Question 1

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

Accepted Answer

An offer is a clear, definite, and explicit proposal to contract, which, if accepted, creates a binding contract. Option A is an offer because it is a unilateral offer to the world at large, promising a reward for the performance of a specific act (returning the lost cat). The other options are invitations to treat, which are invitations for others to make offers.

Question 2

Ann was offered a job that would pay $20,000, that would provide for 18 days vacation after one year of employment, and that would begin one week after her graduation. She wrote back that she would accept the job, but that she would not begin until three weeks after graduation and needed at least a 21-day vacation after the first year of work. On these facts, which of the following is true?

Accepted Answer

Ann's response was not an acceptance, but a counteroffer. A counteroffer amounts to a rejection of the original offer and creates a new offer. Therefore, there is no contract until the prospective employer accepts Ann's counteroffer.

Question 3

An ad in the morning paper read: "Brand new 2011 Ford Focus $19,499. No payment until January 2012. We make your first payment." This is an example of which of the following?

Accepted Answer

An advertisement is generally considered an invitation to treat, meaning it invites others to make an offer rather than being an offer itself.

Question 4

Four days ago, Pete was reading the newspaper and saw the following: "Best offer in town! Zenith XX Laser Printer - $1,000! When he went to the store this afternoon and said he wanted one, they replied that they didn't have any left, nor could they get one. On these facts, which of the following is true?

Accepted Answer

The wording in the newspaper was merely an invitation to the public to do business, and no contract was formed. Advertisements are generally not considered offers but invitations to negotiate or make an offer.

Question 5

Sylvia had contracted with Produce Palace to sell her entire crop of elephant garlic (100 kilograms) and her entire crop of tomatoes (100 kilograms). On the day for delivery, Produce Palace took the garlic but not the tomatoes. In her effort to mitigate her loss, Sylvia called the owner of Val's Veggies and offered her the tomatoes at a reduced price with the words, "Let me know quickly; they are ripe and must be moved out today." That afternoon, Val sent Sylvia a letter accepting the offer. On these facts, which is the most likely outcome?

Accepted Answer

The offer likely lapsed because Sylvia emphasized the need for a quick response due to the tomatoes' ripeness, implying a short time frame for acceptance. Val's acceptance by mail was not timely given the urgency.

Question 6

Martin offered to buy the property for $200,000, "offer to remain open until 5:00 p.m. on Thursday, January 21, 2011." Which one of the following situations will not cause the offer to end?

Accepted Answer

Martin selling the property to another party does not directly end the offer unless communicated to the offeree. The offer remains open until the offeree is informed or the time expires.

Question 7

If you pay $1000 for a 90-day option on property offered at $200,000, which of the following is true?

Accepted Answer

By paying for the option, you have purchased a period of time within which you may or may not accept the offer of the land. The option does not require you to accept the offer, but it gives you the right to do so within the 90-day period. The other options may or may not be true, but option A is the best choice that is definitely true.

Question 8

Which of the following is false with regard to contract law?

Accepted Answer

A newspaper notice offering to pay a reward for the return of lost kittens is generally considered an offer, not an invitation to treat, as it is a promise to pay upon the performance of a specific act.

Question 9

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 $1,000!!! Pick it up today." This is an example of which of the following?

Accepted Answer

An advertisement is generally considered an invitation to treat, inviting customers to make an offer to purchase.

Question 10

Mr. Goode, a neighbour of your parents, offered to sell you his house for $200,000, a bit below market value. You are definitely interested but would like to see if your employment contract will be renewed and to check about financing. Mr. Goode says that he'll hold the offer open for you until May 1, 2011. On these facts, which of the following is false?

Accepted Answer

Mr. Goode's promise to hold the offer open is not binding without consideration or a formal option contract.

Question 11

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?

Accepted Answer

The answer of The owner of a new building wanted...

Question 12

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 false?

Accepted Answer

An option fee is typically non-refundable, meaning Roberts would not get her $400 back if she chooses not to exercise the option.

Question 13

Jon was developing a computer program for use by owners of track clubs, which would aid them in keeping records of the members, their runs, times, injuries, etc. Eager to finish the program, Jon, in Edmonton, called his friend Sam, in Calgary, and offered him $4000 to help: five hours a working day, five days week, for five weeks. Sam said that he would have to think about it. Jon told Sam that he was eager to get going, but that he would hold the offer open until Friday, February 6, 2011, at noon. Which of the following is true? (Read each separately.)

Accepted Answer

In order for a promise to keep an offer open to be enforceable, there must be consideration. Sam should give Jon some consideration to ensure the promise to keep the offer open until the specified time.

Question 14

Bob in Burnaby called Ed in Toronto and offered to sell him 40 kilograms of smoked salmon at $15 per kilogram. He requested that Ed phone him back by noon the next day. That way, Bob could offer it to someone else if Ed wasn't interested. Instead of phoning, Ed sent a letter of acceptance, in which he said that he would have his agent pick up the fish. On these facts, which of the following is false?

Accepted Answer

If using the mail was unreasonable, the acceptance would not be effective when it was mailed; it would only be effective upon receipt.

Question 15

Jones was a caterer; Smith was a florist. Jones won a contract to provide a banquet for a convention of florists. He wanted to decorate the hall with flowers. He sent a letter to Smith describing what he wanted and asked for a price quote. Smith responded by a letter dated January 5, offering to supply the flowers for $5,000. Jones received the letter on January 10 and responded on the same date saying his price was too high and that he would pay $4,500. While that letter was in the mail but before it had been received by Smith, Jones learned that the convention was on artificial flowers and the organizers wanted no real flowers on display. On January 13, Jones quickly sent another letter telling Smith to ignore the letter of January 10 and that he wouldn't need any flowers at this time. This letter of the 13th was received on the 18th. Smith had received the letter of January 10 on January 15 and sent his letter of acceptance on the same day, and he had placed orders to his suppliers for the flowers. The letter of acceptance was received by Jones on January 20. Which of the following is true?

Accepted Answer

The postbox rule states that an acceptance is effective once it is dispatched, not when it is received. Since Smith sent his acceptance on January 15 before receiving the revocation, a binding contract was formed.

Question 16

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?

Accepted Answer

The acceptance was effective when the store owner mailed the letter on November 1, before the offer lapsed on November 2, creating a contract between Jed and the store owner.

Question 17

If an offer is made by mail and an acceptance by mail is requested, when does a letter revoking the previous offer actually take effect?

Accepted Answer

A revocation of an offer sent by mail takes effect when it is received by the offeree, provided it is received before the offeree has dispatched an acceptance.

Question 18

Which one of the following will not end an offer?

Accepted Answer

The sale of goods to someone else does not automatically end an offer unless the offeree is informed or the goods are no longer available for the offer to be fulfilled.

Question 19

If an offeror makes an offer that states, "This offer to be open until noon tomorrow," which of the following does not, in law, end the offer?

Accepted Answer

An inquiry by the offeree does not end the offer; it is merely a request for more information and does not constitute a rejection or counter-offer.

Question 20

Which of the following is correct with respect to the operation of the postbox rule?

Accepted Answer

The postbox rule states that if the offer is accepted by mail, telegram, or other means of communication, then the acceptance is effective at the point of mailing. This means that the acceptance becomes valid even if the offeror is unaware of it until a later date.

Quiz 6: Formation of Contracts