ContractsMC Flashcards
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A retired couple owned a home surrounded by a variety of large, beautiful trees. One evening a violent thunderstorm brought down one of the largest trees. It fell directly over the couple’s driveway, blocking access to their garage and vehicles. The couple phoned several tree removal services but all of their crews were assisting other customers. The husband then went to his neighbor, who owned a chain saw, and offered him $100 if he would come and cut up the tree.
Within the hour the neighbor appeared with his chain saw and began cutting and removing tree branches. He had removed almost half of the tree when a township vehicle arrived. The driver told the couple that he was authorized to clear the debris free of charge. The husband went to the neighbor and said “Thanks anyway, but the deal is off—this guy will do it for free.”
Which of the following accurately reflects the situation?
A. The couple owes nothing because the township was under a preexisting duty to remove the tree.
B. The couple owes nothing because the husband withdrew his offer before the neighbor completed his performance.
C. The couple owes the neighbor $100 if he completes the tree removal.
D. The couple owes the neighbor $50 for services rendered.
C. The couple owes the neighbor $100 if he completes the tree removal.
Discussion of correct answer: This is a unilateral contract. The offeror’s method of acceptance is the commencement of performance. Once performance begins, the offer becomes irrevocable. Therefore, when the neighbor began to work on the tree, a valid contract was formed and the husband’s attempted revocation was ineffective. The neighbor is entitled to full payment, but not until his performance is completed.
Shortly after his 16th birthday, a 16-year-old was drafted by a leading professional baseball team. He celebrated his signing by taking out an eight-year lease on an extremely high-end luxury car. Two years later, while celebrating his 18th birthday, the baseball player crashed the expensive leased car.
At that point, will he be allowed to disaffirm his lease?
(A) He will not be able to disaffirm the lease, because he is no longer a minor.
(B) He will not be able to disaffirm the lease, because it constituted a contract for necessities.
(C) He will be able to disaffirm the contract, because eight years is an unconscionable length of time for a car lease.
(D) He will be able to disaffirm the lease, because he has just recently turned 18 years of age.
(D) He will be able to disaffirm the lease, because he has just recently turned 18 years of age.
A makeup artist owed her sister-in-law $300, but the statute of limitations had run on the debt. She offered to make up a mother and daughter for a family photography shoot on December 6 if the mother would, on that day, pay the $300 debt that the makeup artist owed to the sister-in-law. When the mother agreed, the makeup artist informed the sister-in-law of the agreement. After the makeup artist made up the mother and daughter, the sister-in-law demanded payment but the mother refused to pay.
Is the fact that the statute of limitations had run on the makeup artist’s debt to her sister-in-law a good defense for the mother if the sister-in-law sues the mother for the $300?
(A) No, because the contract to pay the sister-in-law is a separate transaction from the underlying debt.
(B) No, unless the mother can show that the sister-in-law knew that the statute of limitations had run.
(C) Yes, because the contract with the mother was actually agratuitous promise.
(D) Yes, unless the sister-in-law can show that she changed her position in reliance on the makeup artist-mother contract.
(A) No, because the contract to pay the sister-in-law is a separate transaction from the underlying debt.
On January 1, a widget distributor inquired via email about purchasing widgets from a manufacturer. The manufacturer sent the following return e-mail: “Have 1,000 widgets available at $10 each for February delivery. Be advised that this offer will remain open until February 1.” On January 31, the distributor sent the following fax to the manufacturer: “Your offer is hereby accepted, but instead of receiving them all at once, I’d like to request delivery of 500 widgets in February and a second delivery of the remaining 500 widgets in March.” The manufacturer received the fax the same day, but did not respond.
Which of the following is the most accurate statement regarding the legal effect of the distributor’s January 31 fax?
(A) It constituted a counteroffer, because it contains different terms from those contained in the original offer.
(B) It constituted a rejection, because the offer implied limited acceptance to the terms contained therein.
(C) It created an enforceable contract with delivery of 500 widgets in February and delivery of 500 widgets in March.
(D) It created a reformation integrating the terms of both writings.
(C) It created an enforceable contract with delivery of 500 widgets in February and delivery of 500 widgets in March.
A man decides to move out of the city and start a farm in the countryside. He contacts a farmer who wants to sell his land and the two parties orally agree that the man will purchase the farmer’s piece of land. The parties agree that the man will make regular payments to the farmer as part of an installment plan for two years. The man then moves into the farm and starts making regular payments to the farmer. However, after six months, the farmer rejects the contract. The man, on the other hand, is seeking to enforce the agreement in an action for specific performance.
Which of the following is correct?
A. The contract is enforceable, because the man took possession of the land and paid part of the price.
B. The contract is enforceable in an action for specific performance or money damages.
C. The contract is not enforceable, because the man has not made at least one year of payments.
D. The contract is not enforceable, because contracts for the sale of land must be evidenced by a signed writing.
A. The contract is enforceable because the man took possession of the land and paid part of the price.
Discussion of correct answer: Under the Statute of Frauds, for a contract to be enforceable, it must be evidenced by a signed writing reflecting that contract. The Statute of Frauds applies to certain categories of contracts, such as contracts for the sale of real estate or contracts lasting more than one year.
Because this is a contract for the sale of real property, the Statute of Frauds applies. However, the Statute of Frauds may be satisfied with respect to some of the categories of governed contracts via part performance. Part performance of a land contract would be taking possession of the land and paying at least part of the price. In this case, the man took possession of the land and made payments for six months. Additionally, this is an action by the buyer, and the man is seeking specific performance, so the Statute of Frauds is satisfied and the contract is enforceable. Therefore, this is the correct answer.
Think Like a Lawyer
Memorizing the exceptions to the Statute of Frauds is essential.
Step by Step Walkthrough
Step 1: The Statute of Frauds governs: (1) contracts to marry; (2) contracts not to be performed within one year; (3) contracts for the sale of land; (4) contracts for an executor to answer for the duty of a decedent; (5) contracts of guaranty or suretyship; and (6) contracts for the sale of goods of $500 or more.
Step 2: The doctrine of part performance may be used to enforce an otherwise invalid oral contract of sale, provided the acts of part performance unequivocally prove the existence of the contract. To satisfy this doctrine, a showing of at least two of the following three facts must be made: (a) payment of all or part of the purchase price; (b) taking of possession; and (c) making substantial improvements.
Step 3: Here, the man has paid part of the purchase price, and the man has taken possession. Consequently, he can bind the seller (farmer) into allowing the man to finish paying for the farm. The man is entitled to specific performance of the contract.
Step 4: Please note that the man could not sue for money damages, because the doctrine of part performance only protects the purchase rights of the buyer. It does not give the buyer the right to sue for damages, as he would be able to do with a written contract. Instead, the doctrine of part performance is an equitable measure designed to prevent sellers from taking a buyer’s money yet never delivering title to the land.
Step 5: Therefore, choose the answer that states that the contract is enforceable in the man’s lawsuit for specific performance because he paid part of the price and he took possession. This is what he is entitled to; no less, no more.
A costume designer orally agreed with a producer that for $10,000 the designer would provide the 50 costumes the producer needed for his new play. The play had a surrealistic plot in which the characters were all costumed as hairy spiders to emphasize the “tangled web” of today’s society. After the designer had completed almost half of the costumes, the producer decided he would rather do an old musical in which all the actors wore all white. The producer immediately advised the designer that the producer would not accept any of the costumes.
If the designer sues the producer, the court should find in favor of which party?
(A) The designer, because the cost per costume was less than $500, and so the contract did not need to be written.
(B) The designer, because the oral contract was enforceable, as the designer had made a substantial start on the work.
(C) The producer, because this was a contract for specifically produced goods and the agreement was oral.
(D) The producer, because it was a contract for goods in excess of $500 and the agreement was only oral.
(B) The designer, because the oral contract was enforceable, as the designer had made a substantial start on the work.
A soldier had just gotten out of the army when his aunt suggested he move across the country near her. The aunt told him that there were lots of jobs in her area, and that he could stay with her until he found employment. The soldier considered it for a few days, then decided to make the move. When he arrived at her house, his aunt said she would be unable to put him up.
Has the aunt breached a contract with the soldier?
(B) No, because there was no consideration given.
After negotiations, a scientist wrote to a carpenter and said, “I will pay you $1,000 if you build a custom entertainment center in my apartment according to the measurements I am including here. I must have your reply by May 30.” The carpenter replied by letter, saying, “Will not do it for less than $1,500.” The scientist received the reply on May 15.
On May 20, the carpenter wrote to the scientist and said, “I reconsidered. I will do the work for $1,000. Unless I hear from you to the contrary, I will begin work on June 5.” The scientist received this letter on May 22, but did not reply to it. The carpenter, without the scientist’s knowledge, then began the work on June 5.
Which of the following best characterizes the legal relationship between the scientist and the carpenter as of June 5?
A. A contract was formed on May 20, when the carpenter posted his letter.
B. A contract was formed on May 22, when the scientist received the carpenter’s letter.
C. A contract was formed on June 5 when the carpenter began to work.
D. There was no contract between the parties as of June 5.
D. There was no contract between the parties as of June 5.
Discussion of correct answer: According to Restatement Section 39, “A counter-offer is an offer relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer.” Be advised that an offeree’s power of acceptance is terminated by his making of a counteroffer. Because the carpenter’s reply letter of May 15 constituted a counteroffer, his power of acceptance was terminated. Therefore, the carpenter’s May 20 letter did not have any legal effect.
A dentist entered into an agreement with a supply company pursuant to which the dentist promised to purchase all of her supplies from the company for two years. However, when the dentist decided to move into a new office, she ordered three new dental chairs from a different company. The cost of the chairs was $9,000, payable 60 days after delivery. The agreement with the original supplier was primarily oral; the only document that could prove the agreement was a letter, signed by the dentist but not by the company, which outlined the general nature of the agreement. It contained no specific terms such as item or quantity.
Can the supply company enforce the agreement?
A) Yes, under the doctrine of promissory estoppel.
B) Yes, because the parties entered into a valid requirements contract.
C) No, because neither party agreed to a quantity term.
D) No, because the dentist’s promise was illusory.
Explanation
The correct answer is:Yes, because the parties entered into a valid requirements contract.
Discussion of correct answer:Under the facts presented, the dentist and the supply company entered into a requirements contract. Under such a contract, the seller undertakes to supply all of the requirements needed by the buyer. Under the Uniform Commercial Code, contracts to supply a buyer’s requirements are considered to provide sufficient legal detriment and can be enforced. It is implied that both buyer and seller will act in good faith in making their determination of the quantities needed. Therefore, the supply company can enforce the agreement with the dentist.
Discussion of incorrect answers:
Incorrect. Yes, under the doctrine of promissory estoppel. Under the facts presented, the parties entered into a requirements contract, which will be governed by the Uniform Commercial Code. Given that a valid contract was created, there is no need to invoke the doctrine of promissory estoppel, which applies only under certain circumstances, and only in the absence of an enforceable contract.
Incorrect. No, because neither party agreed to a quantity term. The dentist and the supply company did not have to reach a specific quantity term in order for the supply company to enforce the agreement. Under the Uniform Commercial Code, requirements contracts, in which a seller agrees to supply all of a buyer’s requirements, are enforceable, as long as both parties act in good faith and the quantity required is not more than would be normally necessary to meet the buyer’s needs. In this case, because the parties can determine the amount of supplies the dentist will need during the term of the agreement, a specific quantity term was not necessary to make the requirements contract enforceable. As such, this answer is incorrect.
Incorrect. No, because the dentist’s promise was illusory. It is true that an illusory promise given in support of a bilateral contract would not subject the promisor to a legal detriment, in which case the purported contract would fail for lack of consideration. However, modern common law and the Uniform Commercial Code recognize that a promise to purchase “requirements” from a seller is not illusory. As such, the dentist’s promise to purchase all of her required supplies from the supply company is enforceable.
On October 1, a seller mailed a letter to a buyer offering to sell a specified quantity of shirts at list price. The buyer received the seller’s offer on October 2. The next day, the buyer mailed the seller a letter of rejection. The buyer then changed his mind and decided to accept the seller’s offer. On October 4, the seller sent the buyer a letter revoking his original October 1 offer. On October 5, the buyer emailed the seller indicating that he wished to accept the seller’s offer. The seller read the email on October 6. On October 7, the buyer received the seller’s letter of revocation. The following day, the seller received the buyer’s rejection. The seller subsequently refused to sell the shirts to the buyer, and the buyer sued for breach of contract. Assume that the buyer’s email complies with the Statute of Frauds.
Which of the following is most accurate?
(A) Judgment for the buyer, because he accepted in a reasonable manner and before receiving notice of the seller’s revocation.
(B) Judgment for the buyer, because his acceptance was effective upon dispatch.
(C) Judgment for the seller, because he revoked his offer before receiving the buyer’s acceptance.
(D) Judgment for the seller, because the buyer did not accept in a proper manner.
(A) Judgment for the buyer, because he accepted in a reasonable manner and before receiving notice of the seller’s revocation.
A chef was a buyer for a gourmet grocery store. He contracted in writing with a seafood supplier for the purchase of 5,000 frozen swordfish steaks at $2 each, for a total contract price of $10,000. The manager of the gourmet grocery store was very pleased with the chef’s purchase. The purchase price of the swordfish steaks was only half of the usual price. The gourmet grocery store would be able to sell each steak for $5 each, reaping a substantial profit. The manager approached the chef one afternoon and told him that, because of his good work, he would be receiving a raise in salary of $50 per week beginning the next pay period. Three days later, the manager of the seafood supplier called the chef and informed him that the price per swordfish steak was actually $4, for a total contract price of $20,000. Further, given the size of the error, the seafood supplier would not be able to deliver the swordfish unless the grocery store agreed to pay the additional $10,000. The chef advised the manager of the problem and the manager approved payment of the entire $20,000.
Which of the following accurately states the legal effect of the manager’s promise to give the chef a raise in pay?
A) The promise is unenforceable, because it was illusory.
B) The promise is unenforceable, because it was not supported by consideration.
C) The promise is enforceable, because the manager is morally obligated to perform.
D) The promise is enforceable, assuming the chef conferred a benefit on the manager.
Explanation
The correct answer is: The promise is unenforceable, because it was not supported by consideration.
Discussion of correct answer: To be enforceable, a promise must be supported by consideration. Consideration is defined as a bargained-for exchange or, alternatively, as a bargained-for legal detriment. A legal detriment does not arise unless a promisee does something that he is not otherwise legally obligated to do or refrains from doing something that he is legally entitled to do. Under the facts presented, there has been no bargained-for legal detriment. The manager has not bargained for a legal detriment on the chef’s part; the chef had already performed the work when the promise was made. These facts provide a classic example of past consideration, which, in fact, is not consideration at all. Thus, the manager’s promise to give the chef a raise is not enforceable because it was not supported by consideration.
Discussion of incorrect answers:
Incorrect. The promise is unenforceable, because it was illusory. An illusory promise involves a situation in which one of the parties to the contract does not, in fact, commit to do anything (e.g., “I promise to sell my house to you unless I change my mind.”). The manager made an unequivocal, unconditional promise to the chef.
Incorrect. The promise is enforceable, because the manager is morally obligated to perform. To be enforceable, a promise must be supported by consideration. Consideration is defined as a bargained-for exchange or, alternatively, as a bargained-for legal detriment. A legal detriment does not arise unless a promisee does something that he is not otherwise legally obligated to do or refrains from doing something that he is legally entitled to do. Under the facts presented, there has been no bargained-for legal detriment. The manager has not bargained for a legal detriment on the chef’s part; the chef had already performed the work when the promise was made. These facts provide a classic example of past consideration which, in fact, is not consideration at all. Moral obligation is not a substitute for consideration. In fact, the term “moral obligation” is merely another way of referring to past consideration.
Incorrect. The promise is enforceable, assuming the chef conferred a benefit on the manager. Even if the chef conferred a benefit on the manager, it was not a bargained-for benefit. Moreover, quasi-contract theory does not apply here, because the chef did not make the contract with the seafood supplier in expectation that he would be paid additional compensation for his efforts.
A housing contractor offered to hire an expert cabinet maker to design and install 10,000 rare and expensive agarwood cabinets for a new upscale housing development. Three days later, before the cabinet maker had accepted the offer, the contractor told the cabinet maker that he had changed his mind. Ten days later, the cabinet maker learned that the contractor hired his unemployed, inexperienced nephew for the job. The cabinet maker filed suit against the contractor.
Should the contractor prevail?
A. Yes, because adequate consideration was never discussed.
B. Yes, because the cabinet maker had not yet accepted the offer.
C. No, because as a professional, the contractor’s offer is a firm offer and therefore irrevocable for a reasonable period of time.
D. No, because three days is an unreasonable amount of time in which to revoke an offer.
B. Yes, because the cabinet maker had not yet accepted the offer.
An emergency room doctor was camping with his family in a local state park. As the doctor was walking to get water, he heard a woman screaming that her husband was choking. The doctor rushed to help, but was unable to dislodge whatever was causing the man to choke, and the man died. The doctor now seeks your advice as to whether he can charge the man’s estate for his services. This jurisdiction does not have a Good Samaritan statute, and the hospital that the doctor works at treats all doctors as independent contractors.
What advice would be most accurate?
A) The doctor can recover, because he is not a full-time employee at the hospital.
B) The doctor can recover, based on quasi-contract.
C) The doctor cannot recover, because allowing a doctor to benefit in such a situation would be against public policy.
D) The doctor cannot not recover, because the man died.
Explanation
The correct answer is: The doctor can recover, based on quasi-contract.
Discussion of correct answer:Although there is no formal contract entered into between the man and the doctor, the doctor can recover in quasi-contract for two reasons. First, courts will find an implied-in-law contractual obligation where there is an equitable imposition of a would-be contract. Second, it will prevent unjust enrichment, where one party has bestowed a benefit on the other. Emergency services are a typical situation where courts will find that a quasi-contract exists.
Discussion of incorrect answers:
Incorrect. The doctor can recover, because he is not a full-time employee at the hospital. The doctor’s recovery is based on the fact that he performed emergency services to the man, and this has created an implied-in-law contractual obligation. Therefore, whether he is a full-time or part-time employee of the hospital is not relevant. Had he been on-duty and in the emergency room, he would have had a preexisting duty to provide these services to the man, but outside of work, there is no duty to come to the aid of another.
Incorrect. The doctor cannot recover, because allowing a doctor to benefit in such a situation would be against public policy. Actually, it is just the opposite; courts want to foster the idea of doctors and other emergency personnel coming to the aid of others.
Incorrect. The doctor cannot not recover, because the man died. The doctor’s recovery is not based on his success, but rather, on the fact that he rendered services for which he should be compensated.
A contractor and a homeowner entered into a written contract under which the contractor agreed to build a swimming pool in the owner’s backyard. The owner agreed to pay the contractor $20,000 in three installments: $5,000 at the beginning of the project, $5,000 when the swimming pool was one-half completed, and $10,000 upon completion. The contract contained a clause prohibiting assignment of rights. However, in the midst of constructing the swimming pool, the contractor received a letter from his cement supplier demanding payment of an overdue bill. The contractor assigned the right to final contract payment of $10,000 to the supplier. The owner made the first two payments required by the contract as scheduled. However, she defaulted on the final payment.
If the supplier filed suit against the owner, would he prevail?
(A) No, because a clause in the contract prohibited assignment.
(B) No, because a party to a contract may not assign the right to future payments.
(C) Yes, if the owner consented to the assignment.
(D) Yes, with or without the owner’s consent to the assignment.
(D) Yes, with or without the owner’s consent to the assignment.
A man offered to buy a woman’s farm for $100,000. The woman did not wish to sell her farm, but she jokingly accepted the offer because she did not believe that the man has the $100,000. The man and the woman worked out the terms of the contract and the woman, still joking, wrote out the contract on a sheet of paper which both parties signed. The man took the writing and subsequently tried to enforce it, arriving with a check for $100,000.
In a suit by the man against the woman, what is the likely outcome?
(A) The man will win, because they signed the agreement.
(B) The man will win, because the contract is binding even if the woman did not intend to sell her farm, as the man actually believed this to be a serious transaction and his belief was reasonable.
(C) The woman will win, because there was no good faith on her part to enter into a contract.
(D) The woman will win, because there was no true meeting of the minds.
(B) The man will win, because the contract is binding even if the woman did not intend to sell her farm, as the man actually believed this to be a serious transaction and his belief was reasonable
On Monday, a consultant received an offer in the mail to do a speaking engagement for $300 plus expenses. The consultant mailed an acceptance letter on Tuesday. After mailing the acceptance letter, the consultant changed her mind about the speaking engagement. On Wednesday, the consultant called the offeror and left a voicemail stating that she was rejecting the offer. On Thursday, the acceptance letter reached the offeror. Later on Thursday, the offeror listened to the voicemail.
Did a contract form?
A. Yes, because the acceptance letter was received before the offeror listened to the voicemail.
B. Yes, because a contract formed on Tuesday when the consultant mailed the acceptance letter.
C. No, because the consultant dispatched both an acceptance and a rejection, and the rejection reached the offeror first when the voicemail was left.
D. No, because the contract does not satisfy the statute of frauds.
B. Yes, because a contract formed on Tuesday when the consultant mailed the acceptance letter.
An international oil company offered to pay a top-selling author $1 million to ghostwrite a memoir for the company’s president. However, before the author’s agent could notify the company that the author accepted the offer, the company sent the agent an e-mail stating, “We’ve changed our minds. Due to budget cuts, we can’t afford to do the project.” However, in the meantime, the author had already begun an outline of the book.
Can the author recover the value of the work done on the outline?
(A) No, because the author did not accept the oil company’s offer.
Wanting to spend his 18th birthday somewhere exciting, a teenager traveled from his home in a rural part of the state to the city. He arrived in the city a couple of nights before the big day. While he could have spent the night with friends, the teenager wanted to live it up, and he checked into one of the best hotels in the city. The following morning, the teenager informed the management that he was a minor and, in fact, could not pay for his lodging. While frustrated, the manager let the teenager go, because he felt it would be too difficult and time-consuming to recover the lost fees. Six weeks later, the teenager felt guilty about what he had done. He phoned the manager and promised to pay the bill if the manager would send him a new copy. When the bill arrived, however, the teenager realized that he still could not afford to cover the high cost of his hotel stay.
Is the teenager’s promise to pay enforceable?
(A) Yes, but only if the promise is supported by new consideration.
(B) Yes, it is fully enforceable.
(C) No, because the contract was for a necessity.
(D) No, because the teenager’s promise is voidable.
(B) Yes, it is fully enforceable.
Two sisters led very different lives. One sister became a respected bank president, while the other looked to her parents and the government for support. The bank president learned that her sister had obtained a new wide screen television on her parents’ account at the local appliance store. The bank president believed that her parents had not authorized this purchase; however, she wanted to spare them further pain in any way possible. Therefore, she wrote to the appliance store owner: “If you will not seek payment from my parents, I will pay for the television.” A few months later, the parents filed for bankruptcy.
If the store owner did not attempt to collect the purchase price for the television from the parents, should he succeed in an action against the bank president for the purchase price?
A. Yes, because the bank president’s promise was supported by a bargained-for exchange.
B. Yes, because the store detrimentally relied on the bank president’s promise.
C. No, because the bank president, at most, had only a moral obligation to pay the debt.
D. No, because the store owner’s claim against the parents was worthless.
A. Yes, because the bank president’s promise was supported by a bargained-for exchange.
Think Like a Lawyer
Giving up a possible good-faith legal claim is giving up something of value.
Step by Step Walkthrough
Step 1: A contract requires offer, acceptance, and consideration. Consideration can consist of waiving a good-faith legal claim.
Step 2: Here, the store owner has waived his legal right to file a claim against the parents in exchange for payment by the bank president. This creates consideration on both sides for a valid contract, so long as the owner in good faith believes that he might have a valid claim.
Step 3: Choose the answer that recites this rule of law. Do not make it any more complicated than that.
Step 4: Note that detrimental reliance implies promissory estoppel, which is an equitable remedy. Equitable remedies are only needed where there is no legal remedy. Here, the owner has a legal remedy and does not need to argue for promissory estoppel.
The owner of a lakefront house had leased the house to a renter for the past three summers. Last year, on October 1, the owner sent the renter a letter stating, “Because you have been such a great tenant, I will rent you the house on the same terms as last year. However, I need your answer by February 1.” The renter, uncertain as to when he would be taking his annual vacation, decided to put the letter aside for the time being, intending to respond to it by February 1. On January 15, the owner received an offer from the renter’s cousin to rent the house at a higher price than the renter had paid the prior year. The owner accepted. On January 20, after learning about his cousin’s rental, the renter telephoned the owner and said, “I have decided that I want the house for the summer.” The owner replied that he had already accepted an offer to rent the house from the renter’s cousin. The renter then filed a lawsuit seeking to enforce the contract.
If the renter is unsuccessful in his lawsuit, which of the following provides the best reason?
(A) The contract with the cousin indirectly revoked the offer to the renter.
(B) The contract with the cousin terminated the offer to the renter.
(C) There was no mutual assent because the renter was unsure whether he wanted to vacation at the lake.
(D) A common law offer cannot extend beyond three months without consideration.
(A) The contract with the cousin indirectly revoked the offer to the renter
A man decides to sell his car that he has owned for three years. The man places an advertisement in a local newspaper and soon receives a call from a potential buyer. During the call the buyer offers $6,000 for the car and the man agrees. The buyer gives his address to the man so the man can drive the car to the buyer. The man calls his friend and tells him about the details of the transaction. However, after thinking about the sale for a couple of hours, the man decides not to sell the car and sends a signed letter to the buyer stating that he will not be accepting the $6,000 payment for the car. The buyer seeks to enforce the contract.
Which of the following is correct regarding this transaction?
(A) The contract satisfies the Statute of Frauds, because the man notified his friend about the details of the transaction.
(B) The contract satisfies the Statute of Frauds, because the man sent the buyer a signed repudiation.
(C) The contract does not satisfy the Statute of Frauds, because the price of the car is more than $500.
(D) The contract does not satisfy the Statute of Frauds, because the price of the car is more than $1,000.
(B) The contract satisfies the Statute of Frauds, because the man sent the buyer a signed repudiation.
An insurance brokerage agency wished to completely refurbish its office space. The owner of the insurance brokerage agency entered into an agreement with a construction firm which provided that the construction firm would build the addition for $50,000. Under the agreement, the fee of $50,000 was to be all-inclusive, and the construction firm would be responsible for purchasing all the cabinets, molding, woodwork, plumbing materials, and other supplies. The parties entered into the agreement on March 6. During the negotiations, the owner of the insurance brokerage agency stated that he wanted construction to begin on May 1, and the construction firm agreed, but advised the owner that to begin construction on time, it would be necessary to order the bathroom fixtures, cabinets, and other materials very soon.
On March 17, the construction firm placed an irrevocable order with a cabinet manufacturer for the necessary materials. On April 15, the insurance brokerage agency owner sold the building to an affiliated company, which became the new occupant of the building. The insurance brokerage agency owner informed the new occupant that the construction was planned and that the new occupant would be required to pay the associated costs. The president of the new occupant told the insurance brokerage agency owner that the new occupant could use the new office space and would be happy to cover the construction costs, but never expressed this agreement to the construction firm. On April 25, the president of the new occupant contacted the construction firm and told its representative that the new occupant was cancelling the scheduled construction. The construction firm filed suit against the insurance brokerage agency for breach of contract.
What is the most likely outcome?
A. The construction firm will prevail, because the insurance brokerage agency breached its duty of good faith and fair dealing in selling its office to the new occupant.
B. The construction firm will prevail, because the insurance brokerage agency breached its contract with the construction firm for the office refurbishing project.
C. The construction firm will not prevail, because the new occupant assumed the obligation to pay the construction firm and they cancelled the project.
D. The construction firm will not prevail, because the construction firm never completed the office refurbishing project.
B. The construction firm will prevail, because the insurance brokerage agency breached its contract with the construction firm for the office refurbishing project.
Discussion of correct answer: The insurance brokerage agency and the construction firm entered into a valid contract, pursuant to which the construction firm agreed to refurbish the insurance brokerage agency’s office, and the insurance brokerage agency agreed to pay the construction firm $50,000, with payment due upon completion of the project. The construction firm reasonably relied on its contract with the insurance brokerage agency in ordering the materials necessary for the project, and the construction firm informed the insurance brokerage agency during the contract negotiations that it would be placing this order. When the construction firm was prevented from beginning the agreed-upon construction, a breach occurred. Therefore, this answer choice is correct, because the construction firm will prevail in an action to enforce its contract with the insurance brokerage agency.
A banker purchased two tickets for the Super Bowl. The tickets, which cost the banker $200, were now selling for between $600 and $800. On March 1, the banker sent to his three friends–an artist, a singer, and a dancer–an identical copy of the following letter:
“Dear friends: I have two seats for the Super Bowl. Regrettably, I can’t attend. If anyone is interested, I will let you have the tickets for a reasonable price. However, I must have your reply by March 20. s/The banker”
On March 19, the banker received a letter from the artist that stated, “I accept your offer and will pay you $600 for the two tickets.” The banker did not immediately respond to the artist’s letter. On March 22, the banker received the following letter from the singer: “My only wish in life is to go to the Super Bowl…I will pay $800 for your seats.” The next day, the banker sent a telegram to the singer which read, “The tickets belong to you. You may take delivery upon payment of the $800.” The dancer never responded to the banker’s letter. The artist then gave $600 to the banker within a reasonable time, but the banker refused to give the tickets to him.
In an action by the artist against the banker for breach of contract, judgment should be for whom?
A. The banker, because his letter of March 1 and the artist’s reply were too indefinite to constitute an offer and acceptance.
B. The banker, because his letter of March 1 manifested on its face to the three recipients that it was not intended to be construed as an offer.
C. The artist, because his was the highest bid submitted before the March 20 deadline.
D. The artist, because the banker’s attempt to sell the tickets to the singer was a breach of an implied promise to act in good faith.
B. The banker, because his letter of March 1 manifested on its face to the three recipients that it was not intended to be construed as an offer.
A student got into various forms of trouble at college during his first semester, and the Disciplinary Board notified his parents, who refused to provide him with any spending money as a result. The student asked for a loan of $500 from his roommate with the agreement that he would pay the roommate back with interest in one year. The roommate lent him the $500, but the student never paid him back. The statute of limitations in the jurisdiction for breach of contract actions was three years from the date of the agreement. Ten years later, the student saw the roommate at a class reunion, and remembered that he had never paid him back. He told the roommate, “I am so sorry I forgot to pay you back, but I promise I will send you a check to cover the unpaid debt as soon as I get back home on Monday.” The student failed to send the check, and the roommate now sues to recover the $500.
Will the roommate be successful in enforcing the promise?
A. No, because there was no new consideration for the promise.
B. No, because the student’s statement was merely a recital of consideration.
C. Yes, because the student is now estopped from arguing that the enforcement of the contract is barred by the statute of limitations.
D. Yes, because the student’s promise was to pay a debt that was barred by the statute of limitations.
A. No, because there was no new consideration for the promise.