Contracts MBE Practice Test 2017

Question 1

An offeror offers to sell a parcel of land to an offeree for $10,000, stating that the offer shall remain open for 30 days. The offeree replies that she will keep the offeror’s offer under advisement but says, “We can wrap this up immediately if you’ll take $9,000.” The offeror does not reply, but within the 30-day period the offeree accepts the original offer. The offeror, however, replies that he now wants $12,500. Was a contract formed when the offeree accepted the $10,000 offer?

Accepted Answer

Yes, because the offeree was able to keep the original offer with the 30-day window open by stating that he was keeping it under advisement.

Answer

A counter-offer typically terminates the original offer, but an inquiry or negotiation does not. The offeree's statement, 'We can wrap this up immediately if you’ll take $9,000,' coupled with her intention to keep the original offer 'under advisement,' indicates an exploration of terms rather than a definitive rejection. Since the original offer explicitly stated it would remain open for 30 days, it created an option period, and the offeree's subsequent acceptance within that period was valid.

Question 2

A roofer offers to completely refurbish a homeowner’s roof for $1,000. The next day the roofer realizes he’s not going to make much, and he sends a revocation of the offer in the mail to customer. On the third day the homeowner puts a letter in the mailbox accepting the offer. On the fourth day the homeowner receives the roofer’s revocation letter. Was a contract formed between the homeowner and the roofer or was the revocation effective?

Accepted Answer

The acceptance was effective on posting but the revocation does not become effective until received; thus, a contract was formed when the acceptance was placed in the mailbox.

Answer

Under the mailbox rule, an acceptance is generally effective when dispatched (e.g., placed in the mailbox), provided the offer was made by mail or a similar non-instantaneous means. Conversely, a revocation of an offer is only effective when it is *received* by the offeree. In this case, the homeowner's acceptance was effective upon mailing on day three, forming a contract, before the roofer's revocation letter was received on day four.

Question 3

A 16-year-old minor went to a used car dealer with his aunt and grandmother. The minor purchased a used car in “as is” condition. The purchaser was listed as the minor; his relatives were not on the agreements. The boy discovered later that the drive shaft was bent and he returned the car with a demand for a refund of the $2,000 purchase price. The dealer refused to give a refund, citing the assistance and verbal assurances by the aunt and grandmother. They also gave him funds to make the purchase. Is the contract still voidable by the minor so that he can get a refund of the purchase price?

Accepted Answer

The participation in this case by the adults did not change the rule that a contract entered into by a minor is voidable by that minor – he’s entitled to a refund.

Answer

Contracts entered into by minors (typically individuals under 18) are generally voidable at the minor's option. The presence or assistance of adults who are not parties to the contract does not alter the minor's right to disaffirm. Since the contract was solely between the minor and the dealer, the minor retains the power to void the contract and is entitled to a refund of the purchase price.

Question 4

A retail store runs an advertisement in the local newspaper stating: “Only 3 cashmere sweaters remaining; highest quality; real Polo; one grey, one maroon and one beige; on closeout, starting 9 a.m. Saturday, $5.00 each, first-come, first-served.” A store customer was the first to arrive on Saturday morning. He located the three advertised sweaters, picked them up, handed $15.00 to the clerk, and demanded all three sweaters at $5 each. The clerk stated that the store’s price on each sweater was actually $50 each. The customer demanded the advertised price. Who has the superior legal position?

Accepted Answer

The customer, because the terms of the advertisement were definite enough to constitute an offer and the offer was duly accepted.

Answer

While advertisements are usually invitations to make an offer, this advertisement was sufficiently definite and specific to constitute a binding offer. It specified the exact items, quantity ('Only 3'), price ('$5.00 each'), and method of acceptance ('first-come, first-served'). By being the first to arrive and tendering the exact price for the specified items, the customer duly accepted the offer, forming a valid contract.

Question 5

An auto retailer started a marketing promotion on a new hybrid model sedan. It advertised that anyone who purchased the car in 2013 and did not get at least 50 miles per gallon average gas mileage during the first 60 days, would receive a payment of $10,000 cash from the company. Record-keeping and inspection procedures were required to assure accurate reporting by the vehicle owner. The promotion was widely publicized. A female customer purchased a hybrid model during the promotion period, followed all the rules, and recorded only 42 mpg in the first 60 days. She demanded the rebate but the company stalled for months and then stopped responding to her inquiries. Does she have a contractual right to collect the $10,000?

Accepted Answer

Yes, this was a unilateral contract in which the offeree acted upon the offer by performing the terms of the offer, thus creating a binding contract.

Answer

This scenario describes a unilateral contract, where an offer invites acceptance by performance rather than a promise. The auto retailer made a clear offer promising $10,000 for a specific performance: purchasing the car, following the rules, and achieving less than 50 mpg. The customer's actions of purchasing the car, adhering to the rules, and recording the mileage constituted the requested performance, thereby accepting the offer and creating a binding contract.

Multistate Bar Exam Practice Test

Multistate Bar Exam Practice Test

Contracts MBE Practice Test 2017