[needhelpnow]

Bond and Spear orally agreed that Bond would buy a car from Spear for $475. Bond paid Spear a $100 deposit. The next day, Spear received an offer of $575, the car’s fair market value. Spear immediately notified Bond that Spear would not sell the car to Bond and returned Bond’s $100. If Bond sues Spear and Spear defends on the basis of the statute of frauds, Bond will probably:

A. lose, because the agreement was for less than the fair market value of the car.

B. win, because the agreement was for less than $500.

C. lose, because the agreement was not in writing and signed by Spear.

D. win, because Bond paid a deposit.

The correct answer is B.

If Bond (the buyer) sues Spear (the seller), Bond will probably win because the agreement was for less than $500. Since this problem deals with the sale of goods (here, a car), the Uniform Commercial Code’s Statute of Frauds would be applicable. If the sale of a good involves an amount of $500 or more, then a writing is required to have an enforceable agreement. However, the amount involved in this case was only $475. Therefore, the disputant, Bond, does not need to have a writing to sue for breach of contract. Under the facts of the case, they reached an oral agreement, and the buyer gave the seller a $100 deposit. When the seller received a higher offer, the seller breached the contract by refusing to sell the car to Bond. There is sufficient evidence in the fact that the seller accepted the deposit to prove that they had a valid and enforceable oral agreement.

~~~~

BUT why not D? Because when you pay an amount as a deposit and hold something, it means the offer cannot be revoked. Why is B the right answer over D.

Thank you guys!

[spinfuzer]

There was an offer to buy car for $475 and Bond accepted the offer which created an oral contract.

An option contract is used to keep an offer open in order to decide whether or not to accept the offer; however, the offer had already been accepted and there is no option contract here.

Since this is a sale of a good under $500, the contract does not have to be written.

FAR - 08/08/14 - 93
BEC - 08/28/14 - 95
REG - 10/11/14 - 96
AUD - 11/30/14 - 99

[Anonymous]

Why not D? Because this is one of those lovely “Read our freaking minds” question where you have to pick the BEST answer because more than one is correct. There is a special place in hell for whoever decided this was a fair testing practice.

[Anonymous]

I think if they had agreed to a selling price higher than $500, the statute of frauds would apply even though Bond paid a deposit. Deposit or no deposit, the contract would need to be in writing since the statute of frauds would apply.

[needhelpnow]

Got it guys! I didn't fully read the part where it says that they had already “orally” agreed on it! I just went right to the deposit put in place…everything WORD needs to be read :/

[Anonymous]

Hi All, can anyone explain where in the following problem Silk accepted the new offer??

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:

Answer: win, because Blue effectively accepted Silk’s offer of July 1.

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.

[spinfuzer]

July 1 Silk makes an offer to Blue that is good for 30 days, but Silk can revoke this before Blue accepts.

July 15, Blue does NOT reject Silk's offer. Blue sends an inquiry to Silk, NOT A COUNTEROFFER. Blue simply asked a question.

July 19, Tint makes an offer to Silk

July 27, Blue sends an acceptance to Silk's July 1 Offer, which is still open. This creates a contract between Blue and Silk.

The question doesn't really say that Silk accepted some counteroffer. As far as I see it, there is NO counteroffer anywhere in this question. There's an offer from Silk to Blue. There's an inquiry from Blue to Silk. There's an offer from Tint to Silk. There's an acceptance from Blue of Silk's July 1 Offer.

FAR - 08/08/14 - 93
BEC - 08/28/14 - 95
REG - 10/11/14 - 96
AUD - 11/30/14 - 99

[Anonymous]

@spinfuzer Thank you! I saw in Wiley where the asking of a question was explained as a counteroffer and this question was from NINJA which was the opposite. Test is on Tuesday (2nd attempt after a 71 in Aug). =/

[Author]

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