1- While working in the yard, Cherie found a beat-up ring. Betty, an adult neighbor, came over to visit and told Cherie she liked it. Cherie said, "You can have this old ring if you would like." Betty replied, "I do really like it - Maybe it's a real diamond!" Cherie laughted and told her that there was a one in a million chance of that.

A few months later Betty rushed over to Cherie's house and told Cherie that the ring was actually a diamond worth over $2,000. Betty gave Cherie the ring to examine. Cherie put it in her pocket and told Betty that she would never have given it to her if she had realized its value and that Cherie herself really owned it. Cherie also told Betty that Betty failed to legally accept the ring because neither of them knew its true value and because Cherie did not sign any document turning over title to the ring to Betty. Betty sues.

Which of the following is true regarding Cherie's statement that Betty could not have legally validly accepted the ring?

1- Betty is correct for the sole reason that she was a neighbor of Cherie and they knew each other before Cherie gave her the ring.

2- Cherie is correct that Betty did not validly accept the ring because it was found on Cherie's land and the Statute of Frauds requires that Betty sign a paper formally accepting the ring since the transaction involved real property.

3- If the ring is valued at $1,000 or more, then Cherie is correct that Betty did not validly accept the ring because a writing would have been needed to validate acceptance.

4- Cherie is correct that Betty could not have validly accepted the ring when she did not understand its true value.

5- Cherie is incorrect; Betty validly accepted the ring as a gift.