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23. Which of the following is NOT an accurate statement concerning the arrangement between the manufacturer and the hardware wholesaler?
The hardware retailer presented the letter to the hardware wholesaler, who then sold and delivered $20,000 worth of hardware to the hardware retailer on credit. The hardware wholesaler promptly notified the manufacturer of this sale.
/Signed/ manufacturer.
This will introduce you to my good friend and former customer, a hardware retailer, who will be seeking to arrange the purchase of hardware inventory from you on credit. If you will let him have the goods, I will make good any loss up to $25,000 in the event of his default.
A U.S. manufacturer on the west coast gave a hardware retailer who was relocating to the east coast the following «letter of introduction» to a hardware wholesaler on the east coast.
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Most offers propose an exchange of promises. However, in some instances, the offer will propose an exchange of the offeror's promise for the offeree's act. A contract in which only one party promises to do something and the other party is free to act or not act as he wishes is called a unilateral contract. When an offer proposes that the offeree may accept by performing an act rather than by making a return promise, this is an offer for a unilateral contract. In order for the acceptance to be effective, however, the offeree must give seasonable notice of acceptance to the offeror if the offeree has reason to know that the offeror will not learn of the acceptance without notice.
D is correct. The manufacturer's offer to the hardware wholesaler is an offer to enter into a unilateral contract because the manufacturer did not seek a return commitment from the hardware wholesaler, but rather, for the wholesaler to provide credit to the hardware retailer. Because the hardware wholesaler lives far from the manufacturer, however, he has reason to know that the manufacturer will not learn of his acceptance unless he gives notice. Therefore, the hardware wholesaler must give notice of the extension of credit to the hardware retailer.
A is incorrect. This question is asking you to select the statement that is NOT accurate. Under the Statute of Frauds, a promise made by a third person to a creditor that the third person will be responsible for a debt that the debtor owes the creditor must be in writing. The manufacturer's promise to guarantee the debt falls within the surety clause of the Statute of Frauds. Therefore, this answer cannot be correct because it correctly describes the agreement between the parties.
B is incorrect. This is also a CORRECT statement of the position of the parties, which means it is an incorrect answer choice. The hardware wholesaler's extension of credit to the hardware retailer resulted in an acceptance of an offer for a unilateral contract.
C is incorrect. The manufacturer's promise is enforceable by the hardware wholesaler notwithstanding the fact that the hardware retailer provided no consideration because the consideration was furnished by the hardware wholesaler.