Contemporary canadian business law principles and cases 11th edition willes test bank

Contemporary Canadian Business Law Principles and Cases 11th Edition Willes Test Bank Visit to download the full and correct content document: https://testbankdeal.com/dow nload/contemporary-canadian-business-law-principles-and-cases-11th-edition-willes-t est-bank/

c7 Student: ___________________________________________________________________________ 1. Busy Corp. sent a letter on January 12th to Slow Co. offering to sell its main office building for $250,000, stating that its offer was open only until January 20th, and it must have a response from Slow Co. by then. Slow Co. received the letter on January 14th and prepared a letter of acceptance on that day, but had not posted it. The next morning Busy Corp. called and said that it had changed its mind and was withdrawing its offer.

A. There was a contract as soon as Slow Co. wrote the letter of acceptance and the revocation is too late.

B. Since the revocation was made by telephone and the offer was made by letter, the revocation is not effective.

C. The revocation was effective because it was communicated to Slow Co. before the acceptance was sent.

D. The revocation was effective because it was communicated to Slow Co. before the acceptance was received

by Busy Corp.

E. All of the above are false.

2. Mr. Gatlin went into a supermarket where he saw a new kind of toothpaste on a shelf, ticketed at $2.69. He decided to try it, so he took it to the checkout and placed it on the moving counter. The staff member at the checkout ran up the sale, took Mr. Gatlin's money and put the toothpaste in a bag, handing it with the receipt and the change to Mr. Gatlin. A contract was formed when: A. Mr. Gatlin picked up the toothpaste.

B. Mr. Gatlin put the toothpaste on the checkout counter.

C. Mr. Gatlin paid for the toothpaste.

D. The supermarket employee rang in the sale and took his money.

E. The supermarket employee gave Mr. Gatlin the bag, the receipt and his change.

3. As you are walking out of class one night, you discover a notebook, full of equations, belonging to a professor in your school. You write a note telling him who you are and where and when you found it, and you drop the note in an envelope, into one of the university's internal mail boxes. The next day the campus is covered with notices which say "$100 REWARD. A notebook containing mathematical explanation of the meaning of life has been lost. If found, please return to Professor Doddering in Room A123."

A. You have no legal right to the $100.

B. You have a legal right to the $100 since you can prove you put the note in the mail to Prof. Doddering.

C. You have a legal right to the $100 provided you can prove you found it after Prof. Doddering posted the reward notices.

D. Since this was an offer to the public at large, you have accepted it by mailing it and Prof. Doddering legally must give you $100.

E. While you have no legal right to the reward, the court will enforce your moral right to it.

4. Mike responds to Flavio's statement that he would like to buy Mike's motorbike for $3,000 by saying that he would want $4,000, given the work he has put into it. Flavio says OK. I'll give you that. Here's $2,000, and I'll give a promissory note for the balance payable at $500 a month for the next 4 months."

1. There is a contract.

2. There is no contract.

3. Flavio's first statement to Mike was an invitation to do business.

4. Mike's response was a counter offer.

5. Flavio's final statement to Mike was an acceptance.

A. 1 and 3.

B. 1, 3 and 4.

C. 1, 3, 4 and 5.

D. 2.

E. 2 and 4.

5. Johnson became a member of the Book-a-Month Club under an agreement by which members agree to pay for any monthly selection that they have not notified the Club they do not want. Johnson forgets to tell them when he decides he does not want "How to Cook Small Rodents" and the book arrives at his house.

A. Since silence cannot be acceptance, Johnson does not have to take the book, but must send it back.

B. Johnson must pay for the book.

C. Johnson must pay for the book unless he decides to send it back.

D. Since silence is not acceptance, Johnson can keep the book and he does not have to pay for it.

E. Johnson cannot refuse to pay for the book since consumer protection legislation says unsolicited goods delivered to a consumer create no obligation to pay and no liability for loss or damage.

6. Karen offers to sell her antique rocking chair to her friend Julie for $350. Julie has always loved the rocker but, since she is currently short of money, she says to Karen "I will buy the rocker from you, and I'll pay half now and half next month." Don, who has been listening, says "I've always wanted that rocker, too, Karen. I'll pay you $400 cash right now for it."

A. Since there is a contract between Karen and Julie, Karen cannot sell the rocker to Don. B. Karen's offer has lapsed so she may sell the rocker to Don. C. Karen must first revoke her offer to Julie before she can accept Don's offer, since a clear acceptance now by Julie would create a contract between them.

D. Julie's inquiry as to whether she could pay in two instalments did not cause Karen's offer to lapse and she can still accept it.

E. C and D.

7. Mary invites some friends to dinner and they accept. They purchase a much more expensive bottle of wine than they would normally drink and a beautiful bouquet of flowers. Mary calls them two hours before the dinner to tell them she has been invited out by the man of her dreams and is postponing the dinner.

A. The friends can claim the cost of the flowers and the wine since Mary has breached the contract.

B. Since Mary is merely postponing the dinner, she has not breached their dinner contract.

C. Even though they accepted her dinner offer, this is not a situation in which one party can sue another, since no reasonable person would think that there was any intention on Mary's part to create a legally enforceable contract.

D. Mary may not have intended to be bound to her promise, but her friends have suffered a loss and she cannot now claim she did not mean to enter a contract to provide dinner since she did not say that when she made her offer.

E. No agreement between friends can be enforced as a contract, including this one.

8. A contract is a legal relationship between parties. The existence or validity of the contract is measured by conditions outlined by law. An indication of the intention to create a contract is built on certain premises. These premises are: A. The end result will be a meeting of the parties' minds on the terms that are agreed upon.

B. A meeting of the minds is only required when the contract deals with personal service contracts and not with commodity agreements.

C. Each party will normally agree to do or not do certain things if there is an agreement for the other party to do or refrain from doing certain things.

D. The process of the meeting of the minds by the parties will establish the contract itself.

E. All of the above except B.

9. A computer software company advertised a new organizational program as one of the most "user friendly" programs of its kind on the market. The Smallville police department used the program and, during operation, the program collapsed, losing vital information related to the effectiveness of the department in carrying out its duties. Under the law of contract, what is the software company's position with respect to liability?

A. The company is liable for damages because the program promoted as easy has the capacity to collapse and produce this result when used improperly.

B. The police department must bear responsibility because it purchased the program and accepted its limitations without question or instruction therefore this is a situation of caveat emptor.

C. The company is liable because a promise is a promise in contract law in relation to advertising.

D. The company is not liable because it is permitted to use enthusiasm when describing the product and has made no unproven statements in its contract with the police.

E. None of these.

10. On June 1st the Mega Marketing Research Firm sent out a mail survey to 5,000 potential customers of Mega's client company. The survey stated that everyone who completed the survey and mailed it back would receive a prize. Mega did not expect everyone to respond to the survey and had only 1,000 prizes on hand for the respondents. On July 14th Sam mailed back his response and eagerly awaited his prize. On July 15th Mega sent out the last prize it had. Sam's response arrived on July 16th. It was the 1001st and Mega wrote back telling Sam that unfortunately all the prizes were gone and he would not be able to have one.

A. No contract was formed here as there was no communication of Sam's acceptance before Mega's offer lapsed.

B. Sam made a counteroffer by returning the completed survey.

C. Mega had essentially revoked its offer before Sam accepted.

D. A valid contract was formed between Mega and Sam. E. Mega may assert that silence is not acceptance and Sam did not communicate his acceptance on time.

11. Which of the following elements does not constitute a legal relationship in contract?

A. Familiarity B. Consideration C. Capacity D. Acceptance E. Intention

12. Which of the following are NOT presumed to be binding?

A. Agreements between suppliers and manufacturers B. Agreements between family members for the purchase of a business C. Agreements between strangers D. Agreements between family members to cook a birthday dinner E. Agreements between banks and their customers

13. Skinny You is a brand new "weight loss pill." It is being sold by a new company; Skinny Products Inc. Advertisements were placed in the back of Teen Beauty magazine that provided potential consumers with information about the success rate of the pills—"Weight Loss of 10 pounds in 10 days if used as instructed."

Skinny Products Inc. guaranteed the weight loss by saying that if customers did not lose 10 pounds in 10 days then they would receive $100. To increase consumer confidence of the damages being paid Skinny Products Inc. stated that it had put money in trust. Latisha purchased Skinny You and used it for 10 days, as instructed, but only lost 4 pounds. Can she sue Skinny Products Inc for breach of contract?

A. No, the advertisement did not amount to an offer.

B. Yes, the advertisement amounted to an offer.

C. Yes, the advertisement amounted to an offer but the weight loss claims were marketing claims that were not binding.

D. Yes, the advertisement did not amount to an offer but Latisha's purchase constituted the formation of a unilateral contract incorporating the terms of an invitation to treat.

E. No, the advertisement amounted to an invitation to treat.

14. Salem said to Crystal over his cell phone, "Do you want to buy my car for $2,000?" Before she heard him her cell phone dropped the call. Can she accept the offer?

A. Yes. B. Yes, conditionally if she requires he repeat it.

C. No, an offer must be received prior to acceptance.

D. No, offers can only be made in writing.

E. All of the responses are incorrect.

15. Ian offered to sell his horse to Wanda for $3,500. Wanda wanted to think about it and let Ian know by email.

Ian agreed. Wanda emailed Ian at 11:45 that night. At 6 a.m. Ian accepted an offer to sell the horse to William for $3,700. He read his email at 8 a.m. Can Wanda sue Ian for breach of contract?

A. Yes, Wanda accepted Ian's offer prior to William's acceptance.

B. Yes, Ian made the first offer to Wanda.

C. No, the acceptance must be in the same mode of communication as the offer. Therefore, Wanda's offer was not valid.

D. No, the acceptance was not received by Ian until 8 a.m.

E. No, the acceptance was for a lesser sum and sellers are entitled to the best deal.

16. Ian offered to sell his horse to Wanda for $3,500. Wanda wanted to think about it and let Ian know by email.

Ian agreed. Wanda emailed Ian at 11:45 that night. What type of contract was formed?

A. Unilateral Contract B. Qualified Unilateral Contract C. Bilateral Contract D. Qualified Bilateral Contract E. Invitation to Treat

17. Microsoft uses a click wrap agreement with a clause requiring all disputes to be heard in the state of Washington, U.S.A. Microsoft has its head office in Redmond, Washington. A consumer resides in Ontario. Is this click wrap agreement binding?

A. No, it is a consumer contract so the jurisdiction of the consumer prevails.

B. No, it is not binding as it is traditional for consumers to not read online agreements prior to clicking "I accept."

C. No, the consumer does not have a substantial connection to the State of Washington.

D. Yes, the contract became binding when the consumer clicked "I Accept."

E. Yes, only for residents of Washington state.

18. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer was merely an invitation to do business.

True False

19. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer to buy the canoe from Jones was a genuine expression of his intention to create a legal relationship.

True False

20. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer lapsed when Jones did not immediately accept the offer before the two parties departed on their separate business.

True False

21. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer lapsed when Rahul agreed to purchase Brown's canoe.

True False

22. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Brown's acceptance of Rahul's offer was unconditional.

True False

23. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul and Brown established a binding contract which both parties are obliged to perform.

True False

24. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. The contract between Rahul and Brown automatically rescinded the offer which Rahul had made to Jones.

True False

25. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul and Jones established a binding contract when Jones telephoned Rahul and accepted Rahul's offer to buy his canoe for $200.

True False

26. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. The acceptance by Jones was ineffective because Jones did not reply to Rahul by way of a written acceptance.

True False

27. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul is not bound in contract with Brown because the prior contract he made with Jones became enforceable when Jones accepted his offer.

True False

28. Giardetti, a retailer, placed an advertisement in a local newspaper on May 5th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10th customer in the store on May 10th, but Giardetti refused to sell him a TV set for $100. The advertisement is not an offer because Giardetti did not express the intention to be bound by the statements in the advertisement.

True False

29. Giardetti, a retailer, placed an advertisement in a local newspaper on May 5th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10th customer in the store on May 10th, but Giardetti refused to sell him a TV set for $100. Giardetti's advertisement was only an invitation to do business, and not a valid offer to sell.

True False

30. Giardetti, a retailer, placed an advertisement in a local newspaper on May 5th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10th customer in the store on May 10th, but Giardetti refused to sell him a TV set for $100. Giardetti's advertisement was a valid offer to sell, which Don accepted by being one of the first 10 customers at the store on May 10th, and verbally accepting the offer.

True False

31. Giardetti, a retailer, placed an advertisement in a local newspaper on May 5th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10th customer in the store on May 10th, but Giardetti refused to sell him a TV set for $100. If Giardetti had placed a notice on his shop door on May 9th which read: "Sale cancelled," his notice would revoke the offer made in the newspaper on May 5th.

True False

32. Giardetti, a retailer, placed an advertisement in a local newspaper on May 5th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10th customer in the store on May 10th, but Giardetti refused to sell him a TV set for $100. If Don had seen the notice on the shop door on May 9th; he could still accept the offer, because the offer was irrevocable.

True False

33. Andy offers to sell his car to Bob, but Bob needs to arrange financing, so Andy says he will give Bob three days to do so. Andy can revoke the offer before the three days are up.

True False

34. Jill has been negotiating the purchase of a speedboat with Sandi during the past two weeks. Two days ago, she wrote to Sandi, saying "I won't go any higher than $8,000. Take it or leave it, but that's my final offer." By coincidence, Sandi sent a letter the same day which said "I won't take less than $8,000, so if you can't accept that, I'll have to look elsewhere for a buyer." The letters have both arrived today at their destinations. There is a contract between Jill and Sandi.

True False

35. A trader on the floor of the Stock Exchange makes a deal with another trader by hand signals for the sale of a block of shares. This is a binding contract.

True False

36. Franklin Motors Ltd. makes an agreement to buy 3,000 widgets for $1,000 from Stovely's Engineering Co. The law presumes that, unless one of them proves otherwise, they intended this agreement to be a legally binding one.

True False

37. Alliston enters into an agreement with Berkley which, for $2,000, gives him the right to agree to purchase Berkley's screen printing business within the next 30 days for $50,000. If he decides to buy, they agree that the $2,000 will be the down payment on the purchase price. This agreement is an option.

True False

38. Paulette Paulson Furs advertises mink coats for sale at 30% off. The demand was much greater than anyone could have predicted, and 14 people who came to the store could not be provided with one of the sale coats.

Since they had accepted Paulson's offer, she will have to find coats for them or be in breach of their contracts.

True False

39. Tom offers to buy Jenny's fishing tackle for $500, but she says she wants $600. Tom then proposes a price of $550, but Jenny says she is not interested. Tom is afraid she will walk away from a deal, so he says "OK. I'll accept your offer to sell for $600." There is now a contract between them.

True False

40. Victor has breakfast at the Kute Kafey. From the menu, he orders buttered muffins "homemade like your mother's," jam "made with loving care and fresh ingredients," and tea "fresh-picked from the cool hillsides of an Indian plantation." Actually, the muffins are nothing like Victor's mum's muffins and are baked in a factory, the jam is mass-produced from industrial-quality frozen fruit, and the tea is made with no-name tea bags. Victor has a good case for breach of contract.

True False

41. Rosa offers Valerie the chance to buy her cottage for $25,000. Two days later, while Valerie is still considering the offer, Rosa's sister mentions to her that Rosa has sold the cottage to Ben for $30,000. If Valerie now accepts, Rosa will be liable for breach of contract.

True False

42. Craig makes an offer to Josie by mail, because she cannot be reached by telephone. She replies by mail, accepting the offer. Canada Post mislays her reply for several weeks. Craig, who has given up waiting to hear from her, has entered into the contract with someone else after waiting for a reasonable time. Josie can sue Craig for breach of contract.

True False

43. Mookie, a professional baseball player, negotiated with the Soxville Eagles for a one-year contract. He was given one week to consider the offer and was to sign it by the opening day of the season, one week away.

Mookie, in the meantime, was offered a better contract with the Baxton Bulldogs, which he accepted. On opening day, Mookie walked onto the field in the uniform of Baxton. Soxville can sue Mookie for a breach of contract.

True False

44. Becky is colouring her hair one day and her friend Kamilah asks if Becky will colour hers as well. Becky agrees and does a good job. Two months later, Becky goes to a professional hairdresser to have her hair coloured and pays her $100. Becky should also be entitled to payment for her colouring job.

True False

45. John notices while mowing his lawn one summer day that while his neighbour had been on vacation, his hedge had become unkempt. Worried that people might think it were his hedge, John decided to clip the hedge himself. On his return John's neighbour thanked John for the work. Several weeks later the neighbour hired a handyman to do the same job and paid him $50. John would be entitled to payment for subsequent hedge clippings.

True False

46. The world of commerce requires that the intention to create a legal relationship be proven before any contract can be found to exist between the parties.

True False

47. If GA Stereos sends a fax to Wholesale HiFi Equipment ordering ten car stereos at a particular catalogue price, requesting delivery by courier (or some other means), the fax would not constitute an offer to purchase.

True False

48. When an offeree dies before accepting an offer, the offer does not lapse because the deceased's personal representative can accept an offer on behalf of a deceased person.

True False

49. If an acceptance is not unconditional, but changes the terms of the original offer, then it would have the effect of rejecting the original offer.

True False

50. Mario responded to an advertisement placed by Serge in a local newspaper. Serge was looking for business investments, and Mario sent him a letter on October 1st which said that he was willing to make Serge a partner in his tie-dyed T-shirt business if Serge was willing to put up $5,000. Serge received that letter on October 6th and wrote back the same day saying he would love to get involved in the business and would send Mario a certified cheque for $5,000 as soon as the bank had transferred the money from his savings account and certified the cheque. This letter was received by Mario on October 9th, and the certified cheque was sent on October 8th and received on October 12th. Meanwhile, Mario mentioned the advertisement to Sonia, and she said she would like to get into the business and would be willing to put up $8,000. Mario sent another letter to Serge, on October 4th, which Serge received on October 7th, saying Mario had changed his mind and would not be willing to have Serge as a partner. a. What is the legal term for i. Mario's letter of October 1st? ii. Mario's letter of October 4th? iii. Serge's advertisement? iv. Serge's letter of October 6th? b. Discuss whether Mario and Serge have a contract or whether Mario is free to enter into a partnership with Sonia. c. Suppose Mario's letter of October 1st has said that there would be no commitment by him to any arrangement with Serge unless and until he received Serge's certified cheque for $5,000. Explain why this would or would not change your answer to (b).

51. At a computer fair, Porter saw a demonstration by Maxwell of an excellent new accounting software package published by Slyckbyte Co., but he felt it was overpriced at $900. "At $500," he said, "I would definitely buy it." Maxwell said that she was not authorized to give deals to anyone, not even such a good customer as Porter. Porter bought another package from a different company. Four days later, he received a package from Maxwell that contained the new software and a letter which said that Slyckbyte was happy to give him the discount he had wanted and that she looked forward to receiving his cheque within the next few days.

Discuss whether Porter must pay for the software.

52. Robert has just mailed a letter of acceptance in response to James' letter offering to sell his hardware store to Robert, when he is knocked down by a car and killed. Jane, Robert's wife and sole heir, wants to run the business, since that is what she and Robert had intended, but James does not believe a woman could run a hardware store and tells her that the deal is off. Discuss Jane's legal position.

53. There are requirements predetermined by law to make a contract binding and, therefore, legally enforceable.

With your knowledge of the process of arriving at a contract, explain how that process relates to the legal solidification of a contract.

54. Discuss the significance of Carlill v. Carbolic Smoke Ball Co. [1893], 1 Q.B. 256 for modern day marketing practice. Give some examples to illustrate your points.

55. George was an independent salesman, working sales territories in which various manufacturers did not maintain sales agents. Prior to a trip to Northern Manitoba, George informed a manufacturer of small electrical generators he expected to secure an order for fifty generators on this trip. From a more remote community, George was able to send a fax to the manufacturer which, when received, read "Send by air immediately the generators. Must be here by next Thursday." The fax should have read, "three generators" and the mistake was made solely by the fax office. The manufacturer sent fifty generators. Aside from the fact that one of the parties may have a remedy against the fax office, discuss the relevant principles of contract raised here, and determine whether there was no contract, a contract for three generators, or a contract for fifty generators.

56. On July 23rd, Carson, who lived in Bytown, wrote a letter to Henri, offering to sell his (Carson's) vintage car for $18,000. The letter was delivered to Henri in his home in Mount Royal, an hour's drive away, on July 27.

On July 24th, Carson met his friend Jack on the street. Jack expressed an interest in buying Carson's vintage car.

He offered Carson $18,000 for the car, but Carson said only that he would "give the offer some thought," and promised to advise Jack of his decision. Carson did not tell Jack of his offer to sell the car to Henri. On July 25th, while on vacation in York, Jack sent a fax to Carson, offering to buy the car for $18,250 if Carson would deliver the car, on July 30th, to his farm, located some 20 km west of Bytown. Carson received the fax the same day and, that evening, wrote and mailed a letter to Henri, revoking his offer to sell the vintage car.

On July 28th, Henri wrote a letter to Carson accepting his offer to sell the vintage car and enclosed a cheque for $18,000 as payment in full. On July 29th, Henri received Carson's letter revoking the offer. Carson had business west of Bytown on July 29th, and since his trip would take him past Jack's farm, he decided to deliver the vintage car on his way. Carson left the car on a trailer at Jack's farm, but finding no one at home, left the keys to the car and a note in Jack's mailbox. The note stated that he had left the car behind the garage. On July 30th, Carson received the letter of acceptance Henri had mailed to him on July 28th. Carson immediately telephoned Henri to tell him he had sold the car to Jack, but Henri was out of town on a business trip. Carson left a message with Henri's wife and, on July 31st, returned by mail the cheque that Henri had sent him with the letter of acceptance Later on July 31st, Carson received a telephone call from Jack who had just returned from Toronto requesting delivery of the car. When Carson explained that the car had been delivered on July 29th, Jack stated that the car was not behind the garage. Carson then requested Jack to call the police to investigate the theft. Later in August, the police located the car in the possession of a minor and an arrest was made. Unfortunately the car had been badly damaged while in the thief's possession. The estimate of damages was $12,000.

Discuss the issues raised in this case. Describe the rights of the parties (if any) and the possible outcome of any litigation if legal action should be taken to enforce the rights of the parties.

57. It was almost time for the Heeleys to renew the mortgage on their home and they were considering their options. The mortgage was currently held by the Big Bank and the Heeleys were not satisfied with the service they had received from the Big Bank's mortgage staff. Recently, the local radio station had been airing commercials for the Little Bank, which suggested that people switch their mortgages to Little Bank to take advantage of better rates and more personal service. As a special incentive, the commercials stated that, for a limited time, for every mortgage over $50,000 which was brought to Little Bank from another financial institution, Little Bank would give the customer an all-expense-paid trip to Mexico. Feeling in need of a vacation, the Heeleys decided to take advantage of this incentive and made an appointment to see the manager of Little Bank. During their meeting the manager explained that the Mexico trip would be given on mortgages brought within the next month. The Heeleys mortgage did not expire at Big Bank for another six weeks, however the manager said it should not be a problem awarding them the trip for having made the commitment within the advertised period to transfer their mortgage. At the end of the six weeks, the Heeleys transferred their mortgage to Little Bank and delivered the paperwork needed by the bank to set up their trip. Several days later the Heeleys received a telephone call from the head office of the Little Bank informing them that they were not eligible to receive the trip as their mortgage had not been transferred within the offer period.

Discuss the legal issues that arise as a result of this case. What legal principles might the Heeleys and the bank apply to support their respective positions, and what would be the likely result should legal action ensue?

c7 Key 1. Busy Corp. sent a letter on January 12th to Slow Co. offering to sell its main office building for $250,000, stating that its offer was open only until January 20th, and it must have a response from Slow Co. by then. Slow Co. received the letter on January 14th and prepared a letter of acceptance on that day, but had not posted it. The next morning Busy Corp. called and said that it had changed its mind and was withdrawing its offer.

A. There was a contract as soon as Slow Co. wrote the letter of acceptance and the revocation is too late.

B. Since the revocation was made by telephone and the offer was made by letter, the revocation is not effective.

C. The revocation was effective because it was communicated to Slow Co. before the acceptance was sent.

D. The revocation was effective because it was communicated to Slow Co. before the acceptance was received

by Busy Corp.

E. All of the above are false.

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #1

2. Mr. Gatlin went into a supermarket where he saw a new kind of toothpaste on a shelf, ticketed at $2.69. He decided to try it, so he took it to the checkout and placed it on the moving counter. The staff member at the checkout ran up the sale, took Mr. Gatlin's money and put the toothpaste in a bag, handing it with the receipt and the change to Mr. Gatlin. A contract was formed when: A. Mr. Gatlin picked up the toothpaste.

B. Mr. Gatlin put the toothpaste on the checkout counter.

C. Mr. Gatlin paid for the toothpaste.

D. The supermarket employee rang in the sale and took his money.

E. The supermarket employee gave Mr. Gatlin the bag, the receipt and his change.

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #2

3. As you are walking out of class one night, you discover a notebook, full of equations, belonging to a professor in your school. You write a note telling him who you are and where and when you found it, and you drop the note in an envelope, into one of the university's internal mail boxes. The next day the campus is covered with notices which say "$100 REWARD. A notebook containing mathematical explanation of the meaning of life has been lost. If found, please return to Professor Doddering in Room A123."

A. You have no legal right to the $100.

B. You have a legal right to the $100 since you can prove you put the note in the mail to Prof. Doddering.

C. You have a legal right to the $100 provided you can prove you found it after Prof. Doddering posted the reward notices.

D. Since this was an offer to the public at large, you have accepted it by mailing it and Prof. Doddering legally must give you $100.

E. While you have no legal right to the reward, the court will enforce your moral right to it.

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #3

4. Mike responds to Flavio's statement that he would like to buy Mike's motorbike for $3,000 by saying that he would want $4,000, given the work he has put into it. Flavio says OK. I'll give you that. Here's $2,000, and I'll give a promissory note for the balance payable at $500 a month for the next 4 months."

1. There is a contract.

2. There is no contract.

3. Flavio's first statement to Mike was an invitation to do business.

4. Mike's response was a counter offer.

5. Flavio's final statement to Mike was an acceptance.

A. 1 and 3.

B. 1, 3 and 4.

C. 1, 3, 4 and 5.

D. 2.

E. 2 and 4.

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #4

5. Johnson became a member of the Book-a-Month Club under an agreement by which members agree to pay for any monthly selection that they have not notified the Club they do not want. Johnson forgets to tell them when he decides he does not want "How to Cook Small Rodents" and the book arrives at his house.

A. Since silence cannot be acceptance, Johnson does not have to take the book, but must send it back.

B. Johnson must pay for the book.

C. Johnson must pay for the book unless he decides to send it back.

D. Since silence is not acceptance, Johnson can keep the book and he does not have to pay for it.

E. Johnson cannot refuse to pay for the book since consumer protection legislation says unsolicited goods delivered to a consumer create no obligation to pay and no liability for loss or damage.

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #5

6. Karen offers to sell her antique rocking chair to her friend Julie for $350. Julie has always loved the rocker but, since she is currently short of money, she says to Karen "I will buy the rocker from you, and I'll pay half now and half next month." Don, who has been listening, says "I've always wanted that rocker, too, Karen. I'll pay you $400 cash right now for it."

A. Since there is a contract between Karen and Julie, Karen cannot sell the rocker to Don. B. Karen's offer has lapsed so she may sell the rocker to Don. C. Karen must first revoke her offer to Julie before she can accept Don's offer, since a clear acceptance now by Julie would create a contract between them.

D. Julie's inquiry as to whether she could pay in two instalments did not cause Karen's offer to lapse and she can still accept it.

E. C and D.

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #6

7. Mary invites some friends to dinner and they accept. They purchase a much more expensive bottle of wine than they would normally drink and a beautiful bouquet of flowers. Mary calls them two hours before the dinner to tell them she has been invited out by the man of her dreams and is postponing the dinner.

A. The friends can claim the cost of the flowers and the wine since Mary has breached the contract.

B. Since Mary is merely postponing the dinner, she has not breached their dinner contract.

C. Even though they accepted her dinner offer, this is not a situation in which one party can sue another, since no reasonable person would think that there was any intention on Mary's part to create a legally enforceable contract.

D. Mary may not have intended to be bound to her promise, but her friends have suffered a loss and she cannot now claim she did not mean to enter a contract to provide dinner since she did not say that when she made her offer.

E. No agreement between friends can be enforced as a contract, including this one.

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #7

8. A contract is a legal relationship between parties. The existence or validity of the contract is measured by conditions outlined by law. An indication of the intention to create a contract is built on certain premises. These premises are: A. The end result will be a meeting of the parties' minds on the terms that are agreed upon.

B. A meeting of the minds is only required when the contract deals with personal service contracts and not with commodity agreements.

C. Each party will normally agree to do or not do certain things if there is an agreement for the other party to do or refrain from doing certain things.

D. The process of the meeting of the minds by the parties will establish the contract itself.

E. All of the above except B.

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #8

9. A computer software company advertised a new organizational program as one of the most "user friendly" programs of its kind on the market. The Smallville police department used the program and, during operation, the program collapsed, losing vital information related to the effectiveness of the department in carrying out its duties. Under the law of contract, what is the software company's position with respect to liability?

A. The company is liable for damages because the program promoted as easy has the capacity to collapse and produce this result when used improperly.

B. The police department must bear responsibility because it purchased the program and accepted its limitations without question or instruction therefore this is a situation of caveat emptor.

C. The company is liable because a promise is a promise in contract law in relation to advertising.

D. The company is not liable because it is permitted to use enthusiasm when describing the product and has made no unproven statements in its contract with the police.

E. None of these.

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #9

10. On June 1st the Mega Marketing Research Firm sent out a mail survey to 5,000 potential customers of Mega's client company. The survey stated that everyone who completed the survey and mailed it back would receive a prize. Mega did not expect everyone to respond to the survey and had only 1,000 prizes on hand for the respondents. On July 14th Sam mailed back his response and eagerly awaited his prize. On July 15th Mega sent out the last prize it had. Sam's response arrived on July 16th. It was the 1001st and Mega wrote back telling Sam that unfortunately all the prizes were gone and he would not be able to have one.

A. No contract was formed here as there was no communication of Sam's acceptance before Mega's offer lapsed.

B. Sam made a counteroffer by returning the completed survey.

C. Mega had essentially revoked its offer before Sam accepted.

D. A valid contract was formed between Mega and Sam. E. Mega may assert that silence is not acceptance and Sam did not communicate his acceptance on time.

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #10

11. Which of the following elements does not constitute a legal relationship in contract?

A. Familiarity B. Consideration C. Capacity D. Acceptance E. Intention

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #11

12. (p. 119) Which of the following are NOT presumed to be binding?

A. Agreements between suppliers and manufacturers B. Agreements between family members for the purchase of a business C. Agreements between strangers D. Agreements between family members to cook a birthday dinner E. Agreements between banks and their customers

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #12

13. Skinny You is a brand new "weight loss pill." It is being sold by a new company; Skinny Products Inc. Advertisements were placed in the back of Teen Beauty magazine that provided potential consumers with information about the success rate of the pills—"Weight Loss of 10 pounds in 10 days if used as instructed."

Skinny Products Inc. guaranteed the weight loss by saying that if customers did not lose 10 pounds in 10 days then they would receive $100. To increase consumer confidence of the damages being paid Skinny Products Inc. stated that it had put money in trust. Latisha purchased Skinny You and used it for 10 days, as instructed, but only lost 4 pounds. Can she sue Skinny Products Inc for breach of contract?

A. No, the advertisement did not amount to an offer.

B. Yes, the advertisement amounted to an offer.

C. Yes, the advertisement amounted to an offer but the weight loss claims were marketing claims that were not binding.

D. Yes, the advertisement did not amount to an offer but Latisha's purchase constituted the formation of a unilateral contract incorporating the terms of an invitation to treat.

E. No, the advertisement amounted to an invitation to treat.

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #13

14. (p. 121) Salem said to Crystal over his cell phone, "Do you want to buy my car for $2,000?" Before she heard him her cell phone dropped the call. Can she accept the offer?

A. Yes. B. Yes, conditionally if she requires he repeat it.

C. No, an offer must be received prior to acceptance.

D. No, offers can only be made in writing.

E. All of the responses are incorrect.

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #14

15. (p. 123) Ian offered to sell his horse to Wanda for $3,500. Wanda wanted to think about it and let Ian know by email. Ian agreed. Wanda emailed Ian at 11:45 that night. At 6 a.m. Ian accepted an offer to sell the horse to William for $3,700. He read his email at 8 a.m. Can Wanda sue Ian for breach of contract?

A. Yes, Wanda accepted Ian's offer prior to William's acceptance.

B. Yes, Ian made the first offer to Wanda.

C. No, the acceptance must be in the same mode of communication as the offer. Therefore, Wanda's offer was not valid.

D. No, the acceptance was not received by Ian until 8 a.m.

E. No, the acceptance was for a lesser sum and sellers are entitled to the best deal.

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #15

16. (p. 126) Ian offered to sell his horse to Wanda for $3,500. Wanda wanted to think about it and let Ian know by email. Ian agreed. Wanda emailed Ian at 11:45 that night. What type of contract was formed?

A. Unilateral Contract B. Qualified Unilateral Contract C. Bilateral Contract D. Qualified Bilateral Contract E. Invitation to Treat

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #16

17. (p. 128) Microsoft uses a click wrap agreement with a clause requiring all disputes to be heard in the state of Washington, U.S.A. Microsoft has its head office in Redmond, Washington. A consumer resides in Ontario. Is this click wrap agreement binding?

A. No, it is a consumer contract so the jurisdiction of the consumer prevails.

B. No, it is not binding as it is traditional for consumers to not read online agreements prior to clicking "I accept."

C. No, the consumer does not have a substantial connection to the State of Washington.

D. Yes, the contract became binding when the consumer clicked "I Accept."

E. Yes, only for residents of Washington state.

Accessibility: Keyboard Navigation Difficulty: Challenging Willes - Chapter 07 #17

18. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer was merely an invitation to do business.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #18

19. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer to buy the canoe from Jones was a genuine expression of his intention to create a legal relationship.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #19

20. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer lapsed when Jones did not immediately accept the offer before the two parties departed on their separate business.

FALSE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #20

21. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul's offer lapsed when Rahul agreed to purchase Brown's canoe.

TRUE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #21

22. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Brown's acceptance of Rahul's offer was unconditional.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #22

23. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul and Brown established a binding contract which both parties are obliged to perform.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #23

24. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. The contract between Rahul and Brown automatically rescinded the offer which Rahul had made to Jones.

FALSE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #24

25. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul and Jones established a binding contract when Jones telephoned Rahul and accepted Rahul's offer to buy his canoe for $200.

TRUE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #25

26. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. The acceptance by Jones was ineffective because Jones did not reply to Rahul by way of a written acceptance.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #26

27. Rahul met Jones at a street corner and made a verbal offer to buy his canoe for $200. Jones replied that he would "think about it." Rahul nodded affirmatively. The two then went about their separate business. Later in the day, Rahul met Brown, who also had a canoe for sale, and Rahul offered to purchase Brown's canoe for $175. Brown agreed to sell Rahul his canoe. At 4 p.m. the same afternoon, after Rahul and Brown had made their arrangement, Jones telephoned Rahul to say he would accept Rahul's offer to buy his canoe. Rahul is not bound in contract with Brown because the prior contract he made with Jones became enforceable when Jones accepted his offer.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #27

28. Giardetti, a retailer, placed an advertisement in a local newspaper on May 5th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10th customer in the store on May 10th, but Giardetti refused to sell him a TV set for $100. The advertisement is not an offer because Giardetti did not express the intention to be bound by the statements in the advertisement.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #28

29. Giardetti, a retailer, placed an advertisement in a local newspaper on May 5th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10th customer in the store on May 10th, but Giardetti refused to sell him a TV set for $100. Giardetti's advertisement was only an invitation to do business, and not a valid offer to sell.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #29

30. Giardetti, a retailer, placed an advertisement in a local newspaper on May 5th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10th customer in the store on May 10th, but Giardetti refused to sell him a TV set for $100. Giardetti's advertisement was a valid offer to sell, which Don accepted by being one of the first 10 customers at the store on May 10th, and verbally accepting the offer.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #30

31. Giardetti, a retailer, placed an advertisement in a local newspaper on May 5th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10th customer in the store on May 10th, but Giardetti refused to sell him a TV set for $100. If Giardetti had placed a notice on his shop door on May 9th which read: "Sale cancelled," his notice would revoke the offer made in the newspaper on May 5th.

TRUE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #31

32. Giardetti, a retailer, placed an advertisement in a local newspaper on May 5th that read: "Special Sale! New 16" portable TV set available for sale to the first 10 customers at my store on May 10th at a sale price of $100 each. Regular price $199. First come, first served!" Don was the 10th customer in the store on May 10th, but Giardetti refused to sell him a TV set for $100. If Don had seen the notice on the shop door on May 9th; he could still accept the offer, because the offer was irrevocable.

FALSE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #32

33. Andy offers to sell his car to Bob, but Bob needs to arrange financing, so Andy says he will give Bob three days to do so. Andy can revoke the offer before the three days are up.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #33

34. Jill has been negotiating the purchase of a speedboat with Sandi during the past two weeks. Two days ago, she wrote to Sandi, saying "I won't go any higher than $8,000. Take it or leave it, but that's my final offer." By coincidence, Sandi sent a letter the same day which said "I won't take less than $8,000, so if you can't accept that, I'll have to look elsewhere for a buyer." The letters have both arrived today at their destinations. There is a contract between Jill and Sandi.

FALSE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #34

35. A trader on the floor of the Stock Exchange makes a deal with another trader by hand signals for the sale of a block of shares. This is a binding contract.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #35

36. Franklin Motors Ltd. makes an agreement to buy 3,000 widgets for $1,000 from Stovely's Engineering Co. The law presumes that, unless one of them proves otherwise, they intended this agreement to be a legally binding one.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #36

37. Alliston enters into an agreement with Berkley which, for $2,000, gives him the right to agree to purchase Berkley's screen printing business within the next 30 days for $50,000. If he decides to buy, they agree that the $2,000 will be the down payment on the purchase price. This agreement is an option.

FALSE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #37

38. Paulette Paulson Furs advertises mink coats for sale at 30% off. The demand was much greater than anyone could have predicted, and 14 people who came to the store could not be provided with one of the sale coats.

Since they had accepted Paulson's offer, she will have to find coats for them or be in breach of their contracts.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #38

39. Tom offers to buy Jenny's fishing tackle for $500, but she says she wants $600. Tom then proposes a price of $550, but Jenny says she is not interested. Tom is afraid she will walk away from a deal, so he says "OK. I'll accept your offer to sell for $600." There is now a contract between them.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #39

40. Victor has breakfast at the Kute Kafey. From the menu, he orders buttered muffins "homemade like your mother's," jam "made with loving care and fresh ingredients," and tea "fresh-picked from the cool hillsides of an Indian plantation." Actually, the muffins are nothing like Victor's mum's muffins and are baked in a factory, the jam is mass-produced from industrial-quality frozen fruit, and the tea is made with no-name tea bags. Victor has a good case for breach of contract.

FALSE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #40

41. Rosa offers Valerie the chance to buy her cottage for $25,000. Two days later, while Valerie is still considering the offer, Rosa's sister mentions to her that Rosa has sold the cottage to Ben for $30,000. If Valerie now accepts, Rosa will be liable for breach of contract.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #41

42. Craig makes an offer to Josie by mail, because she cannot be reached by telephone. She replies by mail, accepting the offer. Canada Post mislays her reply for several weeks. Craig, who has given up waiting to hear from her, has entered into the contract with someone else after waiting for a reasonable time. Josie can sue Craig for breach of contract.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #42

43. Mookie, a professional baseball player, negotiated with the Soxville Eagles for a one-year contract. He was given one week to consider the offer and was to sign it by the opening day of the season, one week away.

Mookie, in the meantime, was offered a better contract with the Baxton Bulldogs, which he accepted. On opening day, Mookie walked onto the field in the uniform of Baxton. Soxville can sue Mookie for a breach of contract.

FALSE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #43

44. Becky is colouring her hair one day and her friend Kamilah asks if Becky will colour hers as well. Becky agrees and does a good job. Two months later, Becky goes to a professional hairdresser to have her hair coloured and pays her $100. Becky should also be entitled to payment for her colouring job.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #44

45. John notices while mowing his lawn one summer day that while his neighbour had been on vacation, his hedge had become unkempt. Worried that people might think it were his hedge, John decided to clip the hedge himself. On his return John's neighbour thanked John for the work. Several weeks later the neighbour hired a handyman to do the same job and paid him $50. John would be entitled to payment for subsequent hedge clippings.

TRUE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #45

46. The world of commerce requires that the intention to create a legal relationship be proven before any contract can be found to exist between the parties.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #46

47. If GA Stereos sends a fax to Wholesale HiFi Equipment ordering ten car stereos at a particular catalogue price, requesting delivery by courier (or some other means), the fax would not constitute an offer to purchase.

FALSE

Accessibility: Keyboard Navigation Difficulty: Easy Willes - Chapter 07 #47

48. When an offeree dies before accepting an offer, the offer does not lapse because the deceased's personal representative can accept an offer on behalf of a deceased person.

FALSE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #48

49. If an acceptance is not unconditional, but changes the terms of the original offer, then it would have the effect of rejecting the original offer.

TRUE

Accessibility: Keyboard Navigation Difficulty: Moderate Willes - Chapter 07 #49

50. Mario responded to an advertisement placed by Serge in a local newspaper. Serge was looking for business investments, and Mario sent him a letter on October 1st which said that he was willing to make Serge a partner in his tie-dyed T-shirt business if Serge was willing to put up $5,000. Serge received that letter on October 6th and wrote back the same day saying he would love to get involved in the business and would send Mario a certified cheque for $5,000 as soon as the bank had transferred the money from his savings account and certified the cheque. This letter was received by Mario on October 9th, and the certified cheque was sent on October 8th and received on October 12th. Meanwhile, Mario mentioned the advertisement to Sonia, and she said she would like to get into the business and would be willing to put up $8,000. Mario sent another letter to Serge, on October 4th, which Serge received on October 7th, saying Mario had changed his mind and would not be willing to have Serge as a partner. a. What is the legal term for i. Mario's letter of October 1st? ii. Mario's letter of October 4th? iii. Serge's advertisement? iv. Serge's letter of October 6th? b. Discuss whether Mario and Serge have a contract or whether Mario is free to enter into a partnership with Sonia. c. Suppose Mario's letter of October 1st has said that there would be no commitment by him to any arrangement with Serge unless and until he received Serge's certified cheque for $5,000. Explain why this would or would not change your answer to (b). a. i. offer ii. Revocation iii. invitation to do business iv. Acceptance b. Serge and Mario have a contract. The mailbox rule is in effect and the contract was formed when Serge put the letter of acceptance in the mail on October 6th. The revocation was ineffective because it was not communicated to Serge until October 7th, which was too late c. Mario's offer contains a term that avoids the application of the mailbox rule. There can be no deemed acceptance when Serge mails his acceptance since the terms of the offer are that acceptance is effective only when the cheque is received. Since the revocation is received by Serge on October 7th, but the certified cheque does not reach Mario until October 12th, the revocation is effective and there is no contract.

Difficulty: Challenging Willes - Chapter 07 #50

51. At a computer fair, Porter saw a demonstration by Maxwell of an excellent new accounting software package published by Slyckbyte Co., but he felt it was overpriced at $900. "At $500," he said, "I would definitely buy it." Maxwell said that she was not authorized to give deals to anyone, not even such a good customer as Porter. Porter bought another package from a different company. Four days later, he received a package from Maxwell that contained the new software and a letter which said that Slyckbyte was happy to give him the discount he had wanted and that she looked forward to receiving his cheque within the next few days.

Discuss whether Porter must pay for the software.

If Maxwell meant that she was refusing Porter's counteroffer when she said she was not authorized to give him a deal, then she has caused his counteroffer to lapse, and her letter and the software is a new offer. This means that Porter can accept it or reject it. While generally, unsolicited goods sent to people create no liability for them, use of the goods here would be an acceptance of the contract. Failing to return it to Slyckbyte might also mean acceptance of their offer, since it had been sent to him because Maxwell thought she was accepting a counteroffer. It is probable however, that while Maxwell could argue that she never intended to reject his counteroffer, a court would say that she should have made that clear to Porter, especially since if no acceptance has been made of the counteroffer, it would normally lapse once they parted at the fair.

Difficulty: Challenging Willes - Chapter 07 #51

52. Robert has just mailed a letter of acceptance in response to James' letter offering to sell his hardware store to Robert, when he is knocked down by a car and killed. Jane, Robert's wife and sole heir, wants to run the business, since that is what she and Robert had intended, but James does not believe a woman could run a hardware store and tells her that the deal is off. Discuss Jane's legal position.

While only the person to whom the offer is made can accept it, in this case there is a deemed acceptance of James' offer when Robert mailed the letter. The contract is formed before Robert dies. James' feelings about who is capable of running a store are irrelevant. If the contract had not yet been made, only Robert could have accepted it, and his death would have prevented acceptance. (It would not have been possible for the contract to go ahead if it had been for Robert's personal services and no one else could have substituted for him; for example if it was a contract for Robert to work as manager in James' hardware store.)

Difficulty: Challenging Willes - Chapter 07 #52

53. There are requirements predetermined by law to make a contract binding and, therefore, legally enforceable.

With your knowledge of the process of arriving at a contract, explain how that process relates to the legal solidification of a contract.

Students should discuss the intention to create a legal relationship and the elements of offer and acceptance in the contractual sense. They should point out that the intention is a presumption at law, but that the parties' actions toward one another will define the nature of the legal relationship to which they intend to be bound. The discussion should include the importance of the negotiation process and the fact that the conclusion of that process should produce a meeting of the minds of the parties with respect to the terms and conditions that the negotiations produced.

The aspects of offer and acceptance are equally important in the formation of an enforceable contract. When assessing the validity of a contract, there must always be an examination of whether the offer was effectively made and accepted thus creating a valid basis for performance of the agreement. Students should point out circumstances in which either the offer was made improperly (i.e., not communicated to the offeree) or was revoked before acceptance was properly made. Similarly, the numerous rules about acceptance should be discussed together with the consequences to the contract's enforceability of inadequate acceptance.

Difficulty: Challenging Willes - Chapter 07 #53

54. Discuss the significance of Carlill v. Carbolic Smoke Ball Co. [1893], 1 Q.B. 256 for modern day marketing practice. Give some examples to illustrate your points.

See text: The Intention to Create a Legal Relationship The creation of advertising as an inducement to purchase must be carefully structured so as not to make representations or claims that potential customers may later seek to enforce unless the advertiser intended to be bound by them. This may be especially important for the celebrity endorsement type of advertising, but pertains to all advertising forms.

Difficulty: Moderate Willes - Chapter 07 #54

55. George was an independent salesman, working sales territories in which various manufacturers did not maintain sales agents. Prior to a trip to Northern Manitoba, George informed a manufacturer of small electrical generators he expected to secure an order for fifty generators on this trip. From a more remote community, George was able to send a fax to the manufacturer which, when received, read "Send by air immediately the generators. Must be here by next Thursday." The fax should have read, "three generators" and the mistake was made solely by the fax office. The manufacturer sent fifty generators. Aside from the fact that one of the parties may have a remedy against the fax office, discuss the relevant principles of contract raised here, and determine whether there was no contract, a contract for three generators, or a contract for fifty generators.

With respect to George's request for the generators, students should not be permitted to assume away the question by saying that it is not definite enough on its face. It may be assumed that certain terms have been discussed prior to George's departure which would induce the firm to ship generators on the basis of such a fax.

There is clearly an intention on both of the parties to create a legal relationship, regardless of the error contained within the fax transmission. George wants to receive generators; the company wants to sell generators. If George's fax constitutes an offer, which it arguably does, the acceptance must be in the form contemplated by the offer, in this case an act, which is complied with. The company's interpretation of the "offer" is probably reasonable on the basis of prior discussions. Students should have no difficulty realising that an unconditional acceptance has been properly made in accordance with the "offer," since the offer may properly be construed on the basis of the cumulative effect of George's negotiations with them prior to his departure and the added triggering of his offer by the fax. The remaining item to create the enforceable contract is of course a meeting of minds of the parties, and the quest for an enforceable contract ends at this point. This is a good case to introduce students into the concept of mistake, while the treatment of the subject itself is a matter for Chapter 10. There is no meeting of the minds of the parties in this instance, and as a result of this mutual mistake there is no contract.

No enforceable contract of any kind has been created and hence with respect to the latter part of the question, there is no contract for three generators, nor is there a contract for fifty generators. To mitigate losses to some extent, the parties may reach a contract with respect to the three of the generators that have arrived, but the remaining 47 are purely the responsibility of the manufacturer. The manufacturer of the generators may have recourse against the fax office for the damages incurred with respect to the 47 (or 50) generators shipped as a result of their error. The fax office was only an agent to transmit the message in the terms in which the sender delivered it to them. It did not have the authority to do any more or less. Given the independent nature of the fax office, it should not be thought of as a mere agent for the offeror Citation: Henkel v. Pape (1870), 6 Exch. 7.

Difficulty: Challenging Willes - Chapter 07 #55

56. On July 23rd, Carson, who lived in Bytown, wrote a letter to Henri, offering to sell his (Carson's) vintage car for $18,000. The letter was delivered to Henri in his home in Mount Royal, an hour's drive away, on July 27.

On July 24th, Carson met his friend Jack on the street. Jack expressed an interest in buying Carson's vintage car.

He offered Carson $18,000 for the car, but Carson said only that he would "give the offer some thought," and promised to advise Jack of his decision. Carson did not tell Jack of his offer to sell the car to Henri. On July 25th, while on vacation in York, Jack sent a fax to Carson, offering to buy the car for $18,250 if Carson would deliver the car, on July 30th, to his farm, located some 20 km west of Bytown. Carson received the fax the same day and, that evening, wrote and mailed a letter to Henri, revoking his offer to sell the vintage car.

On July 28th, Henri wrote a letter to Carson accepting his offer to sell the vintage car and enclosed a cheque for $18,000 as payment in full. On July 29th, Henri received Carson's letter revoking the offer. Carson had business west of Bytown on July 29th, and since his trip would take him past Jack's farm, he decided to deliver the vintage car on his way. Carson left the car on a trailer at Jack's farm, but finding no one at home, left the keys to the car and a note in Jack's mailbox. The note stated that he had left the car behind the garage. On July 30th, Carson received the letter of acceptance Henri had mailed to him on July 28th. Carson immediately telephoned Henri to tell him he had sold the car to Jack, but Henri was out of town on a business trip. Carson left a message with Henri's wife and, on July 31st, returned by mail the cheque that Henri had sent him with the letter of acceptance Later on July 31st, Carson received a telephone call from Jack who had just returned from Toronto requesting delivery of the car. When Carson explained that the car had been delivered on July 29th, Jack stated that the car was not behind the garage. Carson then requested Jack to call the police to investigate the theft. Later in August, the police located the car in the possession of a minor and an arrest was made. Unfortunately the car had been badly damaged while in the thief's possession. The estimate of damages was $12,000.

Discuss the issues raised in this case. Describe the rights of the parties (if any) and the possible outcome of any litigation if legal action should be taken to enforce the rights of the parties.

This case is identical as to its disposition and facts with Case Five of Chapter 5. Students should work through this case to identify the offer and determine its disposition. The offer of July 23rd by Carson to Henri, was an offer by mail that was communicated to Henri on July 27th. This offer was accepted by Henri on July 28th by mailing a letter of acceptance to Carson with cheque enclosed. The letter sent by Carson to Henri revoking the offer of July 23rd arrived too late to be effective. Returning the cheque has no effect on the agreement itself, because the contract was already formed, and both parties bound.

The offer by Jack to Carson on July 24th to buy the car for $18,250 was not accepted on that date but the parties kept the offer open for acceptance.

Jack's offer of July 25th was of a unilateral nature, whereby Carson could accept by delivering the car to Jack's farm on July 31st. The delivery on July 29th was not acceptance in accordance with the terms of the offer. Jack would argue that Carson did not comply with the terms of the offer and therefore acceptance was not properly made, and it was therefore not bound by the offer to buy the machine. Carson is clearly caught in the middle between Jack and Henri but since the car is now damaged, Henri may also wish to avoid the agreement and accept the return of the cheque as an offer by Carson to terminate the agreement. This would leave Carson with the damaged car.

Citation: Dickinson v. Dodds (1876), 2 Ch.D. 463.

Difficulty: Challenging Willes - Chapter 07 #56

57. It was almost time for the Heeleys to renew the mortgage on their home and they were considering their options. The mortgage was currently held by the Big Bank and the Heeleys were not satisfied with the service they had received from the Big Bank's mortgage staff. Recently, the local radio station had been airing commercials for the Little Bank, which suggested that people switch their mortgages to Little Bank to take advantage of better rates and more personal service. As a special incentive, the commercials stated that, for a limited time, for every mortgage over $50,000 which was brought to Little Bank from another financial institution, Little Bank would give the customer an all-expense-paid trip to Mexico. Feeling in need of a vacation, the Heeleys decided to take advantage of this incentive and made an appointment to see the manager of Little Bank. During their meeting the manager explained that the Mexico trip would be given on mortgages brought within the next month. The Heeleys mortgage did not expire at Big Bank for another six weeks, however the manager said it should not be a problem awarding them the trip for having made the commitment within the advertised period to transfer their mortgage. At the end of the six weeks, the Heeleys transferred their mortgage to Little Bank and delivered the paperwork needed by the bank to set up their trip. Several days later the Heeleys received a telephone call from the head office of the Little Bank informing them that they were not eligible to receive the trip as their mortgage had not been transferred within the offer period.

Discuss the legal issues that arise as a result of this case. What legal principles might the Heeleys and the bank apply to support their respective positions, and what would be the likely result should legal action ensue?

Answers will vary.

Difficulty: Challenging Willes - Chapter 07 #57

c7 Summary Category

# of Questions

Accessibility: Keyboard Navigation

49

Difficulty: Challenging

8

Difficulty: Easy

28

Difficulty: Moderate

21

Willes - Chapter 07

57