Chapter 1. Meaning Of Terms (1-8)

Question 1

A orally agrees to sell land to B. B orally agrees to buy the land and pays $1000 to A. Is the agreement enforceable?

Answer 1

The agreement is unenforceable under the Statute of Frauds. B’s right to restitution of the $1000, however, is governed by the same rules as if the agreement were enforceable. B has a right to recover the $1000 paid if A refuses to convey the land, but not if A is ready and willing to convey. See § 140 and the provisions on restitution in § 375. By virtue of this indirect recognition of the duty to convey, the agreement is a contract. Restatement 2d of Contracts § 1(e)

Question 2

A, the builder of a house, or the inventor of the material used in part of its construction, says to B, the owner of the house, “I warrant that this house will never burn down.” Has A made any promises by the statement?

Answer 2

This includes a promise to pay for harm if the house should burn down. (see UCC § 2-715). Restatement 2d of Contracts § 2(d)

Question 3

A, by a charter-party, undertakes that the “good ship Dove,” having sailed from Marseilles a week ago for New York, shall take on a cargo for B on her arrival in New York. Has A made any promises by the statement?

Answer 3

The statement of the quality of the ship and the statement of her time of sailing from Marseilles include promises to pay for harm if the statement is untrue. Restatement 2d of Contracts § 2(d)

Question 4

A says to B, “I will employ you for a year at a salary of $5,000 if I go into business.” Has A made any promises by the statement?

Answer 4

This is a promise, even though it is wholly optional with A to go into business or not. Restatement 2d of Contracts § 2(e)

Question 5

A, on seeing a house of thoroughly fireproof construction, says to B, the owner, “This house will never burn down.” Has A made any promises by the statement?

Answer 5

This is not a promise but merely an opinion or prediction. If A had been paid for his opinion as an expert, there might be an implied promise that he would employ reasonable care and skill in forming and giving his opinion. Compare UCC § 2-313(2) (seller’s opinion) with UCC § 2-315 (implied warranty). Restatement 2d of Contracts § 2(f)

Question 6

A telephones to his grocer, “Send me a ten-pound bag of flour.” The grocer sends it. Has A made any promises by the statement?

Answer 6

A has thereby promised to pay the grocer’s current price therefor. See UCC § 1-201(3), defining “agreement.”)Restatement 2d of Contracts § 4(a)

Question 7

A, on passing a market, where he has an account, sees a box of apples marked “25 cts. each.” A picks up an apple, holds it up so that a clerk of the establishment sees the act. The clerk nods, and A passes on. Has A made any promises by the statement?

Answer 7

A has promised to pay twenty-five cents for the apple. See UCC § 1-201(3), defining “agreement.”) Restatement 2d of Contracts § 4(a)

Question 8

A’s wife, B, separates from A for justifiable cause, and, in order to secure necessary clothing and supplies, buys them from C and charges their cost to A. Is there a contract?

Answer 8

A is bound to pay for them, though he has directed C not to furnish his wife with such supplies. But, A’s duty is quasi-contractual, not contractual. See Restatement of Restitution § 113. Restatement 2d of Contracts § 4(b)

Question 9

A contracts to sell B a described automobile. Both parties sign a printed contract form on which the description is typed and which contains the printed words, “Seller hereby excludes all warranties, express or implied.” Have any promises been made?

Answer 9

Under Uniform Commercial Code § 2-316 the quoted words do not exclude an implied warranty of merchantability, and under § 2-314 A warrants that the automobile is fit to drive. Under § 2-714 the warranty has the effect of a promise to pay for harm if the warranty is broken. Restatement 2d of Contracts § 5(c)

Question 10

A, an infant, sells and delivers his watch to B, an adult , in return for B’s promise to pay $20. Is there a contract?

Answer 10

There is a contract whereby B becomes owner of the watch and is under an enforceable duty to pay $20 to A. But A has the power to extinguish his own right to the money and B’s duty to pay it and, as against B, to revest in himself the ownership of the watch. Restatement 2d of Contracts § 7(c)

Question 11

A, by fraud, induces B to make a promise to pay A money in consideration of goods delivered by A to B. Is there a contract?

Answer 11

There is a contract, but the fraudulent representations of A give B a power to avoid by tendering back to A within a reasonable time the goods received from him. Restatement 2d of Contracts § 7(d)

Question 12

A, an infant , makes an agreement with B, an adult, the infant promising to pay money and the adult promising to deliver a chattel. Is there a contract?

Answer 12

This is enforceable against B, but not against A. If A has not previously avoided, he will have the power of ratification upon attaining his majority. Restatement 2d of Contracts § 7(d)

Question 13

A, an infant , makes an agreement with B, an adult , the infant promising to pay money and the adult promising to deliver a chattel. Is there a contract?

Answer 13

This is enforceable against B, but not against A. If A has not previously avoided, he will have the power of ratification upon attaining his majority. Restatement 2d of Contracts § 7(d)

Question 14

A, by fraud, induces B to promise to pay for certain advice which A gives. Is there a contract?

Answer 14

This promise creates no duty in B, but is not wholly void, because it can be validated by B after he learns the facts. Restatement 2d of Contracts § 7(e)

Question 15

A, an infant, orally accepts a written offer signed by B, an adult, to sell a tract of land. Have any promises been made?

Answer 15

A’s promise is voidable by him because of his infancy and unenforceable under the Statute of Frauds. Upon attaining his majority, A delivers to B a signed writing stating the terms of the contract and manifesting an election to avoid it. Under § 133, the Statute of Frauds no longer prevents enforcement. But, the contract is avoided. Restatement 2d of Contracts § 8(a)

Question 16

A is indebted to B, but the statute of limitations has barred a direct remedy. Is there a contract?

Answer 16

A has the power to make direct remedies available or to make a new contract without consideration by making a new promise or part payment of the debt (see § 82). Even without such further acts, legal consequences may flow from the barred debt. If the creditor has security, he may have a right to apply it towards payment of the debt. Restatement 2d of Contracts § 8(a)

Question 17

A agrees to sell specific goods to B, and B agrees to buy them. A has previously contracted to sell the same goods to C, as B knows. Is there a contract?

Answer 17

The bargain between A and B is unenforceable on grounds of public policy (§ 194), and neither party can enforce it while executory. But if either party performs his promise, he can recover what he has transferred or its value. The return promise, though unenforceable, is given legal effect as showing that the performance was not gratuitous, and is therefore a contract. Restatement 2d of Contracts § 8(b)

Question 18

A makes an oral purchase of goods from B for an agreed price of $500. Is there a contract?

Answer 18

There is no delivery or part payment, and the bargain is unenforceable under the Statute of Frauds. A insures the goods as owner. The insurer cannot defeat a claim under the policy on the ground that A did not own the goods, although A would have had no direct remedy against B for failure to deliver. Restatement 2d of Contracts § 8(b)