Business Law And The Legal Environment Standard Edition 6th Edition By Jeffrey – Test Bank

CHAPTER 11 – AGREEMENT

TRUE/FALSE

1. When Olga asks Sven if he wishes to sell his Harley motorcycle, he replies that he would not sell it “for less than $2,000.” Olga replies, “I accept,” and hands him $2,000. A contract exists.

ANS: F PTS: 1 MSC: AACSB Reflective Thinking

2. Revocation is the withdrawal of an offer by the offeror.

ANS: T PTS: 1 MSC: AACSB Analytic

3. April put an advertisement in the newspaper advertising the sale of her computer for $500. Simultaneously, six people responded to the ad by mail with formal written acceptances. April is bound on all six contracts to sell her computer for $500.

ANS: F PTS: 1 MSC: AACSB Reflective Thinking

4. You have placed an antique sofa up for auction and the auctioneer has not made any special announcements about the sale. You can withdraw the sofa at any time before the auctioneer closes the sale by announcement or by the fall of the hammer.

ANS: T PTS: 1 MSC: AACSB Reflective Thinking

5. In seeking to determine whether there is a meeting of the minds, the courts look to how a reasonable person would objectively view the language or actions of the parties.

ANS: T PTS: 1 MSC: AACSB Analytic

6. On Monday, Mick puts an offer in the mail to Sheri to sell his guitar for $50. Monday night when jamming with his buddies, he decides he will really miss his old guitar and has second thoughts about selling it. Tuesday morning he puts a revocation in the mail informing Sheri he has changed his mind and the guitar is no longer for sale. The revocation is effective on Tuesday morning.

ANS: F PTS: 1 MSC: AACSB Reflective Thinking

7. Vick Valve Company makes valves for plumbing fixtures. At the beginning of the year, it sends out a price list addressing each one, “To our valued customers.” Honest Hank Hardware orders a variety of valves at the prices quoted on the price list. Vick Valve must honor the prices on the list and sell the valves to Honest Hank.

ANS: F PTS: 1 MSC: AACSB Reflective Thinking

8. A letter of intent summarizes progress made during business negotiations, but more importantly, it creates a binding contract.

ANS: F PTS: 1 MSC: AACSB Analytic

9. According to the UCC, one or more open terms will not cause a sales contract to fail for indefiniteness as long as the parties intended to make a contract and there is a reasonably certain basis for the court to determine the open terms.

ANS: T PTS: 1 MSC: AACSB Analytic

10. Nunnsky’s Retail sent out newspaper inserts advertising wool suits for $50. In fact, the store had only two, out-of-style suits for sale at this price. Their other wool suits started at $175. This constitutes bad faith in its advertising, so consumers may have protection through state statutes.

ANS: T PTS: 1 MSC: AACSB Reflective Thinking