Question

Bob, a merchant, makes an offer to Linda, another merchant, to buy 1,000 of her widgets in a signed letter containing all necessary terms of the offer. The letter states that Bob will keep the offer open for three weeks from the day the offeree receives it. One week later, Bob writes another letter to Linda attempting to revoke his offer. Linda writes a letter to Bob accepting Bob's original offer before she receives his revocation. Which of the following statements is true of this situation?
a. Linda's acceptance is effective and a contract is created.
b. Bob's revocation is effective and no contract is created.
c. Promissory estoppel prevents the formation of a contract in this situation.
d. The offer cannot be revoked since it is an option offer.

Answer 1

Answer:

a. Linda's acceptance is effective and a contract is created.

Explanation:

A contract is created when there is an offer and acceptance of a transaction. When the contract is created it is enforceable and not revocable unless with the consent of parties involved.

Bob made an offer to Linda to buy her 1,000 of her widgets. The offer is open for 3 weeks and Linda accepted the offer within one week.

Although Bob tried to revoke the offer, since Linda has accepted it the contract is created and enforceable on Bob.