In response to Bill's request for a price on high grade fuel oil, Sam, a high grade fuel oil wholesaler, wrote to Bill, a high grade fuel oil retailer, on December 20, 2008: "I offer to supply you with high grade fuel oil, at the price of $14.00 per gallon. Because of your past favors, this offer will remain open, (signed) Sam." On December 22, 2008, Bill wrote to Sam stating that he was considering buying high grade fuel oil in 2009, but Bill did not place an order for high grade fuel oil at this time. Sam received Bill's letter on December 24, 2008.

On January 8, 2009, Bill ordered 40,000 gallons of high grade fuel oil from Sam, which were delivered and paid for at the rate of $14.00 per gallon.

On March 7, 2009, the price of high grade fuel oil rose to $17.00 per gallon generally throughout the trade. On March 9, 2009, Sam mailed a letter to Bill stating: "I revoke my December 2008 offer." Sam's letter was misdirected by the post office and Bill did not receive it until March 16, 2009.

Bill placed additional orders, all by mail: on March 10, 2009, for 50,000 gallons of high grade fuel oil; on March 17, 2009, for 70,000 gallons of high grade fuel oil; on March 30, 2009, for 100,000 gallons of high grade fuel oil. Sam received all the orders two days after they were mailed by Bill, but Sam has refused to fill any of Bill's March 2009 orders.

On April 5, 2009, Bill purchased 55,000 gallons of high grade fuel oil from Tom (a competitor of Sam). The cost was Tom's regular price of $20.00 per gallon, although Bill admitted later that by shopping around he might have been able to buy the high grade fuel oil at $18.00 per gallon.

 

QUESTION 1

1. Bill's request for a price on high grade fuel oil constitues an offer.

    True

    False

5 points   

QUESTION 2

1. Sam's response to Bill, dated December 20, 2008, is a firm offer.

    True

    False

5 points   

QUESTION 3

1. Bill accepted Sam's offer on December 24, 2008.

    True

    False

5 points   

QUESTION 4

1. According to UCC Section 2-205, all firm offers are valid for three months.

    True

    False

5 points   

QUESTION 5

1. The January 8, 2009, order and delivery constitute an executed contract.

    True

    False

5 points   

QUESTION 6

1. Sam's revocation of his offer of December 20, 2008, was effective on March 9, 2009.

    True

    False

5 points   

QUESTION 7

1. According to the "Mailbox Rule," a revocation is effective on the date it is mailed if it has the corect address and proper postage.

    True

    False

5 points   

QUESTION 8

1. Bill's order on March 10, 209, constitutes a valid acceptance of Sam's offer and therefore creates a valid contract.

    True

    False

5 points   

QUESTION 9

1. Bill's order of March 30, 2009, constitutes a valid acceptance of Sam's offer and therefore creates a valid contract.

    True

    False

5 points   

QUESTION 10

1. Bill could not accept Sam's offer by telephone call to Sam.

    True

    False

5 points   

QUESTION 11

1. Bill is obligated to mitigate his damages by finding the lowest reasonable cover price.

    True

    False

5 points   

QUESTION 12

1. In addition to receiving cover damages from Sam, Bill is entitled to receive reasonable incidental damages.

    True

    False

5 points   

QUESTION 13

1. The revocation of an offer must be made in writing.

    True

    False

5 points   

QUESTION 14

1. The offeree of a firm offer must be a merchant, according to UCC section 2-205.

    True

    False

5 points   

QUESTION 15

1. In this case the amount of cover damages due to Bill is the same as the nominal damages due to him.

    True

    False

5 points   

QUESTION 16

1. A firm offer is the same as an option contract.

    True

    False

5 points   

QUESTION 17

1. Anyone could validly accept Sam's offer of December 20, 2008.

    True

    False

5 points   

QUESTION 18

1. Bill's order on March 17, 2009, constitutes an invitation to negotiate.

    True

    False

5 points   

QUESTION 19

1. No consideration is required to make a valid firm offer, according to the UCC section 2-205.

    True

    False

5 points   

QUESTION 20

1. Bill is entitled to receive punitive damages from Sam.

    True

    False