Two-Minute MBE Question: Contracts (acceptance)

Here, we discuss how to approach the following Contracts MBE question in two minutes. Read the question below then check out the YouYube video below for an answer explanation in less than two minutes!

Contracts MBE Question:

On January 1, a man offered to sell his neighbor his lawn mower for $400. The neighbor was considering whether to purchase the lawn mower. The neighbor said to the man, “I cannot decide whether I want to buy your lawn mower. If I pay you $10.00 will you leave the offer open until January 5?” The man agreed to leave the offer open until January 5, and the neighbor paid the man $10.00.

On January 2, the neighbor told the man, “I reject your offer.” The man did not take any steps in reliance on the neighbor’s rejection. On January 3, the neighbor told the man, “I accept your offer.”

Is there a contract between the neighbor and the man?

(A) No, because the January 3 statement constituted a counteroffer.
(B) No, because $10.00 is not considered to be adequate consideration to hold open an offer.
(C) Yes, because the man did not take any steps in reliance on the neighbor’s January 2 rejection and the neighbor accepted the offer prior to the January 5 deadline.
(D) Yes, because an option contract can always be accepted during the time period that the offer is held open.

Contracts Video Answer Explanation:

Looking for the written answer explanation?

You can find the answer to the Contracts MBE question in the video above or the text below. Just click “SHOW ANSWER”

SHOW ANSWER

(C) is the correct answer. The general rule is that once an offer is rejected, it cannot be accepted. However, there is an exception for option contracts. An option contract is created when there is a promise to hold an offer open and consideration to support that promise. The rule for option contracts is that the offer can be accepted during the time the offer is held open even if there is first a rejection. The only exception to this is if the offeror takes steps in reliance on the offeree’s rejection prior to the acceptance.

In this case, there was a valid option contract for $10 to hold open the offer. $10 is not considered to be too “nominal” to hold open an offer. So the option contract is valid. Next, the neighbor rejected the offer on January 2. (Normally this would prevent the neighbor from accepting the offer later; however, option contracts have special rules and state the offer can still be accepted so long as there is not reliance on the rejection.) The facts state that the “man did not take any steps in reliance” on the rejection. Thus, the January 3 acceptance was effective as it took place within the option deadline.

(A) is incorrect because while it would be true if an option contract were not at issue, in this case the man paid to have the offer “open” and he can (generally) accept it within that time frame.

(B) is incorrect as $10 is sufficient consideration to hold open an offer.

(D) is incorrect simply because it is too broad. It uses the word “always” (which you should look out for!). It is not true that an option contract can always be accepted during the time that the offer is held open. In fact, if the man had relied on the neighbor’s rejection, the neighbor would not have been able to accept the offer.

Looking to prepare for the bar exam early?

Sign up for our JD Advising Early Bar Prep campaign. We go over early bar prep tips in five minutes a day! It is a great way to get ahead while practicing social distancing and we also include more two-minute MBE questions like this one!

Looking to Pass the Bar Exam?

Free Resources:
- 🌟Bar Exam Free Resource Center: Access our most popular free guides, webinars, and resources to set you on the path to success.
- Free Bar Exam Guides: Expert advice on the MBE, the MEE, passing strategies, and overcoming failure.
- Free Webinars: Get insight from top bar exam experts to ace your preparation.
Paid Resources:
- 🏆One-Sheets: Our most popular product! Master the Bar Exam with these five-star rated essentials.
- Bar Exam Outlines: Our comprehensive and condensed bar exam outlines present key information in an organized, easy-to-digest layout.
- Exclusive Mastery Classes: Dive deep into highly tested areas of the MBE, MEE, MPT, and CA bar exams in these live, one-time events.
- Specialized Private Tutoring: With years of experience under our belt, our experts provide personalized guidance to ensure you excel.
- Bar Exam Courses: On Demand and Premium options tailored to your needs.
- Bar Exam Crash Course + Mini Outlines: A great review of the topics you need to know!
🔥 NEW! Check out our Repeat Taker Bar Exam Course and our new premier Guarantee Pass Program!

Two-Minute MBE Question: Contracts (acceptance)