Question 1

Victor has breakfast at the Kute Kafey. From the menu, he orders buttered muffins "homemade like your mother's," jam "made with loving care and fresh ingredients," and tea "fresh-picked from the cool hillsides of an Indian plantation." Actually, the muffins are nothing like Victor's mum's muffins and are baked in a factory, the jam is mass-produced from industrial-quality frozen fruit, and the tea is made with no-name tea bags. Victor has a good case for breach of contract.

Accepted Answer

The descriptions provided by the Kute Kafey are considered puffery, which are subjective opinions and not factual representations that would constitute a breach of contract.

Question 2

Giardetti, a retailer, placed an advertisement in a local newspaper on May 5^th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10^th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10^th customer in the store on May 10^th, but Giardetti refused to sell him a TV set for $100. Giardetti's advertisement was a valid offer to sell, which Don accepted by being one of the first 10 customers at the store on May 10^th, and verbally accepting the offer.

Accepted Answer

Giardetti's advertisement was specific in terms of the item, price, quantity, and time, making it a clear offer that Don accepted by meeting the specified conditions, thus forming a contract.

Question 3

Rosa offers Valerie the chance to buy her cottage for $25,000. Two days later, while Valerie is still considering the offer, Rosa's sister mentions to Valerie that Rosa has sold the cottage to Ben for $30,000. If Valerie now accepts, Rosa will be liable for breach of contract.

Accepted Answer

Rosa's sale of the cottage to Ben effectively revokes the offer she made to Valerie, meaning there is no longer an offer for Valerie to accept, thus no contract with Valerie to breach.

Question 4

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul is not bound in contract with Brown because the prior contract he made with Jones became enforceable when Jones accepted his offer.

Accepted Answer

Rahul is not bound in contract with Jones because there was no acceptance at the time of the offer, and Rahul had not agreed to keep the offer open, allowing him to enter into a contract with Brown instead.

Question 5

Paulette Paulson Furs advertises mink coats for sale at 30% off. The demand was much greater than anyone could have predicted, and 14 people who came to the store could not be provided with one of the sale coats. Since they had accepted Paulson's offer, she will have to find coats for them or be in breach of their contracts.

Accepted Answer

Advertising a product at a certain price is generally considered an invitation to treat, not a formal offer that leads to a binding contract when accepted by a customer. Therefore, if the store runs out of the advertised product, they are not legally obligated to provide it to customers who arrive after stock is depleted.

Question 6

Giardetti, a retailer, placed an advertisement in a local newspaper on May 5^th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10^th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10^th customer in the store on May 10^th, but Giardetti refused to sell him a TV set for $100. Giardetti's advertisement was only an invitation to do business, and not a valid offer to sell.

Accepted Answer

The answer of Giardetti, a retailer, placed an advertisement in...

Question 7

Jill has been negotiating the purchase of a speedboat with Sandi during the past two weeks. Two days ago, she wrote to Sandi, saying "I won't go any higher than $8,000. Take it or leave it, but that's my final offer." By coincidence, Sandi sent a letter the same day which said "I won't take less than $8,000, so if you can't accept that, I'll have to look elsewhere for a buyer." The letters have both arrived today at their destinations. There is a contract between Jill and Sandi.

Accepted Answer

The answer of Jill has been negotiating the purchase of...

Question 8

A trader on the floor of the Stock Exchange makes a deal with another trader by hand signals for the sale of a block of shares. This is a binding contract.

Accepted Answer

In the context of stock exchanges, agreements made through hand signals (or open outcry) between traders on the floor are considered binding contracts, as they are recognized methods of communication and transaction in these environments.

Question 9

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. The acceptance by Jones was ineffective because Jones did not reply to Rahul by way of a written acceptance.

Accepted Answer

The acceptance by Jones was ineffective because there was no meeting of the minds when the offer was initially made, and Rahul had effectively revoked his offer by entering into a contract with Brown before Jones had accepted the offer. In contract law, an offer can be revoked before acceptance, and verbal agreements can be legally binding if they meet the criteria for contract formation.

Question 10

Franklin Motors Ltd. makes an agreement to buy 3,000 widgets for $1,000 from Stovely's Engineering Co. The law presumes that, unless one of them proves otherwise, they intended this agreement to be a legally binding one.

Accepted Answer

In most jurisdictions, the law presumes that agreements, especially those involving commercial transactions between businesses, are intended to be legally binding unless proven otherwise. This presumption helps in enforcing contracts and ensuring that parties adhere to their agreements.

Question 11

Giardetti, a retailer, placed an advertisement in a local newspaper on May 5^th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10^th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10^th customer in the store on May 10^th, but Giardetti refused to sell him a TV set for $100. If Giardetti had placed a notice on his shop door on May 9^th which read: "Sale cancelled," his notice would revoke the offer made in the newspaper on May 5^th.

Accepted Answer

The notice on the shop door on May 9th would revoke the offer made in the newspaper on May 5th because it was made before the offer was accepted.

Question 12

Alliston enters into an agreement with Berkley which, for $2,000, gives him the right to agree to purchase Berkley's screen printing business within the next 30 days for $50,000. If he decides to buy, they agree that the $2,000 will be the down payment on the purchase price. This agreement is an option.

Accepted Answer

The answer of Alliston enters into an agreement with Berkley...

Question 13

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul and Jones established a binding contract when Jones telephoned Rahul and accepted Rahul's offer to buy his canoe for $200.

Accepted Answer

Rahul and Jones had a valid contract when Jones accepted Rahul's offer over the phone, even though their initial agreement was not in writing.

Question 14

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. The contract between Rahul and Brown automatically rescinded the offer which Rahul had made to Jones.

Accepted Answer

The contract between Rahul and Brown does not automatically rescind the offer Rahul made to Jones. Rahul's offer to Jones was still open until Rahul explicitly revoked it or until Jones was informed of Rahul's deal with Brown, which could serve as an implied revocation.

Question 15

Tom offers to buy Jenny's fishing tackle for $500, but she says she wants $600. Tom then proposes a price of $550, but Jenny says she is not interested. Tom is afraid she will walk away from a deal, so he says "OK. I'll accept your offer to sell for $600." There is now a contract between them.

Accepted Answer

Jenny's statement that she wants $600 after Tom's offer of $550 constitutes a rejection of Tom's offer and a counteroffer. When Tom agrees to the $600, he is accepting Jenny's counteroffer, thus forming a contract at that point, not before.

Question 16

Andy offers to sell his car to Bob, but Bob needs to arrange financing, so Andy says he will give Bob three days to do so. Andy can revoke the offer before the three days are up.

Accepted Answer

In general contract law, unless an offer is irrevocable (e.g., through an option contract where consideration is given for the offer to remain open), the offeror can revoke the offer at any time before acceptance, even if they've promised to keep the offer open for a certain period.

Question 17

Giardetti, a retailer, placed an advertisement in a local newspaper on May 5^th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10^th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10^th customer in the store on May 10^th, but Giardetti refused to sell him a TV set for $100. The advertisement is not an offer because Giardetti did not express the intention to be bound by the statements in the advertisement.

Accepted Answer

The advertisement is considered an offer because it specifies a clear action (being among the first 10 customers) and a definite price, indicating an intention to be bound by the terms stated.

Question 18

Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul and Brown established a binding contract which both parties are obliged to perform.

Accepted Answer

Rahul and Brown formed a binding contract when they agreed on the sale of Brown's canoe for $175, making Rahul's earlier verbal offer to Jones irrelevant once Jones decided to accept it after Rahul had already entered into another contract.

Question 19

Giardetti, a retailer, placed an advertisement in a local newspaper on May 5^th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10^th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10^th customer in the store on May 10^th, but Giardetti refused to sell him a TV set for $100. If Don had seen the notice on the shop door on May 9^th; he could still accept the offer, because the offer was irrevocable.

Accepted Answer

The advertisement was an invitation to treat, not a formal offer, and therefore it was not irrevocable. Giardetti was not legally obligated to sell the TV to Don even if he was the 10th customer.

Question 20

Craig makes an offer to Josie by mail, because she cannot be reached by telephone. She replies by mail, accepting the offer. Canada Post mislays her reply for several weeks. Craig, who has given up waiting to hear from her, has entered into the contract with someone else after waiting for a reasonable time. Josie can sue Craig for breach of contract.

Accepted Answer

In contract law, acceptance is effective when dispatched, not when received, under the "postal rule." Josie's acceptance was valid when she mailed it, creating a binding contract.

Quiz 7: An Introduction to Contracts

Rosa offers Valerie the chance to buy her cottage for $25,000. Two days later, while Valerie is still considering the offer, Rosa's sister mentions to Valerie that Rosa has sold the cottage to Ben for $30,000. If Valerie now accepts, Rosa will be liable for breach of contract.

A trader on the floor of the Stock Exchange makes a deal with another trader by hand signals for the sale of a block of shares. This is a binding contract.

Franklin Motors Ltd. makes an agreement to buy 3,000 widgets for $1,000 from Stovely's Engineering Co. The law presumes that, unless one of them proves otherwise, they intended this agreement to be a legally binding one.

Tom offers to buy Jenny's fishing tackle for $500, but she says she wants $600. Tom then proposes a price of $550, but Jenny says she is not interested. Tom is afraid she will walk away from a deal, so he says "OK. I'll accept your offer to sell for $600." There is now a contract between them.

Andy offers to sell his car to Bob, but Bob needs to arrange financing, so Andy says he will give Bob three days to do so. Andy can revoke the offer before the three days are up.