[OhSusan]

NINJA Question –

Hey guys, I got this question on REG MCQs:

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:

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.

I’m pretty certain the answer is C because a counter-offer terminates the original offer. But, the solution says: “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.”

Am I missing something? I’m pretty sure Silk didn’t accept anything anywhere in the scenario…

FAR - May 2014
AUD - August 2014
BEC - February 2015
REG - May 2015

Ethics - December 2015

[OhSusan]

Ninja says the answer is A, btw…

FAR - May 2014
AUD - August 2014
BEC - February 2015
REG - May 2015

Ethics - December 2015

[Bnots]

An inquiry is not the same as a counteroffer. The language “seems” and “would you consider … ?” in the July 15 telegram constitutes such an inquiry. Blue retains the right to accept Silk's original offer until 30 days are up, which he does effective July 27. (a) looks right to me. The explanation does not though.

[Anonymous]

I was having trouble understanding this question too when I was going through the MCQ but Bnots is right, Blue is making an inquiry as opposed to a counter offer. In order for Blue's inquiry to be considered a counteroffer, Blue probably would have said something more definite like “I will offer you $75,000” instead of “Would you consider taking 75,000?”

[Stgeorge]

Wouldn't the answer be (B)? Since the original offer stated it was open for 30 days? How is it A ? Blue effectively accepted the offer on July 1st when the original deal was sent to him? Am I missing something? Wouldn't it be Blue Accepted the offer on July 27th?

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

[Anonymous]

This is one of a couple that I never understood!

[jeff]

A similar answer about this question:

https://www.another71.com/cpa-exam-forum/topic/contract-law-questions-reg#post-498688

[Stgeorge]

Hi Jeff Thanks for the link, but based on the question is answer B wrong in some way or is answer A just a better answer. Is Silk not obligated to keep the original offer open for 30 days?

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

[Author]

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