Contracts Formation Flashcards
A retailer sent a purchase order to a computer manufacturer requesting the shipment of a specified quantity of laptops. The purchase order stated: “In the event of a breach, the retailer may pursue all remedies under the UCC.” The manufacturer received the purchase order and promptly shipped the laptops to the retailer. The manufacturer sent an acknowledgment form to the retailer four days later.
Two days after accepting delivery of the laptops, the retailer received the manufacturer’s acknowledgment form, which excluded consequential damages. The same day, the retailer discovered that the laptops were defective.
If the retailer sues the manufacturer for breach of Contract, will the retailer be entitled to pursue a claim for consequential damages?
Yes, b/c the manufacturer’s shipment of the laptops constituted an acceptance of the retailer’s order.
Under UCC 2-206, an offer made by an order of goods may be accepted by the shipment of goods or by a prompt promise to ship. Thus, the shipment of the laptops constituted the manufacturer’s acceptance of the retailer’s offer and the terms set forth in the purchase order.
The Retailer’s order constituted an offer, and a contract was formed when the manufacturer shipped the laptops. The exclusion of consequential damages in the manufacturer’s acknowledgment constituted a request to modify that contract. The exclusion would become a term of the parties’ agreement only if the retailer assented to it, which did not occur here.
A homeowner visited the websites of numerous local plumbers for service and hourly rate information. The homeowner called one of the plumbers, told him she had found him through his website, and asked him to unclog a floor drain in her basement. The plumber responded, “Okay, I’ll be there tomorrow at three.”
The plumber unclogged the drain and gave the homeowner an invoice that reflected the hourly rate for his services as posted on his website. The homeowner refused to pay the full invoice amount, asserting that his hourly rate was bigger than that charged by local plumbers. The homeowner offered to pay him the average of those rates. The plumber demanded payment of the invoiced amount.
Which describes the compensation the plumber is entitled to receive from the homeowner?
Compensation at the invoiced price, b/c the hourly rate posted on the plumber’s website supplied the price term of the parties’ agreement.
When the homeowner asked the plumber to unclog her drain, she agreed to the hourly rate set by the plumber on the website that the homeowner had visited for purposes of researching prices and services. Further, the homeowner told the plumber she found him through the website. Therefore, the homeowner will be deemed to have agreed to the hourly rate set by the plumber on the website that she admitted to reviewing prior to calling for his services.
A consulting firm orally agreed to employ an executive as its president for the executive’s lifetime. The parties negotiated and have agreed to all aspects of the employment except for the executive’s salary, on which they remain several thousand dollars apart. The executive has sent a signed letter to the firm confirming the terms to which remain the parties have orally agreed while acknowledging that the salary has yet to be set. The firm has not responded to the confirmation letter.
Do the parties now have an enforceable contract?
No, because the agreement is too indefinite to be enforced.
An essential term for an employment contract includes salary for the services or work performed. As an essential term, salary must be agreed upon before the contract can be deemed enforceable. A contract is not enforceable if one or more of the essential terms are left open. Here, the agreement is too indefinite to be enforceable b/c the parties failed to agree on the executive’s salary.
A father whose only living relatives were a daughter and a nephew owned land worth $500,000. In return for his daughter’s promise to pay $300,000 to his nephew at the time of the father’s death, the father executed and delivered to his daughter a quitclaim deed to the land. The daughter took possession of the land.
Two years later, in a signed writing, the father directed his daughter to pay to a neighbor, at the father’s death, $50,000 of the $300,000 that was to go to the nephew. The daughter, who had long disliked the neighbor, told her father that she did not plan to honor his request. The father died, and his daughter has since refused to pay anything to either the nephew or the neighbor. The neighbor has sued the daughter for the $50,000.
Is the neighbor likely to prevail?
No, b/c the daughter did not consent to any modification of the contract she had made with her father.
Modification of a contract governed by common law requires mutual assent and consideration. Here, the daughter did not agree to the modification and the father provided no consideration. Therefore, there was no modification of the contract, and the neighbor is not likely to prevail in an action against the daughter.
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?
There was a contract as of May 6
the original letter was not an offer. it was merely a statement indicating a possible interest in selling the truck, and a suggestion as to a price that might be acceptable. It would be regarded, if anything, as a statement soliciting an offer. The nephew’s letter, mailed on May 3, constituted an offer to buy the pickup. The uncle’s note, mailed on May 6, constituted an acceptance of the nephew’s offer, and was effective when mailed. Therefore a contract arose on May 6.
A construction company contracted with a warehouse owner to construct for $500,000 a warehouse and an access driveway at highway level. Shortly after commencing work on the driveway, which required for the specified level some excavation and removal of surface material, the construction company unexpectedly encountered a large mass of solid rock.
The construction company informed the warehouse owner (accurately) that because of the rock, the driveway as specified would cost at least $20,000 more than figured, and demanded that for that reason a total contract price of $520,000. Since the warehouse owner was expecting warehousing customers immediately after the agreed completion date, he signed a writing promising to pay the additional $20,000. Following timely completion of the warehouse and driveway, which conformed to the contract in all respects, the warehouse owner refused to pay the construction company more than $500,000.
What is the maximum amount to which the construction company is entitled?
$520,000 because modification was fair and was made in the light of circumstances not anticipated by the parties when the original contract was made.
Under CL, a modification of a contract is unenforceable when there is no new consideration. However, where there is an unforeseen difficulty so severe that it rises to the level of impracticability, the consideration requires for modification will be considered satisfied by the party’s promise to complete their pre-existing contractual duty. Here, the construction company ran into an expensive difficulty it was not unforeseen difficulty. Therefore, the written modification is valid and the construction company is entitled to a max amount of $520,000.
