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Business Law

PART 1: Offer and Acceptance

Decide whether the parties involved have reached an agreement in each of the following situations. Your answer must include the legal reason for your opinion.

Length of Response: 2‐ 3 Sentences per question

1. Pete placed an ad in the Auto Trader that read “2009 Pontiac Firebird for sale ‐ $6,000″. Paul read the ad and went to see the car. After examining the car, Paul told Pete he would give him the $6,000.

2. Arnold owned three building units (A, B and C) in a commercial development in Brampton. As a result of some financial difficulties, he wrote to Bob as follows “I will sell you one of my units for
$150,000. Bob immediately wrote back “I accept your offer”.

3. On February 1, Ann offers to sell a product she invented to Ace Manufacturing for $30,000. On February 2, Ace replies that they will only pay $20,000. Ann replies “No Deal”. On February 3, having thought it over, Ace tells Ann they will give her the $30,000.

4. On Monday, Horner, a tree farmer, faxes an offer to sell 100 pine Christmas trees at $10.00 each to Green, a retail nursery owner. Horner states that the offer will be open for acceptance until noon on Wednesday. On Tuesday evening, Horner faxes Green and tells him that the trees are no longer available as another purchaser has agreed to pay $12.00 a tree. Ignoring the Tuesday fax, Green faxes Horner an acceptance that is received by Horner at 10 a.m. on Wednesday morning.

5. On September 15th, Dick offered in writing to sell to Jane 5,000 shares in a very volatile computer company at a price of $10.00 each. No time limit was specified for acceptance of the offer. After thinking it over for several weeks, Jane wrote Dick on October 15th stating that she was accepting his offer.

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PART 2: The Other Essential Elements of a Valid Contracts

In each of the following situations the parties have reached an agreement. Their agreements, however, are not valid and enforceable contracts but are void/voidable contracts because an essential element is missing. Decide which of these agreements are void and which are voidable and explain which of the essential elements of a valid and enforceable contract is missing in each agreement.

Length of Response: 2‐ 3 sentences per question.

1. Arnold invited Jane to the college New Year dinner and dance. Jane accepted his invitation and agreed to accompany Arnold who purchased the tickets and arranged a limo.

2. Jones was aware that Smith, a fellow employee, was having an affair. Jones informed Smith that he would advise Smith’s wife of the affair unless Smith entered into an agreement to transfer ownership of a cottage lot he owned to him. Smith agreed.

3. Margaret, an elderly woman, had broken her hip in a fall. During her recuperation, Paul, her neighbour, had cut her grass and looked after her garden. On her recovery, Margaret wrote Paul a letter thanking him for all his kindness and promising him a cedar canoe that was stored in her basement. Paul was delighted and told Margaret he would take it as soon as he cleared a spot for it in his garage.

4. Mike, who is in the electronics business, sold a car stereo system on credit to John, a seventeen year old. The equipment cost $1,500 and John made an initial payment of $500 and agreed to pay the balance in 10 monthly installments of $100 each.

5. Clarence offered to sell his restaurant business to Denise. Prior to accepting, Denise requested the financial statements for the business. Clarence delivered them but in order to make the business look more profitable he inflated the revenue figures on the income statement. After reviewing the statements, Denise agreed to purchase the business. She has now discovered that the business is not very profitable.

6. Larry, a very religious person, who recently inherited a large sum of money, sought advice from his spiritual leader, a well‐known television evangelist. During their conversation, the evangelist suggested Larry donate a large sum of money for a new television studio that the church would name after Larry. Larry, although initially reluctant, was eventually convinced by the evangelist that it was better to build up treasure in heaven than on earth and agreed to make a large contribution. Larry is now having second thoughts.

7. Today, John entered into an agreement to sell his cottage to Paul for $100,000. Unknown to both John and Paul, the cottage was totally destroyed last weekend when a large pine tree fell on it during a severe windstorm

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