Contracts MBE Practice Questions Session 4 (34) ||100%
Verified .
In June, a local chef learned of a new business that opened in the area. Hoping to attract the
business as a new client, the chef sent the business an offer consisting of a catalog of menus
available through his catering service and a form letter he sent to all new businesses in the area.
The letter was signed by the chef and included the following language: "Welcome! I specialize in
creating delicious meals with local and organic ingredients, and I would be honored to be your
catering source for all your business, promotional, and personal needs! To welcome you to the
community, I would like to offer you a 25% discount off of my catalog prices on any three-
course meal order, for up to 100 people, submitted this calendar year. I hope to hear from you
soon and I look forward to doing business with you!" No communication occurred between the
parties until the end of November, when the business faxed an order form to th correct
answersYes, because the signed promotional letter created a firm offer.
Yes, because the chef had not revoked the offer before the end of the calendar year.
No, because the form letter was only an invitation to deal.
No, because the company's power of acceptance terminated after a reasonable period of time.
B
A men's apparel wholesaler was trying to expand its business, so it reached out to an online
company that sold men's ties. The wholesaler mailed a letter to the online company offering to
sell them 1,000 silk ties at a wholesale price of $15 per tie. The signed letter, dated July 1,
assured the online company that the option to purchase would stay open, but did not specifically
state how long the option would remain open. A year later, the online company sent a letter to
the wholesaler accepting its offer to sell them 1,000 silk ties at a wholesale price of $15 per tie.
The wholesaler and online company had no prior dealings, and offers of this kind in the industry
generally do not remain open for a year with no further contact between the parties.
If no other correspondence or action was taken by either party between the wholesaler's offer
and the online company's purported acceptance, is there an enforceable co correct answersNo,
because the online company did not give consideration to keep the offer open.
No, because the online company accepted the offer after an unreasonable period of time.
Yes, because the time period of irrevocability was not stated.
Yes, because the wholesaler's offer had no termination date.
B
,A bank that held a security interest in a delivery van conducted a forced sale of the van at an
auction after the owner of the van defaulted on its loan from the bank. The proceeds of the loan
had been used to purchase the van, which the owner had used in his floral business. At the
auction, which was held in accordance with statutory requirements, the owner, without
disclosing his ownership interest, made a good faith bid on the van. Twelve days after the
auction, the highest bidder filed an action to void the sale after learning that one of the bidders
had been the owner of the van.
Can the sale be voided? correct answersYes, because the owner bid at the auction without
disclosing his interest in the van.
Yes, because the owner was a merchant.
No, because the auction was a forced sale of the van.
No, because the highest bidder did not file his action to void the sale within 10 days of the
auction.
C
A restaurant placed an order for 100 pounds of USDA prime beef from a meat packer. The order
was to be shipped to the restaurant immediately. The meat packer erroneously shipped 100
pounds of USDA choice, rather than prime beef.
When the choice beef arrived at the restaurant, which of the following is an accurate description
of the restaurant's legal obligations? correct answersWhen the meat packer shipped the beef, a
contract was formed, but the restaurant is not required to accept the choice beef.
The shipment constitutes a counteroffer, which the restaurant can accept or reject.
Since the shipment does not mirror the terms of the offer, there is no contract.
The choice beef cannot be rejected because a contract was formed when the meat packer shipped
the beef.
A
A candy store sent an order on December 1 to a jelly bean manufacturer for 500 bags filled with
red, heart-shaped jelly beans in anticipation of Valentine's Day on February 14. The order stated
that the jelly beans should not arrive earlier than January 15 in order to ensure their freshness,
but no later than February 1, in order to maximize sales before Valentine's Day. The order also
clearly stated in bold lettering that the candy store could cancel the order at any time before
December 15. The jelly bean manufacturer mailed an acceptance of the order, which was
received by the candy store on December 3. On January 20, the candy store received the 500
bags filled with red, heart-shaped jelly beans from the manufacturer in compliance with the
order. However, the candy store refused to accept the jelly beans.
, Is the candy store in breach of contract? correct answersYes, because the candy store's right to
cancel the order was a condition subsequent.
Yes, because an enforceable contract existed.
No, because the manufacturer's shipment was only an offer.
No, because the candy store's offer was an illusory promise.
B
A supervisor and an employee in neighboring cubicles had been chatting about sports. Ten
minutes after their sports discussion had ended, the supervisor offered to sell the employee
tickets to an upcoming baseball game for $500, even though he saw the employee had placed
earphones into his ears and begun working again. The employee, realizing that he missed
something his supervisor said, nervously responded, "Sure, boss." The day of the game, the
supervisor told the employee that he would accept cash or check. When the employee indicated
he had no idea what the supervisor was referencing, the supervisor angrily restated the terms of
the discussion. Upon hearing the facts, the employee, who was short on funds, refused to pay the
supervisor.
Has a contract between the supervisor and employee been formed? correct answersYes, because
the supervisor reasonably believed the employee accepted the offer.
Yes, because the employee accepted the terms of the contract.
No, because a reasonable person would not believe the parties had entered into a contract.
No, because the employee did not intend to accept the contract.
C
After the death of a farmer, the executor of his estate held an auction sale of his farm equipment.
The executor specified that she reserved the right to withdraw any item from the sale. A neighbor
placed a bid on a tractor. The bid was acknowledged by the auctioneer. Before another bid was
placed or the auctioneer announced the completion of the sale, the neighbor informed the
auctioneer that he was withdrawing his bid.
Must the auctioneer permit the neighbor to withdraw his bid? correct answersNo, the auctioneer
may, but is not required to, accept the withdrawal of a bid.
No, because there is no right to withdraw a bid.
Yes, because the seller retained the right to withdraw an item from the sale.
Yes, because the auctioneer had not announced the completion of the sale.
Verified .
In June, a local chef learned of a new business that opened in the area. Hoping to attract the
business as a new client, the chef sent the business an offer consisting of a catalog of menus
available through his catering service and a form letter he sent to all new businesses in the area.
The letter was signed by the chef and included the following language: "Welcome! I specialize in
creating delicious meals with local and organic ingredients, and I would be honored to be your
catering source for all your business, promotional, and personal needs! To welcome you to the
community, I would like to offer you a 25% discount off of my catalog prices on any three-
course meal order, for up to 100 people, submitted this calendar year. I hope to hear from you
soon and I look forward to doing business with you!" No communication occurred between the
parties until the end of November, when the business faxed an order form to th correct
answersYes, because the signed promotional letter created a firm offer.
Yes, because the chef had not revoked the offer before the end of the calendar year.
No, because the form letter was only an invitation to deal.
No, because the company's power of acceptance terminated after a reasonable period of time.
B
A men's apparel wholesaler was trying to expand its business, so it reached out to an online
company that sold men's ties. The wholesaler mailed a letter to the online company offering to
sell them 1,000 silk ties at a wholesale price of $15 per tie. The signed letter, dated July 1,
assured the online company that the option to purchase would stay open, but did not specifically
state how long the option would remain open. A year later, the online company sent a letter to
the wholesaler accepting its offer to sell them 1,000 silk ties at a wholesale price of $15 per tie.
The wholesaler and online company had no prior dealings, and offers of this kind in the industry
generally do not remain open for a year with no further contact between the parties.
If no other correspondence or action was taken by either party between the wholesaler's offer
and the online company's purported acceptance, is there an enforceable co correct answersNo,
because the online company did not give consideration to keep the offer open.
No, because the online company accepted the offer after an unreasonable period of time.
Yes, because the time period of irrevocability was not stated.
Yes, because the wholesaler's offer had no termination date.
B
,A bank that held a security interest in a delivery van conducted a forced sale of the van at an
auction after the owner of the van defaulted on its loan from the bank. The proceeds of the loan
had been used to purchase the van, which the owner had used in his floral business. At the
auction, which was held in accordance with statutory requirements, the owner, without
disclosing his ownership interest, made a good faith bid on the van. Twelve days after the
auction, the highest bidder filed an action to void the sale after learning that one of the bidders
had been the owner of the van.
Can the sale be voided? correct answersYes, because the owner bid at the auction without
disclosing his interest in the van.
Yes, because the owner was a merchant.
No, because the auction was a forced sale of the van.
No, because the highest bidder did not file his action to void the sale within 10 days of the
auction.
C
A restaurant placed an order for 100 pounds of USDA prime beef from a meat packer. The order
was to be shipped to the restaurant immediately. The meat packer erroneously shipped 100
pounds of USDA choice, rather than prime beef.
When the choice beef arrived at the restaurant, which of the following is an accurate description
of the restaurant's legal obligations? correct answersWhen the meat packer shipped the beef, a
contract was formed, but the restaurant is not required to accept the choice beef.
The shipment constitutes a counteroffer, which the restaurant can accept or reject.
Since the shipment does not mirror the terms of the offer, there is no contract.
The choice beef cannot be rejected because a contract was formed when the meat packer shipped
the beef.
A
A candy store sent an order on December 1 to a jelly bean manufacturer for 500 bags filled with
red, heart-shaped jelly beans in anticipation of Valentine's Day on February 14. The order stated
that the jelly beans should not arrive earlier than January 15 in order to ensure their freshness,
but no later than February 1, in order to maximize sales before Valentine's Day. The order also
clearly stated in bold lettering that the candy store could cancel the order at any time before
December 15. The jelly bean manufacturer mailed an acceptance of the order, which was
received by the candy store on December 3. On January 20, the candy store received the 500
bags filled with red, heart-shaped jelly beans from the manufacturer in compliance with the
order. However, the candy store refused to accept the jelly beans.
, Is the candy store in breach of contract? correct answersYes, because the candy store's right to
cancel the order was a condition subsequent.
Yes, because an enforceable contract existed.
No, because the manufacturer's shipment was only an offer.
No, because the candy store's offer was an illusory promise.
B
A supervisor and an employee in neighboring cubicles had been chatting about sports. Ten
minutes after their sports discussion had ended, the supervisor offered to sell the employee
tickets to an upcoming baseball game for $500, even though he saw the employee had placed
earphones into his ears and begun working again. The employee, realizing that he missed
something his supervisor said, nervously responded, "Sure, boss." The day of the game, the
supervisor told the employee that he would accept cash or check. When the employee indicated
he had no idea what the supervisor was referencing, the supervisor angrily restated the terms of
the discussion. Upon hearing the facts, the employee, who was short on funds, refused to pay the
supervisor.
Has a contract between the supervisor and employee been formed? correct answersYes, because
the supervisor reasonably believed the employee accepted the offer.
Yes, because the employee accepted the terms of the contract.
No, because a reasonable person would not believe the parties had entered into a contract.
No, because the employee did not intend to accept the contract.
C
After the death of a farmer, the executor of his estate held an auction sale of his farm equipment.
The executor specified that she reserved the right to withdraw any item from the sale. A neighbor
placed a bid on a tractor. The bid was acknowledged by the auctioneer. Before another bid was
placed or the auctioneer announced the completion of the sale, the neighbor informed the
auctioneer that he was withdrawing his bid.
Must the auctioneer permit the neighbor to withdraw his bid? correct answersNo, the auctioneer
may, but is not required to, accept the withdrawal of a bid.
No, because there is no right to withdraw a bid.
Yes, because the seller retained the right to withdraw an item from the sale.
Yes, because the auctioneer had not announced the completion of the sale.
