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Question 1

What is the question you should ask when determining whether a commitment/intention to be bound was present for an offer?

Answer 1

Would a reasonable person, hearing the words spoken, under the circumstances, believe the speaker intended to enter a contractual relationship?

Question 2

Why do you not usually have to judge on an MBE question whether a commitment or intention to be bound was made for an offer?

Answer 2

Because examiners know that different people have different opinions, so you just have to recognize the rule

Question 3

Does it matter what the intention of the speaker is when making an offer?

Answer 3

No, so just look at the language and the circumstances

Question 4

What are things that can cause trouble for an offer?

Answer 4

• preliminary negotiations
• ads
• reward offers
• joke or frolic
• ambiguous language
• auctions

Question 5

Are preliminary negotiations considered offers with intention to be bound?

Answer 5

No, they are a manifestation of a willingness to enter a bargain without the intent to conclude a bargain until a further manifestation of intent has been made

Question 6

What are some examples of things that are not considered offers?

Answer 6

• opinions
• predictions
• encouragement
• hopes
• intentions
• estimates
• inquiries

Question 7

If an offeror retains the right to make a final decision, is that an offer?

Answer 7

No, it’s an invitation to negotiate or make an offer

Question 8

What are some examples of situations where an offeror retains the right to make a final decision and is therefore not an offer?

Answer 8

• asking someone if they’re interested
• asking if they would give you something
• saying “I quote”
• “I would consider”

Question 9

Are ads considered offers?

Answer 9

No, they are just invitations to deal or statements of intention to sell

Question 10

What is the caveat for when an ad is an offer?

Answer 10

If it states a:

1. QUANTITY #
2. Language of COMMITMENT
3. with all material TERMS

Question 11

The language “first come, first served” can change an ad into what?

Answer 11

An offer

Question 12

Can mass mailings, catalogs, or pricelists be treated as offers?

Answer 12

No, those are also advertisements

Question 13

Do price quotes show an intention to be bound enough to be an offer?

Answer 13

No

Question 14

What is the reason that most ads are not offers?

Answer 14

• most ads are indefinite about quantity and other terms
• the seller should be able to choose who they deal with
• ads are usually addressed to the general public, so if that were an offer, the seller would’ve overaccepted

Question 15

What are the ways that an ad will be an offer?

Answer 15

• has definite terms
• clearly an intention to be bound
• invites addressees to take specific action without further communication
• over acceptance is unlikely

Question 16

What are the times that quoting a price can be considered an offer?

Answer 16

If it is directed at a specific person and other words like “for immediate acceptance” are included

Question 17

Why is a first person offer usually considered an offer?

Answer 17

Because only one person can form a contract by accepting

Question 18

Are reward offers considered offers?

Answer 18

Yes, and the power of acceptance is limited to the person that does the act, since only one person can claim a reward

Question 19

Why is a letter of intent not considered an offer?

Answer 19

Because no one is bound to the terms of the letter

Question 20

What is an offering circular?

Answer 20

A general mailing sent out by merchants to a number of potential customers setting forth terms

Question 21

Why are offering circulars not usually considered offers?

Answer 21

They are treated as ads and the test is:

• whether a reasonable person in the shoes of the addressee would think it was addressed to him individually (treated as an offer)
• or only as one of a number of recipients (invitation to deal)

Question 22

Usually the word offer means what, and the word quote means what?

Answer 22

Offer means offer and quote means invitation to deal, but this isn’t always the case

Question 23

If a reasonable person would conclude that something was a joke, made in anger, or mere banter, is that an offer?

Answer 23

No. Ie: PepsiCo case with the harrier jet

Question 24

If you’re unsure because of ambiguous language whether an offer was made, what are the two situations that courts will consider in this case?

Answer 24

• business context

- social/domestic context

Question 25

How is ambiguous language treated in a business context about whether or not an offer has been made?

Answer 25

Court presumes intent to be bound

Question 26

How is ambiguous language treated about whether or not an offer has been made in a social or domestic context?

Answer 26

Court presumes legal relations were not intended

Question 27

What is the role of an auctioneer?

Answer 27

To accept or reject the bids

Question 28

Who makes an offer in an auction situation?

Answer 28

The bid is the offer and the auctioneer just present the items

Question 29

What type of auction are most auctions?

Answer 29

With reserve unless otherwise stated

Question 30

What are the two types of auctions?

Answer 30

- With reserve | - Without reserve

Question 31

What is an auction "with reserve"?

Answer 31

The owner reserves the right to refrain from holding the auction, to interrupt it, terminate it, or withdraw the item even after the bidding starts. The owner can also make a bid and buy his own property.

Question 32

Who is the offeror in a "with reserve" auction?

Answer 32

The bidder and the contract is complete when the hammer falls

Question 33

When can a bidder withdraw in a "with reserve" auction?

Answer 33

Before the hammer falls and that terminates all prior bids

Question 34

When an auctioneer puts an item on the block, and calls for bids, what happens?

Answer 34

That is an invitation to make offers. Because it is not an offer, he can withdraw the item any time, even after bidding has started (until he hammers down or accepts).

Question 35

What does each new bid do in a with reserve auction?

Answer 35

Discharges all earlier ones

Question 36

If a bid is withdrawn before it is hammered down in a "with reserve" auction, can an earlier bid be accepted?

Answer 36

No, because each new bid discharges all earlier ones

Question 37

What is a "without reserve" auction?

Answer 37

Promise by the owner that: - the auction will be held - the property will be sold to the highest bidder - nothing will be held back or withdrawn (unless no bid is placed within a reasonable time).

Question 38

Once an auctioneer calls for a bid in a "without reserve" auction, can he withdraw the item?

Answer 38

No, he has made an irrevocable offer

Question 39

Is putting a contract out for bids considered an offer?

Answer 39

No, the bids that get submitted in response are the offers, and the builder is free to decline or accept any bid even if it isn't the lowest

Question 40

What does it mean that an offer has to have definite terms?

Answer 40

Essential terms of the offer must be certain and unambiguous or empower the other person to specify terms to clear up any uncertainties

Question 41

Does an offer have to contain all material terms?

Answer 41

No, but it needs: - subject matter - parties - price - sometimes a few other key items

Question 42

If an offer is missing terms, can the law fill them in?

Answer 42

Yes, If they are not material

Question 43

If one of the major things that needs to be present for an offer is not present, does that mean there isn't an offer?

Answer 43

Not necessarily, as long as the expression otherwise shows intent to make a bargain, or the court can fill in the omitted term

Question 44

What does the UCC say about definite terms in an offer?

Answer 44

If a few terms are left open, a contract doesn't fail for indefiniteness if the parties: - intended to make a contract, and - there's a reasonably certain basis for giving an appropriate remedy

Question 45

What is the modern rule about definite terms for an offer?

Answer 45

You can have an offer that states the subject matter with certainty and leaves out all other major terms and it is still is a good offer because everything else can be reasonably implied.

Question 46

Exam - If an offer only states the subject matter and then tries to state another material term but doesn't do it with certainty, does that fall under the modern rule for definite terms for an offer?

Answer 46

No, if it tries to address something like price, because it doesn't have to, it cannot do it ambiguously, otherwise the offer will fail

Question 47

What are the four major rules for definite terms for an offer?

Answer 47

- modern rule - traditional rule - significant minority rule - common-law and UCC

Question 48

What is the traditional rule for definite terms for an offer?

Answer 48

Subject matter and quantity have to be included

Question 49

What is the significant minority rule for definite terms for an offer?

Answer 49

That all material terms have to be stated in order to have a contract. This is no longer in effect, so if you see this on an exam, it is the wrong answer

Question 50

How does the UCC justify having requirements and output contracts be valid offers?

Answer 50

Because of the implication of good faith

Question 51

Is the commitment/intention to be bound element of an offer an objective or subjective test?

Answer 51

Objective according to the outward appearance from their language or conduct that is a reasonable person standard