Question 1

What does it mean when we say that the courts apply an objective test of intentions to ascertain what contracting parties have agreed to?
A) The courts look at the parties' actual intentions at the time of contracting and search for common ground.
B) The courts look at the parties' apparent intentions reasonably interpreted from their conduct in all the circumstances.

Accepted Answer

The objective test of intentions means that courts assess what a reasonable person would interpret the parties' intentions to be based on their conduct and the surrounding circumstances, rather than their actual, subjective intentions.

Question 2

Playtron Industries has rented its business headquarters from Novell Realtors for the past two years. With the third year approaching, Novell decides to raise its £9,000 per month rent to £9,800. The assistant writes to Playtron, but accidentally types £8,900 instead of £9,800. When Playtron receives the offer, they are pleasantly surprised and they immediately accept. Novell realizes the mistake they made upon the receipt of this acceptance and calls Playtex to correct the offer. Have the parties contracted and, if so, for which price?
A) Yes, for £9,800.
B) Yes, for £8,900.
C) Yes, for £9,000.
D) No, the parties have not contracted.

Accepted Answer

The parties have contracted for £8,900 because Playtron accepted the offer as it was presented to them, and Novell's mistake was unilateral and not induced by Playtron.

Question 3

Amazon Ltd is a UK based shipping firm with a large international clientele. Biscayne Co, an Irish lumber firm, which plans to ship an order of timber to Japan, calls Amazon to inform about their prices. Amazon replies that, for a shipment of timber to the Far East, the average price would be £95 per pound. After an hour of negotiations, Amazon says it is willing to reduce its price to £91 per pound for the large quantity Biscayne is planning to have shipped. An offer is immediately drawn up by an employee of Amazon. Accidentally, he uses a form normally used for international shipments in which all prices are quoted per kilogram. When Biscayne receives the offer for £91 per kilogram, they immediately accept, this being almost half the price Amazon stated on the phone. Has a contract been concluded and, if so, for which price?
A) Yes, for £91 per kilogram.
B) Yes, for £91 per pound.
C) Yes, for £95 per pound.
D) No, a contract has not been concluded.

Accepted Answer

D

Question 4

Wazu Textile imports wool from India to Britain. The Indian government provides subsidies to exporters of Indian raw materials. In order to make increased profits from the shipment, Wazu decides to mix its Indian wool with inferior quality wool from Nepal and declare all its wool as Indian to the Indian Government. When the wool is auctioned off at a market in Portsmouth, the two lots are separated but given the same identification numbers in the auction catalogue. Comance Co, a UK manufacturer, bids successfully at too high a price for the Nepalese wool, thinking its Indian wool. Have the parties concluded a contract?
A) No, each party contracted for a different subject-matter.
B) No, the auctioneer could not reasonably assume Comance was bidding for Nepalese wool and accept that bid.
C) Yes, the parties' actions objectively ascertained lead to the conclusion that a contract has been concluded.

Accepted Answer

The answer of Wazu Textile imports wool from India to...

Question 5

Edward is an avid rugby fan. He subscribes to Sports World, a magazine which contains a classified section where private persons and small businesses can advertize their sports memorabilia for sale. One day, he sees an advertisement from Lionel, who owns a sports shop, which reads: 'Special deals on Football, Rugby and Cricket sportswear. Special deal this month: England Shirts from last World Cup. Liquidation Sale. £15 each'. After England's success in the Rugby World Cup, Edward has been at pains to find an English rugby shirt. He e-mails Lionel, immediately ordering two. A week later, Edward receives his package and is surprised to see that the shirts he has bought are the English Football Shirts from the 2002 World Cup. Seeing as the 2006 World Cup is nearing, Lionel wanted to make room for new stock. Have the parties concluded a contract and, if so, on which terms?
A) Yes, for two Rugby World Cup shirts. By advertizing in a sports magazine after England won the Rugby World Cup, Lionel gave Edward the impression that the advert was for rugby memorabilia.
B) Yes, for two Football World Cup shirts. Edward should have realized that no one would sell English rugby shirts so cheaply after their World Cup victory. The Football World Cup, on the other hand, was in 2002.
C) No, the parties were contracting for a different subject matter, Edward for Rugby shirts and Lionel for Football shirts.

Accepted Answer

The parties did not have a meeting of the minds on the subject matter of the contract, as Edward intended to purchase Rugby shirts, while Lionel was selling Football shirts.

Question 6

If an item is displayed for sale in a store, when has an offer been made and when has it been accepted?
A) The vendor makes the offer by displaying the goods; the customer accepts it by putting an item in his basket or otherwise taking possession of it.
B) The vendor makes the offer by displaying the goods; the customer accepts it by paying for an item at the cash desk.
C) The customer makes the offer by presenting an item at the cash desk; the vendor accepts it by checking the goods out and taking payment.

Accepted Answer

The display of goods is generally considered an invitation to treat, not an offer. The customer makes the offer by presenting the item for purchase, and the vendor accepts it by processing the sale.

Question 7

In which of the following scenarios has an offer been validly accepted?
A) While driving around town, Nathan sees his neighbour's dog and brings it back home to him. His neighbour was offering a £50 reward for anyone who finds the dog, but Nathan was unaware of this.
B) Quagmire Industries is looking for a new corporate headquarters. After months of negotiations, Relex Realtors faxes them a final offer '£37 million, reply by midnight'. Quagmire faxes an acceptance at 11.55pm, but the ink has run out on Relex's fax. The fax can only be printed out the following morning when the toner is replaced.
C) The Port Authority of South East England invites tenders to provide towage facilities for the port of Ramsgate. The invitation states: 'All tenders must be sent by Friday before 12.00pm by registered mail'. Towex sends a tender on Friday at 11.00am by regular mail.
D) All of the options given are correct.

Accepted Answer

The acceptance was sent before the deadline, and the issue with the fax machine does not invalidate the acceptance as it was sent on time.

Question 8

In which of the following scenarios has an offer not been validly accepted?
A) Staples Co runs a hardware megastore. For the past three years they've contracted with Ironware, a hardware wholesaler. At the end of the third year Ironware sends Staples the following offer 'If you do not object by 1 January, I will consider the contract extended for one year on same terms'. Staple's board of directors decides to continue the agreement on the same terms by not objecting to the offer.
B) Techniworks sends Wonderglue Co an offer for a boiler accompanied with their standard form terms, which Wonderglue fails to read. Wonderglue places an order for a boiler accompanied by their standard form terms, which Techniworks never reads. When the boiler is delivered, Wonderglue is given an invoice on the back of which Techniwork's standard form terms are once again printed.
C) Runner's Weekly offers employees £200 if they successfully complete the London marathon. When Brendan reaches the last five-mile mark as first employee, a representative of Runner's Weekly standing on the sidelines tells him the deal's off. Brendan promptly finishes the race.
D) All of the options given are correct.

Accepted Answer

The answer of In which of the following scenarios has...

Question 9

Alan has placed an advertisement for his Beatles records in a local paper. Ben sees the advertisement and sends Alan an e-mail offering £35 for the records. In which of the following scenarios has Ben's offer not been validly accepted?
A) Alan, reading his e-mail and without replying to it, immediately sends the records by mail to Ben.
B) Alan meets Clarissa, Ben's sister, at the local supermarket and tells her he accepts Ben's offer. Clarissa promises Alan to tell Ben the following day when they meet for lunch. When Alan returns home from the supermarket, he sees an e-mail from Ben revoking his offer.
C) Alan immediately posts a letter to Ben telling him his offer has been accepted and that he can come pick up the records. When the letterbox is emptied, the postman accidentally drops Alan's letter, it falls into the sewer and is lost forever.
D) All of the options given are correct.

Accepted Answer

In scenario B, Alan's acceptance is communicated to a third party (Clarissa) and not directly to Ben. Acceptance must be communicated to the offeror to be valid, and since Ben revoked his offer before receiving Alan's acceptance, the acceptance is not valid.

Question 10

Foodshopper Ltd, a supermarket operator, has been contracting with Berry's Ltd, a fruit wholesaler, for the past three years. Each year the contract is renegotiated. This year, Berry's sends Foodshopper the following offer '100 kilos of citrus fruits for £250'. Foodshopper calls Berry's and leaves a message: 'Could we agree on 100 kilos for £200?' Berry's fails to respond, and, after a week, Foodshopper amends Berry's written offer with the handwritten messages '100 kilos for £200', 'Please send 400 kilos'. After receiving the altered document, Berry's ships 400 kilos to Foodshopper. Enclosed is an invoice for £1000. Foodshopper responds immediately with the following message: 'We agreed upon £200 per kilo, your invoice is incorrect, will pay £800 by Friday'. Knowing that the citrus fruit will go bad in a week, Foodshopper decides to sell the fruit. Have Foodshopper Ltd and Berry's Ltd concluded a binding contract, and if so, on what terms?
A) No, Foodshopper and Berry's never reached agreement on the terms as evidenced by Foodshopper's amendment and Berry's invoice.
B) Yes, the contract agreed upon is 100 kilos for £250. Foodshopper made a new proposal but this was not explicitly agreed to by Berry's. Berry's sent an invoice confirming the initial terms of the offer and Foodshopper proceeded with the sale of the goods.
C) Yes, the contract agreed upon is 100 kilos for £200. Foodshopper's amendment was accepted by Berry's when they shipped the fruit.
D) No, since Berry's is providing the goods, it is up to them to make an offer and Foodshopper's amendment has no effect other than to revoke Berry's first offer.

Accepted Answer

Berry's shipment of the fruit without objection to the amended terms can be seen as acceptance of Foodshopper's counteroffer of 100 kilos for £200. The act of shipping the goods constitutes acceptance of the terms proposed by Foodshopper.

Question 11

All Sugar Ltd is a producer of cane sugar. Blucose Ltd operates a glucose processing factory. For the past four years, Blucose has regularly ordered between 150 and 200 tons of sugar from All Sugar. Every year the contract is renegotiated. On 30 November, All Sugar sends out an offer to Blucose: 'We wish to offer you 200 tons of sugar at same price as last year'. On 1 December, Blucose sends out an offer: 'We wish to purchase 200 tons of sugar at same price as last year'. Both parties receive the respective offers on 4 December. On that day, there is a crash in the sugar market. Can Blucose enforce a contract for 200 tons of sugar at last year's price with All Sugar?
A) Yes, a contract was concluded by offer and acceptance on 4 December.
B) Yes, according to the postal rule, an offer is accepted when acceptance is posted. This was done by Blucose on 1 December, a day after All Sugar made an offer.
C) No, there was no acceptance by either party.
D) No, the crash is the sugar market is a frustrating event

Accepted Answer

There was no acceptance by either party because both sent offers rather than an acceptance of the other's offer.

Question 12

Wilma offers her car, a 1989 Volkswagen Polo, for sale at £750. Vijay sees the advertisement and calls Wilma to ask whether he can come see the car the following Saturday. Wilma proposes to meet on Sunday as she is unavailable on Saturday. Vijay cannot meet on Sunday and decides to send his cousin Sanjay to inspect the car. After Sanjay reports back to Vijay, Vijay calls Wilma to say he's interested but thinks the price is too high. He offers £675 for the car and says his offer is valid until Thursday. On Wednesday, Sanjay sees Wilma on the High Street and tells her that Vijay's no longer interested in the car. Wilma immediately calls Vijay to accept his offer of £675. Has Wilma concluded a contract with Vijay?
A) Yes, for £675. Vijay promised to give Wilma until Thursday to accept his offer and she did so before then
B) Yes, for £675. Only the offeror can revoke an offer, not a third party. Wilma could accept until Thursday.
C) Yes, Vijay is not yet aware that his revocation has had effect. Until Sanjay communicates this, the offer is still valid.
D) No, Vijay's offer was revoked when Sanjay communicated this to Wilma.

Accepted Answer

Vijay's offer was effectively revoked when Sanjay communicated to Wilma that Vijay was no longer interested in the car.

Question 13

On 2 May, Boston Technology Ltd receives a letter from Calculatrix Co offering 250 calculators for £7000. On 10 May, Boston Technology sends a letter to Calculatrix in which they accept the offer. This letter reaches Calculatrix on 12 May. On the evening of 7 May, Calculatrix realizes that they have made a miscalculation and that the offer should have been 250 calculators for £7500. On 8 May, Calculatrix sends Boston Technology a letter revoking the offer. Because of the weekend break, this letter only arrives on 11 May. Has there been a contract concluded between the parties? If so, on what date; if not, when was the offer revoked?
A) No, the offer was revoked on 8 May.
B) Yes, the offer was accepted on 10 May.
C) No, the offer was revoked on 11 May and Boston Technology's acceptance only reached Calculatrix on 12 May.
D) Yes, the offer was accepted on 12 May.

Accepted Answer

A contract was concluded on 10 May when Boston Technology sent the acceptance letter. According to the postal rule, acceptance is effective when the letter is posted, not when it is received.

Question 14

On 4 April, Alison offers Betty an antique clock for £2000. Betty spends a week mulling over the offer. On 13 April, she sends Alison a letter stating she'd be willing to buy it for £1500. The next day, while looking through an antiques catalogue she sees that a similar clock has recently been auctioned off at £5000. Betty realizes that if Allison refuses her counter offer she may lose the clock altogether. She immediately sends another letter on 14 April accepting the original offer. Betty's first letter containing the counter offer arrives on 16 April; her second letter accepting the original offer arrives on 18 April. Have the parties concluded a contract and, if so, when?
A) No, Betty's counter-offer killed off Alison's original offer on 13 April.
B) Yes, Betty has accepted Alison's original offer of £2000 on 14 April.
C) No, Betty's counter-offer killed off Alison's original offer on 16 April.
D) Yes, Betty accepted Alison's original offer of £2000 on 18 April.

Accepted Answer

Betty's counter-offer on 13 April killed off Alison's original offer. However, Betty's second letter on 14 April accepting the original offer revived the contract.

Question 15

Jim sells videocassettes over the internet and has recently acquired two copies of Hitchcock's 1960 masterpiece 'Psycho'. On 1 June, he places the following message on his website: "'Psycho', only £30, limited stock, first come, first served! Reply by e-mail".
Three interested people see the advert:
- Alan sends Jim an e-mail at 2.30am on 2 June. He writes 'I'd like a copy of "Psycho". I can pay by credit card'.
- Barney sees Jim's telephone number on his website. At 12.45pm on 2 June, Barney leaves the following voicemail message: 'I'd like to buy three copies of "Psycho"; would that be possible? Call me back'.
- Chris sends an e-mail at 7.45am on 3 June saying: 'I'd like a copy of "Psycho". I've sent a cheque to the address on your website'.
On the morning of 2 June, when Jim tries to start his computer it crashes. While his computer is being repaired, Jim decides to go hiking. On 3 June at 8.00am, Jim starts up his fixed computer. While he's opening his inbox, Jim listens to his voicemail. The first e-mail he opens is from Chris. While he's reading the e-mail, Jim hears Barney's message. Jim sends a copy of 'Psycho' to Barney and Chris. Jim then replies to Chris: 'The video is in the mail', but doesn't contact Barney. Finally he reads Alan's message and replies: 'Sorry, all copies have been sold'. When Chris receives the video, he is shocked to see that he's been sent the wrong film. He's never heard of Hitchcock and thought he was buying the 1998 version of 'Psycho'. Which of the following is true?
A) Alan and Barney have contracted with Jim. They were the first to respond to his offer. The acceptance was communicated to Jim when he received the e-mail, not when he read it.
B) Barney and Chris have concluded contracts with Jim. Their replies to Jim were offers and Jim accepted these by promptly sending the videocassettes.
C) Alan and Chris have concluded contracts with Jim. Jim stipulated that replies must be made by e-mail, whereas Barney replied by telephone.
D) None of the parties have concluded a contract with Jim.

Accepted Answer

The answer of Jim sells videocassettes over the internet and...

Question 16

Which of the following agreements is likely to be too uncertain to be enforced?
A) 'The supplier agrees not to accept offers from third parties during a six week negotiation period with the purchaser'.
B) 'The vendor agrees to sign the contract of sale, if the purchaser obtains a comfort letter from his bank'.
C) 'In the event of a crash in the market value of the product, the parties agree to renegotiate a new price in good faith'.

Accepted Answer

The phrase "renegotiate a new price in good faith" is too vague and lacks specific terms, making it uncertain and difficult to enforce legally.

Question 17

Which of the following agreements is too uncertain to be enforced?
A) 'The parties agree that the price will be determined by the buyer in six month intervals'.
B) 'The parties agree that the price will be determined by the seller in six month intervals'.
C) 'The parties agree that the price will be determined by both of them in six month intervals'.
D) All of the options given are correct.

Accepted Answer

An agreement is too uncertain to be enforced if it lacks a clear mechanism for determining essential terms. Option C is uncertain because it requires mutual agreement without specifying a method for resolving disagreements, making it unenforceable.

Question 18

Mindset Industries Co is interested in taking a 90% stake in New Age Computers Co. The parties agree that they should wait a month before the shares are transferred to avoid a fall in value. A month later, the shares lose 30% of their value and Mindset refuses to cooperate on the transfer. In which of the following scenarios could Mindset get out of the agreement by alleging it is too uncertain to be enforced?
A) Because of the haste with which the parties concluded the agreement, they forget to stipulate a contract price for the shares.
B) The parties stipulated that the contract price would be determined by an arbitrator appointed by the English Institute of Arbitration. Mindset now refuses to appear before the tribunal.
C) The parties stipulated that the price can only be determined by a chartered accountant agreed by both parties. Mindset now refuses to cooperate in agreeing an accountant.

Accepted Answer

The parties stipulated that the price can only be determined by a chartered accountant agreed by both parties. Mindset now refuses to cooperate in agreeing an accountant.

Question 19

Chris and Harris have been friends all their lives. Harris has a successful dotcom business. He asks Chris, who works as a computer programmer at a large software company, if he could pass by that weekend to help him modernize his website. Working together proves very demanding on their relationship, with Harris throwing Chris out of his apartment when Chris has almost completed the job. For a similar job, Harris would have had to pay a computer programmer £800. Can Chris request this amount from Harris?
A) No, the parties did not agree a price beforehand.
B) Yes, Harris should have expected to pay Chris for his services and the price should be a reasonable one.
C) No, Chris and Harris never intended to create legal relations.
D) No, Chris has not finished the entire job.

Accepted Answer

The answer of Chris and Harris have been friends all...

Question 20

Beth is an elderly widow who is diagnosed with terminal cancer. As she has only six months left to live, she asks her friend Lucy, an unmarried schoolteacher, whether she will move in with her on the condition that she runs errands and drives Beth to her appointments. Lucy lives in a rent-controlled apartment in town. After a month of constant quarrelling, Beth asks Lucy to leave. The only apartments Lucy can find cost almost twice as much as her old place. Can Lucy sue Beth for damages resulting from breach of contract?
A) No, this was a social arrangement; the parties never intended to create legal relations.
B) No, the terms of the contract were insufficiently clear. The parties never agreed what the duration of their contract would be.
C) Yes, the arrangement between the parties is a contract and Beth has breached her obligations under it.

Accepted Answer

The arrangement between the parties is a contract and Beth has breached her obligations under it.

Quiz 2: Aggreement

What does it mean when we say that the courts apply an objective test of intentions to ascertain what contracting parties have agreed to?

If an item is displayed for sale in a store, when has an offer been made and when has it been accepted?

In which of the following scenarios has an offer been validly accepted?

In which of the following scenarios has an offer not been validly accepted?

Alan has placed an advertisement for his Beatles records in a local paper. Ben sees the advertisement and sends Alan an e-mail offering £35 for the records. In which of the following scenarios has Ben's offer not been validly accepted?

Which of the following agreements is likely to be too uncertain to be enforced?

Which of the following agreements is too uncertain to be enforced?