Contracts Flashcards
Acme, Inc. mailed a purchase order to Snowco with the following types across the front: “Acme, Inc. reserves the right to cancel this order at any time before September 1.” Snowco’s mailed response said “We accept your order” was received by Acme on July 21.
As of July 22, which of the following is an accurate statement as to whether a contract was formed?
(A) No contract was formed, because of Acme’s reservation of the right to cancel.
(B) No contract was formed, because Acme’s order was only a revocable offer.
(C) A contract was formed, but prior to September 1 it was terminable at the will of either party.
(D) A contract was formed, but prior to September 1 it was an option contract terminable only at the will of Acme.
(A)
To form a contract, you need an offer, an acceptance, and consideration. Acme made the order here, Snowco accepted it. But there’s a problem here, which is that the promise that Acme made here is illusory. Acme hasn’t actually promised to do anything.
A promise that makes performance entirely optional by one party is not a true promise. The law sees it as an illusory promise, which cannot support a contract.
Now, parties can condition their promises, just to be clear. Acme could say, “We reserve the right to cancel this order if our revenues drop by 10%.” That would be a promise subject to a condition. That will be fine. That would be an enforceable contract.
A debtor owed a lender $1,500. The statute of limitations barred recovery on the claim. The debtor wrote to the lender, stating, “I promise to pay you $500 if you will extinguish the debt.” The lender agreed.
Is the debtor’s promise to pay the lender $500 enforceable?
(A) No, because the debtor made no promise not to plead the statute of limitations as a defense.
(B) No, because there was no consideration for the debtor’s promise.
(C) Yes, because the debtor’s promise provided a benefit to the lender.
(D) Yes, because the debtor’s promise to pay part of the barred antecedent debt needs no consideration to be enforceable.
(D)
The lender promises to extinguish the debt, but the debt is already legally extinguished. The debtor isn’t getting anything in return here. This looks like a promise without consideration. It looks like a case of past or moral consideration. The debtor’s giving the money in exchange for something already given: the extinction of the debt.
But the key to this case is that there are two exceptions to the ban on past or moral consideration. The first is this very case, a promise to pay a debt barred by the statute of limitations is binding, despite the absence of consideration. The second is just slightly different. That’s a promise to pay a debt that’s discharged in bankruptcy. That, too, is binding despite the absence of consideration.
On May 1, an uncle mailed a letter to his adult nephew that stated: “I am thinking of selling my pickup truck, which you have seen and ridden in. I would consider taking $7,000 for it.” On May 3, the nephew mailed the following response: “I will buy your pickup for $7,000 cash.” The uncle received this letter on May 5 and on May 6 mailed a note that stated: “It’s a deal.” On May 7, before the nephew had received the letter of May 6, he phoned his uncle to report that he no longer wanted to buy the pickup truck because his driver’s license had been suspended.
Which of the following statements concerning this exchange is accurate?
(A) There was a contract as of May 3.
(B) There was a contract as of May 5.
(C) There was a contract as of May 6.
(D) There is no contract.
(C)
Remember the mailbox rule. The uncle’s acceptance is valid on May 6th, even though the nephew does not get it until later. The contract is formed on May 6th. It’s binding on May 6th. The nephew’s phone call on May 7th doesn’t matter. It’s legally irrelevant.
While waiting in line to open an account with a bank, a customer read a poster on the bank’s wall that said, “New Customers! $25 FOR 5 MINUTES. If you stand in line for more than five minutes, we will pay you $25! We like happy customers!” The customer started timing his wait and just as five minutes was about to pass, the bank manager tore the poster down and announced, “The $25 stand-in-line promotion is over.” The customer waited in line for 10 more minutes before being served.
Does the customer have a claim against the bank for $25?
(A) No, because the bank withdrew its offer before the customer completed the requested performance.
(B) No, because the bank’s statement was a nonbinding gift promise.
(C) Yes, because the bank could not revoke its offer once the customer had commenced performance.
(D) Yes, because the customer’s presence in line served as notice to the bank that he had accepted.
(C)
The bank is promising $25, but the customer isn’t promising to stay in line for five minutes here. The customer couldn’t be sued if he left the line. This is a unilateral contract, where one side, the bank, promises, but the other side, the customer, accepts by performing the contract, and the customer has a legal right to the promise if he performs the contract.
Here, that means the customer waiting in line for five minutes, which gives him a contractual right to the $25. Now, unilateral contracts have special rules about offer acceptance and revocation of offers.
Pertinent, here, is how a unilateral offer can be revoked. The modern rule is that a unilateral offer can’t be revoked after the offeree begins performance.
On June 1, a seller received a mail order from a buyer requesting prompt shipment of a specified computer model at the seller’s current catalog price. On June 2, the seller mailed to the buyer a letter accepting the order and assuring the buyer that the computer would be shipped on June 3. On June 3, the seller realized that he was out of that computer model, shipped a different computer model to the buyer, and mailed a separate notice of accommodation. On June 5, the buyer received the seller’s June 2 letter and the different computer model, but not the notice of accommodation.
On June 5, which of the following is a correct statement of the parties’ legal rights and duties?
(A) The buyer can either accept or reject the different computer model and, in either event, recover damages, if any, for breach of contract.
(B) The buyer can either accept or reject the different computer model, but if he rejects it, he will thereby waive any remedy for breach of contract.
(C) The seller’s prompt shipment of nonconforming goods constituted an acceptance of the buyer’s offer, thereby creating a contract for the sale of the different computer model.
(D) The seller’s notice of accommodation was timely mailed, and his shipment of the different computer model constituted a counteroffer.
(A)
The seller accepted the buyer’s offer here. So there’s a contract, and the seller has breached it.
As a result, the buyer now has several options. The buyer could accept the different computer model and sue for damages based on the difference between the computer the buyer wanted and the computer the buyer got, or the buyer could reject the different computer model and just sue for damages.
If the seller had not accepted the contract but simply mailed the different computer and given a notice of accommodation, that would be okay because it would be interpreted as a counteroffer.
A toy collector had purchased 10 antique toys over the last several years and had had them restored by an expert in toy restoration. On June 1, the collector sent the 11th antique toy to the expert with a signed note that read: “Here is another toy for you to restore. As with all prior jobs, I will pay $500 for the work, but no more.” On June 4, after receipt of the collector’s June 1 note and the toy, the expert began restoring the toy. On June 6, the collector unexpectedly died. On June 7, unaware of the collector’s death, the expert sent the collector a note that stated that the restoration work had begun on June 4. The following day, the expert learned of the collector’s death.
Does a contract exist that binds the expert and the collector’s estate?
(A) No, because the collector died before the expert sent the June 7 note.
(B) No, because the offer lapsed when the collector died.
(C) Yes, because the expert sent the June 7 note before learning of the collector’s death.
(D) Yes, because the offer was accepted before the collector’s death.
(D)
This question is about contract formation. There’s an offer on June 1st. The collector says, “I’ll pay you $500 to do this,” but does the offer get accepted?
That’s the key question. Let’s start this way. There’s definitely an offer on June 1st. But on June 6th, the offeror, the person who made the offer, dies. And that’s a big deal. It’s hornbook law. It’s just a regular, straightforward, legal principle that offers expire if the person making them dies. So, on June 6th, that offer looks like it expires.
And, to be precise, offers don’t expire when the offeree hears of the offeror’s death. They expire when the offeror dies. So, because the collector dies on June 6th, the offer looks like it may well be terminated. The key, though, is this: on June 4th, the expert started work, and that starting of work matters. That starting of work acts as an acceptance.
And so, as of June 4th, there’s a legal binding contract between the collector and the expert. So, when the collector dies on June 6th, it doesn’t matter. I mean, I’m sorry for the collector, of course, it’s a shame the collector died, but there’s still a contract because that contract was formed on June 4th.
In a written contract, an architect agreed to draw up the plans for and to supervise construction of a client’s new house. In return, the client agreed to pay the architect a fee of $10,000 to be paid upon the house’s completion. After completion, the client claimed erroneously but in good faith that the architect’s plans were defective. The client orally offered to pay the architect $7,500 in full settlement of the claim for the fee. The architect orally accepted that offer despite the fact that the reasonable value of his services was in fact $10,000. The client paid the architect $7,500 pursuant to their agreement.
The architect subsequently sued the client for the remaining $2,500. In a preliminary finding, the trier of fact found that there were no defects in the architect’s plans.
Will the architect be likely to prevail in his action against the client for $2,500?
(A) Yes, because payment of $7,500 cannot furnish consideration for the architect’s promise to surrender his claim.
(B) Yes, because the oral agreement to modify the written contract is not enforceable.
(C) No, because the architect’s promise to accept $7,500 became binding when the client made the payment.
(D) No, because the architect’s acceptance of partial payment constituted a novation.
(C)
In this kind of context, the parties can agree to a lower contract price because of perceived defects in the architect’s performance.
The requirement here is only one of good faith. As long as the client honestly believes that there are defects in the work, and the problem says he does honestly believe that, then the lower contract price is valid. It’s not void for lack of consideration.
The architect could have said, “No, I won’t agree to $7,500. Pay me the full $10,000 or I’ll see you in court.” But when the architect says, “Okay, I agree to $7,500,” that’s a legitimate contractual modification because it’s agreed to by both sides. This happens all the time. People negotiate to pay less after the fact because of perceived defects in performance. The law has an interest in finality. Even if there were no actual defects, as long as the client believed there were, and as long as the architect agreed to the reduced payment, the law will stay out of that.
Loyal, aged 60, who had no plans for early retirement, had worked for Mutate, Inc., for 20 years as a managerial employee-at-will when he had a conversation with the company’s president, George Mutant, about Loyal’s post-retirement goal of extensive travel around the United States. A month later, Mutant handed Loyal a written, signed resolution of the company’s Board of Directors stating that when and if Loyal should decide to retire, at his option, the company, in recognition of his past service, would pay him a $2,000-per-month lifetime pension. (The company had no regularized retirement plan for at-will employees.) Shortly thereafter, Loyal retired and immediately bought a $30,000 recreational vehicle for his planned travels. After receiving the promised $2,000 monthly pension from Mutate, Inc., for six months, Loyal, now unemployable elsewhere, received a letter from Mutate, Inc., advising him that the pension would cease immediately because of recessionary budget constraints affecting in varying degrees all managerial salaries and retirement pensions.
In a suit against Mutate, Inc., for breach of contract, Loyal will probably
(A) win, because he retired from the company as bargained-for consideration for the Board’s promise to him of a lifetime pension.
(B) win, because he timed his decision to retire and to buy the recreational vehicle in reasonable reliance on the Board’s promise to him of a lifetime pension.
(C) lose, because the Board’s promise to him of a lifetime pension was an unenforceable gift promise.
(D) lose, because he had been an employee-at-will throughout his active service with the company.
(B) There’s no contract here, exactly. The $2,000-a-month pension was a gift to Loyal. Loyal did not offer consideration for it. Loyal isn’t promising to do anything in the future for it. Loyal retiring is not good consideration. And Loyal’s past service is not good consideration either. Past consideration, moral consideration, those things are generally not considered good consideration.
[[Promissory Estoppel]] Despite that, Loyal does have a good claim of promissory estoppel. Promissory estoppel is a doctrine that allows a party that’s been promised something to recover, even when there’s no contract, when the party has relied on the promise.
On April 1, Owner and Buyer signed a writing in which Owner, “in consideration of $100 to be paid to Owner by Buyer,” offered Buyer the right to purchase Greenacre for $100,000 within 30 days. The writing further provided, “This offer will become effective as an option only if and when the $100 consideration is in fact paid.” On April 20, Owner, having received no payment or other communication from Buyer, sold and conveyed Greenacre to Citizen for $120,000. On April 21, Owner received a letter from Buyer enclosing a cashier’s check for $100 payable to Owner and stating, “I am hereby exercising my option to purchase Greenacre and am prepared to close whenever you’re ready.”
Which of the following, if proved, best supports Buyer’s suit against Owner for breach of contract?
(A) Buyer was unaware of the sale to Citizen when Owner received the letter and check from Buyer on April 21.
(B) On April 15, Buyer decided to purchase Greenacre, and applied for and obtained a commitment from Bank for a $75,000 loan to help finance the purchase.
(C) When the April 1 writing was signed, Owner said to Buyer, “Don’t worry about the $100; the recital of `$100 to be paid’ makes this deal binding.”
(D) Owner and Buyer are both professional dealers in real estate.
(A)
On April 20th, Owner sells Greenacre to Citizen. But the crucial thing to understand is that this alone does not revoke Owner’s offer to Buyer. Indirect revocation, and that’s the name for this, only happens when Buyer hears that Owner has sold the property to Citizen. So on April 21st, when Owner gets that letter from Buyer, that counts as an acceptance. Buyer is accepting two things at once.
Buyer is accepting the option, and Buyer is exercising the option and accepting the contract, and Buyer can do that as long as Buyer has not heard of Owner’s April 20th contract with Citizen.
Slalome runs a ski shop. Mitt makes ski gloves. In a phone conversation, Slalome orders 12 pairs of ski gloves from Mitt for $600. Afterward, Mitt sends her a written memo: “Confirming our agreement today for your purchase of a dozen pairs of gloves for $600.” Slalome receives and reads it. But three weeks later, she changes her mind and rejects the gloves when they arrive.
On learning of the rejection, does Mitt have a cause of action against Slalome for breach of contract?
Yes. Although SOF is triggered b/c this is a sale of goods for >$500, Slalome’s memo satisfies the merchant provision exception of 2-201.
It meets all the elements: Mitt and Slalome are both merchants here; the writing is sufficient against Mitt; it confirms there’s a contract; it’s sent within a reasonable time of the phone conversation; and Slalome had reason to know of its contents because she actually read it. So, although there’s no writing by Slalome here, the UCC statute of frauds merchant exception is actually satisfied here, which means there’s an enforceable contract.
In order to raise revenue, a city required home-repair contractors who performed work within the city limits to pay a licensing fee to a city agency. A contractor who was unaware of the fee requirement agreed to perform home repairs for a city resident. After the contractor completed the work, the resident discovered that the contractor had not paid the licensing fee, and she refused to pay for the repairs, which were otherwise satisfactory.
If the contractor sues the resident for breach of contract, how is the court likely to rule?
(A) Although the contract violates the law and is void, the court will require the homeowner to pay the contractor the reasonable value of the work accepted.
(B) Although the contract violates the law, the court will find that public policy does not bar enforcement of the contract, because the purpose of the fee is merely to raise revenue.
(C) Because the contract violates the law and is void, the court will not enforce it.
(D) Because the purpose of the fee is merely to raise revenue, the court will find that the contract does not violate the law but will allow the contractor to recover his costs only.
(B) There’s a distinction the law draws between laws that are for the protection of the public and laws that are for revenue raising. If the law is about protecting the public, like the law forbidding prostitution or gambling or bribery, then contracts on those topics won’t be enforced by courts. But if the law is about revenue raising, then the contract will be enforced by the court.
A daughter was appointed guardian of her elderly father following an adjudication of his mental incompetence. The father had experienced periods of dementia during which he did not fully understand what he was doing. The father later contracted to purchase an automobile at a fair price from a seller who was unaware of the guardianship. At the time of the purchase, the father was lucid and fully understood the nature and purpose of the transaction.
What is the legal status of the transaction?
(A) The contract is enforceable, because a reasonable person in the situation of the seller would have thought that the father had the capacity to make the contract.
(B) The contract is enforceable, because it was made on fair terms and the seller had no knowledge of the father’s guardianship.
(C) The contract is void, because the father was under guardianship at the time it was made.
(D) The contract is voidable at the option of the father.
(C). The guardianship itself is sufficient to establish mental incompetence. The guardianship makes the contract not just voidable, but actually void.
In a telephone conversation, a jewelry maker offered to buy 100 ounces of gold from a precious metals company if delivery could be made within 10 days. The jewelry maker did not specify a price, but the market price for 100 ounces of gold at the time of the conversation was approximately $65,000. Without otherwise responding, the company delivered the gold six days later.
In the meantime, the project for which the jewelry maker planned to use the gold was canceled. The jewelry maker therefore refused to accept delivery of the gold or to pay the $65,000 demanded by the company.
Is there an enforceable contract between the jewelry maker and the company?
(A) No, because the parties did not agree on a price term.
(B) No, because the parties did not put their agreement in writing.
(C) Yes, because the absence of a price term does not defeat the formation of a valid contract for the sale of goods where the parties otherwise intended to form a contract.
(D) Yes, because the company relied on an implied promise to pay when it delivered the gold.
(B). Under UCC § 2-201(1), a contract for the sale of goods for a price of $500 or more is not enforceable unless there is a writing indicating the contract that is signed by the party against whom enforcement is sought. In this case, the absence of such a writing signed by the jewelry maker renders the parties’ oral agreement unenforceable. An exception to the writing requirement arises when a seller delivers goods that are accepted by the buyer, but in this case, the jewelry maker did not accept the gold.
Choice (A) is wrong b/c under UCC § 2-305, a contract may be enforceable in the absence of a price term so long as the parties otherwise intended to enter into a contract.
Freund, a U.S. west-coast manufacturer, gave Wrench, a hardware retailer who was relocating to the east coast, the following “letter of introduction” to Tuff, an east-coast hardware wholesaler.
This will introduce you to my good friend and former customer, Wrench, 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.
/Signed/ Freund
Wrench presented the letter to Tuff, who then sold and delivered $20,000 worth of hardware to Wrench on credit. Tuff promptly notified Freund of this sale.
Which of the following is NOT an accurate statement concerning the arrangement between Freund and Tuff?
(A) It was important to enforceability of Freund’s promise to Tuff that it be embodied in a signed writing.
(B) By extending the credit to Wrench, Tuff effectively accepted Freund’s offer for a unilateral contract.
(C) Although Freund received no consideration from Wrench, Freund’s promise is enforceable by Tuff.
(D) Freund’s promise is enforceable by Tuff whether or not Tuff gave Freund seasonable notice of the extension of credit to Wrench.
(D). Freund made a legal offer here to act as a guarantor of any loan Tuff might make to Wrench. Tuff can accept that by lending Wrench credit, but Freund’s promise only becomes enforceable when Tuff tells Freund of that fact.
Sue Starr, a minor both in fact and appearance, bought on credit and took delivery of a telescope from 30-year-old Paul Prism for an agreed price of $100. Upon reaching her majority soon thereafter, Starr encountered Prism and said, “I am sorry for not having paid you that $100 for the telescope when the money was due, but I found out it was only worth $75. So I now promise to pay you $75.” Starr subsequently repudiated this promise and refused to pay Prism anything.
For this question only, assume that Starr bought the telescope from Prism after reaching her majority and promised to pay $100 “as soon as I am able.”
What effect does this quoted language have on enforceability of the promise?
(A) None.
(B) It makes the promise illusory.
(C) It requires Starr to prove her inability to pay.
(D) It requires Prism to prove Starr’s ability to pay.
(D). Minors can enter into contract, but are voidable at the option of the minor upon majority (“power of avoidance”). An adult can ratify a contract they entered into as a minor if they made a representation as an adult promising again what they promised as a minor.
A developer contracted in writing to sell to a buyer a house on a one-acre lot for $100,000. The developer told the buyer that the lot abutted a national park and that the water for the house came from a natural artesian spring. The developer knew that both of these representations were important to the buyer and that both were false. The buyer moved into the house and eight months later learned that a private golf course was being constructed on the adjacent land and that the water for his house was piped in from the city reservoir. The buyer immediately sued the developer to avoid the contract.
The construction of the golf course will probably increase the market value of the buyer’s property, and the water from the city reservoir exceeds all established standards for drinking water.
Is the buyer likely to prevail?
(A) No, because eight months exceeds a reasonable time for contract avoidance.
(B) No, because the developer’s misstatements caused no economic harm to the buyer.
(C) Yes, because the contract was void ab initio.
(D) Yes, because the buyer retained the power to avoid the contract due to fraud.
(D). The buyer is likely to prevail because the buyer retained the power to avoid the contract due to fraud.
Retailer, a dry goods retailer, telephoned Manufacturer, a towel manufacturer, and offered to buy for $5 each a minimum of 500 and a maximum of 1,000 large bath towels, to be delivered in 30 days. Manufacturer orally accepted this offer and promptly sent the following letter to Retailer, which Retailer received two days later: “This confirms our agreement today by telephone to sell you 500 large bath towels for 30-day delivery. /s/ Manufacturer.” Twenty-eight days later, Manufacturer tendered to Retailer 1,000 (not 500) conforming bath towels, all of which Retailer rejected because it had found a better price term from another supplier. Because of a glut in the towel market, Manufacturer cannot resell the towels except at a loss.
In a suit by Manufacturer against Retailer, which of the following will be the probable decision?
(A) Manufacturer can enforce a contract for 1,000 towels, because Retailer ordered and Manufacturer tendered that quantity.
(B) Manufacturer can enforce a contract for 500 towels, because Manufacturer’s letter of confirmation stated that quantity term.
(C) There is no enforceable agreement, because Retailer never signed a writing.
(D) There is no enforceable agreement, because Manufacturer’s letter of confirmation did not state a price term.
(B). This meets the UCC’s merchant exception to the SOF, so there is an enforceable contract. UCC furthers states a contract within the statute of frauds is not enforceable beyond the quantity of goods showing in the writing. The writing says 500 towels, so that’s all that will be enforced.
Ohner and Planner signed a detailed writing in which Planner, a landscape architect, agreed to landscape and replant Ohner’s residential property in accordance with a design prepared by Planner and incorporated in the writing. Ohner agreed to pay $10,000 for the work upon its completion. Ohner’s spouse was not a party to the agreement, and had no ownership interest in the premises.
Shortly before the agreement was signed, Ohner and Planner orally agreed that the writing would not become binding on either party unless Ohner’s spouse should approve the landscaping design.
If Ohner’s spouse disapproves the design and Ohner refuses to allow Planner to proceed with the work, is evidence of the oral agreement admissible in Planner’s action against Ohner for breach of contract?
(A) Yes, because the oral agreement required approval by a third party.
(B) Yes, because the evidence shows that the writing was intended to take effect only if the approval occurred.
(C) No, because the parol evidence rule bars evidence of a prior oral agreement even if the latter is consistent with the terms of a partial integration.
(D) No, because the prior oral agreement contradicted the writing by making the parties’ duties conditional.
(B). The parol evidence rule is about what promises are enforceable. It doesn’t affect oral testimony about conditions or consideration, mistake, duress, fraud, reformation, any of those things. The parol evidence rule just doesn’t apply here because Ohner’s using this oral testimony not to show a promise that Planner made, but instead to show a condition of the contract, and the parol evidence rule doesn’t restrict that at all.
A contractor agreed to remodel a homeowner’s garage for $5,000. Just before the parties signed the one-page written contract, the homeowner called to the contractor’s attention the fact that the contract did not specify a time of completion. The parties orally agreed but did not specify in the contract that the contractor would complete the work in 60 days, and then they both signed the contract. The contract did not contain a merger clause. The contractor failed to finish the work in 60 days. The homeowner has sued the contractor for breach of contract.
Is the court likely to admit evidence concerning the parties’ oral agreement that the work would be completed in 60 days?
(A) No, because the court must ascertain the meaning of the agreement from the terms of the written contract.
(B) No, because the oral agreement was merely part of the parties’ negotiations.
(C) Yes, because the contract is ambiguous.
(D) Yes, because the time limit is an additional term that does not contradict the partially integrated written contract.
(D).
Under the PER, the oral promise will be admissible to the extent it does not contradict the writing UNLESS the agmt is completed integrated (= intended by the parties to be the final and exclusive agmt).
How do we figure out whether the writing is completed integrated or partially integrated?
- Is there a merger clause? No. So may not be completely integrated (if merger clause, analysis ends and oral promise not enforceable).
- Is the oral promise the kind that would naturally be omitted from the written contact? (fact-specific) Yes. This K was very short. A 1-pg K will naturally lack a fair amount of details. This is evidence that the K is only partially integrated.
A farmer contracted to sell 100,000 bushels of wheat to a buyer. When the wheat arrived at the destination, the buyer discovered that the farmer had delivered only 96,000 bushels. The buyer sued the farmer for breach of contract. At the trial of the case, the court found that the written contract was intended as a complete and exclusive statement of the terms of the agreement. The farmer offered to prove that in the wheat business, a promise to deliver a specified quantity is considered to be satisfied if the delivered quantity is within 5% of the specified quantity. The buyer objected to the offered evidence.
Is the court likely to admit the evidence offered by the farmer?
(A) No, because the offered evidence is inconsistent with the express language of the agreement.
(B) No, because the written contract was totally integrated.
(C) Yes, because the offered evidence demonstrates that the farmer substantially performed the contract.
(D) Yes, because the offered evidence explains or supplements the agreement by usage of trade.
(D).
Under common law rules, and under the UCC, evidence of trade usage is generally admissible. It can come in to explain the contract’s terms or to supplement the contract’s terms.
It CANNOT come in if it explicitly contradicts the contract’s terms, which is not the case here. Trade usage and express terms have to be construed as consistent whenever that’s reasonable.
On March 1, a homeowner contacted a builder about constructing an addition to the homeowner’s house. The builder orally offered to perform the work for $200,000 if his pending bid on another project was rejected. The homeowner accepted the builder’s terms, and the builder then prepared a written contract that both parties signed. The contract did not refer to the builder’s pending bid. One week later, upon learning that his pending bid on the other project had been accepted, the builder refused to perform any work for the homeowner.
Can the homeowner recover for the builder’s nonperformance?
(A) No, because efficiency principles justify the builder’s services being directed to a higher-value use.
(B) No, because the builder’s duty to perform was subject to a condition.
(C) Yes, because the builder’s attempt to condition his duty to perform rendered the contract illusory.
(D) Yes, because the parol evidence rule would bar the builder from presenting evidence of oral understandings not included in the final writing.
(B), b/c the PER doesn’t apply to conditions.
A buyer and a seller entered into a written contract for the sale of a copy machine, using the same form contract that they had used a number of times in the past. The contract stated that payment was due 30 days after delivery and provided that the writing contained the complete and exclusive statement of the parties’ agreement.
On several past occasions, the buyer had taken a 5% discount from the contract price when paying within 10 days of delivery, and the seller had not objected. On this occasion, when the buyer took a 5% discount for paying within 10 days, the seller objected because his profit margin on this particular machine was smaller than on his other machines.
If the seller sues the buyer for breach of contract, may the buyer introduce evidence that the 5% discount was a term of the agreement?
(A) No, because the seller timely objected to the buyer’s proposal for different terms.
(B) No, because the writing contained the complete and exclusive agreement of the parties.
(C) Yes, because a modification made in good faith does not require consideration.
(D) Yes, because evidence of course of dealing is admissible even if the writing contains the complete and exclusive agreement of the parties.
(D). The written contract here is the only contract (no PER issue). The course of dealings is only being admitted to explain what the written contract means, to explain what the price term of that written contract really means. And the course of dealings can always come in to explain or supplement the writing in that sense.
(That doesn’t mean the buyer will actually get the discount. The fact finder might conclude that despite this past history, the parties did not intend for the discount to apply here. But it means the fact finder will at least consider the evidence.)
Fixtures, Inc., in a signed writing, contracted with Apartments for the sale to Apartments of 50 identical sets of specified bathroom fixtures, 25 sets to be delivered on March 1, and the remaining 25 sets on April 1. The agreement did not specify the place of delivery, or the time or place of payment.
Which of the following statements is correct?
(A) Fixtures must tender 25 sets to Apartments at Apartments’ place of business on March 1, but does not have to turn them over to Apartments until Apartments pays the contract price for the 25 sets.
(B) Fixtures has no duty to deliver the 25 sets on March 1 at Fixtures’ place of business unless Apartments tenders the contract price for the 25 sets on that date.
(C) Fixtures must deliver 25 sets on March 1, and Apartments must pay the contract price for the 25 sets within a reasonable time after their delivery.
(D) Fixtures must deliver 25 sets on March 1, but Apartments’ payment is due only upon the delivery of all 50 sets.
(B). The gap-filling provisions of the UCC provide default answers to unspecified details.
Where are the fixtures to be delivered? UCC 2-308 says seller’s place of business.
When is the money to be paid? UCC 2-310 says when the buyer receives the goods.
Where is the money to be paid? UCC 2-310 says where the buyer receives the goods.
On May 1, a seller and a buyer entered into a written contract, signed by both parties, for the sale of a tract of land for $100,000. Delivery of the deed and payment of the purchase price were scheduled for July 1. On June 1, the buyer received a letter from the seller repudiating the contract. On June 5, the buyer bought a second tract of land at a higher price as a substitute for the first tract. On June 10, the seller communicated a retraction of the repudiation to the buyer.
The buyer did not tender the purchase price for the first tract on July 1 but subsequently sued the seller for breach of contract.
Will the buyer likely prevail?
(A) No, because the seller retracted the repudiation prior to the agreed time for performance.
(B) No, because the buyer’s tender of the purchase price on July 1 was a constructive condition to the seller’s duty to tender a conveyance.
(C) Yes, because the seller’s repudiation was not retractable after it was communicated to the buyer.
(D) Yes, because the buyer bought the second tract as a substitute for the first tract prior to the seller’s retraction.
(D). You can only retract your repudiation if you do so before the time for performance has become due and only if the other side hasn’t relied on your repudiation.
