LESSON ONE: WHAT IS A HANDOUT CONTRACT? QUESTIONS 1. Examine the following scenarios and decide if a contract could exist in each scenario. a. You buy a bike for $25 at a yard sale. b. You invite your friend to come over to see your bike. C. Your aunt promises to pay you $50 if you quit riding your bike in traffic. d. You buy a bike helmet from the hardware store. e. You bring your bike in for a tune-up at the sporting goods store. 2. List and describe the three elements that must be in place for a contract to exist. 3. In 1996, Pepsi introduced their "Pepsi Points" promotion, which allowed people to collect points from pop bottles to earn merchandise. One television advertisement featuring items that could be purchased with Pepsi Points humorously ended with a student landing at school in a Harrier jet, with the line "7,000,000 Pepsi Points" appearing on the screen. Because additional Pepsi points could be purchased to make up for point shortfalls, one Pepsi customer presented Pepsi with 15 Pepsi Points and a cheque for $700,008.50 (to cover the excess points and shipping and handling) for the jet. Pepsi refused to present him with a Harrier jet, and he sued. Did the advertisement constitute an offer? 4. Brad sends a letter to Carol on September 1st offering to sell his car for $2500. Carol receives the letter on September 5th, and mails back an unconditional acceptance the same day. Brad receives the letter on September 10th. In the meantime, Rachel approaches Brad on September 7th, and offers him $3000 for the car. He accepts. Do all the elements of a contract exist in this scenario? If so, has Brad breached his contract with Carol? Explain. 5. Jim sends a letter to Dean on June 1st offering to sell an MP3 player for $50. Dean receives the letter on June 3rd, and writes a letter back accepting this offer, places a 50 dollar bill in the envelope, and plans on mailing it the next day. However, on June 3rd, Terry tells Jim that he will give him $50 for the MP3 player. Jim accepts this offer, immediately calls Dean and revokes the offer. Dean says he can't revoke this offer because he has already written a letter of acceptance. Does Jim have a contract with Dean that must be honoured? Explain