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Mann_BLRB 9_TB_Ch10

Business Law and the Regulation of Business

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Chapter 10—Mutual Assent TRUE/FALSE 1. On Tuesday morning John sends a letter to Arlene rejecting her offer, but later the same day John changes his mind and sends a letter of acceptance to Arlene. The letter of acceptance will be effective only if it is received by Arlene before she receives the rejection. ANS: T MSC: AACSB Analytic 2. An offer is effective as soon as it is dispatched. ANS: F MSC: AACSB Analytic 3. Pedro receives an unordered three-CD set in the mail accompanied by the statement, “This CD set can be purchased for the special price of $19.95. If the CDs are not returned within two weeks they will be deemed accepted and the payment is due within 30 days of receipt of the CDs.” Pedro is under no ob- ligation to either return the CDs or to pay for them; he may use them or give or throw them away. ANS: T MSC: AACSB Analytic | AACSB Diversity 4. A contractual agreement always involves either a promise exchanged for a promise or a promise ex- changed for a completed act or forbearance to act. ANS: T MSC: AACSB Analytic 5. A contract is invalid if all of the terms are not clearly stated. ANS: F MSC: AACSB Analytic 6. Contract law generally places more importance on the intent of the parties to form a contract than on the inclusion of certain terms in the contract. ANS: T MSC: AACSB Analytic 7. The common law "mirror image" rule applies to an offer and the acceptance of that offer in a contract for the sale of goods. ANS: F MSC: AACSB Analytic 8. If no time is stated, an offer will terminate automatically after a reasonable period of time. ANS: T MSC: AACSB Analytic 9. If Bill tells Sara that he will give her two days to decide if she wants to buy his car, he cannot sell it to anyone else during that time. ANS: F MSC: AACSB Analytic
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10. Martha puts an ad in her company's newsletter saying she would pay $5,000 for a first-issue Grace Kelly stamp to the first person who accepted her offer. Martha decides she would rather go on a European vacation and changes her mind about investing in the stamp. Martha posts a sign at the exec- utive water fountain saying the offer is no longer valid. A foreman from a branch plant takes a flight to the Chicago main office to see Martha and accept her offer. Martha does not owe him any money to pay for a breach of contract. ANS: F MSC: AACSB Analytic 11. Ron offers to sell Pete his stamp collection. Pete gives Ron $10 to induce Pete into keeping his offer open for a week. If Ron decides on day four of the week that he really does not want to sell to Pete, he can revoke his offer without fear of a breach of contract lawsuit being filed against him. ANS: F MSC: AACSB Analytic 12. An acceptance is generally effective upon dispatch. ANS: T MSC: AACSB Analytic 13. George offered to paint Catherine's barn for $3,000. Catherine said she would accept the offer if George would paint the woodshed, too. At this point, they have made a valid and enforceable contract.
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