The following series of events occurred between Bull's Meat Market and The Butcher: May 1 - The Butcher faxes Bull's and offers to buy 200 lbs. of T-bone steak at $3.29 per lb. May 2 - Bull's faxes back: "Price is okay. Payment prior to delivery." Bull's and The Butcher:______. a. have a contract on May 2 with the payment term. b. have a contract on May 2 without the payment term. c. do not have a contract. d. none of the above

The reason is that for formation of a contract their must be an offer from one side and the acceptance from the other, often called an agreement. There must also be a flow of consideration from one party to other and from other party to one. In the current scenario, the butcher sends an offer letter on May 1, which the offeree accepts on May 2. This means both the parties have agreed on the terms and condition on May 2, which includes the consideration which is $3.29 per pounds for 200 pounds. Bull will take the money and the butcher will take the meat. This means the consideration has flowed to each other. The payment timings is though a clause of contract and is part of execution of contract once the contract is formed, so the option B is correct.