CLEP Business Law

Category - Contracts

Paula walked into Pete's Car Repair Shop and said to Patrick, "I will give you $5 if you rotate my tires." Patrick, Pete's employee, responded, "OK." Paula handed Patrick $5. As Patrick began to rotate Paula's tires, Pete walked in and found out about the job. Furious, he said to Paula, "We charge $25 to rotate tires. We do not have a deal!" Is there a contract?
  1. No. Patrick was not authorized to make the agreement.
  2. Yes. There was a valid offer and acceptance.
  3. No. There was no consideration.
  4. No. There was not enough consideration.
  5. No. Patrick made a mistake.
Explanation
Answer: B. Yes. There is a contract because there was valid offer and acceptance. A contract is formed when one party makes an offer and another party communicates acceptance of the offer. The fact that the amount of Paula's offer was less than Patrick should have accepted does not void the contract. If the terms of the agreement were deemed unconscionable, then the contract could be voided.
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