REVIEW QUESTIONS TRUE/FALSE QUESTIONS (CIRCLE THE CORRECT ANSWER)

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1 REVIEW QUESTIONS TRUE/FALSE QUESTIONS (CIRCLE THE CORRECT ANSWER) 1. T F The pre-offer phase of a transaction is also known as preliminary negotiation. 2. T F Preliminary negotiation takes place after an offer has been made. 3. T F The Restatement (Second) of Contracts 24 defines an offer as: the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. 4. T F Offer, as defined in the Restatement (Second) of Contracts 24, is based on an objective standard rather than on a subjective standard. 5. T F The offeror, to create the power of acceptance in the offeree, must state the terms of the contract so nothing remains for the offeror to negotiate once the offeree assents to these terms. 6. T F An offer is a promise made by one party to another in exchange for the other s promise or performance. 7. T F An offeror must make a promise for there to be an 8. T F The consideration for the offeror s promise is also called the price for the offeror s promise and is part of a bargainedfor exchange. 9. T F Consideration for the offeror s promise may be either the offeree s promise or performance, depending on which the offeror prefers. 10. T F An offer which is a promise for a promise is an offer for a unilateral contract. 11. T F A manifestation of willingness or a demonstration of willingness refers to the outward actions of the negotiating parties as understood by an impartial third person watching the parties. 12. T F The third person who is evaluating the outward actions of the negotiating parties is referred to as the reasonable person. 13. T F The reasonable person s standard is a subjective standard. 14. T F Early contracts cases used an objective standard. 15. T F Both the Restatement (First) and the Restatement (Second) of Contracts use an objective standard for the law of contracts. 16. T F An advertisement made to the general public may be an

2 17. T F An advertisement may never be an 18. T F An offer must always be made to a specific party. 19. T F In an auction with reserve, the auctioneer is the offeror. 20. T F In an auction with reserve, the auctioneer may withdraw the property at any time until he or she announces the completion of the sale. 21. T F Once a bidder had made a bid in an auction, he or she may not retract this bid. 22. T F A statement in an advertisement for an auction that says the property will be offered to the highest bidder means that the auction will be conducted without reserve. 23. T F An auction is with reserve unless a contrary intention is apparent from a statute, court order, or advertisement or by an announcement at the beginning of the auction. 24. T F Sam Brown, the auctioneer, presented a Louis XV ormolu clock to the potential bidders at an auction. Susan Sanchez, the owner of this valuable antique clock, had told Sam not to sell it for less than $5,000. In spite of Sam s best efforts, the highest bid was $2,500. Sam could withdraw the clock from the auction. 25. T F A person with a secret (subjective) intent to make a joke while outwardly expressing (objective) intent to make an offer will be judged on his or her subjective intent. 26. T F Contract formation occurs upon acceptance of the 27. T F If the offeror proposes a unilateral contract, the offeree must fully perform to accept the 28. T F An illusory promise is an unequivocal assurance that something will or will not be done. 29. T F An indefinite promise contains all essential terms to allow the court, in the event of breach, to fashion a remedy. 30. T F Consideration is the price that the offeror demands in return for his or her promise. 31. T F Every contract has not one but two considerations: one for the offeror s promise and one for the offeree s promise or performance. 32. T F The consideration for the offeror s promise in the offer is the same as the offeree s promise or performance in the acceptance. 33. T F The consideration for the offeree s promise or performance in the acceptance is the same as the offeror s promise in the 34. T F The promisor s promise to make a future gift lacks consideration and therefore cannot be an 35. T F If a donor of a gift changes his or her mind, a gift that has already been made must be returned.

3 36. T F For an offer to exist, the consideration for the promisor s promise must be adequate. 37. T F A peppercorn cannot be consideration for the promisor s promise. 38. T F I promise to pay you $1,000 for your love and affection is an 39. T F I promise to paint your barn for $10 is an 40. T F Motive can be consideration for a promise. 41. T F Moral obligation may be consideration for a promise. 42. T F An obligation already owed to the promisor (a preexisting duty) may be consideration for the promisor s promise. 43. T F If the promisee has already promised or performed (past consideration), the promisor would not be making his or her promise to induce a promise or performance and there would be no bargained-for exchange. 44. T F Modern contract law allows a less rigid adherence to the classical consideration doctrine. 45. T F Reliance can never be an alternative to consideration. 46. T F Gloria VanFleet had a five-year contract to coach the Springfield Volunteers, a professional football team. During Gloria s second year as coach, her team won its league championship. The owners were so delighted that they offered to replace Gloria s contract with a new five-year contract at a 50 percent increase in salary. Gloria s promise to coach for five years would be consideration for the owner s promise to pay 50 percent more. 47. T F The restitution cause of action is based on the policy of preventing unjust enrichment. 48. T F The restitution cause of action is based on the fact that the promisee relied on the promisor s promise to his or her detriment. 49. T F A restitution cause of action is based on a contract. 50. T F A restitution remedy in a breach of contract action is the same as a restitution cause of action. 51. T F Quantum meruit means as much as it is worth. 52. T F Under the Restatement of Restitution 2 (1937), an officious person is one who is entitled to receive compensation for a benefit conferred upon another while serving in an official capacity. 53. T F An officious person is a meddler. 54. T F Restitution actions are often called contracts implied by law. 55. T F When negotiations end without one party making an offer, the parties are always free to walk away from each other without any obligation. 56. T F Restitution may be both a cause of action and a remedy.

4 57. T F Reliance may be both a cause of action and a remedy. 58. T F The elements for the reliance cause of action come from Restatement of Contracts T F An express contract and an implied in fact contract are real contracts and may form the basis for a breach of contract action. A contract implied by law is not a real contract but rather a judicial construct and may form the basis for a restitution cause of action. 60. T F A person who is officious can recover in a restitution action for a benefit that he or she has conferred on another party. 61. T F When business was slow for the Quality Paving Company, employees would cruise neighborhoods in search of vacant houses with For Sale signs. If the driveway was in a state of disrepair, Quality would repave the drive and send a bill to the owner. Quality could not successfully maintain a restitution cause of action for compensation for the new driveway because Quality was officious. FILL-IN-THE-BLANK QUESTIONS 1.. A third person who is evaluating the outward actions of the negotiating parties. 2.. The reasonable person s standard. 3.. Standard used in early contracts cases. 4.. An auction in which the auctioneer is the offeror. 5.. An auction in which the bidder is the offeror. 6.. A contract that results from a promise for a performance. 7.. A contract that results from a promise for a promise. 8.. The price that the promisor expects to receive for his or her promise. 9.. May sometimes be an alternative to consideration under modern contract law An unequivocal assurance that something will or will not be done An equivocal assurance that something will or will not be done I promise to sell you my car if I feel like it A promise that omits terms essential for the court to determine an appropriate remedy in the event the promise is breached Feigned or pretended consideration An obligation already owed to the promisor by the promisee.

5 16.. A cause of action based on the policy of preventing unjust enrichment Preclusion of an assertion by the promisor that is inconsistent with a previously made promise upon which the promisee has relied A figment of the court s imagination A Latin expression meaning as much as it is worth A term used to describe what takes place when the plaintiff has conferred a benefit on the defendant and it would be unfair to permit the defendant to retain this benefit without compensating the plaintiff A promise that is neither express nor implied in fact but is a legal fiction which represents the court s label attached to a set of facts to reach a desired result A promise that is inferred from conduct rather than expressed orally or in writing. MULTIPLE-CHOICE QUESTIONS (CIRCLE ALL THE CORRECT ANSWERS) 1. The following statements are preliminary negotiation: (a) What will you take for your car? (b) I will give you $1,500 for your car. (c) Will you take $1,500 for your car? (d) Quote me a price for your car. (e) I will pay you no more than $1,500 for your car. 2. Identify the offer in the following sequence of events. (a) Please advise us of the lowest price you can make on our order for 10 car loads of Mason green jars, complete, with caps, packed one dozen in a case, either delivered here, or f.o.b. cars your place, as you prefer. State terms and cash discount. (b) Replying to your letter, we quote you Mason fruit jars, complete, in one-dozen boxes, delivered to your place: pints $4.50, quarts $5.00, half gallons $6.50, per gross, for immediate acceptance. Credit 60 days trade acceptance or 2 percent off if cash in 10 days. Your order subject to the approval of our executive officer. (c) Your letter received. Enter order for 10 car loads as per your quotation. (d) Replying to your letter, price now pints $5.00, quarts $5.50, half gallon $6.50, per gross, for immediate acceptance. (e) Seller ships 10 car loads to the Buyer. 3. Identify which of the following are offers for a unilateral contract. (a) I promise to pay $500 for your promise to sell me your gold watch. (b) I promise to pay $500 for your selling me your gold watch. (c) I promise to sell you my gold watch for your promise to pay $500. (d) I promise to sell you my gold watch for your paying me $500. (e) I promise to pay you $500 for your refraining from smoking for five years.

6 4.Identify which of the following is an (a) I may sell you my car for $5,000. (b) I will sell you my car for $5,000. (c) I will sell you one of my cars for $5,000. (d) I might sell you my car for $5,000. (e) I will consider selling you my car for $5, Identify which of the following is an (a) I promise to sell you my car. (b) I will sell you my car for your promise to pay $5. (c) I promise to give you my car if you roof my house. (d) (e) I will give you my car for your having roofed my house. I will give you $1,000 for your having taken care of me while I was ill. 6. Under classical contract law, the court will investigate the following: (a) Whether there is consideration for the promisor s promise (b) Whether what appears to be consideration is really a sham (c) Whether there is mutuality of obligation (d) Whether the promisor s motive is appropriate (e) Whether the consideration is adequate 7. A restitution cause of action has also been known as a cause of action based upon which of the following? (a) A contract implied by law (b) A constructive contract (c) An express contract (d) Quasi-contract (e) An implied contract 8. When may a cause of action for reliance occur? (a) When the parties have not negotiated (b) When the parties have negotiated, but no offer has been made (c) After an offer has been revoked (d) After an offer has been rejected (e) After an offer has been accepted 9. A restitution cause of action requires: (a) a promise by the promisor. (b) a benefit being conferred by one party on another. (c) that the promisor reasonably expected to induce action or forbearance on the part of the other party. (d) that the retention of the benefit without compensating the party conferring the benefit would be unjust. (e) that injustice could be avoided only by enforcement of the promise.

7 10. Anderson s car skidded off the highway during an ice storm and hit a tree. Anderson was knocked unconscious by the impact. McGill, a doctor of internal medicine, came upon the accident scene on her way home from making rounds at the local hospital. Dr. McGill rendered first aid at the scene and later sent Anderson a bill for her services. Anderson refused to pay, claiming that he did not request her services. (a) Dr. McGill could not successfully maintain either a breach of contract or a restitution cause of action against Anderson. (b) Dr. McGill could successfully maintain a breach of contract action against Anderson but not a restitution cause. (c) Dr. McGill could successfully maintain a restitution cause of action against Anderson but not a breach of contract cause of action. (d) Dr. McGill could successfully maintain both a breach of contract cause of action and a restitution cause of action against Anderson. SHORT-ANSWER QUESTIONS 1. Describe the difference between evaluating a communication using an objective standard rather than a subjective standard. 2. Discuss the practical significance between an offer for a unilateral contract and an offer for a bilateral contract. 3. Discuss why past services cannot be consideration for the promisor s promise. 4. A father told his son that if the son would move back to town, the father would start him in business. Is the son s moving back to town consideration for the father s promise or only a condition? 5. Discuss several ways legislatures have tinkered with the classical consideration doctrine. 6. Discuss several ways courts have tinkered with the classical consideration doctrine. 7. List the four elements of the reliance doctrine necessary to enable it to be used as an alternative to consideration. 8. List the four elements for a cause of action for reliance. 9. Grandpa Jones sent his 18-year-old granddaughter, Katie, a letter in which he promised to give her $10,000 when she became 25. In the meantime, he would pay her 6 percent interest annually on the $10,000 so she could stop working. Upon receiving this letter, Katie quit her job. Could Katie successfully sue Grandpa Jones s estate if after he died his estate discontinued paying her the annual interest? 10. Describe the role of expectation when negotiations fail to produce an 11. Describe the role of reliance when negotiations fail to produce an 12. Describe the role of restitution when negotiations fail to produce an 13. Are implied by law, implied in fact and implied contracts really contracts? 14. When is a person officious?