Agreement in Traditional and E-Contracts
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
For your convenience, page references for both the Summarized and Excerpted case versions of Fundamentals of Business Law are included.
SUMMARIZED PAGE: Fundamentals of Business Law: Summarized Cases, Ninth Edition
EXCERPTED PAGE: Fundamentals of Business Law: Excerpted Cases, Third Edition
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
153
TRUE/FALSE QUESTIONS
1. An agreement is evidenced by a single event: an acceptance.
ANSWER: F SUMMARIZED PAGE: 144 TYPE: N
EXCERPTED PAGE: 152
NAT: AACSB Analytic AICPA Legal
2. An effective offer requires reasonably certain terms.
ANSWER: T SUMMARIZED PAGE: 144 TYPE: +
EXCERPTED PAGE: 152
NAT: AACSB Analytic AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
154 UNIT THREE: CONTRACTS
CHAPTER 8: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 155
3. An offer must be practical to be effective.
ANSWER: F SUMMARIZED PAGE: 144 TYPE: N
EXCERPTED PAGE: 152
NAT: AACSB Reflective AICPA Legal
4. An offeror’s subjective intent determines the effectiveness of an offer.
ANSWER: F SUMMARIZED PAGE: 145 TYPE: N
EXCERPTED PAGE: 153
NAT: AACSB Analytic AICPA Legal
5. An expression of opinion “your customers will like this” is an offer.
ANSWER: F SUMMARIZED PAGE: 145 TYPE: =
EXCERPTED PAGE: 154
NAT: AACSB Analytic AICPA Legal
6 An invitation to submit bids “how much would you charge to do this work?” is an offer.
ANSWER: F SUMMARIZED PAGE: 146 TYPE: N
EXCERPTED PAGE: 154
NAT: AACSB Reflective AICPA Legal
7. An invitation to negotiate “can you afford this?” is an offer.
ANSWER: F SUMMARIZED PAGE: 146 TYPE: =
EXCERPTED PAGE: 154
NAT: AACSB Analytic AICPA Legal
8. Most advertisements “this property for sale” are offers.
ANSWER: F SUMMARIZED PAGE: 146 TYPE: N
EXCERPTED PAGE: 154
NAT: AACSB Reflective AICPA Legal
9. An auction—“we ask you to bid on this item”—is an offer.
ANSWER: F SUMMARIZED PAGE: 146 TYPE: N
EXCERPTED PAGE: 154
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
NAT: AACSB Analytic AICPA Legal
10. In an auction, the auctioneer is an offeree.
ANSWER: T SUMMARIZED PAGE: 146 TYPE: N
EXCERPTED PAGE: 154
NAT: AACSB Analytic AICPA Legal
11. An offer may invite an acceptance to be worded in such specific terms that the contract is made definite.
ANSWER: F SUMMARIZED PAGE: 147 TYPE: N
EXCERPTED PAGE: 155
NAT: AACSB Analytic AICPA Legal
12. An offer must be communicated to the offeree to be effective.
ANSWER: T SUMMARIZED PAGE: 147 TYPE: N
EXCERPTED PAGE: 155
NAT: AACSB Reflective AICPA Legal
13. A person who does not know about a reward can still claim it.
ANSWER: F SUMMARIZED PAGE: 147 TYPE: N
EXCERPTED PAGE: 155
NAT: AACSB Reflective AICPA Legal
14 An effective offer requires a reasonable price related to market value.
ANSWER: F SUMMARIZED PAGE: 147 TYPE: +
EXCERPTED PAGE: 155
NAT: AACSB Analytic AICPA Legal
15 There are no revocable offers.
ANSWER: F SUMMARIZED PAGE: 148 TYPE: N
EXCERPTED PAGE: 156
NAT: AACSB Analytic AICPA Legal
16. An acceptance that materially changes a term in the offer will still be considered an acceptance.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
156 UNIT THREE: CONTRACTS
CHAPTER 8: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 157
ANSWER: F SUMMARIZED PAGE: 149 TYPE: N
EXCERPTED PAGE: 157
NAT: AACSB Analytic AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
17. An acceptance must be unequivocal.
ANSWER: T SUMMARIZED PAGE: 150 TYPE: N
EXCERPTED PAGE: 158
NAT: AACSB Analytic AICPA Legal
18. No offer can be accepted by silence.
ANSWER: F SUMMARIZED PAGE: 150 TYPE: =
EXCERPTED PAGE: 158
NAT: AACSB Analytic AICPA Legal
19. Under the mailbox rule, no acceptance is valid until it is received.
ANSWER: F SUMMARIZED PAGE: 151 TYPE: +
EXCERPTED PAGE: 160
NAT: AACSB Analytic AICPA Legal
20. An e-contract must meet the same basic requirements as a paper contract
ANSWER: T SUMMARIZED PAGE: 152 TYPE: N
EXCERPTED PAGE: 160
NAT: AACSB Analytic AICPA Legal
21. A “sale” of software generally involves a right to use the software and a passage of ownership rights in the software to the buyer
ANSWER: F SUMMARIZED PAGE: 152 TYPE: N
EXCERPTED PAGE: 160
NAT: AACSB Analytic AICPA Legal
22. An online offer should include provisions relating to dispute settlement.
ANSWER: T SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 161
NAT: AACSB Reflective AICPA Legal
23. A forum-selection clause indicates the place for the resolution of a dispute arising under a contract.
ANSWER: T SUMMARIZED PAGE: 153 TYPE: N
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
158 UNIT THREE: CONTRACTS
CHAPTER 8: AGREEMENT IN TRADITIONAL AND E-CONTRACTS
EXCERPTED PAGE: 161
NAT: AACSB Reflective AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
159
24. The terms in a click-on agreement may be enforced if the parties expressly agreed to them.
ANSWER: T SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 161
NAT: AACSB Reflective AICPA Legal
25. The terms of a shrink-wrap agreement may be enforced in the same way as the terms of other contracts.
ANSWER: T SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 162
NAT: AACSB Reflective AICPA Legal
26. An electronic symbol, adopted by a person with the intent to sign an e-record, is an e-signature.
ANSWER: T SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 162
NAT: AACSB Analytic AICPA Legal
27. A partnering agreement can indicate the parties’ intent with respect to subsequent contracts.
ANSWER: T SUMMARIZED PAGE: 154 TYPE: N
EXCERPTED PAGE: 162
NAT: AACSB Analytic AICPA Legal
28. A partnering agreement reduces the likelihood that a dispute will arise under a contract.
ANSWER: T SUMMARIZED PAGE: 154 TYPE: N
EXCERPTED PAGE: 162
NAT: AACSB Reflective AICPA Critical Thinking
29. The UETA does not create rules for e-transactions.
ANSWER: T SUMMARIZED PAGE: 154 TYPE: +
EXCERPTED PAGE: 163
NAT: AACSB Analytic AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
160 UNIT
CONTRACTS
THREE:
CHAPTER 8: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 161
30. The UETA covers only e-records and e-signatures relating to a transaction.
ANSWER: T SUMMARIZED PAGE: 154 TYPE: N
EXCERPTED PAGE: 163
NAT: AACSB Analytic AICPA Legal
31. The E-SIGN Act preempts the uniform version of the Uniform Electronic Transactions Act (UETA).
ANSWER: F SUMMARIZED PAGE: 155 TYPE: N
EXCERPTED PAGE: 164
NAT: AACSB Analytic AICPA Legal
32. The UETA does not require that an agreement to conduct a transaction electronically be made electronically.
ANSWER: T SUMMARIZED PAGE: 155 TYPE: +
EXCERPTED PAGE: 164
NAT: AACSB Analytic AICPA Legal
33. The UETA applies to an e-transaction unless the parties “opt out.”
ANSWER: F SUMMARIZED PAGE: 155 TYPE: +
EXCERPTED PAGE: 164
NAT: AACSB Analytic AICPA Legal
34. State law other than the UETA always determines the effect of an error on an agreement between contracting parties.
ANSWER: F SUMMARIZED PAGE: 157 TYPE: N
EXCERPTED PAGE: 165
NAT: AACSB Technology AICPA Legal
35. A record does not require a signature to have legal effect under the UETA.
ANSWER: T SUMMARIZED PAGE: 157 TYPE: +
EXCERPTED PAGE: 165
NAT: AACSB Analytic AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
MULTIPLE CHOICE QUESTIONS
1. Nate tells Opal, “I might sell the skis that I bought last fall since I haven’t used them and the skiing season is almost over.” This is
a. an acceptance of an offer.
b. an invitation to accept an offer.
c. an offer.
d. a statement of future intent.
ANSWER: D SUMMARIZED PAGE: 146 TYPE: =
EXCERPTED PAGE: 154
NAT: AACSB Reflective AICPA Legal
2. Wanda tells Vito that she would like to buy his Chocolate Goodies store. Vito declines, but later decides to sell and sends to Wanda, and others, a flyer describing the details. Wanda responds with a letter of “acceptance.” Wanda and Vito have
a. a contract.
b. no contract, because Vito sent the letter to more than one party.
c. no contract, because Vito was only inviting bids.
d. no contract, because the letter was an invitation to negotiate.
ANSWER: B SUMMARIZED PAGE: 146 TYPE: N
EXCERPTED PAGE: 154
NAT: AACSB Reflective AICPA Legal
3. Elin decides to try to sell her collection of celebrity memorabilia in an auction “with reserve.” If Elin changes her mind, she can withdraw her collection
a. only before the auctioneer announces that the items are sold
b. only before the auctioneer delivers the items to the buyers
c. under no circumstances.
d. within thirty days after the auction.
ANSWER: A SUMMARIZED PAGE: 146 TYPE: N
EXCERPTED PAGE: 154
NAT: AACSB Reflective AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
162 UNIT THREE: CONTRACTS
4. Craig decides to sell his Double-D Ranch in an auction “without reserve.” If Craig changes his mind at the auction, he can withdraw his property
a. only before the auctioneer announces that the ranch is sold.
b. only before the auctioneer delivers the deed to the buyer
c. under no circumstances.
d. within thirty days after the auction.
ANSWER: C SUMMARIZED PAGE: 146 TYPE: =
EXCERPTED PAGE: 154
NAT: AACSB Reflective AICPA Legal
5. Yvon asks Zac, “Do you want to buy one of my fishing rods?” This is
a. a valid offer.
b. not a valid offer because the terms are not definite.
c. not a valid offer because Yvon did not state an intent.
d. not a valid offer because Zack did not respond.
ANSWER: B
SUMMARIZED PAGE: 147 TYPE: =
EXCERPTED PAGE: 155
NAT: AACSB Reflective AICPA Legal
6. Corner Convenience Store (CCS) takes out a full-page ad in a local newspaper and runs a thirty-second commercial on a local television station, offering a reward for information leading to the apprehension of a certain criminal. CCS could normally terminate the offer by placing
a. a full-page ad in the local paper and a thirty-second commercial on the local station.
b. a notice in the “Legal Announcements” section of the paper.
c. a notice to the news departments of the local stations.
d. any, or none, of the choices.
ANSWER: A SUMMARIZED PAGE: 148 TYPE: =
EXCERPTED PAGE: 156
NAT: AACSB Reflective AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 8: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 163
7. Business Properties, Inc. (BPI), offers to sell a warehouse to Corporate Investments. Corporate says that it will pay BPI $100 to hold the offer open for three business days. This
a. creates an illegal contract by adding a clause to BPI’s offer.
b. makes the offer irrevocable for three days if BPI accepts.
c. negates BPI’s offer by changing the price term.
d. voids BPI’s offer by extending the time term.
ANSWER: B SUMMARIZED PAGE: 148 TYPE: N
EXCERPTED PAGE: 156
NAT: AACSB Reflective AICPA Legal
8. Elmore offers to sell a Ford F-150 for $7,500 to Grace. Before Grace can respond, Elmore refers to the prices for similar Fords and says, “Forget it. I changed my mind.” Elmore’s offer was terminated by
a. Elmore.
b. Ford.
c. Grace.
d. no one Elmore’s offer is still open.
ANSWER: A SUMMARIZED PAGE: 148 TYPE: +
EXCERPTED PAGE: 156
NAT: AACSB Reflective AICPA Legal
9. Jane offers to sell Kyle three desks for his Lights & Lamps Company administrative office. Kyle sends a rejection first, then changes his mind and sends an acceptance. Whether they have a contract is determined by
a. Kyle’s rejection.
b. Kyle’s subjective intent.
c. whatever Jane decides.
d. whether Kyle’s rejection or acceptance is received first.
ANSWER: D SUMMARIZED PAGE: 148 TYPE: =
EXCERPTED PAGE: 156
NAT: AACSB Reflective AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
164 UNIT THREE: CONTRACTS
CHAPTER 8: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 165
10. Quik Fix-It, Inc., offers Pam a job as a plumber. No time for acceptance is specified in the offer. The offer will terminate
a. after a reasonable period of time.
b. after a typical work week (five business days).
c. after a usual month (thirty calendar days).
d. never.
ANSWER: A SUMMARIZED PAGE: 148 TYPE: =
EXCERPTED PAGE: 156
NAT: AACSB Reflective AICPA Legal
11. Grant offers to sell his Honda Civic for $10,000 to Ivy. Referring to the prices for similar Hondas, Ivy says, “I’ll pay no more than $5,000.” Grant says, “Forget it.” Grant’s offer was terminated by
a. Grant.
b. Honda.
c. Ivy.
d. no one Grant’s offer is still open.
ANSWER: C SUMMARIZED PAGE: 148 TYPE: N EXCERPTED PAGE: 157
NAT: AACSB Reflective AICPA Legal
12 Wally’s Warehouse offers to sell a certain used forklift to Value Lumber Outlet, but it is stolen before Value accepts. Most likely, Wally’s must obtain
a. a forklift for Value if Wally’s insurance covers the loss.
b. a forklift for Value if it still wants one.
c. nothing for Value because that would extend the time of the offer.
d. nothing for Value because the theft terminated the offer.
ANSWER: D SUMMARIZED PAGE: 149 TYPE: = EXCERPTED PAGE: 158
NAT: AACSB Reflective AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
13 Lovett County Bank offers to lend money to Kino, the owner of Java Stop, at 15 percent interest. Before Kino accepts, a state statute is enacted prohibiting loans at rates greater than 12 percent. Kino and the bank have
a. have a contract for a loan at 15 percent interest.
b. have a contract for a loan at 12 percent interest.
c. have a contract for a loan at 0 percent interest.
d. no contract for a loan.
ANSWER: D SUMMARIZED PAGE: 150 TYPE: =
EXCERPTED PAGE: 158
NAT: AACSB Reflective AICPA Legal
14. Kim sends an offer to Leo to cut down and remove a tree for $200. Kim says, “If you say nothing, I will consider you to have accepted my offer.” If Leo does not respond, he will be deemed to
a. accept the offer.
b. make a counteroffer.
c. reject the offer.
d. none of the choices.
ANSWER: D SUMMARIZED PAGE: 150 TYPE: N
EXCERPTED PAGE: 158
NAT: AACSB Reflective AICPA Legal
15. Shelby offers to make digital copies of Relay Company’s business conference videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule and the Uniform Electronic Transactions Act (UETA), Relay’s acceptance by e-mail will be considered effective when
a. received.
b. sent.
c. followed up by a confirmation letter sent by regular mail.
d. composed on a Relay computer.
ANSWER: B SUMMARIZED PAGE: 151 TYPE: N
EXCERPTED PAGE: 160
NAT: AACSB Technology AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
166 UNIT THREE: CONTRACTS
CHAPTER 8: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 167
16. Mayfair Company offers to sell a certain mall to Galleria Stores, Inc., for a certain price if it accepts before 10 A.M. Monday. A contract is formed if Galleria’s acceptance is received
a. before 10 A M Monday.
b. before midnight Monday.
c. before twenty-four hours of 10 A.M. Monday.
d. within a reasonable time of 10 A M Monday.
ANSWER: A SUMMARIZED PAGE: 151 TYPE: N
EXCERPTED PAGE: 160
NAT: AACSB Reflective AICPA Legal
17. Tomato Farms (TF) offers to sell United Grocers, Inc., a boxcar load of tomatoes. The offer is sent via fax. An acceptance is required urgently. It would be most reasonable for United to accept via
a. a fax, a letter, or a phone call to TF within two weeks.
b. a fax sent to TF as soon as the offer is received.
c. a letter mailed to TF within two days.
d. a phone call to TF within five business days.
ANSWER: B SUMMARIZED PAGE: 151 TYPE: =
EXCERPTED PAGE: 160
NAT: AACSB Reflective AICPA Legal
18. Bret enters into a contract with Collegiate University over the Internet to take an online course titled “Internet Law.” This is an e-contract because
a. the contract was entered into over the Internet.
b. the contract was formed between a student and a university
c. the contract will be performed online.
d. the subject matter of the contract is “Internet Law.”
ANSWER: A SUMMARIZED PAGE: 152 TYPE: N
EXCERPTED PAGE: 160
NAT: AACSB Reflective AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
19. Flem, a user of GameCenter.com’s Web site, can download gaming software for free if he first clicks on “I accept” after viewing certain terms. This is
a. a contract that does not include the terms.
b. a contract that includes the terms.
c. not a contract but the terms are enforceable.
d. unenforceable.
ANSWER: B SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 161
NAT: AACSB Reflective AICPA Legal
20. Deb buys a song through eSongs, an online music vendor. Before completing the purchase and downloading the song, Deb must agree to a provision not to sell copies of the song. This provision is
a. a browse-wrap term
b. a click-on agreement.
c. a shrink-wrap agreement.
d. none of the choices.
ANSWER: B SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 161
NAT: AACSB Reflective AICPA Legal
21. Jelly Jar Company includes in its online offers a provision that indicates any disputes arising under the contract must be resolved in Kansas. Lena, a resident of Maine, accepts Jelly Jar’s offer. If a dispute arises, a court will most likely rule that it must be resolved in
a. Kansas.
b. Kansas or Maine.
c. Maine.
d. the location selected by the first party to file a suit.
ANSWER: A SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 161
NAT: AACSB Technology AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
168 UNIT THREE: CONTRACTS
CHAPTER 8: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 169
22 Magic Math Corporation makes business accounting software, which is packaged with a shrink-wrap agreement. National Distribution Company distributes the software to retailers, including an Office Stuff store, where Peg buys a package of it. The parties to the shrink-wrap agreement are
a. Magic Math and National Distribution only.
b. Magic Math and Peg only.
c. Magic Math, National Distribution, Office Stuff, and Peg
d. Office Stuff and Peg only.
ANSWER: B SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 161
NAT: AACSB Reflective AICPA Legal
23. Lightspeed Corporation makes computers, each of which is packaged with a shrink-wrap agreement. Milo buys a Lightspeed desktop. The shrink-wrap agreement is most likely enforceable if
a. Milo buys the computer directly from Lightspeed.
b. Milo expressly agrees to the terms in the shrink-wrap agreement.
c. Milo reads the shrink-wrap agreement.
d. the terms in the shrink-wrap agreement concern warranties.
ANSWER: B SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 162
NAT: AACSB Reflective AICPA Legal
24 Final Foto, Inc., makes photo and video editingsoftware, which includes a shrinkwrap agreement. Gert buys a package of the software. With respect to the contract for the software’s purchase, the shrink-wrap agreement may not be enforced if
a. Gert does not read it.
b. Gert learns of it after contracting.
c. Gert learns of it before contracting.
d. the quality of the software is poor.
ANSWER: B SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 162
NAT: AACSB Reflective AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
25 Mica buys “Nature,” a movie, through Open View, an online entertainment vendor. Before completing the purchase and downloading “Nature,” Mica must review a warning not to make and sell a copy of it. This warning is
a. a browse-wrap term
b. a click-on agreement.
c. a shrink-wrap agreement.
d. none of the choices
ANSWER: A SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 162
NAT: AACSB Reflective AICPA Legal
26 Overnight Delivery Service delivers a package to Pam. At the request of Overnight’s delivery person, to acknowledge receipt Pam signs a digital pad. This signing creates
a. a cybernotarized signature.
b. a digitized handwritten signature
c. an asymmetric cryptosystemic signature.
d. a public-key infrastructure digital signature
ANSWER: B
SUMMARIZED PAGE: 153 TYPE: N
EXCERPTED PAGE: 162
NAT: AACSB Reflective AICPA Legal
27. Nero and Oona negotiate a contract. Nero prints out a hard copy to review before both parties sign the electronic form of the contract. Neither party signs the hard copy. Under the Electronic Signatures in Global and National Commerce Act (ESIGN Act), the signatures can
a. be denied effect because they are in electronic form
b. be denied effect because Nero has not signed a hard copy
c. be denied effect because Oona has not signed a hard copy.
d. not be denied effect because they are in electronic form
ANSWER: D
SUMMARIZED PAGE: 154 TYPE: N
EXCERPTED PAGE: 162
NAT: AACSB Reflective AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
170 UNIT THREE: CONTRACTS
28. Dino and Elle engage in a transaction that involves e-documents. The E-SIGN Act applies if those documents include
a. a divorce decree or a prenuptial agreement.
b. a health-insurance termination.
c. an agreement subject to Article 2 of the Uniform Commercial Code.
d. an eviction or a foreclosure.
ANSWER: C SUMMARIZED PAGE: 154 TYPE: N EXCERPTED PAGE: 162
NAT: AACSB Technology AICPA Legal
29. Lively Toys Store and Movin’ Products Company (MPC) enter into an e-contract under which MPC agrees to ship a case of electronic, remote-controlled bugs to Lively Toys, which agrees to pay on delivery. The Uniform Electronics Transactions Act (UETA)
a. denies the enforcement of such contracts.
b. does not apply to such contracts
c. preempts all other laws with respect to such contracts.
d. supports the enforcement of such contracts
ANSWER: D SUMMARIZED PAGE: 154 TYPE: N EXCERPTED PAGE: 163
NAT: AACSB Reflective AICPA Legal
30. Order Processing Corporation and Pinpoint Data, Inc., enter into a contract online in a state that has enacted an unmodified version of the UETA. With regard to the E-SIGN Act
a. the E-SIGN Act does not preempt this version of the UETA.
b. the E-SIGN Act preempts this version of the UETA.
c. the “fit” between the acts is an issue for a court to determine.
d. the two acts “cancel” each other’s application.
ANSWER: A SUMMARIZED PAGE: 155 TYPE: + EXCERPTED PAGE: 164
NAT: AACSB Technology AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 8: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 171
31. Michelle gives out a business card with an e-mail address on it. According to the comments that accompany the UETA, it may be reasonable to infer that Michelle has consented to
a. transact business electronically.
b. submit to the jurisdiction of any selected forum.
c. accept and respond to any correspondence sent to that address.
d. nothing.
ANSWER: A SUMMARIZED PAGE: 155 TYPE: N EXCERPTED PAGE: 164
NAT: AACSB Technology AICPA Legal
32. Jaime and Kip, consumers, transact a deal over the Internet. Their contract does not mention the UETA. The UETA covers
a. none of the contract.
b. only the part of the contract that involves computer data.
c. only the part of the contract that does not involve computer data.
d. the entire contract.
ANSWER: D SUMMARIZED PAGE: 155 TYPE: + EXCERPTED PAGE: 164
NAT: AACSB Technology AICPA Legal
33. On behalf of Bay Oyster Company, Celia types her name at the bottom of an email purchase order and submits the order to Deepwater Parts Company. Under the UETA, qualifying Celia’s name as her “signature” is
a. attribution.
b. cybernotarization.
c. acceptance.
d. agreement.
ANSWER: A SUMMARIZED PAGE: 156 TYPE: N EXCERPTED PAGE: 165
NAT: AACSB Technology AICPA Legal
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
172 UNIT THREE: CONTRACTS
34. Beyond-the-Sea Corporation and Homeport Company make a deal for Homeport’s products, via e-records. Under the UETA, an e-record is considered sent when it
a. is signed and encrypted, and will be sent without changes.
b. is stored in the sender’s back-up system.
c. is composed on the sender’s computer.
d. leaves the sender’s control.
ANSWER: D SUMMARIZED PAGE: 157 TYPE: N
EXCERPTED PAGE: 165
NAT: AACSB Technology AICPA Legal
35. Consumer Payments Processing Corporation (CPPC) and Mall Kiosk Company make a deal for CPPC’s services, via e-records. Under the UETA, an e-record is considered received when
a. it enters the recipient’s processing system in a readable form.
b. the recipient is aware of its receipt.
c. the recipient is aware that it has been sent.
d. it leaves the sender’s control.
ANSWER: D SUMMARIZED PAGE: 157 TYPE: N
EXCERPTED PAGE: 165
NAT: AACSB Technology AICPA Legal
ESSAY QUESTIONS
1. On May 1, Brand Name Industries, Inc. (BNI), sent Carol a letter, via overnight delivery, offering to employ her to audit BNI’s financial statements for the current year for $10,000. In the letter, BNI stated that Carol had ten days to accept. On May 5, Carol sent BNI a fax that stated, “The price for the audit seems too low. Would you consider paying $12,000?” BNI received the fax. The next day, Dan offered to conduct the audit for $8,000. On learning of Dan’s offer, Carol immediately e-mailed BNI, agreeing to do the work for $10,000. BNI received this e-mail on May 7. Explain why BNI and Carol do, or do not, have a contract.
ANSWER: BNI and Carol have a contract. Carol effectively accepted BNI’s offer to perform an audit of BNI’s financial statements. Carol’s fax was merely an inquiry about BNI’s offer. An attempt to change the terms of an offer is a rejection of that offer, terminates it, and makes a counteroffer. Here, however, the fax did
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
CHAPTER 8: AGREEMENT IN TRADITIONAL AND E-CONTRACTS 173
not indicate an intent to reject the offer, and a reasonable person in BNI’s position would not conclude that the fax was a rejection. Carol was still considering the offer. Her learning of Dan’s offer did not act as a revocation of BNI’s offer (although the offer would have been revoked if BNI had accepted Dan’s offer, and Carol had learned of this acceptance). Also, in accepting BNI’s offer, Carol used a medium that was reasonable under the circumstances because BNI did not expressly specify any particular method of acceptance. Carol’s acceptance was timely sent and received, and consequently, was effective on dispatch.
SUMMARIZED PAGES: 148 & 152
EXCERPTED PAGES: 156–157 & 160
TYPE: N
NAT: AACSB Reflective AICPA Decision Modeling
2. Myra owns a house, which she advertises for sale for $200,000. On May 1, Nicole offers Myra $180,000 for the house. On May 5, Myra delivers to Nicole a form that includes additional terms but does not state a price. At 9 A.M. on May 6, Nicole signs the form and gives it to Odell, her administrative assistant, with instructions to mail it. At 10 A M., Myra calls to tell Nicole that the deal is off. The next day, Odell mails the signed form to Myra. When Myra refuses to sell the house, Nicole files a suit against her, alleging breach of contract. Myra claims that there was no contract. What are arguments supporting each party’s position? What is the court likely to rule? Explain.
ANSWER: Nicole might assert her intent to accept, and point to her signature on Myra’s form as proof of the assertion. Nicole might claim that she accepted Myra’s counteroffer (including the additional terms) before it was revoked. Nicole might argue that she put her acceptance into the “stream of commerce,” or the “route of response,” or the “transmission of delivery,” or some similar phrase, when she gave it to Odell, her administrative assistant.
Myra might contend that there was no contract, because she revoked the offer before Nicole’s acceptance was received. Myra might argue that Nicole did not place her acceptance into any “mode of dispatch” because Nicole could still control the form she had only given it to her administrative assistant, who did not mail it until the next day, long after Myra had revoked the offer. A court would most likely agree with Myra and hold that the acceptance was not effective. Nicole still controlled this acceptance at the time that Myra revoked the offer. Nicole’s mailed acceptance was too late.
SUMMARIZED PAGES: 148 & 152
EXCERPTED PAGES: 156 & 160
TYPE: =
NAT: AACSB Reflective AICPA Decision Modeling
174 UNIT THREE: CONTRACTS
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
