Sdfasdf

Chapter 7

Critical Thinking Exercise

1. Define the Objective Theory of Contracts.

2. On May 1, Brand Name Industries, Inc. (BNI), sent Carol a letter, via overnight delivery, offering to employ her to audit BNI’s financial statements for the current year for $10,000. In the letter, BNI stated that Carol had ten days to accept. On May 5, Carol sent BNI a fax that stated, “The price for the audit seems too low. Would you consider paying $12,000?” BNI received the fax. The next day, Dan offered to conduct the audit for $8,000. On learning of Dan’s offer, Carol immediately e-mailed BNI, agreeing to do the work for $10,000. BNI received this e-mail on May 7. Explain why BNI and Carol do, or do not, have a contract.

If the offeror specifically conditions his or her offer on the receipt of an acceptance by a certain time, it must be received before that time. Also, the means chosen by the offeror in making the offer implies that the offeree is authorized to use the same or faster means for acceptance.

(A): On May 1, when BNI sent Carol a letter by overnight delivery, it clearly stated that Carol had 10 days to accept the offer. Carol, on her side, decided to bargain. She sent BNI a counteroffer by fax (that even faster than an overnight delivery). BNI received the fax on May 5. The next day Carol changed her mind because of Dan. She immediately e-mailed (still a faster mean than an overnight delivery – mean used by offeror) BNI her acceptance of the offer. BNI received it on May7 (before the expiration of a 10-days period).

(C): So, BNI and Carol do have a contract, because Carol finally accepted an offer during 10 days and she used same or faster means for acceptance the offer

3. Chris promises Dina $40,000 if she graduates from Eagle College. Dina enrolls in Eagle, attends full-time for four years, and graduates. When Dina asks Chris for $40,000, Chris says, “I don’t remember promising you $40,000. But if there was a promise, it’s...