On October 1, 2025, Pythonic, a well-known electronics retailer, sends a signed letter to Penelope, a tech consultant. The letter states, "We offer to sell you 500 units of the new 'Quantum Pro' tablet for $400 per unit. This offer will remain open until November 1, 2025." Pythonic does not receive any payment from Penelope to keep the offer open. On October 15, 2025, due to a surge in demand for the tablets, Pythonic decides to revoke its offer to Penelope and sells the tablets to another customer for a higher price. Pythonic sends a signed letter to Penelope revoking the offer. On October 20, 2025, before she receives the letter of revocation, Penelope sends a letter to Pythonic stating, "I accept your offer to purchase 500 Quantum Pro tablets for $400 each."

Which of the following statements best describes the legal outcome of this situation?

Question

On October 1, 2025, Pythonic, a well-known electronics retailer, sends a signed letter to Penelope, a tech consultant. The letter states, "We offer to sell you 500 units of the new 'Quantum Pro' tablet for $400 per unit. This offer will remain open until November 1, 2025."  Pythonic does not receive any payment from Penelope to keep the offer open. On October 15, 2025, due to a surge in demand for the tablets, Pythonic decides to revoke its offer to Penelope and sells the tablets to another customer for a higher price. Pythonic sends a signed letter to Penelope revoking the offer. On October 20, 2025, before she receives the letter of revocation, Penelope sends a letter to Pythonic stating, "I accept your offer to purchase 500 Quantum Pro tablets for $400 each."

Which of the following statements best describes the legal outcome of this situation?

BlackTom AI · Accepted Answer

To tackle this question, I’ll lay out the scenario and then evaluate each answer choice carefully before identifying which aligns with contract doctrine.

Option A: "A valid contract was formed because mailbox rule applies to both the offer and the acceptance." The mailbox rule indeed provides that an acceptance is effective upon dispatch when mailed as a reasonable means of communication. However, it does not make the offer itself irrevocable or trigger irrevocability by itself. The offer’s validity and the potential for an irrevocable period depend on separate rules (such as a firm offer by a merchant under the UCC, or a separate consideration in common law). So saying the mailbox rule applies to both offer and acceptance and creates a contract is not correct: the mailbox rule applies to acceptance, not to binding the offer indefinitely, and it does not by itself resolve the irrevocability question here.

Option B: "No contract was formed because Pythonic effectively revoked its offer before Penelope's acceptance was received." While the revocation was sent on October 15, revocation is typically effective upon receipt by the offeree. Here, Penelope sent her acceptance on October 20, and she had not yet received the revocation. If the contract formation hinges on whether the revocation was effective upon receipt, there would be a dispute. But this option ignores two crucial points: first, Pythonic is a merchant offering a firm offer, which under the UCC can be irrevocable for the stated period without consideration; second, the acceptance may have occurred before the revocation was communicated to Penelope. Thus, this option incorrectly assumes revocation voids the offer before acceptance is communicated, which is not consistent with the given facts and governing rules.

Option C: "No contract was formed because Penelope did not provide any consideration to keep the offer open, so it was a revocable offer." At common law, keeping an offer open typically requires consideration to create an option contract. However, the scenario describes a merchant making a signed writing that states the offer will remain open until a specific date (November 1). Under the UCC, a merchant’s firm offer to buy or sell goods is irrevocable for the time stated (not exceeding three months) even without consideration. Therefore, the lack of consideration is not the controlling factor here; the firm offer rule applies and renders the offer irrevocable for the specified period. Hence this option is incorrect because it ignores the firm offer rule.

Option D: "A valid contract was formed because Pythonic, as a merchant, made a firm offer in a signed writing, which became irrevocable until November 1." This option correctly applies the UCC firm offer rule: a merchant’s written, signed offer to buy or sell goods is irrevocable for the time stated (not exceeding three months) without the need for consideration. The offer stated it would remain open until November 1, and even though a revocation was sent on October 15, the revocation is not effective until it is received by Penelope. Penelope’s acceptance mailed on October 20 can thus form a contract under the firm offer rule, because the offer was irrevocable during the period until November 1, and the acceptance was communicated in a timely manner under normal mailbox-rule reasoning for acceptance.

Overall, the reasoning shows why the first two options misapply the rules, why the third option ignores the controlling UCC doctrine, and why the fourth option best aligns with the firm offer rules for merchants. Each point highlights the key distinctions between acceptance timing, revocation effectiveness, and the irrevocability period created by a merchant’s firm offer.

BUSFIN 3500 AU2025 (2111) Final Exam Au_1_25- Requires Respondus LockDown Browser

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