CL 610- Contracts Quizzes

Question 1

G, a general contractor, solicited bids for a project from subcontractors, including S. S replied “I can’t give you a bid, because I don’t trust your specifications. But it should be about $2.00 per cubic foot. It’s fine with me if you want to use my quote or if you don’t.” G used the quote from S in preparing her bid, and was awarded the contract. Because of this, G claims that S has a duty to perform at a rate of $2.00 per cubic foot. Is the quote from S an offer?

Answer 1

Because S’s response included the words “I can’t give you a bid,” S’s response is not an offer.

Question 2

What jurisdiction’s law is used to determine the outcome in Texaco, Inc. v. Pennzoil, Co.?

Answer 2

New York law, because the court found New York law to be controlling.

Question 3

Which of the cases that were included in the assigned reading for Module 1 based its holding in part on the rule that an unreasonable meaning attached by one party to a specific assertion will control only if that unreasonable meaning is known to the other party?

Answer 3

Lucy v. Zehmer.

Question 4

Which of the following statements best describes the Restatement of Contracts?

Answer 4

It does not have the force of law, but is highly persuasive authority.

Question 5

Which of the following correctly states the Restatement (Second) definition of offer?

Answer 5

The manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

Question 6

Which of the following is not an important factor in determining whether a communication is or is not an offer?

Answer 6

The manner used to communicate the potential offer.

Question 7

Which of the following statements regarding estimates is most accurate?

Answer 7

An estimate can be an offer if it is sent in response to an invitation to bid.

Question 8

An estimate can be an offer if it is sent in response to an invitation to bid.

Answer 8

Communications by one party are to be interpreted from the vantage point of a reasonable person in the position of the other party.

Question 9

In Hawkins v. McGee, the court found that Dr. McGee’s statement about making the injured hand a “100% good hand” was a:

Answer 9

guarantee

Question 10

In an auction, generally the auctioneer: I. makes an offer, which the bidder can accept or reject. II. makes an invitation to bid, then the bidder makes the offer. III. can accept the offer. IV. can seek another offer.

Answer 10

II., III., and IV.

Question 11

Alice cannot find her $800 set of china table settings. Some months later, while at a party for connoisseurs of fine china, and after consuming an adult beverage, Alice proclaims in front of the entire group that she will gladly pay $2,000 to anyone who locates and returns the china to her. Percy locates and returns the china to Alice and demands $2,000. Alice refuses to pay. Percy files suit to recover the $2,000. It is most likely that Percy will:

Answer 11

prevail, if a reasonable person would conclude from the statement Alice made that she intended to enter into a contract.

(c) is correct. The “objective theory” of contracts (the majority rule) is that the subjective intent of the parties is not relevant when determining whether a party has given assent to enter into a contract. Pursuant to this theory, a party’s intent is determined by examining what a reasonable person, standing in the other party’s position, would conclude the party intended based on the words, conduct and demeanor of that party. This principle is true regardless of what the party actually intended. Choice (d) is incorrect because there are insufficient facts to determine whether Percy knew or should have known Alice was overstating the value of the china. Even if Percy had such knowledge, that alone would not be sufficient to establish Alice’s statement was not reasonably intended to enter into a contract. She may have stated a higher price to induce Percy to take immediate action to find the missing china. If you missed this question, please review Section 2.2 of the Hornbook (6th Edition) pages 23–24; pages 26–27 (7th Edition).

Question 12

Anne and Bob were co-owners of a small, very successful restaurant. Anne was interested in opening a second location in a nearby town and asked Sam (a regular customer of the restaurant) if he would be willing to sell Anne and Bob a particular parcel of land Sam owned in the nearby town of Greenville for $100,000. Sam said “Sounds great…let’s do it.” However, unknown to Anne and Bob, Sam had serious doubts about selling the land and was considering developing the land himself to build and operate a restaurant. When Anne attempted to hand Sam the $100,000, Sam refused to take the money and told Anne he would not sell Anne and Bob the land. Anne and Bob sued Sam for breach of contract. Sam alleged he never intended to sell the land to Anne and Bob.At trial, the following three statements were offered: (1) Bob testified that he and Anne had “no definite plan to ever open a second restaurant, and that Sam was aware of this.” (2) Sam testified that he “never really intended to sell the property to Anne and Bob.” (3) Anne testified that she was very surprised when Sam so quickly agreed to sell because Sam was always joking about “how you should buy my land in Greenville and open a second restaurant there so I wouldn’t have to drive so far for breakfast.” Which of the statements will the court consider important to determine if a valid contract was formed?

Answer 12

Statements 2 and 3 only.

Hide Feedback

(d) is correct. Under the “objective theory” of contracts, the subjective intent of either party is not a factor when determining whether the parties were serious about intending a contract or that a contract was formed. Instead, it is the objective, reasonable interpretation by someone in the position of the contracting parties (based on their words and conduct) that will determine whether the intent to enter into a contract exists. Thus, the evidence in statement 2 that Sam “never intended to sell the property to Anne and Bob” would not be important because that is merely the subjective undisclosed intent of a party. However, both statements 1 and 3 would be important. Statement 1 is evidence that Bob and Anne were not seriously planning to open a second restaurant and thus unlikely (as reasonable parties to a potential agreement) to consider any statement by Sam as an “acceptance” of any inquiry made regarding the possible purchase of his parcel of land. Statement 3 is also important because it shows that a reasonable person in Anne and Bob’s position would not have interpreted Sam’s statement as an offer because he was “always joking” about selling the land to them. If you missed this question, please review Section 2.2 of the Hornbook (6th Edition) pages 23–24; pages 26–27 (7th Edition).

Question 13

Harry and Sandra have been happily married since 1866. Harry needs to go to England to write a play and before he leaves, in order to maintain domestic tranquility, he agrees to pay Sandra $5000 per week for her support. They both agree that Sandra has financial needs and that she has always worked hard at maintaining the house. Has an enforceable contract been formed?

Answer 13

No. There is a presumption that the parties did not intend to create a contract.

(a) is correct. The general rule applicable is that if the parties do not intend to be bound or do not intend legal consequences, there will be no contract. There was a presumption in the 19th century (and perhaps even today) that when a husband and wife are living together amicably, an agreement between them with respect to a housekeeping allowance will not be enforced as a contract. (b) and (c) are incorrect, as they are not part of the requirements for forming a contract; (d) is incorrect as it misstates the law. If you missed this question, please review Section 2.5 of the Hornbook (6th Edition) page 27; page 29 (7th Edition).

Question 14

Pat agrees to buy Dana’s car for $10,000. The contract between Pat and Dana will be:

Answer 14

governed by the Uniform Commercial Code.

(c) is correct. The general rule is that contracts are governed by the common law. The exception is a contract for the sale of goods, which will be governed by the Uniform Commercial Code (UCC). (a) is incorrect because it misstates the law; (b) is incorrect, because contracts for the sale of goods are governed by the UCC; (d) is incorrect because merchant status does not determine the controlling law. If you missed this question, please review Section 2.10 of the Hornbook (6th Edition) pages 57–58; page 59–60 (7th Edition).

Question 15

Retailer placed a notice in a trade journal stating that it had men shoes in various sizes available for sale at a price of $75 per pair. When Customer went to Retailer’s store to purchase a pair of men’s shoes at the advertised price, Retailer refused to sell Customer the shoes for $75. If Customer brings an action in court, which of the factors listed below will the court LEAST LIKELY consider as important when determining whether Retailer’s notice in the trade journal constitutes a valid offer?

Answer 15

Whether Retailer intended the notice to be an offer to sell shoes to Customer.

(c) is correct. Under the objective theory of contracts (the majority rule), a party’s intent to enter into a contract will be judged solely based on what that party says or does, rather than any subjective and undisclosed intent. In addition, a notice in a trade journal will generally not be considered as an offer to sell the items listed in the notice unless promissory language is used demonstrating a willingness to be bound and a sufficient description of the quantity and quality of goods offered for sale. (a), (b), and (d) are incorrect, as they are all factors that a court would consider when determining a party’s intent under the objective theory of contracts. If you missed this question, please review Section 2.2 of the Hornbook (6th Edition) pages 23–24; pages 26–27 (7th Edition) (objective theory of contract) and Section 2.6(g) of the Hornbook (6th Edition) page 40; (7th Edition) page 43 (factors to be considered in determining whether a communication is an offer).

Question 16

Widget Company manufactures widgets and had a number of clients who sold products to consumers. Widget wanted to compete with some of its clients, but believed that its clients would be displeased and might cease doing business with Widget. In order to keep this new business activity secret, Widget set up a subsidiary company to distribute its products and formalized its agreement with Paul in writing, which stated that Paul agreed to purchase all shares of the subsidiary for $10,000 and Widget agreed to sell the shares at that price. Widget and Paul had an oral, side agreement that the stock purchase agreement would not be carried out. The parties carried on business for many years without a transfer of the shares or payment of the money. For all appearances, Paul was the sole owner of the distribution business. However, Paul always acted as a loyal employee of Widget. Widget decided to end its arrangement with Paul and to let it be known to the trade that it was operating the distribution business. Paul tendered $10,000 to Widget and demanded that Widget transfer the shares of stock pursuant to the written agreement. Widget refused and sued Paul for a declaratory judgment to the effect that the written agreement is not binding. Will Widget succeed?

Answer 16

Yes, because Widget and Paul never intended to enter into an agreement.

(c) is correct because Widget and Paul both intended their agreement to have no binding legal effect, and thus understanding was expressed between them. As a result, there is no valid contract and Widget need not sell the shares to Paul. (a) and (b) are incorrect, although these factors could point to a validly formed contract, the fact that the parties intent not to form a contract will control over other factors suggesting contract formation; (d) is incorrect, because it does not address a requirement for contract formation. If you missed this question, please review Section 2.4 of the Hornbook (6th Edition) page 26; page 28 (7th Edition).

Question 17

A contract in which one or more of the parties has the power to terminate the legal relations created by the contract is best referred to as:

Answer 17

a voidable contract.

Hide Feedback

(b) is correct. Rewards are offers for unilateral contracts, and can only be accepted by performance. (a) is incorrect, as there is no requirement that notice of the intent to perform be given before accepting by performance where the offeror will become aware of the performance in the normal course of that performance; (c) is incorrect, because rewards are not offers for bilateral contracts, and cannot be accepted by promising to perform; (d) is incorrect, because City’s announcement has required information in sufficient detail to function as a valid offer.

Question 18

City posted this announcement on its website: “The City will pay $2,000 to anyone with information leading to the arrest and conviction of the person or persons responsible for vandalizing City Park last weekend.” Anne saw it all happen, and knows the names of the people who did it. If she wants to receive the reward:

Answer 18

Anne can accept the offer by providing the information to City.

(a) is correct, because, although statements in catalogs are generally not considered offers, but are instead invitations for offers, when Marie appeared, completed the application and paid the lot fee, her offer implicitly included the conditions expressed in the catalog. When Marie proved that Stargell failed to comply with the criteria in the catalog, she stated a cause of action for breach of contract. (c) is incorrect because the conditions expressed were an offer; (b) is incorrect because acceptance can be based on such factors, if so stated; (d) is incorrect, because it has no bearing on whether or not the conditions expressed were an offer. If you missed this question, please review Section 2.6(d) of the Hornbook (6th Edition) page 33; page 36 (7th Edition).

Question 19

Marie read the following statement in a Stargell’s catalog: “Lots available for $20,000. First come, first served. Appear in person, complete application and tender funds.” The catalog also stated the physical location of the real estate. Marie went to the physical location, completed the application and tendered $20,000 in cash that was accepted by Stargell. Subsequently, Stargell mailed Marie a cashier’s check for $20,000 with a note stating that Marie’s application was “rejected.” At trial, Marie proved that Stargell’s had lots available, but only sold to prominent people who endorse Stargell’s company. Does Marie prevail on a claim for breach of contract?

Answer 19

Yes, because Stargell accepted Marie’s offer to purchase the lot according to the terms expressed in Stargell’s catalog.

Question 20

John had read many newspaper and Internet news articles suggesting that the fillings commonly used by dentists to fill teeth contained dangerously high levels of mercury. John decided that he would have all his fillings removed and replaced with another safer alternative. He consulted with Dr. Decay, his dentist, and requested removal of all his fillings. Dr. Decay stated that he was not comfortable performing the oral procedure, but that he would make sure that Dr. Abcess would perform the oral procedure. In Dr. Decay’s informed medical opinion, removal of John’s fillings is not medically required. If Dr. Decay fails to retain Dr. Abcess to perform the oral procedure, will John have an action for breach of contract against Dr. Decay?

Answer 20

No, unless John reasonably concluded that Dr. Decay expressly promised him that Dr. Abcess would perform the procedure.

(c) is correct. While it is true that a doctor is not ordinarily liable in contract for breach of an implied promise to provide a reasonable level of medical competency, a doctor is liable in contract for failure to honor an express promise, which is why (a) is incorrect. (b) is incorrect, because retaining Dr. Abcess is a promise, not an express condition; (d) is incorrect, because it has no bearing on whether the retention of Dr. Abcess is a condition or a promise. If you missed this question, please review Section 2.6(a) of the Hornbook (6th Edition) page 28–30; pages 31–32 (7th Edition).

Question 21

A large daily newspaper publishes and distributes two booklets, one regarding general advertising rates, and the other regarding advertisements that will not be accepted. These booklets state that the newspaper will refuse advertising that is “dishonest, indecent or illegal.” A labor union presented an advertisement to the newspaper that urged readers not to patronize certain businesses because those businesses featured imported clothing that was manufactured by low-wage, foreign labor. The union also paid the appropriate advertising rate in accordance with general advertising rates, but the newspaper refused to print the advertising. Assume that the advertisement was not dishonest, indecent, or illegal. Will the union prevail against the newspaper for breach of contract?

Answer 21

No, the Defendant’s booklet containing its “General Advertising Rates” is only a statement of intention to sell or invitation for offers.

(c) is correct. When an advertisement does not contain a quantity term or language of commitment, it will only be construed as a preliminary proposal and an invitation for offers, rather than an offer. Note: just because something is not actionable in contract does not mean that a remedy cannot be pursued under other areas of law. (a) is incorrect, as the “dishonest, indecent or illegal” criteria are not the only bases for refusing an offer, if an offer had been made; (b) and (d) are incorrect, as no offer has been made. If you missed this question, please review Section 2.6(c) of the Hornbook (6th Edition) pages 31–32; page 34 (7th Edition).

Question 22

Which of the following is the most accurate statement?

Answer 22

Article 2 of the Uniform Commercial Code represents majority law to be used to determine the outcome of disputes involving a contract for the sale of goods.

(b) is correct, the UCC has been adopted by all 50 states and governs the sale of goods in both commercial and non-commercial contracts. (a), (c), and (d) are incorrect, as they misstate the status and coverage of the UCC. See Hornbook Section 1.7.

Question 23

How can an offer to buy goods be effectively accepted?

Answer 23

by either a shipment of conforming or non-conforming goods or a promise to ship the goods.

Hide Feedback

(c) is correct, such contracts are called voidable. (a) and (b) are incorrect, as they both refer to methods of communication used in forming contracts and do not speak to whether a contract can be terminated by one or both parties; (d) is incorrect, as quasi-contract is an equitable remedy imposed by a court in order to prevent unjust enrichment. See Hornbook Section 1.8(c).

Question 24

In a sale of goods contract, how will the courts respond to a failure of the parties to specify a quantity of goods?

Answer 24

Courts will not enforce the contract because it is missing a material term.

(d) is correct, all three methods of acceptance listed are effective under the UCC. (a), (b), and (c) are incorrect, as they leave out one or more of the ways to effectively accept an offer to buy goods under the UCC. See Hornbook Section 2.10(b).

Question 25

Which of the following is the most accurate statement as to the role of a judge and jury in a court of law?

Answer 25

A judge is to determine questions of law and a jury is to determine questions of fact. (a) is correct, as it accurately states the roles of a judge and a jury in a jury trial (note: when a judge sits without a jury, the judge determines both questions of law and questions of fact). (b), (c), and (d) are incorrect, as they misstate the roles of a judge and a jury in a jury trial. See Hornbook Section 2.7.

Question 26

If an offer is unclear as to the proper mode of acceptance, how can the offer be accepted?

Answer 26

In any manner reasonable under the circumstances. (d) is correct, as it states the law accurately. (a) is incorrect, as it addresses methods of communication, not the proper mode of acceptance, and is too narrow in any event; (b) and (c) are incorrect, as they do not accurately state the proper modes of acceptance when an offer is unclear as to the proper mode of acceptance. See Hornbook Section 2.10(a).

Question 27

Each provision of the Uniform Commercial Code is followed by official comments. What is the legal effect of the official comments?

Answer 27

While most states have enacted into law the provisions of the UCC, most have not enacted into law the official comments.

Question 28

Where there is no language in a contract addressing duration, the contract will:

Answer 28

run for a reasonable time. (d) is correct, as it allows the court to determine the length of the contract based on the intent of the parties. (a) is incorrect, as duration is not a material term; (b) and (c) are incorrect, as they both provide outcomes that are not able to be adjusted to reflect the intent of the parties. See Haines v. City of New York.

Question 29

If an offer has no quantity term:

Answer 29

a) no contract can be formed. b) but does commit the purchaser to buy the amount the purchaser requires, a contract can be formed. (d) is correct. The general rule is that no contract can be formed, per (a); however, courts have recognized an exception to this rule where the offer is to purchase all of a certain good that is “required,” per (c). (b) is incorrect, as courts will not impose quantity terms where there is no express language indicating either an amount or the intent of the parties for the contract to be for the amount required. See Sylvan Crest Sand & Gravel Co. v. United States.

Question 30

An illusory promise:

Answer 30

is unenforceable. (c) is correct, illusory promises are not enforceable. (a) and (d) are incorrect, because there is no way to make an illusory promise enforceable. (b) is incorrect, because a promise that is supported by consideration is not illusory. See Strong v. Sheffield.

Question 31

A contract is called a “hybrid” contract if it involves the sale of both goods and services. What is the most accurate statement regarding the test most courts will apply to determine whether UCC Article 2 or the common law should apply to a “hybrid” contract?

Answer 31

Whether the contract’s predominant factor--the thrust, the purpose, reasonably stated--is the rendition of service, with good incidentally involved; or is a transaction of sale, with labor incidentally involved. (c) is correct. Where a hybrid contract is not divisible, courts will determine the predominant factor in order to decide whether the UCC or the common law will control. (a), (b), and (d) are not correct, as none of them represent the test that the court uses to determine the controlling law in hybrid contract involving goods and services. See BMC Industries, Inc. v. Barth Industries, Inc.

Question 32

Pearl has lost her prize-winning cat, Mr. Whiskers. On the website where she chronicles the competitions in which she enters Mr. Whiskers, Pearl offers a $2,000 reward for the return of her beloved cat, which (elsewhere on the website) she claims is worth at least $10,000. When Diego returns the cat, Pearl refuses to pay. When Diego sues to recover the $2,000, it is most likely that Diego will:

Answer 32

prevail, if a reasonable person would conclude from the statement on Pearl’s website that she intended to enter into a contract. (b) is correct. The "objective theory" of contracts (the majority rule) is that the subjective intent of the parties is not relevant when determining whether a party has given assent to enter into a contract. This principle is true regardless of what the party actually intended. (a) is incorrect, because rewards are not always enforceable, they still have to meet the requirements for a valid offer, regardless of whether they are in the form of a reward. (c) is incorrect, because they contradict the objective theory of contracts. (d) is incorrect because there are insufficient facts to determine whether Diego knew or should have known Pearl was overstating the value of the cat. Even if Diego had such knowledge, that alone would not be sufficient to establish that Pearl’s statement was not reasonably intended to enter into a contract. She may have stated a higher price to induce Diego to take immediate action to find the missing cat. If you missed this question, please review Section 2.2 of the Hornbook (6th Edition) pages 23–24; pages 26–27 (7th Edition).

Question 33

Max and Sam have been business partners for years, with Max being the managing partner and Sam being a passive investor. Max needs to go to Canada to settle the estate of his uncle and before he leaves, in order to keep the business open, Max agrees to pay Sam $20,000 per month for his services managing the business while Max is away. They both agree that the business cannot run itself, and Sam needs to protect both of their investments. Has an enforceable contract been formed?

Answer 33

No, if there is a presumption that the parties did not intend to create a contract.

Question 34

Marta read this statement on Developer's website: "Condominiums available for $120,000. First come, first served. Appear in person at our office, complete our application, and tender 10% down payment." The website included the physical location of the condominium and the unit numbers of the condominiums that were available. Marta went to Developer's office, completed the application and tendered $12,000 in cash that was accepted by Developer. A few days later, Developer mailed Marta a letter informing her that her application had been rejected. Enclosed with the letter was a cashier's check for $12,000. At trial, Marta proved that Developer had units available for sale, but only sold to prominent people who would endorse Developer's projects. Can Marta prevail on a claim for breach of contract?

Answer 34

Yes, because Developer accepted Marta's offer to purchase the condominium according to the terms stated on Developer's website. (b) is correct. Although statements on websites are generally not considered offers, but are instead invitations for offers, when Marta appeared, completed the application and paid the down payment, her offer implicitly included the conditions expressed on the website. When Marta proved that Developer failed to comply with the criteria listed on its website, she stated a cause of action for breach of contract. (a) is incorrect because the conditions expressed were an offer; (c) is incorrect because acceptance can be based on such factors, if so stated; (d) is incorrect, because it has no bearing on whether or not the conditions expressed were an offer. If you missed this question, please review Section 2.6(d) of the Hornbook (6th Edition) page 33; page 36 (7th Edition).

Question 35

Sir Henry Magazine derives a great deal of income from the sale of advertising. It publishes a "rate sheet" as well as an "Advertising Guidelines" brochure. The Advertising Guidelines brochure states, "Sir Henry reserves the right to refuse to print advertising for untruthful copy." A nonprofit political action group presented an advertisement stating that a local political figure had used political contributions for personal use. The group paid the advertising rate in accordance with the rate sheet, but the magazine refused to print the advertising even though it admitted the advertisement was truthful. Will the political action group prevail against the magazine?

Answer 35

No, the magazine's rate sheet is only a statement of intention to sell or invitation for offers. (c) is correct. When an advertisement does not contain a quantity term or language of commitment, it will only be construed as a preliminary proposal and an invitation for offers, rather than an offer. (a) is incorrect, because the magazine had not made a valid offer (likewise, a proposed contract term cannot be enforced if no contract has been formed), but even if it was, there is nothing to indicate that this is the only reason for which the ad could be refused. (b) and (d) are incorrect, as the magazine had not made a valid offer. If you missed this question, please review Hornbook (6th Edition) page 32–33; pages 35–36 (7th Edition).

Question 36

Buyer and Seller want to do business together, but they would like to have a relatively informal arrangement. They prepare a written "Gentlemen's Agreement," but state in the agreement that it is not binding. It also states, "This writing is only an expression of our intention to work honorably together. We have always worked well together, therefore, we do not wish to be bound by this document.” When the business relationship ends there are $100,000 worth of orders pending, but not delivered by Seller. Seller refuses to ship the orders and Buyer sues. Does Buyer prevail?

Answer 36

No, because this was just a "gentlemen's agreement" and was not intended to have legal effect. (c) is correct, because when the parties expressly state that they do not intend to be bound by their so called "gentlemen's agreement," the courts conclude that a contract does not arise. (a) is incorrect, the actions of the parties do not negate their intent to not form a contract. (b) is incorrect, a “gentlemen’s agreement” can be valid. (d) is incorrect, because it is possible to create just such an agreement (as was done here). If you missed this question, please review Hornbook (6th Edition) page 26; page 28 (7th Edition).

Question 37

Arthur calls Betty and says: "I am in a real fix and I must sell my house. I am so motivated that I would consider $100,000 for it." Immediately Betty says: "I'm sorry about your predicament. I will buy your house for $100,000." Is there a contract?

Answer 37

No, because Arthur never accepted Betty's offer. (c) is correct, because while Arthur stated that Arthur "must sell" and "would consider" taking $100,000, Arthur never made an offer to sell the house to Betty. Arthur's statements were merely preliminary negotiations and were not intended as an offer to sell the house to Betty for $100,000. (a) is incorrect; many material terms can be gap-filled, allowing a contract to be formed where the intent to form a contract is clear (as is the case here). (b) and (d) are incorrect, because Arthur has not made a valid offer that would give Betty the power of acceptance. If you missed this question, please review Hornbook (6th Edition) pages 38–40; pages 41–43 (7th Edition).

Question 38

Review the following conversation: Kathy: "Jerry, will you consider buying my cabin in Aspen? If you will make me an offer, I will consider it." Jerry: "Okay, $5.00." Kathy: "No, that is not enough." Jerry: "Will you accept $85,000?" Kathy: "I won’t sell it for less than $95,000." Jerry: "I accept." Was there a contract?

Answer 38

No, because Kathy never offered to sell the property for $95,000. (b) is correct, because Kathy stated that Kathy would consider an offer made by Jerry, not that Kathy was making Jerry an offer to sell the property. When Jerry asked for a price, Kathy responded with a price quotation. However, Kathy never made an offer to sell the property to Jerry. (a) is incorrect, because Kathy never made an offer to sell the property to Jerry. (b) is incorrect, having a reasonable time within which to revoke is not required for an offer to be valid (or for an acceptance to be valid). (d) is incorrect, Kathy’s intent to form a contract is not clear (which is what prevented Kathy from making a valid offer). If you missed this question, please review Hornbook (6th Edition) pages 38–40; pages 41–43 (7th Edition).

Question 39

Benson owned a golf course. Benson was approached by the Magson Railroad Company, that asked for a right of way across Benson’s land that was adjacent to his golf course. Benson agreed to the right of way in exchange for the railroad’s promise to build “a really cool railway station" at a specified spot near the golf course. The railroad was built on the right of way, but Magson did not build the station. Benson sues Magson for the station. Will Benson prevail in this lawsuit?

Answer 39

es, because the parties agreed that Magson would build a station near the golf course in exchange for the right of way. (d) is correct, because it expresses the intentions of the parties to enter into a contract as well as its specific terms. (a) and (b) are incorrect, as neither of these issues have any bearing on whether the agreement would be enforceable. (c) is incorrect, because the concept of mitigation of damages impacts the amount of damages awarded, not whether a contract is enforceable. If you missed this question, please review Hornbook (6th Edition) pages 41–43; pages 44–47 (7th Edition).

Question 40

A agrees to remodel B’s home pursuant to specific plans and specifications. The price for the job is $8,500. The plans do not specify the materials that A must use. Is the contract void?

Answer 40

Yes, if the omission of the terms describing the materials to be used cannot be implied due to lack of objective standards. (a) is the best answer, because the courts will not imply a missing term in a contract if the court lacks objective standards to determine what term would be appropriate to fill the gap in the agreement of the parties; this answer choice addresses a fundamental requirement that can prevent a contract from being formed. (b) is incorrect, because the courts will not imply a missing term in a contract if the court lacks objective standards to determine what term would be appropriate to fill the gap in the agreement of the parties. (c) is incorrect, as there is no requirement that the contract must specify the materials to be used. (d) is not incorrect (as this is the standard that will guide the builder’s action), but it is not the best answer among the choices offered, because it assumes that a valid contract has been formed as opposed to addressing the more fundamental issue, as seen in (a), of whether the missing term will prevent a contract from being formed. If you missed this question, please review Hornbook (6th Edition) page 46–48; pages 51–53 (7th Edition).

Question 41

Jill says to Dave, "If you ride your bike from San Diego to New York City by September, I promise to pay you $10,000." Dave promises to ride. Is there a contract?

Answer 41

No, because Dave did not accept Jill’s offer. (d) is correct, because in order to accept Jill's offer, Dave must do the act requested by Jill, not simply promise to perform as requested. (a) and (c) are incorrect, because this is a unilateral contract and cannot be accepted by a promise. (b) is incorrect, the reasonableness of the terms is irrelevant to determining whether the offer was accepted. If you missed this question, please review Hornbook (6th Edition) pages 56–58; pages 61–63 (7th Edition).

Question 42

Buyer telephoned seller and made the seller a valid offer to buy goods from the seller. Assume that the seller did not accept the offer during the telephone call. Absent any manifestation of contrary intent by either party, at what time will most courts find that the buyer’s offer lapsed?

Answer 42

After the phone call came to an end. (a) is correct, unless there is a manifestation of intent to the contrary, the offer will lapse (terminate) when the phone call comes to an end (because that is a reasonable amount of time under the circumstances). (b) and (c) are incorrect, neither party expressed such an intent, which would be required for the offer to remain open for either period of time. (d) is incorrect, because the offeree’s subjective intent does not control the duration of an offer. See Hornbook Section 2.20(a).

Question 43

Offeror mailed a valid offer to an intended offeree and then died of a heart attack the next morning. The offeree received the offer at noon and, not knowing of the offeror’s death, mailed an acceptance of the offer that same afternoon. Is there a valid contract under the majority view?​

Answer 43

No, the offeror’s death terminated the offeree’s power of acceptance. (d) is correct, an offer that has not been accepted terminates upon the death of the offeror. (a) is incorrect, mailing does not make an offer irrevocable. (b) is incorrect, regardless of the subject matter, all offers that have not been accepted terminate upon the death of the offeror. (c) is incorrect, the offeree’s knowledge of the death of the offeror has no impact of the offer’s termination upon the death of the offeror. See Hornbook Section 2.20(c).

Question 44

Offeror posts on a Web page an offer that can be accepted by any viewer. If the offeror wants to revoke the offer, the offeror must do which of the following?

Answer 44

Must post a revocation of the offer on the Web page. (d) is correct. To be effective, a revocation of a public offer must be communicated in the same manner as the public offer. (a) is incorrect, there is no time delay requirement. (b) is incorrect. This could only be an effective way of revoking a public offer, if you could determine which members of the general public were aware of the public offer (which is impossible in most circumstances). (c) is incorrect, public offers posted on the internet can be accepted. See Hornbook Section 2.20(d).

Question 45

Which one of the following statements best describes the earliest time an offeror’s written revocation of an offer will take effect under the majority rule? (c) is correct. The general rule for business communications (including revocations) is that they are effective upon receipt, which is why (b) is incorrect. (a) is incorrect, the offeror’s manifestation of intent must be communicated to the offeree to take effect. (d) is incorrect, as the revocation will be effective upon receipt, whether the offeree reads it or not. See Hornbook Section 2.20(d).

Answer 45

When the revocation is received by the offeree.

Question 46

Assume that an offeree learns from a reliable source that land that has been offered to her by a seller, has also been offered by the seller to another interested party who had not yet accepted. Which one of the following statements most accurately describes the offeree’s rights?

Answer 46

The offeree may accept the offer. (a) is correct. The offer is open and the offeree has the power of acceptance; the fact that another party also has the power to accept does not prevent the offeree from accepting. (b) is incorrect, no such inquiry is required. (c) is incorrect, the potential for such exposure does not restrict the offeree’s power of acceptance, since the offeror is the one that created the situation in the first place. (d) is incorrect, granting the power to accept to multiple offerees does not revoke the offer. See Hornbook Section 2.20(d).

Question 47

An offeree responds to an offer with a proposal for a similar but different contract, but also notes that the offeree will keep the original offer under advisement. Offeree’s proposal is best understood as:

Answer 47

a counter offer. (b) is correct, offeree has created a new offer while expressly keeping the old offer open, which is why (c) is incorrect. (a) is incorrect, since there is already an offer between the parties, offeree’s response creates a counter offer. (d) is incorrect, offeree has been careful not to reject the old offer. See Hornbook Section 2.20(e).

Question 48

A submits an offer in writing to provide B with a service. B quickly responds in writing stating that she accepts the offer, but includes somewhat different terms. Most likely B’s response is:

Answer 48

a counteroffer and rejection of the offer. (c) is correct. At common law, B has created a new offer, which acts as a counter offer; without expressly keeping the old offer open, the counter offer will also revoke the prior offer, which is why (b) and (d) are incorrect. (a) is incorrect, most likely B’s response will not be an acceptance. See Hornbook Section 2.21(a).

Question 49

A submitted an offer in writing to provide B with a service. B responded in writing stating that she accepts the offer, but B included somewhat different material terms. If A begins to provide the agreed services for B, a court will most likely rule that there is:

Answer 49

A contract including the terms in B’s written response. (b) is correct. Under the common law “last shot rule,” since A is performing without objection after receiving B’s terms, the last articulation of the terms by B will be enforceable, which is why (a) is incorrect. (c) is incorrect, it is clear from the conduct of the parties that a contract has been formed. (d) is incorrect, as it misstates the last shot rule. See Hornbook Section 2.21(a).

Question 50

A submitted an offer in writing to provide B with goods. B quickly responded in writing stating that she accepted A’s offer, but B’s written response includes some additional terms. A court will most likely find that B’s response is

Answer 50

an acceptance. (a) is correct. Under UCC 2-207(1), “A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon,…”, which is why (b), (c), and (d) are incorrect. See Hornbook Section 2.21(b).

Question 51

A submits an offer in writing to provide B with goods and B responds in writing stating that she accepts the offer, but B’s response includes additional material terms. If A provides the goods and B accepts them, which of the following best describes the contractual relationship between A and B?

Answer 51

A contract including only A’s terms. (a) is correct. Under the UCC 2-207(2), since there is nothing to indicate that the parties are merchants, a contract would be formed, but it would not include the additional terms in B’s acceptance, which is why (b), (c), and (d) are incorrect. See Hornbook Section 2.21(b).

Question 52

Assume that A and B are both merchants and they have an oral agreement for the sale of goods. Assume also that B quickly sent a written confirmation of the oral agreement but the confirmation contained additional non-material terms. If, after several weeks, A has not objected, how would a court most likely rule?

Answer 52

A contract exists between A and B including B’s terms. (b) is correct. Under UCC 2-207(2), “…Between merchants such terms become part of the contract unless:...(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.” Which is why (a), (c), and (d) are incorrect. See Hornbook Section 2.21(b).

Question 53

A makes an offer to B, suggesting no particular means of acceptance. B responds by mail. Assuming a response by mail is reasonable, when is B’s acceptance effective?

Answer 53

When put in the mail box. (b) is correct. While the general rule for business communications is that they are effective upon receipt, under the mailbox rule acceptances are effective upon dispatch, which is why (c) is incorrect. (a) is incorrect, the offeror’s manifestation of intent must be communicated to the offeree to take effect. (d) is incorrect, as the acceptance will be effective upon dispatch, whether the offeree reads it or not. See Hornbook Section 2.23(a).

Question 54

A makes an offer to B by e-mail, suggesting that acceptance should be by e-mail response. B accepted by regular mail with a properly stamped and addressed letter. Assuming that a response by regular mail is an improper medium, when under the traditional rule would B’s letter acceptance be effective?

Answer 54

When received by A. (c) is correct. The mailbox rule applies only when using an authorized medium of communication, when an unauthorized medium is used it will be effective upon receipt, which is why (b) is incorrect. (a) is incorrect, use of an unauthorized medium still allows a contract to be formed, unless the offer specifies that the authorized medium is the only way that the offer may be accepted. (d) is incorrect, as the communication is effective upon receipt, whether the offeree reads it or not. See Hornbook Section 2.23(a).

Question 55

A makes an offer by mail to B. B sends an acceptance by first class mail, but then sends a rejection by overnight express mail. A receives the rejection first. Which of the following best states the rights of A and B under the Restatement view?

Answer 55

There is a contract between A and B, but B has offered to rescind it. (c) is correct and the best answer. Under the mailbox rule, the acceptance is effective upon dispatch, making the rejection merely an offer to rescind (as a contract has already been formed). (b) is also correct, as far as it goes; because (c) also addresses the status of the rejection, it is a more complete and therefore the better answer than (b). (a) is incorrect, as a contract was formed when B’s acceptance was dispatched. (d) is incorrect, as B’s ineffective rejection does not create an option for B to form or not form a contract. See Hornbook Section 2.23(a).

Question 56

A makes an offer by mail to B. B sends a rejection by mail, but before A receives it, B sends an acceptance. A receives B’s rejection before receiving B’s acceptance. Under the Restatement view there is:

Answer 56

a rejection of the offer when the rejection was received. (d) is correct. Under the Restatement approach, when the rejection arrives first, it is effective when received. (a) is incorrect, when both a rejection and an acceptance have been dispatched, the acceptance is not effective until it is received. (b) is incorrect, as the rejection is effective upon receipt, whether the offeree reads it or not. (c) is incorrect, as the rejection is effective upon receipt. See Hornbook Section 2.23(a).

Question 57

A offers to sell her car to B for $10,000, and promises to keep the offer open for the entire weekend. If on Saturday morning, C offers A $11,000 for the car, may A revoke her offer to B and sell the car to C?

Answer 57

Yes, because there was no consideration or substitute for consideration supporting her promise to keep the offer open for the weekend. (c) is correct. Under both the common law and the UCC, options require consideration (or a consideration substitute) for them to be enforceable. (a) is incorrect, there are no damages available when an offeror validly revokes an offer prior to acceptance. (b) is incorrect, absent a merchant’s firm offer (see (d)), a promise to hold an offer open unsupported by consideration (or a consideration substitute) is not enforceable. (d) is incorrect. While a merchant’s firm offer under the UCC would not require consideration to be enforceable, there are no facts to indicate that A is a merchant (n.b., always assume non-merchant status unless there are facts indicating that a party is a merchant). Under both the common law and the UCC, options require consideration (or a consideration substitute) for them to be enforceable. See Hornbook Section 2.25.

Question 58

A pays B $100 in exchange for B’s promise to keep his offer to provide childcare open for six months. Can A enforce B’s promise to keep the childcare offer open for six months?

Answer 58

Yes, because there is consideration to support B’s promise (a) is correct. A promise supported by consideration (or a consideration substitute) creates an enforceable option contract. (b) is incorrect, the basis for enforcing an option contract is consideration (or a consideration substitute). (c) is incorrect, options are not required to be in writing to be enforceable. (d) is incorrect, options are not limited to three months. See Hornbook Section 2.25.

Question 59

A, a merchant, makes an offer by mail to B in a signed writing. The offer provides assurances that it will be held open for two weeks. The following week, A changes her mind and calls B to revoke the offer. Is the offer revocable?

Answer 59

No, is correct. Once given, a merchant’s firm offer is irrevocable for the period stated. (a) is incorrect, consideration is not required for a merchant’s firm offer to be irrevocable. (b) is incorrect, only the party granting a merchant’s firm offer must be a merchant (i.e., a merchant’s firm offer can be granted to anyone). (c) is incorrect, fairness of the exchange is not required for a merchant’s firm offer to be irrevocable. See Hornbook Section 2.25(a).

Question 60

A, a merchant, makes an offer by mail to B in a signed writing. The offer provides assurances that it will be held open for two weeks. B sends an unequivocal acceptance by mail to A’s authorized address. The contract is formed when:

Answer 60

B’s correspondence is received by A. (c) is correct. A merchant’s firm offer creates an exception to the mailbox rule; during the period in which the offer is being held open under a merchant’s firm offer, acceptance is effective upon receipt, which is why (b) is incorrect. (a) is incorrect, communication of B’s manifestation is required for it to be effective. (d) is incorrect, as the acceptance is effective upon receipt, whether the offeror reads it or not. See Hornbook Section 2.25(d).

Question 61

A seller located in China makes an offer by mail for the sale of goods to a buyer located in the U.S. Assume the buyer promptly mailed an acceptance to the seller and that both parties are merchants. When would the contract be formed?

Answer 61

When the acceptance is received. (b) is correct. Under the United Nations Convention for the International Sale of Goods (which would apply to this international transaction), acceptances are effective upon receipt, which is why (a) is incorrect. (c) is incorrect, the acceptance is effective upon receipt, whether the offeror reads it or not. (d) is incorrect, there is no requirement that the offeror must give notice of receipt to the offeree for the acceptance to be effective. See Hornbook Section 2.26.

Question 62

If two parties have entered into a contract for the sale of goods that is complete in all material respects but lacks any express language identifying the time and place of payment, a court would likely rule that the gap:

Answer 62

should be filled with a gap-filler provision of the UCC. (a) is correct, as the UCC provides specific gap-fillers for terms such as time and place of payment. (b) and (c) are incorrect, as the UCC’s expressly stated gap-fillers control over any analysis based on reasonableness or trade standards. (d) is incorrect, as UCC 2-204(3) would prevent the contract from being unenforceable where the intent to form a contract is clear. See Southwest Engineering Co. v. Martin Tractor Co.

Question 63

In most modern jurisdictions is a contract whereby the parties promise to negotiate an agreement enforceable?

Answer 63

Yes, because the parties would be obligated to negotiate in good faith. (d) is correct. The obligation to negotiate in good faith enables a promise to negotiate to be enforceable. (a) and (b) are incorrect, as they are inaccurate statements of the law. (c) is incorrect, because the court will not substitute its judgment for that of the parties. See Copeland v. Baskin Robbins, where the specific context of the contract and the continuing business relationship between the parties distinguishes this from the usual treatment of an agreement to agree as not enforceable..

Question 64

Under the traditional rule, an employee who has an employment-at-will contract may be terminated “for good cause, for no cause or even for cause morally wrong.” Today, many jurisdictions:

Answer 64

protect at-will employees from no cause termination only if terminated for reasons that are contrary to public policy. (d) is correct, the modern majority approach is to prohibit terminations for reasons that are contrary to public policy. (a) is incorrect, the traditional rule is no longer the modern majority approach. (b) and (c) are incorrect, as what they describe is not employment-at-will. See Hornbook Section 2.9(a)(3).

Question 65

What is required before a court will enforce a contract for services where the price term is not provided in the contract but has been left to be agreed upon by the parties at a later time?

Answer 65

The parties’ actions must conclusively show that they have intended to conclude a binding agreement. (b) is correct, the parties’ performance under the contract and/or their statements at the time of contracting must show their intent to enter into a binding contract. (a) is incorrect, the UCC gap-filler for price terms does not apply to contracts controlled by the common law (n.b.,the common law controls, as this is a contract for services). (b) and (c) are incorrect, as they introduce principles of equity that courts have not adopted to address service law contracts where the price term has been left to be agreed upon at a later time. See Oglebay Norton v. Armco.

Question 66

Between the UCC and the common law, the controlling law of a contract is determined by:

Answer 66

The subject matter of the contract. (c) is correct, the subject matter of the contract determines which law is controlling. (a) and (d) are incorrect, as the controlling law cannot be chosen by contracting or by the court. (b) is incorrect, as merchant status (which only exists under the UCC) does not determine the controlling law. See BMC Industries, Inc. v. Barth Industries, Inc. and Hornbook Section 1.7.

Question 67

A party is a merchant under the UCC if he or she:

Answer 67

A) deals in goods of the kind involved in the transaction. B) by occupation holds himself or herself out as having knowledge or skill peculiar to the practices involved in the transaction. C) hires as his or her agent someone who qualifies as a merchant under (a) or (b)

Question 68

Indefinite contract terms:

Answer 68

can in some instances be understood by applying the duty to perform with reasonable effort and in good faith. (b) is correct, the duty to perform with reasonable effort and in good faith (implied in all contracts) can in some instances be used to determine the nature of the performance required by the party. (a) is incorrect, see (b). (c) is incorrect, because gap-fillers are used where there is no term expressed, not to replace an indefinite term. (d) is incorrect, because (1) gap-fillers are used where there is no term expressed, not to replace an indefinite term, and (2) the common law also has gap-filling provisions. See Wood v. Lucy, Lady Duff-Gordon and Hornbook Section 2.9(a)(2).

Question 69

Where a court must gap-fill a term not articulated in the UCC:

Answer 69

the court should take into account (in this order) the intention of the parties, the nature and purpose of the contract, good faith and fair dealing, and reasonableness. (c) is correct, courts should take into account (in this order) the intention of the parties, the nature and purpose of the contract, good faith and fair dealing, and reasonableness in gap-filling contracts outside of the gap-fillers provided under the UCC. (a) is incorrect, as contracts under the common law can also be gap-filled. (b) is incorrect, as material terms can be gap-filled. (d) is incorrect, as it does not consider the primary role of the intent of the parties and their purpose in contracting. See Hornbook Section 2.9(a)(2).

Question 70

Under the UCC, the question of whether the parties intended to contract:

Answer 70

will ordinarily be a question of fact. (a) is correct, the court ordinarily must make a factual determination of the intent of the parties. (b) is incorrect, see (a). (c) is incorrect, not only is the standard proposed inaccurate, it would also be useless for resolving this question between parties that had never contracted before. (d) is incorrect, as it prevents the parties to the contract in question from being able to determine whether they intended to form a contract or not. See Hornbook Section 2.9(b).

Question 71

A contract in which one or more of the parties has the power to terminate the legal relations created by the contract is best referred to as:

Answer 71

a voidable contract. (c) is correct, such contracts are called voidable. (a) and (b) are incorrect, as they both refer to methods of communication used in forming contracts and do not speak to whether a contract can be terminated by one or both parties; (d) is incorrect, as quasi-contract is an equitable remedy imposed by a court in order to prevent unjust enrichment. See Hornbook Section 1.8(c).

Question 73

The power of acceptance:

Answer 73

can be exercised only with knowledge of the offer. (b) is correct, the offeree must have knowledge of the offer in order to accept it, which is why (a) is incorrect. (c) and (d) are incorrect, because the power of acceptance is created when the offeror makes a valid offer. See Broadnax v. Ledbetter.

Question 74

The offeree accepts the offer:

Answer 74

a) when the offeree acts with the intent to accept the offer. b) when the offeree acts to do what the offer requires for acceptance. (d) is correct, the offeree must do what the offer requires for acceptance (c), whether that is performance or promise, and must do so with the intent to accept the offer (b). (a) is incorrect, as it does not describe what the offeree must do to accept an offer. See Hornbook Section 2.13.

Question 75

In determining whether an advertisement is an offer:

Answer 75

courts look to whether the text contains the requirements for a valid offer. (c) is correct, courts ignore the way the text is described and determine whether it contains the requirements for a valid offer, which is why (a) incorrect. (b) and (d) are incorrect, while both represent one of the requirements for a valid offer (n.b.), (d) is only a requirement under the common law), neither describe (either by list or in general terms) all of the requirements for a valid offer, making (c) the better answer. See Carlill v. Carbolic Smoke Ball Co.

Question 76

For public offers and rewards, the offer:

Answer 76

can be accepted by the means specified in the offer. (a) is correct, public offers and rewards can be accepted by the means specified in the offer, which is which is why (b) is incorrect. (c) and (d) are incorrect, whether the public offer or reward is or is not in the form of an advertisement is irrelevant to its ability to serve as a valid offer. See Carlill v. Carbolic Smoke Ball Co. and Leonard v. Pepsico.

Question 77

A Dead Man’s Statute:

Answer 77

prevents testimony about acts or conversations of the decedent. (c) is correct, a Dead Man’s Statute prevents testimony about acts or conversations of the decedent. See Miller v. NBD Bank.

Question 78

Unsolicited merchandise

Answer 78

a) may be kept and not paid for. b) must be paid for, if there is a pre-existing business relationship. (d) is correct, as it includes both the general rule for unsolicited merchandise (b), and the exception to the general rule (c). (a) is incorrect, as it contradicts 39 USC §3009. See 39 USC §3009 (for the general rule) and Hobbs v. Massasoit Whip Co. (for the exception).

Question 79

You have lunch to go from the same place every day, and you always order the same thing, your “usual.” You go to the counter and the cashier hands you your usual, neither of you speak a word. Which of the following is correct?

Answer 79

By conduct, you have made an offer and the cashier has accepted it. (d) is correct, by your conduct you have made an offer, and the cashier (also by conduct) has accepted it. (a), (b), and (c) are incorrect, as your conduct is a valid offer. See Hornbook Section 2.19.

Question 80

When you begin performance to accept a unilateral contract, under Petterson v. Pattberg the offeror:

Answer 80

can revoke the offer at any time prior to the completion of performance. (c) is correct, the offeree can revoke the offer at any time prior to the completion of performance under the decision in Petterson v. Pattberg. (a) and (b) are incorrect; while they represent possible results if the approach outlined in the dissent to Petterson v. Pattberg were followed, they do not represent the holding of the majority in Petterson v. Pattberg. (d) is incorrect, as it posits criteria that are not the law and have not been advocated by any court. See Petterson v. Pattberg.

Question 81

When you begin performance to accept a unilateral contract, under Brackenbury v. Hodgkin the offeror:

Answer 81

must hold the offer open for a reasonable period of time to allow you to complete performance. (b) is correct, the offeror must hold the offer open for a reasonable period of time to allow you to complete performance under the decision in Brackenbury v. Hodgkin. (a) is incorrect, the offeror is not required to hold the offer open for an indefinite period of time to allow completion of performance. (c) is incorrect, as it represents the holding in Petterson v. Pattberg, not Brackenbury v. Hodgkin. (d) is incorrect, as it posits criteria that are not the law and have not been advocated by any court. See Brackenbury v. Hodgkin.

Question 82

When you begin performance to accept a unilateral contract, under Motel Services, Inc. v. Central Maine Power Co. the offeror:

Answer 82

cannot alter the terms of the offer. (d) is correct, while the offeror is holding the offer open for a reasonable time to allow you to complete performance, the offeror cannot alter the terms of the offer under Motel Services, Inc. v. Central Maine Power Co. (a) is incorrect, the offeror is not required to hold the offer open for an indefinite period of time to allow completion of performance. (b) is incorrect, as the offeror cannot alter the terms of the offer under Motel Services, Inc. v. Central Maine Power Co. (c) is incorrect, as it represents the holding in Petterson v. Pattberg, not Motel Services, Inc. v. Central Maine Power Co. See Motel Services, Inc. v. Central Maine Power Co.

Question 83

Which of the following is best description of the three essential elements of consideration?

Answer 83

b) is correct, the three essential elements of consideration are bargained-for exchange, legal sufficiency, and determinable promises (that is, promises that are capable of being objectively determined). See Hornbook Section 4.2.

Question 84

Sandy says to Dave, “I promise to buy you lunch if you pay me the $100 you owe me.” Which of the following statements is most accurate regarding Sandy’s promise?

Answer 84

(b) is correct. While Sandy’s promise it could serve as consideration under other circumstances (which is why (a) and (c) are incorrect), it cannot serve as consideration under these circumstances, where it is an inducement to get Dave to perform what he is already obligated to do (which is why (d) is not correct). See Hornbook Section 4.12(a).

Question 85

If Bob and Sally are friends and Sally promised to sell her television to Bob for $50 where the actual value of the television is $1,000, is there proper consideration to support Sally’s promise?

Answer 85

Yes, if there is a bargained-for exchange in their agreement.

Question 86

Dick entered into an employment agreement with Ajax Company that provides for a set salary and also for a performance-based bonus. Ajax paid Dick his salary for the first year, but refused to pay the performance-based bonus stating that the consideration for Dick’s work was the salary and there was no consideration for the bonus – there must be a separate consideration for the bonus. Dick brought suit against Ajax for the bonus. Who will prevail in this lawsuit?

Answer 86

C) Dick, because one consideration will support many promises.

Question 87

Barry signed an agreement without reading it, but checked off a box in the agreement that stated: "By checking this box, you agree that you have read and understood the entire agreement and that all terms contained therein are bargained for." Which of the following statements most accurately states the legal effect of Barry's conduct?

Answer 87

Even though Barry did not read the agreement, if the terms objectively contain the appearance of a bargained for exchange, consideration is present.

Question 88

Assume that Bill has a valid claim against Jan for $10,000 due in one year for a loan Bill made to Jan. Later Jan and Bill become good friends and Bill tells Jan she does not have to pay the full $10,000 if she will instead pay him $8,000 within one week. Five days later, Jan pays Bill $8,000. If Bill on year later asserts the breach of contract claim against Jan seeking $2,000 he claims is still owed under the original loan, a court will most likely find that

Answer 88

Bill’s surrender of the $10,000 claim is supported by new consideration--the right to receive payment within one week.

Question 89

Paul owes Big $10,000. Since Paul has lost his job and cannot afford to pay Big the entire $10,000 owed, Paul wrote a check to Big for $1,000 – all the money that Paul has – and wrote on the back of the check, “Accept only as payment in full of my $10,000 debt.” Big endorsed and cashed the check. Which of the following is the most accurate statement of Paul’s obligation to Big?

Answer 89

Paul still owes the $9,000 balance of the debt to Big if there is no good faith dispute between Paul and Big regarding the amount owed or if Big was not aware of the basis of the dispute.

Question 90

A owes B $20,000 and A agrees that he will pay back the money to B “so long as my union does not order me to walk off my job.” Later, A’s union goes on strike and orders A to walk off the job. Does A have an obligation to pay B the $20,000 owed?

Answer 90

No, A does not have to pay B because A’s promise to pay so long as A is not ordered by his union to walk off the job is outside the control of A.

Question 91

Mother says to Sissy, “since you have taken care of me all these years, I promise to pay you $100,000 at the end of the year.” Will a court enforce Mother’s promise to Sissy?

Answer 91

No, Mother does not have to pay because Mother’s promise did not induce any detriment by Sissy.

Question 92

Which of the following statements is NOT true?

Answer 92

\*\*A) A “bad deal” on the part of a party to a contract will render consideration inadequate. B) It would be an unwarranted interference with freedom of contract if a court were to relieve an adult party from a bad exchange. C) Generally, courts do not review the adequacy of the consideration of a contract. D) Economic inadequacy of a detriment is one of the factors courts will consider in determining whether the promisor really exchanged a promise in return for a small detriment.

Question 93

Modification of an enforceable agreement requires new consideration

Answer 93

if the contract is governed by the common law.

Question 94

A party’s ability to modify an agreement under the UCC requires good faith. Which of the following statements is correct regarding the two distinct inquiries a court must make to determine if the parties entered into the modification in good faith?

Answer 94

The party asserting the modification must demonstrate that he was in fact motivated by a legitimate honest commercial reason and that the conduct is consistent with “reasonable commercial standards of fair dealing in the trade.”

Question 95

Under the UCC Article 2, a written modification is required in which one of the following situations?

Answer 95

If the contract as modified is within the Statute of Frauds provision of the UCC .

Question 96

Which one of the following statements is most accurate?

Answer 96

Under both the UCC and common law, modification may be either express or implied.

Question 97

Under UCC 2-209, a merchant may supply a form which requires modification or rescission be in a signed record. Which of the following is a true statement where the contract containing that clause is contained a contract between a merchant and a non-merchant?

Answer 97

The clause must be separately signed by the non-merchant, otherwise the clause is ineffective.

Question 98

Under UCC 2-209, a merchant may supply a form which requires modification or rescission be in a signed record. Which of the following is true under the UCC if an oral modification or rescission is made in violation of a clause forbidding any oral modifications of the written contract?

Answer 98

The attempted oral modification can operate as a waiver.

Question 99

Based on Roth Steel Products v. Sharon Steel Corp., which of the following statements is not correct?

Answer 99

The seller’s subjective bad faith is not an element of the good faith requirement.

Question 100

Which of the following factors will a court consider when determining whether the parties have entered into a valid modification of an existing contract?

Answer 100

A) Duress B) Statute of Frauds C) Good Faith

Question 101

Which one of the following statements about a modification is correct?

Answer 101

A waiver can be retracted.

Question 102

Jill says to Dave, "If you ride your bike from San Diego to New York City by September, I promise to pay you $10,000." Dave promises to ride. Is there a contract?

Answer 102

No, because Dave did not accept Jill’s offer.

Question 103

A says to B, "If you promise to paint my house, I promise to pay you $1500." B starts to paint in A’s presence. Is there a contract?

Answer 103

Yes, because B’s conduct constitutes an implied promise to paint A’s house.

Question 104

O was the owner of vacant land in another state. When he visited the land, he found that S had built a house on the empty lot. When O tried to enter the house, S told O that if O stayed there, O would be contractually obligated to pay for the house. Is S correct?

Answer 104

No, because O had no opportunity to reject the house.

Question 105

Alec wants to sell some china to Ben, but he knows that Ben often does not pay his bills. Cecil, Ben’s wealthy brother, tells Alec that he (Cecil) promises to pay if Alec promises to deliver the china to Ben. Alec agrees, but later fails to deliver the china. Ben sues Alec. Is Alec’s promise to deliver the china supported by consideration?

Answer 105

Yes, because legal detriment may be given by someone other than the promisee.

Question 106

Jeff does fine carpentry work. Mutt and Jeff enter into a contract whereby Jeff will perform carpentry for Mutt and Mutt will pay $10,000 to Jeff upon completion of the work. Jeff finishes the work and Mutt is so pleased he tells Jeff that he will pay Jeff an additional $1,000. Is Mutt obligated by contract to pay the extra $1,000?

Answer 106

No, because Mutt's promise to pay the additional $1,000 was not supported by consideration.

Question 107

Davis, a supplier of religious items, needs to obtain an inventory of metal crosses. He contracts with Petterman to make and deliver 10,000 crosses at $1.00 per cross. Petterman manufactures and delivers half of the crosses and Davis pays $5,000. Petterman then tells Davis that the price has gone up to $1.50 per cross. Davis agrees because he needs the crosses. When Petterman delivers the crosses, what price is she entitled to be paid?

Answer 107

At a rate of $1.50 each, if the modification was requested in good faith.

Question 108

Dexter and Posley enter into an agreement whereby Dexter is to grow and deliver corn to Posley at a specified time, price, quantity and quality. The agreement states that "either party may terminate this agreement at any time." After more than 10 years of performance under the contract, Dexter terminates the agreement. Is Dexter justified?

Answer 108

No, unless Dexter gave Posley reasonable notice.

Question 109

Sarah manufactures and sells novelty dolls. Bernhardt is a retail novelty store owner who specializes in dolls. Sarah and Bernhardt enter into a written agreement wherein Bernhardt agrees to buy from Sarah 600 of Sarah's novelty dolls at a specific price. One particular clause in the agreement states that Bernhardt has the right to purchase an additional 400 dolls at any time during the time period covered by the agreement. Bernhardt orders an additional 400 dolls, but Sarah does not deliver them. What are the rights of the parties?

Answer 109

Bernhardt has the right to purchase 400 additional dolls from Sarah under the terms of the contract.

Question 110

When Darlene bought some mountain property, she constructed a road on her property, but next to the border of adjacent land owned by Ms. Painter. Darlene asked Ms. Painter if she would be interested in sharing the cost of construction and maintenance in exchange for use of the road. They agreed. By the terms of their written agreement, Ms. Painter was allowed to terminate the agreement at will. Everything went fine for a number of years and both Darlene and Ms. Painter paid one-half of the road maintenance expense until Darlene refused to allow Ms. Painter to use the road. Ms. Painter sues Darlene for breach of contract and Darlene claims, as her defense, mutuality of agreement. What result?

Answer 110

Ms. Painter will prevail, because the court would imply that reasonable notice be given prior to termination.

Question 111

Devlon owned a house that he rented to Paula. Paula was a rowdy sort and continually hosted loud parties, disrupting the neighborhood, all in violation of the lease. Rather than fight Paula in court to get him to leave, Devlon offered to pay Paula’s moving expenses if Paula would vacate the premises peacefully and relocate outside of his neighborhood. Paula agreed. Was Devlon’s promise to pay Paula’s moving expenses supported by consideration?

Answer 111

Yes, if either of the two promises made by Paula is valid and enforceable.

Question 112

Where consideration is inadequate, promissory estoppel

Answer 112

Allows a contract to be enforced. Serves as a substitute for consideration.

Question 113

Promissory estoppel is

Answer 113

An exception to the requirements of the Statute of Frauds.

Question 114

Past performance

Answer 114

Generally cannot serve as present consideration.

Question 115

Under Section 90 of the first Restatement of Contracts, detrimental reliance requires

Answer 115

A promise the promisor should reasonably expect to induce action or forbearance. A promise that actually does induce action or forbearance.

Question 116

Grandpa promised granddaughter that if granddaughter would take a trip to Africa, he would reimburse her travel expenses. Grandpa fell sick and died while granddaughter was in Africa, now grandpa’s estate

Answer 116

Must pay the expenses, because grandpa’s promise is supported by consideration.

Question 117

Where a party has promised to obtain a policy of insurance to protect the property of another,

Answer 117

Modernly, courts have done away with the distinction between misfeasance and nonfeasance in this context, and have found liability where reliance on the promise to obtain insurance is justified.

Question 118

In providing a bid to a general contractor for a construction contract, a subcontractor is

Answer 118

Seeking the general contractor’s reliance on the bid.

Question 119

Damages for detrimental reliance

Answer 119

Can be measured by the terms of the contract. Can be measured by the amount necessary to protect the reliance interest. Can be measured by the amount necessary to protect the expectancy interest.

Question 120

Where a party promises to pay a time-barred debt

Answer 120

The promise is enforceable. There is an exception to the requirement of consideration.

Question 121

Charitable subscriptions

Answer 121

Are enforceable, without consideration.