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.
The owner of a retail garden supply store ordered 500 terracotta flower pots from a wholesaler for a total price of $2,500. Under the contract, the wholesaler is to deliver the flower pots to the store on May 5. On May 1, the wholesaler delivers the flower pots to the store. Upon delivery, the owner of the store inspects the shipment. Although the wholesaler’s catalog stated that the flower pots had drainage holes, the flower pots which were delivered did not. The store owner immediately notifies the wholesaler that the flower pots are defective. The wholesaler offers to replace the flower pots with a shipment of conforming flower pots to be delivered on May 4. The store owner refuses the wholesaler’s offer and tells the wholesaler that he has decided to buy flower pots from a different wholesaler.
Which of the following is the most accurate description of the parties’ rights?
(A) The store owner had the right to reject the flower pots, subject to the wholesaler’s right to cure, but only if the wholesaler delivered conforming pots immediately upon learning of the defects.
(B) The store owner had the right to reject the flower pots, subject to the wholesaler’s right to cure.
(C) The store owner had the right to reject the defective flower pots under the UCC’s perfect tender rule.
(D) The store owner was required to accept the flower pots, because they were still of merchantable quality.
(B) The store owner had the right to reject the flower pots, subject to the wholesaler’s right to cure.
Two neighbors hired the same contractor to repair their roofs. The first neighbor also contracted to have a new deck constructed. Both neighbors unexpectedly left town, and the contractor mixed up the projects, installing a deck on the second neighbor’s house, not the first neighbor’s. When the contractor discovered the mistake, the second neighbor refused to pay. She claimed that because it was the contractor’s mistake, he should absorb the cost. The contractor filed suit against the second neighbor for payment.
If the contractor prevails in his suit, his success will likely be based on which of the following principles of contract law?
(A) Unjust enrichment.
(B) Benefit of the bargain.
(C) Liquidated damages.
(D) The clean hands doctrine.
(A) Unjust enrichment
A homeowner hired a contractor to remodel her kitchen, pursuant to the design of a famous architect. The contract specifies that the homeowner shall pay the cost of the materials up front, but the labor costs of the contract price will be due only upon the architect’s certification of satisfaction that the contractor’s work is in compliance with the architect’s designs and specifications. The architect had worked with the contractor on another project, and was not satisfied with the contractor’s work on that project. In fact, that project is currently involved in litigation. Although the homeowner’s kitchen was remodeled according to the architect’s designs and specifications, the architect withheld the certificate of satisfaction unless the contractor would make certain concessions in the unrelated litigation, which the contractor refused to do. The homeowner, not knowing about the litigation between the architect and the contractor, refused to pay the contractor without the architect’s certification. The contractor is now suing the homeowner for payment under the contract.
Will the contractor prevail?
(A) Yes, because the architect has maliciously withheld certification of satisfaction.
(B) Yes, because the architect has withheld certification of satisfaction in bad faith.
(C) No, because the architect has complete discretion as to whether or not to issue the certificate of satisfaction.
(D) No, because the homeowner is unaware of the dispute between the architect and contractor
(B) Yes, because the architect has withheld certification of satisfaction in bad faith.
A neon sign designer contracted with a theater to create and mount a splashy new sign using the theater’s new logo by June 1. After many consultations, the sign was completed on May 30. However, due to a shortage of scaffolding, the sign was not mounted until June 5. The theater director asserted that the theater owed nothing to the designer, because the designer had completed the project four days later than promised.
Is the theater required to render payment under the contract despite designer’s delay in completing the project?
(A) No, because the doctrine of substantial performance is not applicable to a commercial contract.
(B) No, because the designer’s agreement to complete by June 1 was an express condition.
(C) Yes, because the liquidated damages clause sets the amount of damages due for delay.
(D) Yes, because the designer’s breach was not a material one.
(D) Yes, because the designer’s breach was not a material one.
A music store ran the following ad in the newspaper on Thursday: “This Sunday ONLY take advantage of the best offer this side of the Mississippi! Rock and Rap albums at outlandish prices, only $20 each. Come and get ‘em!”
On Sunday, after reading the advertisement, a professor went to the store to cash in on the awesome deal. The professor picked out thee rock albums and went to the register to pay. The clerk asked the professor for his e-mail address, and found that he was already in the computer. He then charged the professor the regular rate for the albums. The professor mentioned the $20 ad in the paper. The clerk said, “I apologize; that was intended for new customers only, and you do not qualify, because you are already in the computer.”
If the professor sues the music store for breach of contract, for whom should the court rule?
A. The professor, because he detrimentally relied upon the ad in the paper.
B. The professor, because the music store’s advertisement was an offer that the professor accepted by attempting to purchase the albums.
C. The music store, because the advertisement will not be construed as containing a promise to sell a specific set of merchandise.
D. The music store, because the ad was intended to attract new customers.
C. The music store, because the advertisement will not be construed as containing a promise to sell a specific set of merchandise.
Discussion of correct answer: As a general rule, advertisements for the sale of goods, circular letters, price lists, and articles displayed on a shelf with a price tag are construed as preliminary proposals inviting offers. However, in certain situations, an advertisement for the sale of goods may constitute an offer. Students may be familiar with the case of Lefkowitz v. Great Minneapolis Surplus Store [86 N.W.2d 689 (1957)], where the court held that an advertisement in a newspaper proposing the sale of a coat “first come, first served” did, in fact, constitute an offer because the language in the ad indicated a promise to sell.
However, under these facts, there was no specific promise to sell a specified item or enumerated list of items. While choice (B) does mimic the rule of Lefkowitz, choice (C) is better because the advertisement was of the type that is a mere proposal inviting offers.
On August 1, a manufacturer of whole grain breads and cereals decided to expand his product line to include wheat-based items in addition to the oat-based products he currently produced. He sent a signed letter to his oat supplier offering to purchase 100 barrels of wheat at $20 per barrel to be paid in full upon delivery. The letter stated that the offer would remain open for 30 days from supplier’s receipt of the offer. The supplier received the letter on August 4. On August 6 the manufacturer found another grain supplier who could provide higher quality wheat for $18 per barrel. He telephoned his regular supplier to say that he was revoking his offer. The supplier replied that he planned to ship the wheat the following day and that full payment would be expected upon receipt.
Which of the following accurately describes the legal relationship between the manufacturer and the supplier when the wheat is delivered on August 10?
A. No contract exists, because the manufacturer revoked his offer before he received the shipment from the supplier.
B. No contract exists, because the supplier provided no additional consideration to keep the offer open.
C. A contract exists, because a bilateral offer to purchase goods may be accepted by either a promise to ship or by shipment itself.
D. A contract exists, because the manufacturer’s offer was irrevocable.
D. A contract exists, because the manufacturer’s offer was irrevocable.
Discussion of correct answer: This is a contract between merchants governed by UCC § 2-205, often referred to as the firm offer rule. The rule clearly states that an offer made by a merchant to sell or purchase goods becomes irrevocable if the offeror gives assurances that it will remain open for a specified time or, if no time is specified, for a reasonable time, not to exceed three months. This is true regardless of whether additional consideration is supplied by the offeree. The supplier accepted well in advance of the 30-day time limit specified by the manufacturer, so a contract was formed upon delivery.
Think Like a Lawyer
The UCC’s firm offer rule applies to merchants who promise that an offer will be held open for a stated period of time.
Step by Step Walkthrough
Step 1: Under UCC 2-205 regarding firm offers, an offer by a merchant to buy or sell goods in a signed writing, which by its terms gives assurance that it will be held open, is not revocable, for lack of consideration, during the time stated, or if no time is stated then for a reasonable time, but in no event may such period of irrevocability exceed three months.
Step 2: Here, both parties are merchants who deal in the type of goods under discussion. The letter stated that the offer would be held open for 30 days. Thus, under UCC 2-205 it cannot be revoked for 30 days.
Step 3: The supplier accepted the offer within 30 days. The two parties have an enforceable contract for 100 barrels of wheat at $20 per barrel. Select the answer saying that a contract exists, because the manufacturer’s offer was irrevocable.
Step 4: Discard the answer choice saying that no contract exists, because the manufacturer revoked his offer before he received the shipment from the supplier. Under the “firm offer rule” of UCC 2-205, the manufacturer could not revoke his offer until 30 days had passed.
Step 5: Discard the answer choice saying that no contract exists, because the supplier provided no additional consideration to keep the offer open. Under the “firm offer rule” there is no need for the offeree to provide consideration.
Step 6: Finally, discard the answer choice saying that a contract exists, because a bilateral offer to purchase goods may be accepted by either a promise to ship or by shipment itself. This is true, but the answer choice fails to address the attempted revocation of the offer.
A man makes the following statement to a woman: “I hereby offer to sell you Blackacre for $10,000. This offer expires in 30 days.”
Which of the following is most accurate regarding the man’s offer?
(A) It is a firm offer that is irrevocable before the 30-day period has passed.
(B) It is neither a firm offer nor an option contract, and is revocable at any time before acceptance has been made.
(C) Because the man is not a merchant, the woman has a reasonable time to accept.
(D) Regardless of the man’s status, the woman must accept within 30 days and before receiving notice of the man’s direct revocation.
(B) It is neither a firm offer nor an option contract, and is revocable at any time before acceptance has been made.
A locksmith had known an artist for twenty years. One day, the two friends were watching a baseball game on television when the artist said to the locksmith, “Hey, you know, your walls are really bare. If you want, I’ll paint a mural on your living room wall for $100.” The locksmith replied, “That seems like a fair deal.” A few seconds later, the home team hit a home run and the two men jumped up, started cheering, and gave each other a high five. Nothing further was said about painting a mural on the locksmith’s wall.
The next day, the locksmith telephoned the artist and said, “I accept your offer.” The artist replied, “I can’t paint your wall now, because after I left your house last night, I contracted to paint a mural at a bar.”
If the locksmith sues the artist for breach of contract, who will likely prevail?
A. The artist, because the offer lapsed at the end of their conversation.
B. The artist, because his contract with the bar effectuated a revocation of his offer to the locksmith.
C. The locksmith, because the acceptance was communicated before the attempted revocation.
D. The locksmith, because the revocation was ineffective.
A. The artist, because the offer lapsed at the end of their conversation.
Discussion of correct answer: The duration of an offer that states no time limit for acceptance is a reasonable time. The factors determining a reasonable time are: (1) the subject matter of the offer; (2) its rate of price fluctuation; (3) the period within which the offeror’s known purpose in inducing the contract can be effectuated; and, of lesser importance, (4) the mode of communication of the offer. Certain offers, such as those involving stock purchases, have a short life expectancy, due to ever-changing market fluctuations. Thus, a bid on the floor of a stock exchange in an active market will create a power of acceptance lasting only a few minutes. Similarly, under the face-to-face conversation rule, an offer expires at the conclusion of a face-to-face conversation (unless there is an acceptance).
While a grocer was on vacation, sudden flooding started in her town. Her neighbor, a retiree who knew that the grocer was out of town, spent eight hours erecting a wall of sandbags around the grocer’s house. The sandbags kept the house dry and prevented many thousands of dollars in damages. When the grocer returned, she thanked her neighbor and told him that she would pay him $500 the following week. Several months later, the grocer had not paid. Incensed, the neighbor sued the grocer for $500.
In a jurisdiction which has adopted the theory of moral consideration, will the neighbor prevail?
A. Yes, because the neighbor conferred a material benefit on the grocer.
B. Yes, because a reasonable person would have asked the neighbor to help prevent flooding.
C. No, because the neighbor was not performing professional services when he made the sandbag walls.
D. No, because the grocer did not have a contract with the neighbor to take action to save her house.
A. Yes, because the neighbor conferred a material benefit on the grocer.
An experienced antique collector orally agreed to pay a dealer $250,000 for a rare Stradivarius violin. During their negotiations, both parties referred to the violin as “an original Stradivarius.” The collector paid the dealer $250,000 and received the violin. At the time of the purchase, the dealer also handed the collector a bill of sale disclaiming, under applicable provisions of the Uniform Commercial Code, all express or implied warranties. A short time later, the collector discovered that the violin he purchased was not an original Stradivarius, but in fact, a masterful imitation. The violin was valued at only $500. The collector subsequently brought an appropriate action against the dealer to rescind the contract and recover the $250,000.
The court will likely find in favor of which party?
(A) The dealer, because the sales contract was valid and enforceable under the doctrine of caveat emptor.
(B) The dealer, because the bill of sale disclaimed any warranties as to the genuineness of the violin.
(C) The collector, because the dealer’s actions were tantamount to fraud.
(D) The collector, because although the sales contract was valid, it would be voidable by the collector due to the mutual mistake of the parties regarding the genuineness of the violin.
(D) The collector, because although the sales contract was valid, it would be voidable by the collector due to the mutual mistake of the parties regarding the genuineness of the violin.
A chef negotiated with a contractor to remodel his home kitchen to look like the kitchen in his restaurant. In order to do this, the contractor had to order top-of-the-line appliances. He also needed to remove some sections of a wall and install new electrical sockets to accommodate the appliances. The cost of the remodel was $50,000, with two-thirds of the price coming from the purchase of the appliances. A dispute arose and the parties both suspended their obligations. The contractor refused to further perform and the chef refused to pay the contractor.
What law should be used to analyze the dispute?
A) The UCC applies to the purchase of the appliances and common law applies to the delivery, the wall removal, and the electrical socket installation.
B) The UCC should be applied to the entire transaction, because the primary purpose of the contract was the appliances, which account for the overwhelming majority of the contract price.
C) Common law should be applied to the entire transaction, because the primary purpose was to provide a service, regardless of the cost of the appliances.
D) When a contract is for both goods and services, in the absence of a choice-of-law selection clause, common law is the default law to be applied.
Explanation
The correct answer is: Common law should be applied to the entire transaction, because the primary purpose was to provide a service, regardless of the cost of the appliances.
Discussion of correct answer:Following the predominant purpose test, a court will view the predominant purpose of the contract to be for services–specifically, a kitchen remodel. Where a contract has a mix of goods and services, relevant criteria for determining whether the UCC will control will include: (1) the contract language; (2) the nature of the seller’s business; (3) the reason for entering the contract; and (4) the amounts charged under the contract for the goods and services. Here, although most of the contract price was for the purchase of the appliances, the purchase was not made directly to an appliance store, where delivery was the only service. Rather, the chef went to a contractor, presumably for his skill and experience in remodeling. The end result that the chef was contracting for was not the appliances, but a kitchen that looked like the one he used in his restaurant. As such, this is primarily a services contract, with the goods being incidental to the agreement.
Discussion of incorrect answers:
Incorrect. The UCC applies to the purchase of the appliances and common law applies to the delivery, the wall removal, and the electrical socket installation. This is a rule followed in only a minority of jurisdictions, splitting the contract between the different components.
Incorrect. The UCC should be applied to the entire transaction, because the primary purpose of the contract was the appliances, which account for the overwhelming majority of the contract price. The predominant purpose of the agreement here was to remodel the chef’s home kitchen to look like the one in his restaurant. The purchase of appliances was incidental to this purpose.
Incorrect. When a contract is for both goods and services, in the absence of a choice-of-law selection clause, common law is the default law to be applied. There is no requirement that the parties choose what law applies (UCC or common law), and there is no default rule, as the majority of states follow the predominant purpose test.
A porcelain doll collector is 17 years old and has been buying and selling antique and custom-made dolls for the past five years. An older personal shopper, who had never been interested in dolls before, saw the doll collector’s showcase at an antique toy convention and decided that she would like to own one. The personal shopper asked the doll collector if she knew where she could get such a doll, and the doll collector showed the personal shopper a very rare and old doll she had in her collection. Although the doll was missing two buttons and a strap on her dress, when the personal shopper asked the doll collector whether the lack of buttons and strap would affect the doll’s potential resale value, the doll collector replied that it would have no effect at all. Actually, the doll collector knew that the lack of the buttons and strap probably would interfere substantially with the potential market/resale value of the doll. Unaware of this significance, the personal shopper arranged to come by the doll collector’s house the following weekend to bring the doll collector $150 cash and to pick up the doll. The doll collector wrote the terms of their agreement with lipstick on a small receipt she had gotten from buying lunch earlier in the day and both parties signed it. A few days later, the personal shopper found out from one of her clients that the incomplete dress would diminish the resale value of the doll considerably. The personal shopper called the doll collector that night and told her that the deal was off. The doll collector sued the personal shopper for breach of contract.
Will the doll collector prevail?
A. Yes, because the agreement was a voidable obligation only at the doll collector’s election.
B. Yes, because it was not reasonable for the personal shopper to rely on the doll collector’s statement.
C. No, because the personal shopper relied on a material misrepresentation.
D. No, because the doll collector cannot enter into an enforceable contract because she is still a minor.
C. No, because the personal shopper relied on a material misrepresentation.
After a two week unpaid internship, a designer offered his services to an architect for $150 per hour. The architect replied, “Sounds good but I’ll get back to you tomorrow.” The next day, just as the architect was about to accept the designer’s offer to work for her, the architect received a text message from the designer that said, “Leaving for parts unknown on vacation, I need to clear my head. I’ll call when I get back.” In need of immediate services for a big project, the architect was forced to hire another designer for $250 per hour. The architect then filed an action for breach of contract against the designer seeking to recover the extra expenses she incurred.
Who should prevail in the action?
A. The architect, because she detrimentally relied on the graphic artist’s promise of performance, causing the creation of an enforceable contract.
B. The architect, because the designer’s vacation deprived her of the benefit of the bargain.
C. The designer, because the architect’s refusal acted as a counteroffer, which effectively revoked the designer’s offer.
D. The designer, because the parties did not have a valid contract.
D. The designer, because the parties did not have a valid contract.
A retired teacher loved being around cars, and she frequently stopped by a mechanic’s garage to watch the mechanics work and help out with various odd jobs. Finding that the retired teacher was a big help around the shop, the mechanic decided to offer to pay the retired teacher for her work. The mechanic told the retired teacher, “You’ve been doing such a good job that I’d like to pay you $50 per week to keep helping out. Come to think of it, I’ll also pay you $500 for all of the work you’ve done so far.” Delighted, the retired teacher accepted the mechanic’s offer and continued to perform odd jobs for the mechanic.
If the mechanic refuses to pay her, what may the retired teacher recover under the common law?
A. Nothing.
B. Only the actual value of the services she has rendered.
C. $50 per week, but not the $500.
D. $50 per week, plus $500.
C. $50 per week, but not the $500.
A unilateral contract is one that is accepted by performance, rather than by a return promise.
Step by Step Walkthrough
Step 1: A contract requires offer, acceptance, and consideration. A unilateral contract requires performance as the acceptance, rather than a promise as the acceptance.
Step 2: Here, the team offered $1 million for one backwards half-court shot. The fan performed as agreed, thus accepting the offer by performance. His shot was the consideration for the $1 million. A valid contract exists, and the team must pay.
Step 3: Select the answer stating that a binding contract exists between the team and the fan, because it was a unilateral contract.
Step 4: Note that there is no need for the equitable doctrine of promissory estoppel, because there is a contract on which to rely.
Step 5: Note that there was no failure of consideration, because the fan performed the task requested.
Step 6: Finally, note that there was no gratuitous promise, because a task was offered in exchange for the money. The team must pay the $1 million. (Also note that, in real life, teams buy insurance to make these prize payments.)
A museum enters into a contract with an art institute to manage a nationwide tour of numerous priceless paintings owned by the art institute. The contract calls for the art institute to lend the works of art to the museum and for the parties to cooperate in the display of the art in various museums over a two-year period. Just before the tour is to begin, the art institute refuses to abide by the contract.
Is a court likely to order the art institute to specifically perform the contract?
(A) Yes, because the art works involved are unique.
(B) Yes, because specific performance would be in the public interest.
(C) No, because such a remedy would require the parties to cooperate over a long period of time.
(D) No, because this contract does not involve the sale of land.
(C) No, because such a remedy would require the parties to cooperate over a long period of time.
A well-known fisherman lived in the southeast by the Gulf of Mexico. One day a local sportsman approached the fisherman and said, “If you catch a marlin weighing over 100 pounds today, I’ll pay you $1000”. The fisherman then purchased special bait that he knew would attract a marlin and filled his boat with gas for the ride out to the fishing grounds. As the boat approached the fishing grounds, the fisherman baited the hooks with herring roe, set the lines, and began trolling for marlin. After the sportsman had his third beer, he exclaimed “New deal, I will only pay if you catch a marlin weighing over 500 pounds.” That day, fisherman caught a 250 pound marlin.
Can the fisherman recover $1000 from the sportsman?
A. Yes, under the doctrine of quasi-contract.
B. Yes, because there was an offer for a unilateral contract that became irrevocable prior to the sportsman’s attempted revocation.
C. No, because there was no consideration.
D. No, because the sportsman’s revocation and modification were effective since the fisherman had not completed performance.
B. Yes, because there was an offer for a unilateral contract that became irrevocable prior to the sportsman’s attempted revocation.
Discussion of correct answer: An offer that invites performance of an act, rather than a return promise, as acceptance, becomes irrevocable as soon as the offeree has started to perform the act. This rule is deemed essential to prevent hardship to the offeree where his part performance does not benefit the offeror and so would give him no recovery in quasi-contract. Students should be advised that although some of the older decisions have applied the logical view that a unilateral offer may be revoked at any time prior to full completion of the act bargained for, by the majority rule today such an offer becomes irrevocable as soon as the offeree has started to perform the act requested. Part of the actual performance requested must have been given in order to render the offer irrevocable. Mere preparation for performance, no matter how detrimental to the offeree, will not affect the offeror’s power and privilege to revoke a unilateral offer. Here, the fisherman went beyond mere preparation because he had already baited the hooks, set the lines and actually began fishing. The sportsman’s attempted revocation and modification was too late, thus he must pay the fisherman $1000.
A cleetch is a custom-designed transmitter device that is used in wireless phones. A phone company entered into a written contract with a cleetch manufacturer to purchase 1,000 cleetches for the total contract price of $100,000. After the 1,000 cleetches were manufactured, the phone company received a telephone call from the manufacturer. During their conversation, the manufacturer told the phone company that the manufacturer would not deliver the cleetches unless the phone company agreed to pay an additional $5 per cleetch. Reluctantly, the phone company agreed to pay the additional $5 per cleetch. Following their phone conversation, the manufacturer authorized the delivery of the 1,000 cleetches to the phone company. After the transmitter devices were accepted by the phone company, the phone company sent the manufacturer a check in the amount of $100,000. The manufacturer has made repeated demands for the additional $5,000, which the phone company refuses to pay.
The manufacturer filed suit against the phone company to recover the additional $5,000.
(A) There was no new consideration for the phone company’s promise to pay the additional $5,000.
(B) The manufacturer acted in bad faith in demanding the additional $5,000.
(C) The manufacturer’s demand for the additional $5 per cleetch makes the contract unconscionable.
(D) The price modification materially altered the terms of the contract and, thus, did not become part of the bargain.
(B) The manufacturer acted in bad faith in demanding the additional $5,000.
A seller sent an email to a potential buyer offering to sell his patio furniture to her for $5,000. The buyer immediately responded via email asking whether the offer included the umbrella that was sitting in the garage. The seller emailed back: “No, it does not; just what is sitting on the patio. If you want an umbrella, you will have to buy one.” The buyer then ordered an umbrella that would fit on the table and matched the color of the chairs. Later that day, the buyer replied to the seller: “I accept your offer.” The seller then wrote back, “I have changed my mind, I’ve decided to keep the furniture.”
If the buyer sues the seller claiming there was a valid contract, who is likely to prevail?
(A) The buyer, because she accepted the seller’s offer within a reasonable amount of time and before the seller revoked his offer.
(B) The buyer, because her ordering the umbrella is a sufficient act in reliance on the seller’s offer.
(C) The seller, because the offer lapsed after the buyer did not accept the original offer.
(D) The seller, because the buyer’s initial email was a counteroffer which terminated her power of acceptance.
(A) The buyer, because she accepted the seller’s offer within a reasonable amount of time and before the seller revoked his offer.
The owner of a salvage business specialized in antique architectural hardware and other architectural elements, such as doors and window frames. He generally sold items to people who were in the process of restoring old houses and other buildings. When a nearby house was demolished, the owner obtained a large set of double parlor doors. Several weeks later, the owner spotted a customer admiring the parlor doors in his showroom. The owner said, “Hey, that’s a great set of standard, 19th-century parlor doors. I’ll sell them to you, including the hardware, for $1,000.” The customer agreed and bought the doors and hardware for $1,000. The customer (whom the owner did not know was an art historian) was well-acquainted with the history of the demolished house. He knew that, shortly after the house was built, a well-known American folk artist painted a mural on the inside of the doors, which had be painted over by the house’s owners when the style of painting went out of fashion. The customer knew that the mural would be worth thousands on the current art market. After having several layers of paint professionally removed, he arranged to sell the painting at auction for an estimated selling price of $20,000.
What is the owner’s best argument for rescinding his contract with the customer?
(A) The owner did not know about the presence of the mural.
(B) The owner was not aware that the customer was an art historian and acquainted with the history of the house from which the doors were obtained.
(C) The customer was aware that the owner did not know about the presence of the mural.
(D) The owner’s mistake had a material effect on the performances the parties agreed to exchange.
(C) The customer was aware that the owner did not know about the presence of the mural.
A dog breeder lost her prized golden retriever puppy during a walk in a nature preserve. To enlist help in finding her dog, the breeder posted a notice on the internet and offered to pay $1,000 for the return of her puppy. A hiker saw the notice, equipped herself, drove to the nature preserve, and subsequently found the puppy. However, before the hiker could return the puppy, the breeder heard that the dog had been found and posted another notice on the internet withdrawing the reward offer. The hiker brought the breeder the dog and demanded the reward. The breeder refused.
Is the breeder liable to pay the hiker the reward?
A) Yes, because the hiker had undertaken substantial steps toward acceptance of the breeder’s offer before it was revoked.
B) Yes, because the hiker did not actually see the breeder’s purported revocation of her reward offer.
C) No, because the hiker did not communicate her acceptance of the breeder’s offer.
D) No, because the breeder revoked the offer before the completion of the hiker’s performance.
Explanation
The correct answer is:Yes, because the hiker had undertaken substantial steps toward acceptance of the breeder’s offer before it was revoked.
Discussion of correct answer:A unilateral contract is created when an offer seeks performance rather than a promise in return. An offer in a unilateral contract cannot be revoked once performance has begun. This answer is correct because the hiker undertook substantial efforts towards acceptance by performance of the breeder’s offer to enter into a unilateral contract. All that remained was delivery of the puppy to the breeder. Therefore, the breeder cannot revoke her offer to enter into a unilateral contract once the hiker began performance.
Discussion of incorrect answers:
Incorrect. Yes, because the hiker did not actually see the breeder’s purported revocation of her reward offer. Revocation of an offer that is made available generally through a particular medium, such as a web site or a newspaper, can be revoked by using the same medium, unless there is a readily available and better alternative. Such a revocation does not require that the other party actually see it. Unilateral contracts which seek performance rather than a promise in consideration can be revoked until performance has begun. The problem in this situation is that the time for revocation had passed, because the hiker had begun performance. The problem is not that the breeder had to give actual notice to the hiker to have effective revocation.
Incorrect. No, because the hiker did not communicate her acceptance of the breeder’s offer. A unilateral contract like a reward contract may be accepted by performance. Therefore, there is no need for the hiker to communicate her acceptance to the breeder.
Incorrect. No, because the breeder revoked the offer before completion of the hiker’s performance. This answer is incorrect. Unilateral contracts, which seek performance rather than a promise in acceptance of the offer, can be revoked until performance has begun. Although posting the note generally would be effective as a revocation, the breeder’s purported revocation was ineffective in this case, because the hiker had already begun performance that would constitute acceptance of the unilateral contract. At that point, the breeder had no power to revoke her offer.
A homeowner hired a roofer to replace the roof on his home, with full payment after completion. The roofer finished half of the job, then had to leave town. He called his friend and requested that she finish the job for him. She agreed to complete the job for half of the money, but failed to complete it. The homeowner sued both the roofer and the friend for breach of contract.
Who is liable for the roofing contract?
(A) The roofer, because his assignment was invalid.
(B) The friend, because the assignment was valid.
(C) Both the roofer and the friend, because they are jointly and severally liable.
(D) Neither party, because the homeowner did not render payment to anybody.
(C) Both the roofer and the friend, because they are jointly and severally liable.
A homeowner renewed her homeowner’s insurance policy without reviewing the terms by mailing the signed copy to her insurance agent. When she read the terms later, she found that her rates had been increased. The homeowner called her agent and said that she had mailed the policy along with a check for the premium, but was not sure about renewing at the increased price. The agent said that he would check for any additional discounts. He later called the homeowner and stated that in fact, he had undercharged her, and a new policy would cost 20% more. He indicated that he was revoking the first policy and preparing a new one for her to sign.
Is there a validly formed contract between the insurance company and the homeowner?
(C) Yes, because the homeowner accepted the agent’s first offer prior to his revocation.
On Monday, Jim decided to sell his vintage car. Bill had always admired the car and inquired as soon as he saw the for-sale sign. Jim said he was firm at $5,000. Bill thought this was a good price, and told Jim he wanted it, but needed to check with his wife before spending such a large amount of money. In the meantime, Bill pulled a $100 bill from his pocket and gave it to Jim, saying, “Here’s a down payment. See you tomorrow!” Jim replied, “Okay, it will be here.” On Tuesday morning, Bill approached Jim with a check written out for $4,900. Jim said, “Sorry, but you’re too late. I accepted an offer last night for $10,000.”
In an action by Bill against Jim for breach of contract, how should the court rule?
(A) For Jim, because $100 is insufficient to create an option contract for a $5,000 car.
(B) For Jim, because Bill’s language was insufficient to create a valid option contract.
(C) For Bill, because Jim created an option contract, which is irrevocable at least until the following day.
(D) For Bill, because the UCC precludes Jim from selling the car to anyone other than Bill before Wednesday.
(C) For Bill, because Jim created an option contract, which is irrevocable at least until the following day.
A buyer ordered 1,000 widgets from a seller for immediate delivery. The seller responded by shipping 800 widgets, along with an accompanying notice to the buyer explaining that the seller did not have an adequate inventory to ship 1,000 widgets, and was therefore shipping 800 widgets as an accommodation to the buyer in light of the buyer’s urgent need.
Which of the following is the most accurate statement?
A) A contract was formed under the mailbox rule when the seller shipped the widgets.
B) A contract will be formed once the widgets arrive at the buyer’s address.
C) No contract exists, because the notice of accommodation operates as a counteroffer.
D) No contract exists, because the buyer’s accommodation is not an acceptance.
Explanation
The correct answer is: No contract exists, because the notice of accommodation operates as a counteroffer.
Discussion of correct answer: The UCC governs contracts for the sale of goods. If the contract falls under the UCC, then the UCC’s provisions will trump any contrary common law rules. Under the UCC, an offer can be accepted by the offeree communicating that acceptance or by the prompt shipment of the goods. When the seller ships nonconforming goods, this operates as an acceptance of the offer and a simultaneous breach of contract. However, the shipment of nonconforming goods will not constitute an acceptance of the offer if the seller notifies the buyer that the shipment is offered only as an accommodation to the buyer. In such circumstances, the shipment instead constitutes a counteroffer, which the buyer is free to accept or reject. Here, the seller notified the buyer of an accommodation in light of the buyer’s urgent need. As such, the notice will operate as a counteroffer.
Discussion of incorrect answers:
Incorrect. A contract was formed under the mailbox rule when the seller shipped the widgets. Under the common law mailbox rule, which is the rule in almost every American jurisdiction, an acceptance by mail is effective upon dispatch so long as the acceptance is properly posted, with the correct address and postage amount. Absent an accommodation, the seller’s shipment of nonconforming goods constitutes an acceptance of the buyer’s offer under the UCC and also constitutes a simultaneous breach of the resulting contract under the perfect tender rule. Because there was a notice of accommodation here, this will act as a counteroffer, and not an acceptance. Therefore, no contract was formed.
Incorrect. A contract will be formed once the widgets arrive at the buyer’s address. Under the UCC, a seller can accept a buyer’s offer to purchase goods for prompt or current shipment in one of three ways: (1) a promise to ship goods in conformity with the terms of the offer, such as an acknowledgment of the order form sent to the buyer; (2) the prompt or current shipment of the goods in conformity with the terms of the offer; or (3) under the UCC, the seller can also accept the buyer’s offer by shipping nonconforming goods. As discussed above, the notice of accommodation operates as a counteroffer to the buyer’s original offer. Therefore, no contract will be formed unless and until the buyer accepts the counteroffer. The arrival of the goods at the buyer’s address is insufficient for contract formation, as the buyer has not necessarily accepted the goods.
Incorrect. No contract exists, because the buyer’s accommodation is not an acceptance. When choosing between answers that are close, the better answer is usually the one that is more accurate on the point of law. Here, the seller’s notice of accommodation was not an acceptance; rather, it was a counteroffer. Furthermore, the buyer did not make an accommodation–the seller did. Be careful when reading the language of the question. Accordingly, this is the not the best answer.
A man owned a store that sold dishware. One day, he decided to expand his inventory by buying more dishware for his store. He contacted a dishware production company and spoke to a company sales agent over the phone. The two agreed that the man would buy 100 sets of dishes for a total of $5,000. The man then asked if he needed to show up in person to the company headquarters so that both parties could sign the contract, but the agent stated that there was no such need since the agent would send the man a letter describing the offer. However, the agent never sent the offer letter, and, two days later, the company denied the existence of the contract. The man suffers damages as a result.
Which of the following is correct?
A. The contract is enforceable, and the man will receive damages via promissory estoppel.
B. The contract is enforceable, because the contract does not need to be evidenced by a signed writing.
C. The contract is not enforceable, and the man will not receive any damages.
D. The contract is not enforceable, but the man can still recover damages via promissory estoppel.
D. The contract is not enforceable, but the man can still recover damages via promissory estoppel.
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. A contract for the sale of goods at a price of $500 or more falls under the Statute of Frauds. As such, this contract is not enforceable, since it cannot be evidenced by a signed writing. However, where a party to an oral contract within the Statute of Frauds promises the other party that he has created or will create a signed writing evidencing the parties’ agreement, and the other party relies on that assurance by failing to take other steps to satisfy the Statute of Frauds, most courts will find promissory estoppel against the party whose assurances of a signed writing turn out to be false. In this case, the sales agent promised but never sent a written offer to the man, so the man never went to the company headquarters. The man relied on that promise and suffered damages as a result. As such, the company will have to pay the man damages via promissory estoppel.
Think Like a Lawyer
Even where there is no contract, and thus no legal remedy, there still may be a remedy in equity.
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: Here, there was a contract for goods worth $5,000, so it had to be in writing to be enforceable. However, there was no writing. This means that the seller (production company) could, indeed, break the contract before performance was complete.
Step 3: Once the production company decided not to continue with the unenforceable agreement, the man was left without any legal remedy. However, he had suffered damages. Fortunately, there was still a remedy in equity. The equitable remedy is called promissory estoppel. Promissory estoppel requires: (1) a promise; (2) foreseeable reliance on the promise; (3) actual reliance; and (4) injustice without enforcement.
Step 4: The company made a promise. It was foreseeable that the man would rely on the promise by waiting for the written contract. He actually did so. Finally, he suffered damages by relying on the promise, creating an injustice if there is no enforcement of the promise. Equity will allow the man to recover his damages from the production company.
Step 5: The two choices stating that the contract was enforceable can be immediately discarded. Then, of the two remaining answer choices, choose the one that recognizes that the man still can get reimbursed for his losses through an equitable remedy.
A rare coin dealer and a collector met at a stamp-and-coin fair that was held on a monthly basis. The dealer had a mint condition 1905 Silver Eagle in his inventory that was valued at well over $10,000. The collector desperately wanted to purchase the coin, but knew that he did not have enough money to make the purchase. The two spoke for a while, and before leaving, the following note was written from the dealer to the collector: “I will hold the 1905 Silver Eagle you were eyeing up at the fair today for sale to you alone until the next fair.” The dealer signed and dated the note and handed it to the collector.
If the collector wanted to purchase the coin at the following fair, is the offer still in force?
(A) No, because there was no consideration provided to keep the offer open until the next fair.
(B) No, because “until the next fair” does not state a sufficient period of time.
(C) Yes, because it was a firm offer.
(D) Yes, because the offer concerned the sale of goods.
(C) Yes, because it was a firm offer.
On February 3, a florist left a note for one of his customers offering to pay $2,000 for his truck if the customer delivered the truck to the flower shop before 1:00 p.m. on February 13. The florist indicated that the customer needed to accept by delivering the truck because the florist had lots of deliveries for Valentine’s Day. Two days later, the customer sent a letter to the florist indicating his acceptance of the offer to purchase. However, the letter was delayed by the post office and did not reach the flower shop until February 12. By then, having not heard back from his customer, the florist had purchased another used truck for $1,800. On February 13, the customer drove his truck to the florist, arriving at about 12:55 p.m., at which time the florist rejected the customer’s truck. The customer then filed suit for breach of contract.
Which of the following most accurately describes the significance the court will attach to the customer’s letter accepting the offer to purchase the truck?
A) The customer’s letter, upon its receipt by the florist, operated as an effective acceptance of the florist’s offer to purchase.
B) The letter from the customer, upon the customer’s mailing of the letter, created a binding unilateral contract between the florist and the customer for the purchase of the customer’s truck.
C) The mailing of the customer’s letter did not create a binding contract between the customer and the florist.
D) The customer’s letter bound the florist and the customer to a unilateral contract as of February 12, when the florist received the letter.
Explanation
The correct answer is: The mailing of the customer’s letter did not create a binding contract between the customer and the florist.
Discussion of correct answer:When an offeror requests acceptance by actual performance rather than by a promise to perform, the offer is considered an offer for a unilateral contract. An offeree’s promise is insufficient to create acceptance of a unilateral contact; a unilateral contract can be accepted only by the offeree’s performance of the requested act. Here, the florist’s note to his customer was an offer for a unilateral contract, because it requested the customer’s acceptance by performance of the act of delivery of the truck on or before the specified date and time. The customer’s letter containing the promise to deliver the truck by the specified deadline did not operate to create an enforceable contract between the parties, as the customer could accept the florist’s offer only by rendering the requested act of actually delivering the truck by the specified deadline, which the customer failed to do.
Discussion of incorrect answers:
Incorrect. The customer’s letter, upon its receipt by the florist, operated as an effective acceptance of the florist’s offer to purchase. The florist’s note was an offer for a unilateral contract, in that it requested acceptance by performance of an act (the delivery of the truck on or before the specified date and time), rather than by a promise to perform. Thus, the only way the customer could effectively accept this offer was by performance, not by the promise contained in his letter. As such, this answer is incorrect.
Incorrect. The letter from the customer, upon the customer’s mailing of the letter, created a binding unilateral contract between the florist and the customer for the purchase of the customer’s truck. The florist’s note was an offer for a unilateral contract, in that it requested acceptance by performance of an act (delivery of the truck on or before the specified date and time), rather than by a promise to perform. A unilateral contract can be accepted only by performance of the requested act, not by a promise to perform. Therefore, the customer’s letter containing a mere promise to deliver the truck by the specified date and time was insufficient to create any contract between the parties, either upon the customer’s mailing of the letter or the florist’s receipt of the letter.
Incorrect. The customer’s letter bound the florist and the customer to a unilateral contract as of February 12, when the florist received the letter. The florist’s note was an offer for a unilateral contract, in that it requested acceptance by performance of an act (delivery of the truck on or before the specified date and time), rather than by a promise to perform. A unilateral contract can be accepted only by performance of the requested act, not by a promise to perform. Therefore, the customer’s letter containing a mere promise to deliver the truck by the specified date and time was insufficient to create any contract between the parties, either upon the customer’s mailing of the letter or the florist’s receipt of the letter.
A homeowner said to a carpet installer, “My carpets are worn and filthy. I think the pad is shot, too. If you will replace the carpet and pad with all new materials, I’ll pay you $6,000.” The carpet installer replied, “Sure, but I’m really busy for the next two or three weeks.” The homeowner then remarked, “OK, but let me know a soon as possible.” A week later, the installer drove his installation van to the homeowner’s home and unloaded the padding materials and other equipment needed to perform the carpeting job. When the homeowner looked out his window and saw the installer, he immediately ran outside and exclaimed, “What are you doing! No deal. I couldn’t wait for you and decided to do it myself.” The installer filed an action against the homeowner for breach of contract.
Which theory provides the installer with the best chance for recovery?
A. A bilateral contract was formed when the installer purchased the materials and equipment needed to do the carpeting job.
B. A bilateral contract was formed when the installer said, “Sure, but I’m really busy for the next two or three weeks.”
C. The homeowner made an offer that proposed a unilateral contract, and the offer became irrevocable when the installer purchased the materials and equipment needed for the job.
D. The homeowner made an offer that proposed a unilateral contract, and the installer manifested an intent to accept the offer when he began performance by unloading the materials and equipment at the homeowner’s house.
D. The homeowner made an offer that proposed a unilateral contract, and the installer manifested an intent to accept the offer when he began performance by unloading the materials and equipment at the homeowner’s house.
Discussion of correct answer: A unilateral offer which invites performance of an act as acceptance, rather than a return promise, becomes irrevocable as soon as the offeree has started to perform the act. Thus, this answer choice correctly describes the theory that would be most helpful to the roofer. A bilateral contract requires an exchange of promises for the contract to be formed. Neither the purchasing of the material nor the statement by the installer would be a sufficient promise to bind the parties to a bilateral contract. Note that choice (C) is incorrect because purchasing the materials is mere preparation and not the commencement of actual performance.
A tenor entered into a contract with the city opera. The contract was signed by himself and by the city opera’s manager. The tenor was to be employed by the city opera for three seasons, each running from September 1 through March 30, at a salary of $35,000 per season. On September 1, the tenor failed to appear for work at the city opera. On September 4, the manager heard on the news that the tenor had been seriously injured in a water-skiing accident the previous week and would require two to three months of recovery. The manager then hired a local tenor to sing for city opera for a period of three months at a salary of $6,000 per month.
Is the city opera entitled to recover from the tenor the additional $1,000 per month that it has to pay the local tenor beyond what it had contracted to pay the tenor?
(A) Yes, because the tenor knew that the city opera had spent a considerable sum advertising his appearance with the city opera beginning September 1.
(B) Yes, because the tenor did not give the city opera timely notice of his accident and recuperation.
(C) No, because the performance of a personal services contract is excused if a party is injured and cannot perform.
(D) No, because the tenor did not cause the accident and was not at fault for the delay.
(C) No, because performance of a personal services contract is excused if a party is injured and cannot perform.
A young man had been helping his father run the father’s farm for several years. The son wished to move out of town, but his father’s health had been declining to the extent that he was unable to take care of himself anymore. The farm was located south of town, in an area into which the town might be expanding in the next few years. The son was aware of the possible expansion, but his father was not. The son spoke to his father and told him of his plan to move out of town. Worried about his father’s failing health, the son urged his father to sell the farm to a neighbor for $150,000. Unbeknownst to the father, his son and the neighbor were actually planning to hold onto the land until the town expanded south, at which time they planned to subdivide it and make a large profit in the real estate market. The father agreed to sell the farm to the neighbor and signed the papers for a transfer, even though the sales price was below the actual market value. The father later discovered that he could have sold the farm for at least $300,000. He now seeks to void the contract.
Which of the following is the father’s strongest argument?
(A) The contract is voidable by reason of misrepresentation.
(B) The contract is voidable by reason of undue influence.
(C) The contract is voidable by reason of unconscionability.
(D) The contract is voidable by reason of mistake.
(B) The contract is voidable by reason of undue influence.
After several days of negotiations, a homeowner wrote to a plumber and said, “Will pay you $3,000 if you will install new plumbing in my home according to the specifications I have sent you. I must have your reply by March 30.” The plumber replied by a letter that the homeowner received on March 15 stating, “Will not do it for less than $3,500.” On March 20, the plumber wrote to the homeowner, “Have changed my mind. I will do the work for $3,000. Unless I hear from you to the contrary, I will begin work on April 5.” The homeowner received this letter on March 22 but did not reply to it. The plumber, without the homeowner’s knowledge, began the work on April 5.
Which of the following best characterizes the legal relationship between the homeowner and the plumber as of April 5?
(A) A contract was formed on March 20, when the plumber posted his letter.
(B) A contract was formed on March 22, when the homeowner received the plumber’s letter.
(C) A contract was formed on April 5, when the plumber began to work.
(D) There was no contract between the parties as of April 5.
(D) There was no contract between the parties as of April 5.
A man needed to have the oil changed in his car. When he mentioned this to his neighbor, she said, “If you will agree to pay me $50, I’ll change the oil in your car over the weekend.” The man agreed. On Sunday afternoon, the man noticed that his neighbor still had not started working on the car and asked if the car would be ready by Monday morning. The neighbor replied, “I realized $50 is too low a price.” The man then said, “If you change the oil in my car by tomorrow morning, I’ll pay you an additional $25, and I won’t sue you in small claims court.” The neighbor then changed the oil late Sunday afternoon, but the man refused to pay to the neighbor anything more than $50.
Can the neighbor recover the additional $25 from the man?
(B) No, because the neighbor had a pre-existing duty to change the oil in the car for $50.
A homeowner said to a roofer, “My roof leaks. I think the old tiles are cracked. If you will replace them with all new tiles, I will pay you $5,000.” The roofer replied, “Sure, if I can clear my busy schedule.” The homeowner then remarked, “That’s all right, but let me know soon.” Three days later, the roofer drove his pickup truck to the homeowner’s home and unloaded the materials and equipment needed to perform the roofing job. When the homeowner looked out his window and saw what was transpiring, he immediately ran outside and exclaimed, “Stop! The deal’s off. I decided to repair the roof myself.”
In an action by the roofer against the homeowner for breach of contract, which of the following would provide the roofer with his best theory of recovery?
A) A bilateral contract was formed when the roofer purchased the materials and equipment needed to do the job.
B) A bilateral contract was formed when the roofer said, “Sure, if I can clear my busy schedule.”
C) The homeowner made an offer that proposed a unilateral contract, and the offer became irrevocable when the roofer purchased the materials and equipment needed for the job.
D) The homeowner made an offer that proposed a unilateral contract, and the roofer manifested an intent to accept the offer when he began performance by unloading the materials and equipment at the homeowner’s house.
Explanation
The correct answer is: The homeowner made an offer that proposed a unilateral contract, and the roofer manifested an intent to accept the offer when he began performance by unloading the materials and equipment at the homeowner’s house.
Discussion of correct answer: A unilateral offer which invites performance of an act as acceptance, rather than a return promise, becomes irrevocable as soon as the offeree has started to perform the act. Thus, this answer choice correctly describes the theory that would be most helpful to the roofer.
Discussion of incorrect answers:
Incorrect. A bilateral contract was formed when the roofer purchased the materials and equipment needed to do the job. If this was interpreted as a bilateral contract, it would take an exchange of promises for the contract to be formed. Neither the purchasing of the material nor the statement by the roofer would be a sufficient promise to bind the parties to a bilateral contract.
Incorrect. A bilateral contract was formed when the roofer said, “Sure, if I can clear my busy schedule.” If this was interpreted as a bilateral contract, it would take an exchange of promises for the contract to be formed. Neither the purchasing of the material nor the statement by the roofer would be a sufficient promise to bind the parties to a bilateral contract.
Incorrect. The homeowner made an offer that proposed a unilateral contract, and the offer became irrevocable when the roofer purchased the materials and equipment needed for the job. This answer choice is wrong because purchasing the materials is mere preparation, and not the commencement of performance.
On December 1, Arnold, who had purchased two tickets for a holiday magic show, sent the following email to his three friends, Baker, Charlie, and Dora:
“Dear Baker, Charlie, and Dora: I have two tickets for the upcoming holiday magic show. If any of you are interested in buying my tickets, I will let you have them for a reasonable price, but I must have your reply by December 20.
s/Arnold”
The tickets, which cost Arnold $10, were now selling for between $50 and $70. On December 19, Arnold received an email from Baker that stated, “I accept your offer and will pay you $50 for the two tickets.” Arnold did not immediately respond to Baker’s email. On December 22, Arnold received the following text message from Charlie: “I am dying to go to the concert…will pay $70 for your seats.” The next day, Arnold sent a reply text to Charlie which read: “The tickets are yours. You may take delivery upon payment of the $70.” Dora did not respond to Arnold’s letter. Baker tendered the $50 to Arnold within a reasonable time, but Arnold refused to sell the tickets to him.
In an action by Baker against Arnold for breach of contract, judgment should be for whom?
A) Arnold, because his email of December 1 and Baker’s reply were too indefinite to constitute an offer and acceptance.
B) Arnold, because his email was not an offer, but rather, an invitation to bargain, and he was free to accept either Baker or Charlie’s offer.
C) Baker, because he accepted Arnold’s offer first.
D) Baker, because Arnold’s offer lapsed on December 20, and therefore, Charlie’s attempted acceptance was invalid.
Explanation
The correct answer is: Arnold, because his email was not an offer, but rather, an invitation to bargain, and he was free to accept either Baker or Charlie’s offer.
Discussion of correct answer:An offer is the manifestation of a 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. Arnold’s email to three people does not qualify as an offer. An offer must evidence a commitment by the offeror that he reasonably intends to be bound upon acceptance by the offeree, rather than a mere statement of present intention or preliminary negotiations. Arnold’s email stated, “I will let you have [the tickets] for a reasonable price.” This language evidences an intent to invite a reasonable offer by the message’s recipients. Therefore, Arnold’s email was not an offer. On the other hand, Baker’s email was an offer, which Arnold chose not to accept. Charlie’s text was also a valid offer and, in this case, Arnold accepted it upon dispatch of his email on December 23. Therefore, Baker will not prevail against Arnold.
Discussion of incorrect answers:
Incorrect. Arnold, because his email of December 1 and Baker’s reply were too indefinite to constitute an offer and acceptance. Baker did make an offer, but Arnold chose not to accept it.
Incorrect. Baker, because he accepted Arnold’s offer first. Baker made Arnold an offer, not the other way around. Arnold’s initial email was an invitation for reasonable offers, but was not an offer in itself. Baker’s reply was an offer, but Arnold chose not to respond to it, and thus did not accept it.
Incorrect. Baker, because Arnold’s offer lapsed on December 20, and therefore, Charlie’s attempted acceptance was invalid. Arnold is free to accept an offer from Charlie even if it exceeded his initially stated time frame. As this was not a firm offer, nor a situation where the offer lapsed immediately, Arnold was free to accept Charlie’s offer.
A prune preserves manufacturer entered into a contract with a fruit grower. The contract provided that the manufacturer would purchase and the fruit grower would supply all of the manufacturer’s requirements for prunes for the next five years at a specified price per ton reflecting the most recent market price. The contract stated, in part, that the manufacturer need not order any specified amount of prunes, but would notify the fruit grower of his yearly requirements no later than August 15 of each year. The manufacturer notified the fruit grower that it would need 100 tons of prunes for the year. But before the two parties exchanged any prunes or money under the contract, plum blight struck the major growing areas, including the fruit grower’s orchards, causing production to go down and the price of prunes to triple. The fruit grower produced about 120 tons of prunes and decided to sell them on the open market, rather than provide 100 tons at the contract price to the manufacturer.
May the fruit grower rescind the agreement with the manufacturer on the grounds that it was not supported by consideration?
A. No, because an agreement of that nature does not need any consideration to be enforceable.
B. No, because the parties’ mutual promises to purchase and sell the subject goods are sufficient considerations, even though no specific amount of goods to be sold was stated in the contract.
C. Yes, because the manufacturer’s lack of an obligation to purchase any particular amount of prunes was insufficient consideration to support the fruit grower’s return promise.
D. Yes, because requisite mutuality of obligation between the parties is lacking.
B. No, because the parties’ mutual promises to purchase and sell the subject goods are sufficient considerations, even though no specific amount of goods to be sold was stated in the contract.
An elderly woman and a landscaper entered into a written agreement for him to landscape the front yard of her home. The agreement contained no provision regarding assignment. That summer, the area experienced a rash of fires. The landscaper therefore assigned the woman’s contract to another local landscaper. The new landscaper subsequently failed to meet the specifications of the original landscaping agreement.
Which of the following is true?
(A) The woman would not have a cause of action against the original landscaper, because she waived her rights when she permitted the second landscaper to perform the work.
(B) The woman would have a cause of action against the original landscaper only.
(C) The woman must pursue a cause of action against the second landscaper before attempting to recover damages from the first one.
(D) The woman may pursue a cause of action against either landscaper.
(D) The woman may pursue a cause of action against either landscaper.
On Monday, a man told a gardener, “I am having a party on Sunday and I want my house to look good. If you will agree to mow my lawn by Saturday, I will pay you $50. Think about it and let me know.” The man did not hear from the gardener all week. Therefore, the man decided to mow the grass himself. On Saturday, the gardener arrived with his lawn mower, and saw that the grass had been freshly mowed. The man informed the gardener that he had just finished cutting the grass himself. The gardener then brought suit against the man for breach of contract, because he argued that he was within the window of time to accept and that he had given up another job in reliance on mowing the man’s grass.
Who is likely to prevail?
(A) The man, because the gardener never accepted the offer.
(B) The man, because the offer to the gardener was indirectly revoked.
(C) The gardener, because the man did not specify that acceptance had to be by return promise.
(D) The gardener, because he gave up another job in order to accept the man’s offer.
(B) The man, because the offer to the gardener was indirectly revoked.
A science fiction fan met a friend while attending a convention celebrating the science fiction fan’s favorite television show. The friend, a swordsmith, had a table in the dealer’s room, where the friend sold custom-made swords and accompanying accessories. The science fiction fan purchased a custom-made sword. On the bill of sale, the friend noted that the science fiction fan prepaid $300 and received a scabbard, with his actual sword to be delivered in two months. The blade was to be made according to the science fiction fan’s specifications. Six months later, the science fiction fan received his sword. Although substantially similar, the sword did not match the science fiction fan’s specifications.
Can a court order a rescission of the contract?
(A) No, unless both the science fiction fan and the friend agree to the rescission.
(B) No, because the friend substantially performed the contract.
(C) Yes, because the friend materially breached the contract.
(D) Yes, but the science fiction fan must first return the scabbard and sword.
(C) Yes, because the friend materially breached the contract.
A homeowner agreed to prepare his neighbor’s tax return by April 15. In exchange, the neighbor agreed to pay anyone whom the homeowner hired in the next two months to wallpaper the homeowner’s living room. The homeowner prepared the neighbor’s tax return as promised. The homeowner then hired a contractor to wallpaper his living room. The contractor was not aware of the homeowner’s agreement with the neighbor when the contractor agreed to wallpaper the homeowner’s living room. The contractor completed the wallpapering job, but the neighbor refused to pay him.
May the contractor sue the neighbor to enforce the neighbor’s promise to the homeowner?
(A) No, because the contractor was a donee beneficiary.
(B) No, because the contractor was not named in the agreement between the homeowner and the neighbor.
(C) Yes, because the contractor was an intended third-party beneficiary of the contract.
(D) Yes, because the contractor may recover under promissory estoppel.
(C) Yes, because the contractor was an intended third-party beneficiary of the contract.
A seller sent an email to a potential buyer offering to sell his patio furniture to her for $5,000. The buyer immediately responded via email asking whether the offer included the umbrella that was sitting in the garage. The seller emailed back: “No, it does not; just what is sitting on the patio. If you want an umbrella, you will have to buy one.” The buyer then ordered an umbrella that would fit on the table and matched the color of the chairs. Later that day, the buyer replied to the seller: “I accept your offer.” The seller then wrote back, “I have changed my mind, I’ve decided to keep the furniture.”
If the buyer sues the seller claiming there was a valid contract, who is likely to prevail?
A) The buyer, because she accepted the seller’s offer within a reasonable amount of time and before the seller revoked his offer.
B) The buyer, because her ordering the umbrella is a sufficient act in reliance on the seller’s offer.
C) The seller, because the offer lapsed after the buyer did not accept the original offer.
D) The seller, because the buyer’s initial email was a counteroffer which terminated her power of acceptance.
Explanation
The correct answer is: The buyer, because she accepted the seller’s offer within a reasonable amount of time and before the seller revoked his offer.
Discussion of correct answer: The UCC governs contracts for the sale of goods. An offer was made by the seller via email. It was not a firm offer, because it did not specify that it would remain open for a period of time. Therefore, it is revocable either through lapse of time or a rejection or counteroffer. It appears from the facts that this conversation is taking place on the same day, so the offer would not be revoked due to lapse of time. The buyer notified the seller of her intent to accept before the seller revoked the offer, and within a reasonable time. Therefore, a contract was formed.
Discussion of incorrect answers:
Incorrect. The buyer, because her ordering the umbrella is a sufficient act in reliance on the seller’s offer. The buyer validly accepted the agreement before the seller revoked the offer, and as such, there is a valid contract. Therefore, reliance principles are not needed to enforce the agreement.
Incorrect. The seller, because the offer lapsed after the buyer did not accept the original offer. There is no requirement that the buyer accept immediately; in fact, only if there is a rejection, counteroffer, or revocation would there not be a contact here.
Incorrect. The seller, because the buyer’s initial email was a counteroffer which terminated her power of acceptance. This was not a counteroffer, which would terminate the buyer’s power of acceptance. Instead, it was a mere inquiry, allowing the buyer to accept within a reasonable time before receiving notice of revocation.
A restaurant owner contracted in writing with a produce distributor to buy tomatoes. At the time the contract was signed, the owner said to the distributor, “Our chef must approve the quality of the heirloom tomatoes before I will pay you.” The distributor agreed orally to this condition. The distributor delivered the tomatoes, but after inspecting the tomatoes, the chef refused to give his approval, finding them to be of inferior quality. The owner refused to accept and pay for the tomatoes. The distributor brought a breach of contract action against the owner.
Should the court permit the owner to offer evidence that the chef refused to approve the tomatoes that were delivered?
(A) No, because the oral agreement is within the Statute of Frauds.
(B) No, because the written contract appears to be a complete and total integration of the parties’ agreement.
(C) Yes, to show frustration of purpose.
(D) Yes, to show that the written agreement was subject to an oral condition precedent.
(D) Yes, to show that the written agreement was subject to an oral condition precedent.
A homeowner needed a tree removed from his front yard. He hired a landscaper, who specialized in pruning and removing trees, to do the job. The landscaper carefully cut off and removed all the branches of the tree and the main tree trunk, so that all that was left was the stump of the tree. The landscaper then dug around the roots of the tree in preparation to remove the stump. As he had done many times before, he then removed a chain from his truck, secured the chain around the tree stump, and hooked the other end to the front bumper of his truck, intending to use the truck to remove the tree stump from the ground. The landscaper started his truck, put it into reverse, slowly took up the slack in the chain, and slowly pressed on the accelerator to put pressure on the tree trunk to dislodge it from the ground. However, the chain snapped from the pressure, and a portion of the chain flew off and struck a man who was walking by at the time.
If the man brings an action against the landscaper for the injuries suffered when he was hit by the chain, which of the following is the landscaper’s strongest defense?
A. A reasonable person would not have expected the chain to snap.
B.The homeowner instructed the landscaper to remove the tree.
C. The tree was the property of the homeowner.
D. The homeowner should be forced to indemnify the landscaper for any damages he is required to pay.
A. A reasonable person would not have expected the chain to snap.
Discussion of correct answer: The landscaper’s best defense would be that he was not negligent in using the chain in this manner because a reasonable person would not have expected the chain to snap. If the injury was not foreseeable as a result of the landscaper’s activities, the injury was not one he needed to guard against, and he did not breach any duty of care.
A carpet cleaner sent the following terms in a writing to a homeowner. “I will clean your carpets up to 1,000 square feet for a price of $100 per room. This offer is noncancellable for 60 days from today.” The carpet cleaner dated the letter and signed it at the bottom. The homeowner received the letter and immediately wrote a letter accepting the carpet cleaner’s terms, but did not immediately send the letter. A week after sending his letter to the homeowner, the carpet cleaner received an offer from a hotel owner requesting his services for the next month at several of his hotels. The carpet cleaner wanted to accept the hotel owner’s offer but was concerned about the outstanding letter to the homeowner.
Which of the following is most accurate?
(A) The carpet cleaner can revoke his offer to the homeowner because the mailbox rule does not apply to option contracts.
(B) The carpet cleaner can revoke his offer to the homeowner because there was no consideration provided that would make the offer irrevocable.
(C) The homeowner has manifested his intent to accept, and if he accepts within 60 days of the date of the letter, there is a contract.
(D) The homeowner has three months from the date of the letter to accept because offers from merchants are irrevocable.
(B) The carpet cleaner can revoke his offer to the homeowner because there was no consideration provided that would make the offer irrevocable
An employee successfully negotiated a lucrative contract for her employer. As a result, her employer orally promised her a $10,000 bonus payable at the end of the year because of the employee’s “good work.” At the end of the year, the employer informed the employee that the company’s profits were not as large as he expected, so the promised bonus would not be paid.
Which of the following is the legal effect of the employer’s promise to pay the bonus to the employee?
A) It is enforceable because the employee conferred a material benefit on the employer by negotiating the lucrative contract.
B) It is enforceable because the employer was morally obligated to pay the bonus.
C) It is unenforceable because it was not supported by legally sufficient consideration.
D) It is unenforceable because it was not in writing.
Explanation
The correct answer is: It is unenforceable, because it was not supported by legally sufficient consideration.
Discussion of correct answer: Donative promises generally are not enforceable unless supported by consideration or a consideration substitute (like promissory estoppel). Here, the employer’s promise was made in exchange for work already performed by the employee. Past consideration is not considered to be good consideration, so the employer’s promise to pay the bonus would be unenforceable.
Discussion of incorrect answers:
Incorrect. It is enforceable, because the employee conferred a material benefit on the employer by negotiating the lucrative contract. This choice is wrong, because no present material benefit was conferred on the employer in exchange for the bonus; past consideration is not sufficient to support a contract.
Incorrect. It is enforceable, because the employer was morally obligated to pay the bonus. While moral obligation can (in some jurisdictions) make a promise supported by past consideration enforceable, this is generally only done when necessary to prevent unjust enrichment or undue hardship, neither of which would be the case here.
Incorrect. It is unenforceable, because it was not in writing. This answer is wrong, because there would be no reason why the promise would need to be in writing. The duration of the promise would not be for longer than one year, and the only time the amount of the promise can trigger the need for a writing is when the contract involves a sale of goods.
A businessman lived in Japan. He sent a letter to a California car dealership stating that if the dealership would extend his son the credit, he would guarantee the purchase price of any car. The dealership received the letter on February 9, and on February 10, sold a car to the son for $11,500. On February 11, the businessman died suddenly. Unaware of his death, the agency sent him a letter indicating its acceptance of the offer and notifying him of the sale. The dealership also noted that the son had a good credit rating and that the dealership would have extended him credit even without his father’s guarantee. Two months later, the son also died suddenly, leaving a bankrupt estate. The dealership then sought to recover the balance of the car’s purchase price from the businessman’s estate.
Would the dealership prevail in a suit against the businessman’s estate for the balance owed on the car?
A) No, because the dealership would have sold the car to the son even without the businessman’s guarantee of the purchase price.
B) No, because the businessman died before the dealership mailed the letter notifying him of its acceptance.
C) Yes, because the dealership accepted the businessman’s offer before his death.
D) Yes, because the dealership foreseeably, justifiably, and reasonably relied on the businessman’s promise.
Explanation
The correct answer is: Yes because the dealership accepted the businessman’s offer before his death.
Discussion of correct answer:A unilateral contract is created when the offeror requests acceptance of the offer by the performance of an act rather than by a promise to perform the act. The offer is accepted only when the offeree performs the requested act. An offer is revoked by operation of law upon the death of the offeror. Here, given that the businessman’s offer requested acceptance by performance rather than by a promise to perform, the dealership accepted the offer when it performed the act that the businessman had requested (i.e., extending his son credit). Therefore, the businessman’s offer created a unilateral contract, which can be enforced against his estate. The fact that the dealership notified the businessman of its acceptance of the offer after his death is not the controlling factor; what is controlling is that by performing the requested act, the dealership validly accepted the offer (by its performance of the requested act) before the businessman died.
Discussion of incorrect answers:
Incorrect. No, because the dealership would have sold the car to the son even without the businessman’s guarantee of the purchase price. The dealership accepted the businessman’s offer and made its sale to the son based on that offer, not on the basis of the son’s credit. Thus, whether the dealership would have nonetheless extended credit to the son is irrelevant. As such, this answer is incorrect.
Incorrect. No, because the businessman died before the dealership mailed the letter notifying him of its acceptance. Given that the businessman’s offer requested acceptance by performance rather than by a promise to perform, the dealership accepted the offer when it performed the act that the businessman had requested (that is, extending the son credit). Therefore, the businessman’s offer created a unilateral contract, which can be enforced against his estate. The fact that the dealership notified the businessman of its acceptance of his offer after his death is irrelevant; the determining factor is that the dealership, by its performance of the requested act prior to the businessman’s death, accepted the offer before the businessman died.
Incorrect. Yes, because the dealership foreseeably, justifiably, and reasonably relied on the businessman’s promise. Under the doctrine of promissory estoppel, a party who makes a promise cannot assert a lack of consideration as a defense to enforcement of the promise, if the promise is made with the expectation that the promisee will change his position in reliance on the promise. Here, however, the businessman’s promise to the dealership was supported by his bargained-for exchange in the letter to the dealership. Because valid consideration existed to support the agreement between the dealership and the businessman, the dealership need not rely on the doctrine of promissory estoppel to recover under the contract. Therefore, this answer is incorrect.
A woman owned a gardening business that enjoyed much success in a large city. The woman was seeking to expand her business, and so she decided to purchase more gardening equipment. She contacted a gardening store and the two parties entered into a written contract whereby the woman would buy the particular gardening equipment she needed for $3,000. The contract did not state the date on which the store had to make delivery.
Which of the following is correct?
A. The contract is enforceable, but the parties must renegotiate the date of delivery.
B. The contract is enforceable, but the delivery must take place within a reasonable time.
C. The contract is not enforceable, because a necessary term is missing.
D. The contract is not enforceable, because of the Statute of Frauds.
B. The contract is enforceable, but the delivery must take place within a reasonable time.
Think Like a Lawyer
The UCC often supplies defaults for missing terms, and those defaults tend to involve actions that are commercially reasonable.
Step by Step Walkthrough
Step 1: For the sale of goods, the UCC supplies missing terms in many situations. Contracts that are missing terms will still be enforceable, so long as the offer and acceptance are clear about what goods are being purchased.
Step 2: UCC 2-309 sensibly states that: “The time for shipment or delivery or any other action under a contract, if not provided in this Article or agreed upon, shall be a reasonable time.”
Step 3: In this fact pattern, the parties have not set a particular date for delivery, so it will be “a reasonable time.” The contract is still valid, because it has offer, acceptance, and consideration. The UCC fills in the minor details. Choose the answer that reflects this.
A tomato genetics stock researcher had developed and produced a variety of square tomato. The researcher believed that this would revolutionize sandwich-making. On May 1, the researcher orally agreed to sell five tons of this square tomato to a sandwich shop manager for $5,000. The $5,000 was payable on May 31. On May 5, the researcher dictated the agreement to the researcher’s secretary, who was more familiar with typing research papers than with typing contracts. She inadvertently typed in $4,000, instead of $5,000 as the price. Neither the researcher nor the manager noticed the mistake in the purchase price. Both signed the agreement as it was typed. The manager refused to pay more than $4,000 for the square tomatoes, and the researcher filed an action for the
additional $1,000.
Which of the following is the strongest argument in favor of the researcher?
(A) There was a mistake in integration.
(B) The writing was intended only as a sham.
(C) The writing constituted a partial integration.
(D) There was a misunderstanding between the researcher and the manager concerning the purchase price.
(A) There was a mistake in integration.
Discussion of correct answer: Here, the secretary’s error in typing $4,000 instead of $5,000 would be viewed as a mistake in integration, or a “scrivener’s error.” Reformation is available to cure a mistake of this sort. Thus, if it can be determined that the parties intended that the final agreement contain a sale price of $5,000, that is the price the manager will be required to pay.
On Thursday, a seller sent a buyer a letter by over-night mail promising to sell him 1500 pairs of high end running shoes for $200,000. On the following Tuesday, the buyer faxed the seller a letter rejecting the offer. The letter stated “price too high, highway robbery!” The seller immediately called the buyer and said, “I received your letter, it’s a good deal, why don’t you think it over?” The following day, the buyer learned that there was a high demand for the running shoes because a famous basketball player had endorsed them. He immediately telephoned the seller and said, “You were right, it’s a good deal, I accept your offer.” The seller then told the buyer, “Sorry, too late. They are all gone.” The buyer demanded the shoes and tendered a check to the seller for $200,000. The seller returned the check and the buyer sued for breach of contract.
Who should prevail?
A. The seller, because the buyer’s letter faxed on Tuesday constituted a rejection which terminated the offer.
B. The seller, because there was no consideration to keep the offer open beyond Tuesday.
C. The buyer, because the seller revived the offer, which the buyer subsequently accepted in a timely manner.
D. The buyer, because both parties were merchants.
C. The buyer, because the seller revived the offer, which the buyer subsequently accepted in a timely manner.
Discussion of correct answer: There are no magic words required to extend an offer, but all offers contain three elements: (1) an expression of present intent to enter a contract; (2) articulation of the essential terms of the proposed bargain; and (3) communication of the intent and the terms to another party (the offeree) who has the capacity to form a contract by timely acceptance. This contracts question deals with the revival of an offer. If, in the wake of a rejection/counter-offer, the offeror remanifests an intention to trade on the terms of the original offer, that offer is once again open to an acceptance by the offeree. This choice is correct because the seller’s statement, “I received your letter, it’s a good deal, why don’t you think it over?” revived the original offer. Further, the buyer’s acceptance by telephone would be effective even though the offer was by a different medium (letter). Per UCC 2-206, “an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium that is reasonable under the circumstances.” Note that choice (B) is not the best answer. Although consideration is generally required for an option to keep an offer open, this is not the best description of what happened here. Rather, the offer was revived when the seller suggested the buyer think it over.
A famous designer was launching an advertising campaign for her new brand of cosmetics. The designer hired a noted fashion photographer for the ads. In their written contract, the designer agreed to pay the photographer $20,000. Shortly thereafter, the photographer assigned the contract to a second photographer, a colleague who had received awards for his still-life advertising photography. For her part, the designer assigned the contract to a friend, whose company was launching an advertising campaign for a new brand of dog food.
Which statement expresses the allowable interpretation of the described transactions?
(A) The photographer has been assigned the right to receive payment from the designer, and the designer has delegated her duty to pay the photographer to her friend.
(B) The photographer has delegated his duty to photograph the models for the designer’s ads to his colleague.
(C) The designer and the photographer have not effectively assigned any of their rights or delegated any of their duties under their contract.
(D) The designer has assigned her right to have the photographer take advertising photographs to her friend.
(A) The photographer has assigned the right to receive payment from the designer, and the designer has delegated her duty to pay the photographer to her friend.
A 16-year-old girl purchased an expensive pair of designer jeans at a retail store. She paid for the jeans by writing a check in the amount of $150, although she was aware that her account had less than $100 in it. The following day the girl wore the jeans to school. During her fourth period art class she spilled a bottle of paint thinner on herself, ruining the jeans in the process. After school she went home and threw the jeans in the trash. Several days later the store manager discovered that the girl’s check had been returned marked “insufficient funds.” The store promptly sued the girl and her parents for $150 based on breach of contract.
Which of the following is true?
(A) The store has no legal claim against the girl, but they are entitled to recover $150 from her parents.
(B) The store may recover $150 from the girl, but they have no legal claim against her parents.
(C) The store may recover $150 from either the girl or her parents, but it may make only one recovery.
(D) The store cannot recover from anyone.
(D) The store cannot recover from anyone.
A teacher owns three large plots of land in the suburbs. He decided to build an office complex on one of the plots so that he could rent out the offices to gain some extra income. The teacher met an agent of a construction company who laid out the plans for constructing such a complex. The two orally agreed that the company would do the work over a period of one year and eight months, for a price of $2,000,000.
The teacher, wanting to brag, then notified his old college friend via a signed letter of the details of the $2,000,000 transaction. Just before construction was to begin, the teacher balked at the deal and refused to go through with it. The construction company now seeks to enforce the contract.
Which of the following is the best answer?
A. The contract can be enforced, because the teacher and the company agreed on the terms.
B. The contract can be enforced, because the teacher notified his friend of the contract.
C. The contract cannot be enforced, because the contract was for longer than one year.
D. The contract cannot be enforced, because the contract was for $2,000,000.
B. The contract can be enforced, because the teacher notified his friend of the contract.
Discussion of correct answer: The Statute of Frauds requires a contract that cannot be performed within one year to be evidenced by a writing signed by the party against whom enforcement is sought. However, there is no requirement that the parties put their actual agreement in writing. Rather, all that is necessary is that the writing be a memorandum of the agreement, which can be prepared before, during, or after contract formation. Under the common law, a letter from one of the parties to a third party describing the agreement has been held to satisfy the writing requirement. In this case, the agreement falls within the Statute of Frauds, because the agreement was oral and it is for longer than one year. However, the Statute of Frauds is satisfied because the teacher sent a letter to his friend describing the agreement, so the contract can be enforced. Therefore, this is the correct answer.
The owner of a large social function hall hosts various banquets, meetings, and other types of community events in the social function hall. An entrepreneur is in the business of running bingo games sponsored by charities, a legal form of gambling in the state in which the social function hall is located. Without disclosing his intended use for the hall, on June 1, the entrepreneur entered into a one-year lease of the social function hall commencing on July 1. On June 15, a scandal erupted in the state in which the social function hall was located concerning corruption in bingo games sponsored by charities, and the state legislature passed legislation, effective June 30, outlawing bingo games. Upon passage of the legislation, the entrepreneur purported to cancel the lease.
In a suit by the owner against the entrepreneur, what is the likely outcome?
A) The entrepreneur will prevail, because after the lease had been signed, the government made its subject matter illegal.
B) The entrepreneur will prevail, because the contract is voidable under the doctrine of frustration of purpose.
C) The owner will prevail, because the purpose of the contract was not illegal at the time that the contract was formed.
D) The owner will prevail, because the parties formed a valid contract supported by consideration.
Explanation
The correct answer is:The owner will prevail, because the parties formed a valid contract supported by consideration.
Discussion of correct answer:Because neither the doctrine of impossibility nor frustration of purpose will excuse the entrepreneur’s performance, and the subsequent illegality of bingo games will have no effect on the lease, the owner will prevail.
Discussion of incorrect answers:
Incorrect. The entrepreneur will prevail, because after the lease had been signed, the government made its subject matter illegal. This answer choice is incorrect because the contract in question is a lease of space, not a contract to conduct bingo games. If this were a contract to conduct bingo games, the subsequent illegality of those games would excuse performance under the contract. In this case, the owner was unaware of the purpose of the lease of the property, and the fact that bingo was later made illegal does not vitiate the contract.
Incorrect. The entrepreneur will prevail, because the contract is voidable under the doctrine of frustration of purpose. The doctrine of frustration of purpose may excuse performance of a lease when an unseen event destroys its underlying purpose. However, for that doctrine to apply, both parties must know of the purpose. Because the owner was not aware of the intended use of the social function hall for bingo games, this answer is incorrect.
Incorrect. The owner will prevail, because the purpose of the contract was not illegal at the time that the contract was formed. It is true that the owner will prevail in an action to enforce the parties’ valid contract. However, the contract in question is a lease of space, not a contract to conduct bingo games. Therefore, the fact that bingo was later made illegal is irrelevant. Thus, this answer reaches the right conclusion, but cites an irrelevant fact as the basis of this conclusion.
A contractor agreed to build a house for an enigmatic and highly particular billionaire in accordance with detailed plans and specifications. In return, the billionaire agreed to pay the contractor $10,000,000 for the home upon completion. The written contract included the following provision: “The billionaire’s liability is expressly conditioned on the master bedroom being constructed entirely out of malachite.” While the home was under construction, a health pandemic developed in the only country that supplied sheets of malachite, ending the supply of malachite to the United States. Because no malachite was available in the country, the contractor used a similarly colored jade to construct the master bedroom instead. A jeweler had agreed in writing with the contractor to trim the walls with pearls. Unfortunately, the pearls were fake, although otherwise functional. Other than the lack of malachite and the fake pearls, the house was completed according to the plans and specifications contained in the contractor-billionaire contract. Despite these discrepancies, the billionaire paid the contractor the full contract price, moved in, and sued the jeweler for using fake pearls instead of real ones.
For whom should the court find?
(A) The jeweler, because the jeweler was not in privity with the billionaire.
(B) The jeweler, because the billionaire waived his right to claim the damages by paying the contractor and taking possession of the house.
(C) The billionaire, because when the billionaire paid the contractor he acquired an implied assignment of any rights that the contractor had against the jeweler.
(D) The billionaire, because the billionaire was a third-party beneficiary of the contract between the contractor and the jeweler.
(D) The billionaire, because the billionaire was a third-party beneficiary of the contract between the contractor and the jeweler.
A woman agreed to sell a tract of rural farmland to a man, and each signed a writing stating that the farmland was being sold “for $10,000, receipt of which is acknowledged.” In actuality, the man had not yet paid the woman the $10,000. At the date set for closing, the woman transferred a deed to the farmland to the man, who gave the woman a check for $10,000. A few days after the woman deposited the check, it was returned due to insufficient funds in the account. The woman then brought suit against the man for the amount owed.
May she introduce evidence that the man did not pay her the $10,000 as recited in the written instrument?
(A) No, because the doctrine of promissory estoppel will prevent the woman from denying her own signed acknowledgment that she received the $10,000.
(B) No, because the written instrument appears to be a complete integration of the parties’ agreement.
(C) Yes, because the parol evidence rule does not apply to events occurring after the forming of the writing.
(D) Yes, because the parol evidence rule does not operate to exclude evidence to show lack or want of consideration.
(D) Yes, because the parol evidence rule does not operate to exclude evidence to show lack or want of consideration.
A famous football player had his dog stolen from his yard. He immediately went to social media and implored anyone with details to contact him. He put a description of the dog, where it was last seen, and said that he would be forever indebted to whomever found his dog. One particular fan immediately went out looking for the dog in the area surrounding the player’s home. A few days passed and the player became desperate, so he offered a $5,000 reward for finding the dog. After several days of looking, the fan finally saw the dog tied to a bench. He untied the dog and went onto the player’s website to contact him. The fan then saw the reward offer and returned the dog, demanding the reward. The player refused to pay the fan the $5,000.
Is the player liable to pay the fan the reward money?
(A) No, because the fan did not know of the reward before he found the dog.
(B) No, because the player was unaware that the fan had accepted the offer.
(C) Yes, because the fan found the dog as requested.
(D) Yes, because the fan learned of the reward before he returned the dog.
(A) No, because the fan did not know of the reward before he found the dog.
A man wins a lottery prize of $1,000,000. He is so happy that he orally promises a friend that he would give to this friend enough funds for the friend to start the cupcake bakery business the friend was contemplating opening. The friend, based upon this promise, immediately leases a large commercial bakery, hires 10 employees, and resigns from his job. The friend then asked the lottery prizewinner for the monies to pay for the lease, the employees and for his own salary. The lottery prizewinner refuses to pay anything to his friend. Assume that this jurisdiction does not recognize promissory estoppel.
Will the friend’s lawsuit against the lottery prizewinner for breach of contract succeed?
A. Yes, because the lottery prizewinner made a binding agreement to fund the friend’s new business.
B. Yes, because there was adequate consideration for the promise to fund the new business.
C. No, because the promise made to the friend did not have sufficient consideration.
D. No, because the promise to fund the new business was not in writing.
C. No, because the promise made to the friend did not have sufficient consideration.
A shirtmaker and a retailer entered into a written contract whereby the shirtmaker agreed to supply the retailer 1,000 painted sweatshirts, in accordance with specifications set forth in the contract, for sale during the Christmas season. The goods were to be shipped to arrive at the retailer’s store in 10 shipments of 100 each. The first shipment was to be delivered on Sept. 1. The remaining shipments were to be made at one-week intervals until the middle of November. The first shipment arrived at the retailer’s store on Sept. 6, and contained only 80 sweatshirts, 10 of which did not conform to the retailer’s design specifications.
Which of the following most accurately sets forth the obligations of the parties on Sept. 6?
(A) The retailer may declare that the entire contract has been breached because of the defects in the first shipment and seek appropriate buyer’s remedies under the UCC.
(B) The retailer may reject the first shipment even if the shirtmaker agrees to ship 30 conforming sweatshirts the next day.
(C) The retailer may accept the conforming sweatshirts, sue for breach of the obligations with respect to the Sept. 1 delivery, and at a later date terminate the contract with respect to future installments.
(D) The retailer may not terminate the entire contract for breach of the contract obligations with respect to the first installment unless the first shipment substantially impairs the value of the whole contract.
(D) The retailer may not terminate the entire contract for breach of the contract obligations with respect to the first installment unless the first shipment substantially impairs the value of the whole contract.
On Monday, a man offered to sell his lawn mower to his neighbor for $100. After receiving the man’s offer, the neighbor responded, “Let me think it over.” The man then said, “If you say so, but I need to know in a day or two, tops.” On Friday, the man sold the lawn mower to his brother. Thereafter, the neighbor decided to accept the man’s offer and walked to his house, only to find the man’s brother loading it onto his truck.
If the neighbor sued the man for breach of contract, judgment should be for whom?
A) The man, because the offer to the neighbor terminated when the neighbor saw the brother loading the lawn mower onto his truck.
B) The man, because the offer was terminated due to the lapse of time.
C) The neighbor, because the offer became irrevocable for a reasonable time when the neighbor asked to “think it over.”
D) The neighbor, because the sale of a lawn mower is governed by the UCC.
Explanation
The correct answer is: The man because the offer was terminated due to the lapse of time.
Discussion of correct answer:The man agreed to hold the offer open for the neighbor to give the neighbor time to think it over, but the man stated that the offer would only be open for, at most, two days. Thus, when the neighbor failed to accept the offer by the end of Wednesday, two days after the offer was made, the offer lapsed due to time.
Discussion of incorrect answers:
Incorrect. The man, because the offer to the neighbor terminated when the neighbor saw the brother loading the lawn mower onto his truck. An offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect. While an indirect revocation may have occurred when the neighbor saw the brother loading the lawn mower onto his truck, the offer terminated due to lapse of time. An offer is open for a reasonable period of time. Given the conversation, that would be two days from Monday, or Wednesday. Here, by Friday, the offer had lapsed, so the neighbor could no longer accept it.
Incorrect. The neighbor, because the offer became irrevocable for a reasonable time when the neighbor asked to “think it over.” Simply allowing an offeree to think over an offer for a period of time does not make the offer irrevocable. Absent consideration, the offeror is not obligated to hold the offer open for that period.
Incorrect. The neighbor, because the sale of a lawn mower is governed by the UCC. Whether the lawn mower is a good governed by the UCC is irrelevant. If the man had been a merchant and his offer was in writing, promising to hold the offer open for a length of time, this would have made the offer irrevocable as a firm offer. However, that is not the case here, and even if it were, the offer was only open for two days, and lapsed before the neighbor attempted to accept it.
After graduating from a state university, a woman could not decide whether to continue on in graduate school or to accept an offer from a company in another city. The woman’s aunt said she would pay all of the woman’s tuition and expenses for the year-and-a-half that the woman would need to complete her master’s degree. The aunt also said she would pay the woman an additional $500 for every A that the woman earned and $250 for every B she earned. The woman told her aunt that she would enroll in a master’s program. The following week, the woman’s father learned of the offer his sister had made. He told the woman that if the aunt did not pay the woman as she had indicated she would, he would pay the woman. The woman enrolled in a master’s program at the state university, and she earned eight A’s and two B’s for her coursework. The aunt died shortly after the woman’s graduation. The executor of the aunt’s estate refused to pay the woman the $4,500 bonus for her good grades. The woman then went to her father and asked him for the $4,500 bonus, but he refused to pay. The woman then sued her father.
What is the most likely reason why the woman would not succeed in trying to enforce his promise?
(A) The woman received sufficient compensation in the form of a year-and-a-half of free tuition and expenses.
(B) It was an illusory contract.
(C) It was an oral contract.
(D) No consideration flowed to the father.
(C) It was an oral contract.
