Exam 6: Formation of Contracts

Joe offered to sell Harry his car for a specific price, and Harry indicated that he needed some time to think about it. Two days later, Joe sold the car to a third party. That afternoon Harry phoned up and told Joe that he decided to accept the offer and that he'd buy the car. Joe told him that it was too late; he had sold it to someone else. Harry said that it was offered to him first, and he insisted that he go through with the contract. Explain the legal liability of the parties.

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

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?

Which one of the following will not end an offer?

Carlos visited Vancouver last summer and instead of going back to Ontario he stayed and enrolled at Simon Fraser University. He needed money but didn't need things left in Ontario, including his car. In mid-December, he wrote a friend and offered to sell the car for $4,000 and told him to send him a letter with his answer. His friend received the letter on January 2, checked his financial situation, and sent a letter of acceptance January 3. Meanwhile Carlos, short of cash and not hearing from his friend, sold the car to Mr. Reno on December 31. Carlos received his friend's letter January 8. On these facts, which of the following is false?

Why is an understanding of contract law important for a business person?

Is an "agreement to agree" binding?

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

What is promissory estoppel?

A contract is a single promise, made by one person to another, enforceable in court.

Explain the postbox rule and discuss its relevancy in the modern business world. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.

Mary received a non-solicited selection of compact discs in the mail, with a letter informing her that she was now a member of the CD of the month club. It also said that if she didn't want these CDs, she could simply send them back; otherwise, she would be billed $10 for each CD at the end of the month. She simply put them away, and did not respond. They continued to send her more CDs each month until she had received 100 of them over a period of 10 months. The club then sent her a letter demanding payment; otherwise, they would take legal action. Explain her legal obligation in these circumstances.

Even though a person promises to hold an offer open for a specified period of time, the offeror can revoke that offer before that time if he feels like it.

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 had placed orders to his suppliers for the flowers. The letter of acceptance was received by Jones on January 20. Is there a contract between Jones and Smith? Explain.

A revocation of an offer is effective only when it has been communicated to the offeree.

"For a contract to be binding, both parties must have a clear understanding of all the terms of that agreement." Discuss the accuracy of that statement.

Joe offered to sell Harry his car for $500. Harry responded by saying, "I accept, providing you install a new radio in that car." Explain the legal relationship between the two parties.

Indicate the correct statement about consideration.

Sam had been a friend of Joe's for a considerable period of time and had often accompanied him as he sailed his classic yacht. Sam had often communicated to Joe how much he would like to have it. On Friday night, a friend told Joe that Sam had suffered some business reverses and was going to have to get rid of the yacht. Joe immediately wrote Sam a letter offering to purchase the yacht for $25,000. Unknown to Joe, Sam had written Joe a similar letter offering to sell the yacht for $25,000. These two letters had passed in the mail. Joe received Sam's letter about 12 noon on Saturday, and Sam received Joe's letter about 2:30 p.m. on Saturday. Are these people bound in contract? Explain.

What was significant about the case of R. v. Commercial Credit Corp.?