[Anonymous]

Here is the question:

On day 1, Jackson, a merchant, mailed Sands a signed letter that contained an offer to sell Sands 500 electric fans at $10 per fan. The letter was received by Sands on day 3. The letter contained a promise not to revoke the offer but no expiration date. On day 4, Jackson mailed Sands a revocation of the offer to sell the fans. Sands received the revocation on day 6. On day 7, Sands mailed Jackson an acceptance of the offer. Jackson received the acceptance on day 9. Under the Sales Article of the UCC, was a contract formed?

a. No contract was formed because the offer failed to state an expiration date.

b. No contract was formed because Sands received a revocation of the offer before Sands accepted the offer.

c. A contract was formed on the day Jackson received Sands acceptance.

d. A contract was formed on the day Sands mailed the acceptance.

The answer is “d”.

This question is from the AICPA 2013 Newly Released Questions which don’t have any explanations with the answers. My question is why is the answer “d” instead of “b.”

Any help would be greatly appreciated. Thanks!

[carpeCPA]

I want to say it's because a merchant's firm offer is irrevocable for a reasonable period of time. So, Jackson's revocation was ineffective. I would have blown through this question without picking up on this during the exam!

REG - 93 (Jul'13)
FAR - 97 (Dec '13)
AUD - 99 (May '14)
BEC - Jul '14

Becker Self Study/Ninja Notes/Ninja Audio/Ninja MCQ/Wiley Test Bank/Wiley Book

[Kodiak]

I'm confused on this as well. I thought if the buyer had received the revocation prior to sending his acceptance then the offer would be invalid. If it was still in transit or whatever before he mailed his acceptance then I could see D being the right answer.

Any REG wizards care to elaborate?

AUD - Pass
FAR - Pass
BEC - Pass
REG - Nov

[OneStep]

The letter contained a promise not to revoke the offer. This means the right answer could be either c. or d. Further, since the letter doesn't explicitly states that contract is formed upon RECEIPT of acceptance letter by Jackson, this means that contact is formed when it is mailed by Sands. (i think i read this rule in the Wiley book) If I am wrong correct me.

FAR - Apr 2013 - PASSED
REG - Oct 2013 - PASSED
AUD - Apr 2014 - PASSED
BEC - May 2014 - PASSED

[VR]

Firm offer rule states: promises to keep an offer open, even if not supported by consideration, are irrevocable if the promises are 1) in writing and 2) made by a merchant. The maximum duration of a firm offer is 3 months if there is no date on the offer. However, in Common Law to keep an offer open consideration has to be given. I hope it will help you cpa contender.

[JAltNJCPA]

OneStep@aTime and VR give the right answer. I had this same problem and also got it wrong. I'm using RogerCPA Review and sent them the question for explanation. The Firm offer rule “rules” in this case. Stupid question…

FAR: 84 (expires May '14)
AUD: 82
BEC: 91
REG: 78

done, Done, DONE!!!

Roger CPA Review, Wiley Test Bank, NINJA Audio

[Anonymous]

Becker has provided the explanation for AICPA 2013 Newly Released Questions.

Here's the website for REG, your question is #39:

Hope this help.

.

Created with Compare Ninja

[JAltNJCPA]

To clarify…the question itself is stupid…I don't mean to imply asking why the answer is D and not B is stupid…hope that didn't come across that way…

FAR: 84 (expires May '14)
AUD: 82
BEC: 91
REG: 78

done, Done, DONE!!!

Roger CPA Review, Wiley Test Bank, NINJA Audio

[Anonymous]

Thank you Rache1, VR, and OneStep@aTime. Aris, you have saved me so much time. I'm going to print those out tonight because for the ones that I didn't know, I was having to look them up in my Wiley book and that was very time consuming so I stopped and decided to go back and do it later. So this will save me that time of having to find the explanations. JaltN..I knew what you meant 🙂

[Anonymous]

this question is deep, not just addressing firm offer rule but also mailbox rule in sales…

recall from the mutual consideration requirement in open offer in contract law-both parties must present consideration otherwise such offer may be terminated by offeror any time despite the scheduled date. in sales, both parties dont need mutual. so once the offer is firm offer, offeror won't be able to terminate/reject it before the scheduled date.

also, in contract law mailbox rule, an acceptance is effective when sent in the same method as the offer sent. in sales, as long as the method and time is reasonable, the acceptance is effective (in essense, not a mailbox rule).

u also must remember in sales, the intent is the top factor. so as long as the offeree has the intent, the contract is formed. i believe an acceptance sent is enough for the “intent”.

[Author]

Replies