Accounting 324 Smartbook Questions for Exam 1
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CHAPTER 14 SMARTBOOK
Justin proposes to do woodwork for Joseph provided he agrees to the proposed terms within a week. Suppose Joseph calls Justin within a few hours and says, "Justin, I've found someone else to do my woodwork for the winter, and I won't be needing you." A day later Joseph changes
his mind and calls Justin and wants to hire him based on the previously discussed terms. This is
a valid: - Rejection The creation of a valid contractual offer requires what elements? - The intent of the offeror for an agreement, definite terms, and the offer must be communicated to the offeree
According to common law, a valid offer requires the intent to make an offer in response to an invitation to negotiate, definite and certain terms, and communication of the offer to the offeror. -
False, Reason: To have a valid offer under the common law, you need (1) the intent to be bound by an acceptance, (2) definite and certain terms, and (3) communication to the offeree.
If an offer is for a unilateral contract, the offeree can accept only by providing the requested performance. Suppose Bill offered to pay $500 to anyone who returned his lost dog to him. Mary
could accept by: - Returning the dog
As a general rule, a revocation of an offer is effective - when the offeree receives it Under common law, what are the necessary elements of a valid contractual acceptance? (Check all that apply.)
●
The intent of the offeree to be bound by acceptance of the contract.
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The acceptance will have the definite and certain terms of the offer.
Who has the power to decide by what means an offer can be validly accepted? - the offeror In determining contractual intent, courts are concerned only with the parties' outward manifestations of intent, not their internal thought processes. - True, Courts interpret contracts using an objective standard, meaning the courts are concerned only with the parties' outward manifestations of intent, not their internal thought processes.
Absent a description in the offer of what form of communication must be used to form a valid acceptance, what methods of communication are generally accepted as reasonable?
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Telephone communication
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In-person communication
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E-mail communication
If the offer merely authorizes certain modes of acceptance, but does not condition acceptance on the use of those modes, use of an unauthorized means of acceptance is: - Acceptable If nothing is stated to the contrary in terms of an auction, the auction is presumed to be without reserve. - False, If nothing is stated to the contrary in terms of an auction, the auction is presumed to be with reserve, which means that the seller is merely expressing intent to receive offers.
In a(n) auction without reserve
the seller is treated as making an offer to accept the highest bid and therefore must accept it.
In general, what are the ways an offeree can manifest intent to enter into a contract? (Check all that apply.)
●
By performance of the requested actions under the offer and the contract
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By giving the offeror a return promise (e.g., a promise to pay contract value)
Under common law, what types of terms must be included in a valid contractual offer? - Material terms, all major items necessary for mutual consent that are clearly laid out
A valid contractual offer must be communicated to what party? (Check all that apply.)
●
The offeree
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The agent of the offeree who is acting on behalf of the offeree
Death of the offeror will have what effect on a contractual offer? - It will cause the offer to be terminated.
Which party to a contract can revoke an offer at any time? - the offeror Promissory estoppel requires what form of contractual mindset? - Detrimental reliance on the offer
What is the term for an offer made by the offeree to the offeror proposing a substituted bargain differing from the original proposed offer? - a counteroffer What conditions would legally cause an offer to be immediately terminated? (Check all that apply.) ●
The offeror loses the legal capacity to be in a contract
●
Death of the offeror
If a contractual offer becomes illegal, what is status of the offer? - it is immediately terminated If there is no stated period when the offeree must accept or reject an offer, when will the offer expire? - The offer will expire after a reasonable period of time.
In general, what are the ways an offeree can manifest intent to enter into a contract? (Check all that apply.)
●
By giving the offeror a return promise (e.g., a promise to pay contract value)
●
By performance of the requested actions under the offer and the contract
In a bilateral contract, the offeror is expecting what action from the offeree? - a return promise As a general rule, silence cannot be used to form a contract.
Under the common law mirror-image rule, if an offer and acceptance do not have the exact terms in the contract, the acceptance is treated as a(n) - counteroffer
Under the mailbox rule, a revocation is effective: when it is received by the offeree
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Regarding contractual offers, which of the following statements best describes express authorization? - It is the specific mode of communication of acceptance that is stated in the offer. According to the Restatement of Contracts, if no mode of communication is specified in the offer, - any reasonable means of acceptance is valid
Who has the right to reject an offer? - The offeree only Which of the following is an element in the formation of a contractual offer? - The offer must include serious intent by the offeror to be bound to an agreement.
If an offer states that it is good for thirty days, what happens in thirty days if the offeree has not responded? - The offer terminates immediately.
Which of the following is not a basic common-law requirement for a valid acceptance? - The offeree's written acceptance, dispatched by certified mail, to the offeror
An agreement consists of an offer and acceptance What is the standard that courts use to interpret contracts? - objective An auction with reserve
means that the seller is merely expressing intent to receive offers.
Who can accept a valid offer that will create a binding contract? - only the offeree or his or her agent
Justin informs Joseph that he will not be able to accept the contract for doing woodwork for the winter at Joseph's farm because of prior commitments. A day later, Justin calls up Joseph and tells him the original terms of the contract are acceptable to him and he can take up the offer. Joseph tells Justin he would indeed like Justin to do the work; however, her will pay only $15 per hour rather than $18 per hour as mentioned in the original contract. This proposal made by Joseph illustrates a - counteroffer
If the subject matter of a contractual offer is destroyed, what is the status of the offer? - The offer is immediately terminated.
Under the mailbox rule, acceptance is valid: when it is mailed by the offeree
As a general rule, a revocation of an offer is effective: when the offeree receives the revocation
The means by which the offeree can communicate a valid acceptance to the offeror may be: ●
implied from the facts and circumstances surrounding the communication of the offer to the offeree
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expressly stated in the offer
Suppose Jeremy offers a job to Carol but states in the offer, "I must receive your acceptance by e-mail before 5:00 p.m. on September 5." Carol puts her signed acceptance in the postal mail on September 3, but the acceptance does not arrive until September 7. Jeremy and Carol have:
no agreement, because Carol did not accept in the manner and time specified in the offer
What form of intent must an offeror have in creating a contractual offer? - intent to be bound by the offeree's acceptance CHAPTER 15 SMARTBOOK
A promise to refrain from doing something is sufficient: consideration
Which of the following is
true about a bilateral contract? (Check all that apply.)
-
A promise to perform has value.
-
A promise in exchange for a promise can be consideration.
In a bilateral contract, one party's consideration is the promise and the other party's consideration is the act. - false As a remedy, promissory estoppel is awarded regularly. - false
Every contract must be supported by the element of: consideration Which of the following is not
an type of consideration? - A promise to accept a gift
Promissory estoppel and contracts under seal are two exceptions to the common law rule requiring consideration.
Anna promises Elsa that she will clean Elsa's house and Elsa promises Anna she will pay Anna $100 when Anna is done. Which of the following is true
? (Check all that apply)
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Anna and Elsa have formed a bilateral contract.
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Anna and Elsa's promises are an exchange of something of value.
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Anna's promise in exchange for Elsa's promise is sufficient consideration.
When does the court look at the adequacy of consideration in a contract? (Check all that apply.)
- If the court thinks that undue influence was used and If the court believes fraud occurred Which of the following are true
about a unilateral contract? (Check all that apply.) - It is a promise in exchange for performance and It is a real contract because it is a mutual exchange of value.
What are the conditions for promissory estoppel to occur? (Check all that apply.)
●
To avoid an injustice, the promise must be enforced.
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A party reasonably relies on another's promise.
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One party makes a promise and knows the other party will rely on it.
Sheila tells Ed that if Ed repairs her air conditioner by the end of the day, Sheila will pay Ed $500. Which of the following is true
? - Ed and sheila have entered into a valid unilateral contract
Phil tells Gloria that if she works for him full-time, he'll pay her $1,000 a week. As a result and based on Phil's promise, Gloria quits her job at the department store and puts a down payment on a car. When Gloria shows up at Phil's to start work, Phil tells her he's changed his mind about the full-time job. Which of the following is correct regarding this scenario? - The best way for Gloria to enforce Phil's promise is to assert promissory estoppel.
Currently, how many states will still enforce contract under seal even if it is not supported by consideration? - 10
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Which of the following is correct regarding adequacy of consideration and the enforceability of contracts? - The court does not weigh whether each party made a good bargain.
Which of the following is a correct
statement regarding a promise to refrain from doing something you are legally entitled to do? - A promise to not do something you are otherwise legally entitled to do is good consideration for a contract.
Andy is an artist and Jane runs a famous art gallery. Jane calls Andy and tells him she has seen
some of his work and likes it. She tells him to bring his newest paintings to her gallery and says "I promise that if I like them, I will show them in my gallery." Which of the following is true
? (Check all that apply.) - ●
Jane made an illusory promise.
●
Andy has no contract to compel Jane to show his paintings in the gallery.
Forrest hires Nadine to turn his basement into a family room for $50,000. About halfway through
the work, Nadine discovers for the first time that the wood in the floor of the basement is riddled with mold and all the wood must be removed and replaced. Nadine tells Forrest that it will cost him an additional $10,000 for this work. Which of the following is true
? - The mold was an unforeseen circumstance to the basement work, and it is lawful for Nadine to charge Forrest for the additional work.
Past consideration is no consideration at all. - true, Reason: A promise cannot be based on consideration provided before the promise was made. Past consideration is no consideration at all.
Wanda works for Acme Corporation. Part of her job, for which she was hired 10 years ago, is to prepare a monthly report of all transactions in her department. After 10 years, Wanda tells Acme
Corporation that she wants another $500 per month to prepare the reports. Which of the following is true
? - wanda has an existing contractual duty to prepare the reports When a person promises that they may do something if they want to, they have made a(n) illusory promise. Such a promise is not sufficient consideration
Performance of a duty you are obligated to do under the law is not good consideration. This is known as the preexisting duty rule If there is no dispute that money is owed, the debt is liquidated
In an accord and satisfaction, the accord is the new agreement to pay less than the creditor claims is owed and the satisfaction is the debtor's payment of the reduced amount
Under the Uniform Commercial Code (UCC), writing "paid in full" on a check for less than the full
amount of the debt owed will not be an accord and satisfaction unless the creditor inadvertently cashes the check and waits longer than 90 days to offer the debtor repayment in the same amount, or unless the - check is sent to a special address for disputed amounts per the creditor's request
Consideration, as a required contractual element, can be: a service or money
Performance of a duty you are obligated to do under the law is not good consideration.- true, reason: performance of a duty you are obligated to do under the law is not good consideration. Identify exceptions to the preexisting duty rule. (Check all that apply.)
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UCC Article 2 (sale of goods)
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Additional work required to fulfill the promised obligation
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Unforeseen circumstances
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