FYLSX Contract Formation Principles 2

Question 1

A store displays a jacket with a price tag of $150. A customer brings it to the register and says, 'I'll take it.' The store clerk refuses to sell it. Is there a contract?

Accepted Answer

No, the price tag is an invitation to make an offer, not an offer itself.

Answer

Yes, the display was an offer that the customer accepted.

Answer

Yes, because the price was clearly stated.

Answer

No, because the customer did not sign anything.

Question 2

Donna mails an offer to Ed on Monday. Ed mails his acceptance on Wednesday. The acceptance is lost in the mail and never arrives. When, if ever, was a contract formed?

Accepted Answer

When Ed mailed the acceptance on Wednesday.

Answer

When Donna mailed the offer.

Answer

When the acceptance would have normally arrived.

Answer

No contract was formed because acceptance never arrived.

Question 3

Frank offers to sell his car to Grace for $5,000, stating the offer is open for two weeks. After one week, Frank sells the car to Harry. Grace then accepts within the two-week window. Is there a contract with Grace?

Accepted Answer

No, because Frank's offer was revoked when he sold to Harry, even without direct notice.

Answer

Yes, because the offer was irrevocable for two weeks.

Answer

Yes, because Grace had not received notice of revocation.

Answer

No, because Frank had the right to revoke at any time.

Question 4

Which of the following is NOT a recognized exception to the rule that offers are freely revocable?

Accepted Answer

An offer that has been open for more than 30 days.

Answer

An option contract supported by consideration.

Answer

A firm offer under the UCC made by a merchant in a signed writing.

Answer

An offer where the offeree has begun performance on a unilateral contract.

Question 5

Ivan offers to hire Julia as a consultant for $200/hour. Julia responds, 'I'll do it for $250/hour.' Ivan says nothing. Is there a contract?

Accepted Answer

No, because Julia's response was a counteroffer that rejected Ivan's offer.

Answer

Yes, at $200/hour because Ivan made the original offer.

Answer

Yes, at $250/hour because Ivan's silence constitutes acceptance.

Answer

No, because neither party signed a written agreement.

Question 6

Karl promises to give his nephew $10,000 if the nephew quits smoking for one year. The nephew quits for the full year. Karl then refuses to pay. The nephew sues. What is the most likely outcome?

Accepted Answer

The nephew wins because he provided consideration by forbearing a legal right.

Answer

Karl wins because the promise was a gift with no consideration.

Answer

Karl wins because a family promise is unenforceable.

Answer

The nephew wins only if the promise was in writing.

Question 7

Under the common law, when parties exchange emails and dispute whether they reached an agreement, courts use which standard to determine contract formation?

Accepted Answer

The objective standard — what a reasonable person would believe the communications meant.

Answer

The subjective standard — what each party privately intended.

Answer

The written instrument standard — only signed documents count.

Answer

The majority rule standard — whatever most courts have decided in similar cases.