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NINJA Question –
So I got this question on Ninja and remember seeing it also on WTB.
The explanation doesn’t seem to make sense with the correct answer. If Blue’s counter offer was sent on July 15th, would that not count as a rejection of the original offer and terminate the original contract?
That is what seems to be the case with all the explanations pertaining to this question.
On July 1, Silk, Inc., sent Blue a telegram offering to sell Blue a building for $80,000. In the telegram, Silk stated that it would give Blue 30 days to accept the offer. On July 15, Blue sent Silk a telegram that included the following statement: “The price for your building seems too high. Would you consider taking $75,000?” This telegram was received by Silk on July 16. On July 19, Tint made an offer to Silk to purchase the building for $82,000. Upon learning of Tint’s offer, Blue, on July 27, sent Silk a signed letter agreeing to purchase the building for $80,000. This letter was received by Silk on July 29. However, Silk now refuses to sell Blue the building. If Blue commences an action against Silk for breach of contract, Blue will:
Correct A.
win, because Blue effectively accepted Silk’s offer of July 1.
B.
win, because Silk was obligated to keep the offer open for the 30-day period.
C.
lose, because Blue sent the July 15 telegram.
D.
lose, because Blue used an unauthorized means of communication.
Explanation:
To create a contract, the offer must be accepted before a termination of the contract. A counteroffer is a rejection of the original offer followed by a new offer. Since Silk accepted the new offer, the counteroffer is a new contract.
An offer may be terminated by the following:
a. Expiration of the time specified in the offer or a reasonable time if no time is mentioned
b. Revocation received by offeree before acceptance
c. Rejection by the offeree (a counteroffer is a rejection combined with a new offer to the original offeror)
FAR 81
AUD 65, 84 (Used Ninja MCQ which I say contributed to my huge increase in score I love you Jeff)
REG 87 (CPA excel Wiley Self Study Book, Ninja 10 point combo)
BEC 86! I Must Pass or I lose my FAR Credit, Pray for me(Becker, Wiley, WTB, Ninja MCQ, Ninja Notes)DONE!!!!!!
Using : Wiley CPA Exam Review Textbook, Wiley TB, Ninja Notes, Ninja MCQ
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