Question 1

Jed, who lived on Cape Breton Island, needed money for a trip to France. He decided to sell his electric guitar. On Monday, October 29, he called the owner of a music store in Halifax and offered to sell his Fender Stratocaster guitar for $400, the offer to be open until Friday noon, November 2. Jed told the store owner to send a letter of acceptance since he (Jed) would be away for a few days. The store owner examined his inventory and mailed a letter of acceptance on Thursday, November 1. When Jed returned home on Saturday, November 3, the letter had not yet arrived, so that afternoon he sold the guitar to a music teacher in his town. The store owner in Halifax sued for breach of contract. Which of the following is true?
A) Sending a letter by mail was not a reasonable method of acceptance.
B) The letter of acceptance was effective when it was received, and by then Jed had sold it, so there was no contract.
C) The acceptance was effective before the offer lapsed, so there was a contract between Jed and the store owner.
D) The offer was revoked before the store owner accepted.
E) The offer lapsed before the store owner accepted.

Accepted Answer

The store owner's acceptance was effective before the offer lapsed, so there was a contract between Jed and the store owner. Even though the letter hadn't arrived yet, the acceptance was valid as soon as it was sent, and Jed was bound by the contract. Therefore, he was in breach of contract when he sold the guitar to the music teacher.

Question 2

Sarah wanted an antique lamp for the bedroom. While in a second-hand shop, she saw a lamp that she really wanted marked $100. She offered the owner $75 for it. He said "I'll take $95." She answered "$80!" He said, "Lady, you're pushing me a bit, aren't you? I'll take $90, that's it." She said "OK I'll pay $90 if you throw in this old 'Vote-for-Trudeau' button." He said, "Forget it, lady, my shop is closed," and asked her to leave. She said, "OK, I accept your offer of $95." He made no response. If she sues for breach of contract, which of the following is true?
A) There is no contract because his offer to sell for $95 lapsed after a reasonable time.
B) There is a contract because at one time he offered to sell the lamp for $95 and she accepted it.
C) There is no contract because his offers to sell the lamp for $95 and $90 were revoked and he didn't accept her offers.
D) There is a contract because he wanted to sell the lamp for $95 and she was willing to pay that much.
E) There is no contract because his offer to sell the lamp for $95 was rejected by counter-offer, and her offer to buy it for $95 wasn't accepted.

Accepted Answer

There is no contract because her counter-offer of $80 rejected his $95 offer, and when she later tried to accept the $95 offer, it was no longer valid as he did not accept it.

Question 3

In contract cases, the court generally
A) will rewrite an agreement for the parties if their existing agreement did not include all the essential terms.
B) will enforce all promises.
C) will require the recipient of a service to pay a reasonable price where it is determined that the agreed-upon price was too low.
D) attempts to punish the party in breach of the contract by imposing a sentence.
E) does not look to see if the bargain is fair.

Accepted Answer

Courts generally do not assess the fairness of a bargain in contract cases, focusing instead on whether a valid contract exists and its terms.

Question 4

Which of the following is not an example of a contract?
A) An agreement not to sue someone for negligence in exchange for their promise to pay you a specified amount
B) A verbal agreement to work for someone starting next week
C) A verbal agreement for the sale of a car where neither the money nor the car has yet changed hands
D) An implied promise to pay for a meal when you order it
E) A written promise to give your husband a ring for Christmas

Accepted Answer

A promise to give a gift, such as a ring, without any consideration or exchange, is not a contract. Contracts require an exchange of value or consideration.

Question 5

Which of the following is an example of a unilateral contract?
A) C returns a lost dog and claims the $50 reward.
B) Joe promises to give Harry his old boat when he gets his new one.
C) Joe pays $50 for groceries at a grocery store.
D) Joe agrees to paint Sam's house for $500.
E) Sam orders a meal in a restaurant.

Accepted Answer

Option A is an example of a unilateral contract because C is performing an act (returning a lost dog) in exchange for a promised reward ($50). The offeror (the person who lost the dog) has made a promise to give a reward to anyone who returns it, and C is accepting that offer by performing the requested act. Options B through E do not involve a promise in exchange for an act, and therefore are not examples of unilateral contracts.

Question 6

Which of the following is an ingredient necessary to form a contract?
A) Fairness
B) Assignment
C) Privity
D) Exemption clauses
E) Capacity

Accepted Answer

Capacity is necessary to form a contract. It refers to the legal ability of parties to enter into a contract. Parties must have the mental capacity, age, and legal standing to enter into a contract. The other options are not necessary ingredients to form a contract. Fairness and exemption clauses are related to the terms of a contract. Assignment and privity relate to the rights and obligations of parties under a contract but are not necessary to form a contract.

Question 7

Franz bought a round trip ticket to Germany to visit relatives. Unfortunately, a week before flight time, he broke his leg. He offered his co-worker, Joe, the ticket for 80% of the full price, offer to remain open until 10:00 p.m. on December 15. Indicate to Joe which of the following is true with regard to the law of offer and acceptance.
A) If Franz sells to someone else, it is too late for Joe to accept the original offer.
B) A letter of acceptance is always effective when it is dropped in the mailbox.
C) If Joe makes a counteroffer of 50% of the full price, and Franz rejects the counteroffer, Joe can still accept the original offer.
D) To create a contract, an offer must be in writing.
E) Franz could revoke the offer anytime before acceptance, even before 10:00 p.m. on December 15.

Accepted Answer

An offer can be revoked anytime before acceptance, even if a time limit is set.

Question 8

When Mr. Adams tells the local Boys' and Girls' Club that he will give them $5,000 if they promise to use the funds for their summer camping program, this is an example of which one of the following?
A) Promissory estoppel
B) When accepted by the club, a unilateral contract
C) Gratuitous promise
D) Inadequate consideration
E) When accepted by the club, a bilateral contract

Accepted Answer

The answer of When Mr. Adams tells the local Boys'...

Question 9

Mary bought a new Macintosh computer and advertised her old computer system for $1,500. Mr. Jones offered to pay $1,000. Mary said no, she wanted $1,500. Mr. Jones offered $1,250. Mary rejected that and said she wanted $1,500, but then said to him, "I withdraw my offer, I've decided to give it to school and apply for the tax benefit." Mr. Jones said, "All right, I'll accept your offer of $1,500." Which of the following is true?
A) There is a contract because at some point in time Mary was willing to sell and Mr. Jones was willing to buy the computer system for $1,500.
B) There is a contract, because once a seller makes an offer she cannot change her mind; she is bound to receive an acceptance.
C) There is a contract and Mr. Jones has to pay a reasonable price for Mary's old computer.
D) There is no contract because the last offer had lapsed.
E) There is no contract because Mary revoked the offer before Mr. Jones attempted to accept it.

Accepted Answer

Mary revoked her offer before Mr. Jones attempted to accept it, so there is no contract.

Question 10

Which of the following would best satisfy the requirements for a good legal offer?
A) "I'll give you $1 for your new green bike."
B) On a flyer placed on your windshield: "We have the best offer in town! A mint 1956 Chevrolet for $20,000."
C) "I'll drive you to Seattle on Saturday."
D) "I'll pay you at least $300 for your horse, Blackie, and even more if the horse is lucky."
E) "The purchaser will pay $1000 for one of the seller's laser printers, the exact model to be determined at a later date."

Accepted Answer

A meets the requirements for a good legal offer because it is specific, definite, and communicated to a specific person. It also includes a consideration (the $1 offer) and an intention to create a legal relationship.

B does not specify a specific person or target audience and lacks the intention to create a legal relationship.

C is too vague and lacks consideration.

D is too ambiguous and lacks definite terms.

E is too uncertain and lacks definite terms.

Question 11

Carlos visited Vancouver last summer and instead of going back to Ontario he stayed and enrolled at Simon Fraser University. He needed money but didn't need things left in Ontario, including his car. In mid-December, he wrote a friend and offered to sell the car for $4,000 and told him to send him a letter with his answer. His friend received the letter on January 2, checked his financial situation, and sent a letter of acceptance January 3. Meanwhile Carlos, short of cash and not hearing from his friend, sold the car to Mr. Reno on December 31. Carlos received his friend's letter January 8. On these facts, which of the following is true?
A) The acceptance was effective before it was received, so there was a contract between Carlos and his friend.
B) All methods of acceptance are effective upon receipt by the offeror.
C) Sending an acceptance by mail was not a reasonable method of acceptance in this situation.
D) The letter of acceptance was effective when it was received, and by then Carlos had sold the car, so there was no contract.
E) In order for there to be a binding contract, there must be an offer and receipt of the letter.

Accepted Answer

The acceptance was effective before it was received because the offeror, Carlos, specified that the acceptance should be sent by letter. According to the postal rule, acceptance is effective when the letter is posted, not when it is received.

Question 12

The owner of a new building wanted four maple trees, 6 metres tall, planted on the north side of the building. Lloyd Landscaper submitted his offer of four 6-metre maples planted for $800. The owner said he would pay $600 for that. Lloyd said, for $600 he would supply four smaller, 5-metre trees. The owner said, "$600 for 5-metre trees plus a Christmas tree for my kids." Lloyd was disgusted and said, "Forget it. I don't need this job." As he was leaving the owner said, "All right, I'll accept your offer of $600 for the 5-metre maples planted." Lloyd kept on walking. Which of the following is true?
A) There is no contract because Lloyd's last offer had lapsed after a reasonable time.
B) There is a contract because at one point in the conversation Lloyd was willing to sell and the owner was willing to buy four trees.
C) There is no contract because Lloyd's last offer was revoked.
D) There is no contract because Lloyd's last offer had been rejected by a counter-offer.
E) There is no contract because there is a presumption in law in these circumstances that the parties did not intend to create legal relationship.

Accepted Answer

The owner's counter-offer of $600 for 5-metre trees plus a Christmas tree effectively rejected Lloyd's last offer. Once an offer is rejected, it cannot be accepted later unless it is renewed.

Question 13

Which of the following would best satisfy the requirements for a good legal offer?
A) On a flyer placed on your windshield):"We have the best offer in town! A mint 1956 Chevrolet for $20,000."
B) "I'll give you $1 for your new green bike."
C) "The purchaser will pay $1,000 for one of the seller's laser printers, the exact model to be determined at a later date."
D) "I'll pay you at least $300 for your horse, Blackie, and even more if the horse is lucky."
E) "I'll drive you to Seattle on Saturday."

Accepted Answer

A good legal offer must be clear, definite, and explicit, with terms that are certain. Option B is a clear and definite offer with specific terms: $1 for a new green bike.

Question 14

The postbox rule applies when which of the following means of communication is used?
A) Messenger
B) Telephone
C) Mail
D) Fax
E) Electronic mail

Accepted Answer

The postbox rule applies to communication by mail, which is specifically mentioned in the options given.

Question 15

Sam placed an announcement in the newspaper as follows: "$200 reward for the return of two lost Siamese kittens." Joe read the ad, found the kittens, and returned them. This is an example of which of the following?
A) Unilateral contract
B) Gratuitous promise
C) Bilateral contract
D) Offer
E) Invitation to treat

Accepted Answer

This is an example of a unilateral contract, where Sam made a promise to pay $200 in exchange for the performance of returning the kittens. Joe accepted the offer by performing the act of returning the kittens.

Question 16

Which one of the following is enforceable?
A) An ad in the paper promises to pay $5 for the return of a lost ring, but the person who finds and returns the ring never saw the offer in the newspaper.
B) Mr. Baker was so sick of an old chair that, when Mr. Venson offered him $10 for it, he agreed (i.e., promised to sell it to him), although the market value of the chair was $80.
C) Mr. Ho promised to give his needy friend Mr. Jahn $100.
D) Ms. Jones promised to pay an additional $100 to Mr. Wood if Wood finished the existing contract on time, according to the terms of the contract.
E) Ms. Goode promised to send $10 to Mr. Paul, who kindly came and warned her when he saw a tow truck approach her car.

Accepted Answer

Mr. Baker's agreement to sell the chair to Mr. Venson for $10, despite its market value, is enforceable because it involves a mutual exchange of consideration (the chair for $10), making it a valid contract.

Question 17

Roberts has the chance to buy three adjacent city lots zoned "duplex." The most profitable return would be the building of four townhouses across the three lots, but that would necessitate getting permission from the city, and that procedure takes time. If Roberts buys a 60-day option from the seller of the properties for $400, which of the following is true?
A) By buying the option, Roberts has bought a period of time during which she must accept the land offer.
B) If Roberts does not exercise the option, she will get her $400 back because she didn't get what she was bargaining for.
C) If Roberts does not exercise the option during the option period, she can later force the seller to sell that property to her at that price.
D) The offer for the properties will expire before the end of the designated 60-day period, if another person offers a higher price.
E) The seller is bound by contract neither to sell the property to any other party nor to revoke the offer within the option period.

Accepted Answer

By purchasing the option, Roberts secures the right to buy the property within the 60-day period, and the seller cannot sell to someone else or revoke the offer during this time.

Question 18

An ad in the morning newspaper read "Absolutely the best offer anywhere in Calgary. We'll give you an IBM-compatible PC with a Roland PR-1011 printer for only $4 000!!! Pick it up today." This is an example of which of the following?
A) Offer
B) Invitation to treat
C) Unilateral contract
D) Bilateral contract
E) Gratuitous promise

Accepted Answer

The ad is an invitation to treat, which means it is an invitation for the customer to make an offer to purchase the PC and printer. The seller is not obligated to sell the product at the advertised price, but can negotiate with the customer for a different price or decline the offer altogether.

Question 19

Which of the following is an offer as opposed to an "invitation to treat"?
A) A notice in the Toronto Star: "I will pay $100 to whoever finds and returns my lost female calico cat which answers to the name Marx."
B) A sweater displayed in the window of a shop with the price tag attached and showing.
C) An ad in a real-estate paper: "Best offer in Vancouver! 3 bedroom home in Kitsilano for only $350,000!"
D) A notice in the catalogue from the gift shop of the Edmonton Aquarium: "15% off the price of all jewellery until January."
E) The display of goods on the shelves of Safeway.

Accepted Answer

Option A is an offer because it is a promise to pay a reward to anyone who finds and returns the lost cat. This is an unequivocal statement of terms that can be accepted by anyone who performs the specified act of finding and returning the cat. The other options are invitations to treat, which means they are invitations for customers to make an offer to buy the product or service. The price tag on the sweater in option B, the advertisement in option C, and the discount offer in option D are all examples of invitations to treat. Option E is also an invitation to treat because the display of goods in Safeway is not an offer to sell but an invitation for customers to make an offer to buy.

Question 20

Indicate the correct statement about consideration.
A) Consideration is "the price for which the promise (or the act) of the other is bought."
B) The common law holds that consideration must be adequate to insure that contracts are fair bargains.
C) In a unilateral contract, the performance of the promisee provides no consideration to the promisor.
D) An altered course of action, e.g. forbearance, is not good consideration.
E) In a bilateral contract, the exchange of promises does not provide consideration for both parties.

Accepted Answer

Consideration is defined as "the price for which the promise (or the act) of the other is bought." This means that each party to a contract must give something of value to the other party in exchange for what they are receiving. Without consideration, a contract is not legally binding.

Quiz 6: Formation of Contracts

In contract cases, the court generally

Which of the following is not an example of a contract?

Which of the following is an example of a unilateral contract?

Which of the following is an ingredient necessary to form a contract?

When Mr. Adams tells the local Boys' and Girls' Club that he will give them $5,000 if they promise to use the funds for their summer camping program, this is an example of which one of the following?

Which of the following would best satisfy the requirements for a good legal offer?

Which of the following would best satisfy the requirements for a good legal offer?

The postbox rule applies when which of the following means of communication is used?

Sam placed an announcement in the newspaper as follows: "$200 reward for the return of two lost Siamese kittens." Joe read the ad, found the kittens, and returned them. This is an example of which of the following?

Which one of the following is enforceable?

An ad in the morning newspaper read "Absolutely the best offer anywhere in Calgary. We'll give you an IBM-compatible PC with a Roland PR-1011 printer for only $4 000!!! Pick it up today." This is an example of which of the following?

Which of the following is an offer as opposed to an "invitation to treat"?

Indicate the correct statement about consideration.