour, Coldwell Banker’s account agent, to seek a counteroffer. In a letter to Gilmour,
dated September 7, Martin Marietta agreed to sell the property for $550,000. The counteroffer stated
it was to remain open for thirty days. Gilmour informed Pollitt, president of FDCK, of the
counteroffer by telephone on September 7 and sent a copy of the letter to Pollitt, which was received
on September 12. .
Within days of the expiration of FDCK’s original offer, Bill Harvey, president of Harmony
Landing, a development company, initiated direct negotiations with Martin Marietta to purchase
the riverfront parcel. These negotiations resulted in a contract being executed on September 21
or 22. During a September 21 phone call, Gilmour advised Pollitt of Harmony Landing’s interest
in buying the property, but Pollitt remained noncommittal during the conversation. Later that
day, Pollitt, along with his partner and engineer, visited the property and discussed various
studies and arrived at a decision to accept the September 7 offer from Martin Marietta.
However, Pollitt did not convey this acceptance to Gilmour. Rather, he consulted his attorneys
regarding a contract to accept Martin Marietta’s offer.
After consulting with his attorneys, Pollitt prepared an acceptance of Martin Marietta’s offer but
did not put it in the mail. The next morning, Pollitt placed the acceptance in his office suite’s mail
depository. However, after being informed by Gilmour that Martin Marietta had accepted
Harmony Landing’s option on the river property, Pollitt retrieved the acceptance and personally
delivered it to Gilmour at 4:15 p.m. The acceptance was returned to Pollitt and he subsequently
initiated this action for temporary and permanent injunction and specific performance. The
district court ruled that the $1,000 check, payable to and in the possession of Coldwell Banker
during the period of this controversy was, by operation of law, converted into consideration for a
thirty-day irrevocable option in favor of FDCK to purchase the riverfront property in accordance
with the terms of Martin Marietta’s letter of September 7. Does a contract exist between Martin
Marietta and FDCK?
Answer: Revocation/Option Contract/ Acceptance. No. An option contract which is not supported
by consideration can be withdrawn at any time before acceptance. The $1,000 deposit
accompanying FDCK’s initial offer was not consideration for an option contract. The
documentation is explicitly clear that the parties, all of whom were sophisticated businessmen
On August 12, Mr. and Mrs. Mitchell, the owners of a small secondhand store, attended Alexander’s
Auction, where they bought a used safe for $50. The safe, part of the Sumstad estate, contained a
locked inside compartment. Both the auctioneer and the Mitchells knew this fact. Soon after the
auction, the Mitchells had the compartment opened by a locksmith, who discovered $32,207 inside.
The Everett Police Department impounded the money. The city of Everett brought an action against
the Sumstad estate and the Mitchells to determine the owner of the money. Who should receive the
money? Why?
Answer: Auction Sales. Judgment in favor of the Mitchells—they are entitled to the funds. The
subject matter transferred in a sale is determined by the intent of the parties as revealed by the
terms of their agreement in light of the surrounding circumstances. The intentions of the parties
ANSWERS TO “TAKING SIDES” PROBLEMS
Cushing filed an application with the office of the Adjutant General of the State of New
Hampshire for the use of the Portsmouth Armory to hold a dance on the evening of April 29. The
application, made on behalf of the Portsmouth Area Clamshell Alliance, was received by the
Adjutant General’s office on or about March 30. On March 31 the Adjutant General mailed a
signed contract after agreeing to rent the armory for the evening requested. The agreement
required acceptance by the renter affixing his signature to the agreement and then returning the
copy to the Adjutant General within five days after receipt. Cushing received the contract offer,
signed it on behalf of the Alliance, and placed it in the outbox for mailing on April 3. At 6:30 on
the evening of April 4, Cushing received a telephone call from the Adjutant General revoking the
rental offer. Cushing stated during the conversation that he had already signed and mailed the
contract. The Adjutant General sent a written confirmation of the withdrawal on April 5. On
April 6 the Adjutant General’s office received by mail from Cushing the signed contract dated
April 3 and postmarked April 5.
(a) What are the arguments that a binding contract exists?
(b) What are the arguments that a contract does not exist or should not exist?
(c) What is the proper outcome? Explain.
ANSWER:
(a) Cushing claims that he signed the contract and placed it in the outbox for mailing on April 3.
Furthermore, it was customary practice for letters to be collected from the outbox daily and
then placed in the U.S. mail. Since this occurred before the attempted revocation of the offer
by the Adjunct General on April 4, the revocation was ineffective, and the contract is binding