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Business Law, 10e (Cheeseman)
Chapter 10 Agreement
1) A(n) ________ is a voluntary exchange of promises between two or more legally competent
persons to do, or refrain from doing, an act.
A) offer
B) advertisement
C) agreement
D) proposal
Answer: C
Diff: 1
LO: 10.1 Define agreement.
AACSB: Analytical thinking
Classification: Concept
1
Copyright © 2019 Pearson Education, Inc.
5) Without mutual assent, there is no contract.
Answer: TRUE
Diff: 1
LO: 10.1 Define agreement.
AACSB: Analytical thinking
Classification: Concept
7) Which of the following statements is true of an offer that was not communicated?
A) The offer stays valid for 30 days from the date of creation.
B) The offer cannot be accepted by the offeree if not communicated.
C) The offeree can claim an offer that was not communicated.
D) The offer is considered to be an implied term.
Answer: B
Diff: 1
LO: 10.2 Define offer and describe express and implied terms of an offer.
AACSB: Analytical thinking
Classification: Concept
8) A term in a contract that can reasonably be supplied by the courts is referred to as a(n)
________.
A) intent term
B) unconditional term
C) objective term
D) implied term
Answer: D
Diff: 1
LO: 10.2 Define offer and describe express and implied terms of an offer.
AACSB: Analytical thinking
Classification: Concept
2
Copyright © 2019 Pearson Education, Inc.
9) An offer is not effective until it is actually received by the offeree.
Answer: TRUE
Diff: 1
LO: 10.2 Define offer and describe express and implied terms of an offer.
AACSB: Analytical thinking
Classification: Concept
10) The offeree must objectively intend to be bound by the offer for the offer to be effective.
Answer: FALSE
Diff: 1
LO: 10.2 Define offer and describe express and implied terms of an offer.
AACSB: Analytical thinking
Classification: Concept
11) The offer must be communicated to the offeree for the offer to be effective.
Answer: TRUE
Diff: 1
LO: 10.2 Define offer and describe express and implied terms of an offer.
AACSB: Analytical thinking
Classification: Concept
12) Identification of the subject matter and quantity would be an implied term.
Answer: FALSE
Diff: 1
LO: 10.2 Define offer and describe express and implied terms of an offer.
AACSB: Analytical thinking
Classification: Concept
3
Copyright © 2019 Pearson Education, Inc.
15) Give an account of the express terms that are parts of an offer.
Answer: The terms of an offer must be clear enough for the offeree to be able to decide whether
to accept or reject the terms of the offer. To be considered definite, an offer generally must
contain the following terms: (1) identification of the parties, (2) identification of the subject
matter and quantity, (3) consideration to be paid, and (4) time of performance. Complex
contracts usually state additional terms. Most offers and contracts set forth express terms that
identify the parties, the subject matter of the contract, the consideration to be paid by the parties,
and the time of performance, as well as other terms of the offer and contract. If the terms are
indefinite, the courts usually cannot enforce the contract or determine an appropriate remedy for
its breach.
Diff: 2
LO: 10.2 Define offer and describe express and implied terms of an offer.
AACSB: Analytical thinking
Classification: Concept
16) The Restatement (Second) of Contracts states that the terms of the offer should be
"reasonably certain." Accordingly, courts can supply some missing terms. What terms might be
supplied? What terms CANNOT usually be implied?
Answer: A court can supply a missing term if a reasonable term can be implied. The definition
of reasonable depends on the circumstances. Generally, time of performance can be implied.
Price can be implied if there is a market or source from which to determine the price of the item
or service (e.g., the Carfax or Kelley Blue Book for a used automobile price).
The parties or subject matter of the contract usually cannot be implied if an item or a service is
unique or personal, such as the construction of a house or the performance of a professional
sports contract.
Diff: 2
LO: 10.2 Define offer and describe express and implied terms of an offer.
AACSB: Analytical thinking
Classification: Concept
17) An invitation to make an offer for the sale of goods is a(n) ________.
A) proposal
B) reward
C) advertisement
D) bid
Answer: C
Diff: 1
LO: 10.3 List and describe special types of offers, including advertisements and auctions.
AACSB: Analytical thinking
Classification: Concept
4
Copyright © 2019 Pearson Education, Inc.
18) Which of the following would be considered an offer to form a unilateral contract?
A) an advertisement
B) an auction without reserve
C) a reward offer
D) an auction with reserve
Answer: C
Diff: 1
LO: 10.3 List and describe special types of offers, including advertisements and auctions.
AACSB: Analytical thinking
Classification: Concept
21) In which of the following types of offers does the seller offer the goods for sale?
A) a revocation
B) a reward
C) an auction with reserve
D) an auction without reserve
Answer: D
Diff: 1
LO: 10.3 List and describe special types of offers, including advertisements and auctions.
AACSB: Analytical thinking
Classification: Concept
5
Copyright © 2019 Pearson Education, Inc.
22) Which of the following is true for an auction with reserve?
A) The seller retains the right to refuse the highest bidder.
B) Invitations to make an offer are not allowed.
C) Goods cannot be withdrawn from sale after the offer has been made.
D) A bid once made cannot be withdrawn and is legally binding.
Answer: A
Diff: 1
LO: 10.3 List and describe special types of offers, including advertisements and auctions.
AACSB: Analytical thinking
Classification: Concept
24) An agreement that an offeror will not sell his property for a specified period subsequent to
the offeree paying consideration to the offeror is referred to as a(n) ________.
A) unequivocal acceptance
B) contract of adhesion
C) option contract
D) firm offer
Answer: C
Diff: 1
LO: 10.3 List and describe special types of offers, including advertisements and auctions.
AACSB: Analytical thinking
Classification: Concept