Chapter 12, Formation of Contracts Offer and Acceptance Video Solutions, Anderson’s Business Law and the Legal Environment, Comprehensive Volume

Problem 1

Bernie and Phil's Great American Surplus store placed an ad in the Sunday Times stating, "Next Saturday at $8: 00$ A.M. sharp, 3 brand new mink coats worth $$\$ 5,000$$ each will be sold for $$\$ 500$$ each! First come, first served." Marsha Lufklin was first in line when the store opened and went directly to the coat department, but the coats identified in the ad were not available for sale. She identified herself to the manager and pointed out that she was first in line in conformity with the store's advertised offer and that she was ready to pay the $$\$ 500$$ price set forth in the store's offer. The manager responded that a newspaper ad is just an invitation to negotiate and that the store decided to withdraw "the mink coat promotion." Review the text on unilateral contracts in the section titled "Bilateral and Unilateral Contracts" in Chapter 11. Decide.

Breanna Ollech

Numerade Educator

01:37

Problem 2

Brown made an offer to purchase Overman's house on a standard printed form. Underneath Brown's signature was the statement: "ACCEPTANCE ON REVERSE SIDE." Overman did not sign the offer on the back but sent Brown a letter accepting the offer. Later, Brown refused to perform the contract, and Overman sued him for breach of contract. Brown claimed there was no contract because the offer had not been accepted in the manner specified by the offer. Decide. [Overman $v$. Brown, 372 N.W.2d 102 (Neb.)]

Jennifer Stoner

Numerade Educator

Problem 3

Katherine mailed Paul an offer with definite and certain terms and that was legal in all respects stating that it was good for 10 days. Two days later she sent Paul a letter by certified mail (time stamped by the Postal Service at 1:14 P.M.) stating that the original offer was revoked. That evening Paul e-mailed acceptance of the offer to Katherine. She immediately phoned him to tell him that she had revoked the offer that afternoon, and that he would surely receive it in tomorrow's mail. Was the offer revoked by Katherine?

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Problem 4

Nelson wanted to sell his home. Baker sent him a written offer to purchase the home. Nelson made some changes to Baker's offer and wrote him that he, Nelson, was accepting the offer as amended. Baker notified Nelson that he was dropping out of the transaction. Nelson sued Baker for breach of contract. Decide. What social forces and ethical values are involved? [Nelson v. Baker, 776 S.W.2d 52 (Mo. App.)]

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02:02

Problem 5

Lessack Auctioneers advertised an auction sale that was open to the public and was to be conducted with reserve. Gordon attended the auction and bid $$\$ 100$$ for a work of art that was worth much more. No higher bid, however, was made. Lessack refused to sell the item for $$\$ 100$$ and withdrew the item from the sale. Gordon claimed that because he was the highest bidder, Lessack was required to sell the item to him. Was he correct?

Bobby Barnes

University of North Texas

00:46

Problem 6

Willis Music Co. advertised a television set at $$\$ 22.50$$ in the Sunday newspaper. Ehrlich ordered a set, but the company refused to deliver it on the grounds that the price in the newspaper ad was a mistake. Ehrlich sued the company. Was it liable? Why or why not? [Ehrlich v. Willis Music Co., 113 N.E.2d 252 (Ohio App.)]

Trinity Steen

Numerade Educator

Problem 7

When a movement was organized to build Charles City College, Hauser and others signed pledges to contribute to the college. At the time of signing, Hauser inquired what would happen if he should die or be unable to pay. The representative of the college stated that the pledge would then not be binding and that it was merely a statement of intent. The college failed financially, and Pappas was appointed receiver to collect and liquidate the assets of the college corporation. He sued Hauser for the amount due on his pledge. Hauser raised the defense that the pledge was not a binding contract. Decide. What ethical values are involved? [Pappas v. Hauser, 197 N.W.2d 607 (Iowa)]

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Problem 8

Maria Cantu was a special education teacher under a one-year contract with the San Benito School district for the 1990-1991 school year. On Saturday, August 18 , just weeks before fall-term classes were to begin, she hand delivered a letter of resignation to her supervisor. Late Monday afternoon the superintendent put in the mail a properly stamped and addressed letter to Cantu accepting her offer of resignation. The next morning at 8:00, before the superintendent's letter reached her, Cantu hand delivered a letter withdrawing her resignation. The superintendent refused to recognize the attempted rescission of the resignation. Decide. [Cantu v. Central Education Agency, 884 S.W.2d 563 (Tex. App.)]

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Problem 9

A. H. Zehmer discussed selling a farm to Lucy. After a 40 -minute discussion of the first draft of a contract, Zehmer and his wife, Ida, signed a second draft stating: "We hereby agree to sell to W. O. Lucy the Ferguson farm complete for $$\$ 50,000$$ title satisfactory to buyer." Lucy agreed to purchase the farm on these terms. Thereafter, the Zehmers refused to transfer title to Lucy and claimed they had made the contract for sale as a joke. Lucy brought an action to compel performance of the contract. The Zehmers claimed there was no contract. Were they correct? [Lucy $v$. Zehmer, 84 S.E.2d 516 (Va. App.)]

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Problem 10

Wheeler operated an automobile service station, which he leased from W. C. Cornitius, Inc. The lease ran for three years. Although the lease did not contain any provision for renewal, it was in fact renewed six times for successive three-year terms. The landlord refused to renew the lease for a seventh time. Wheeler brought suit to compel the landlord to accept his offer to renew the lease. Decide. [William C. Cornitius, Inc. v. Whecler, 556 P.2d 666 (Or.)]

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06:04

Problem 11

Buster Cogdill, a real estate developer, made an offer to the Bank of Benton to have the bank provide construction financing for the development of an outlet mall, with funds to be provided at prime rate plus two percentage points. The bank's president Julio Plunkett thanked Buster for the proposal and said, "I will start the paperwork." Did Cogdill have a contract with the Bank of Benton? [Bank of Benton $v$. Cogdill, 454 N.E.2d 1120 (Ill. App.)]

Anas Venkitta

Numerade Educator

12:57

Problem 12

Ackerley Media Group, Inc., claimed to have a threeseason advertising Team Sponsorship Agreement (TSA) with Sharp Electronics Corporation to promote Sharp products at all Seattle Supersonics NBA basketball home games. Sharp contended that a valid agreement did not exist for the third season (20002001) because a material price term was missing, thus resulting in an unenforceable "agreement to agree." The terms of the TSA for the 2000-2001 third season called for a base payment of $$\$ 144,200$$ and an annual increase "not to exceed $6 \%$ [and] to be mutually agreed upon by the parties." No "mutually agreed" increase was negotiated by the parties. Ackerley seeks payment for the base price of $$\$ 144,200$$ only. Sharp contends that since no price was agreed upon for the season, the entire TSA is unenforceable, and it is not obligated to pay for the 2000-2001 season. Is Sharp correct? [Ackerley Media Group, Inc. v. Sharp Electronics Corp., 170 F. Supp. 2d 445 (S.D.N.Y.)]

Harsh Gadhiya

Numerade Educator

03:28

Problem 13

L. B. Foster invited Tie and Track Systems Inc. to submit price quotes on items to be used in a railroad expansion project. Tie and Track responded by email on August 11, 2006, with prices for 9 items of steel ties. The e-mail concluded, "The above prices are delivered/Terms of Payment-to be agreed/ Delivery-to be agreed/We hope you are successful with your bid. If you require any additional information please call." Just 3 of the 9 items listed in Tie and Track's price quote were "accepted" by the project. L. B. Foster demanded that Tie and Track provide the items at the price listed in the quote. Tie and Track refused. L. B. Foster sued for breach of contract. Did the August 11 e-mail constitute an offer, acceptance of which could bind the supplier to a contract? If so, was there a valid acceptance?

Kevin Morgan

Numerade Educator

Problem 14

On August 15, 2003, Wilbert Heikkila signed an agreement with Kangas Realty to sell eight parcels of Heikkila's property. On September 8, 2003, David McLaughlin met with a Kangas agent who drafted McLaughlin's offer to purchase three of the parcels. McLaughlin signed the offer and gave the agent checks for each parcel. On September 9 and 10, 2003 , the agent for Heikkila prepared three printed purchase agreements, one for each parcel. On September 14, 2003, David's wife, Joanne McLaughlin, met with the agent and signed the agreements. On September 16,2003, Heikkila met with his real estate agent. Writing on the printed agreements, Heikkila changed the price of one parcel from $$\$ 145,000$$ to $$\$ 150,000$$, the price of another parcel from $$\$ 32,000$$ to $$\$ 45,000$$, and the price of the third parcel from $$\$ 175,000$$ to $$\$ 179,000$$. Neither of the McLaughlins signed an acceptance of Heikkila's changes to the printed agreements before Heikkila withdrew his offer to sell. The McLaughlins learned that Heikkila had withdrawn his offer on January 1, 2004, when the real estate agent returned the checks to them. Totally shocked at Heikkila's conduct, the McLaughlins brought action to compel specific performance of the purchase agreement signed by Joanne McLaughlin on their behalf. Decide.

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