MBE Questions Flashcards by Abby Schwarz

A seller and a buyer have dealt with each other in hundreds of separate grain contracts over the last five years. In performing each contract, the seller delivered the grain to the buyer and, upon delivery, the buyer signed an invoice that showed an agreed-upon price for that delivery. Each invoice was silent in regard to any discount from the price for prompt payment. The custom of the grain trade is to allow a 2% discount from the invoice price for payment within 10 days of delivery. In all of their prior transactions and without objection from the seller, the buyer took 15 days to pay and deducted 5% from the invoice price.

The seller and the buyer recently entered into a contract for a single delivery of wheat at a price of $300,000. The same delivery procedure and invoice were used for this contract as had been used previously. The seller delivered the wheat and the buyer then signed the invoice. On the third day after delivery, the buyer received the following note from the seller: “Payment in full in accordance with signed invoice is due immediately. No discounts permitted. s/Seller.”

Which of the following statements concerning these facts is most accurate?

A) The custom of the trade controls, and the buyer is entitled to take a 2% discount if he pays within 10 days.
B) The parties’ course of dealing controls, and the buyer is entitled to take a 5% discount if he pays within 15 days.
C) The seller’s retraction of his prior waiver controls, and the buyer is entitled to no discount.
D) The written contract controls, and the buyer is entitled to no discount because of the parol evidence rule.

(B) The parties’ course of dealing controls, and the buyer is entitled to take a 5% discount if he pays within 15 days.

UCC rule: while a final written expression of agreement may not be contradicted by any prior agreement, it may be explained or supplemented “by course of dealing or usage of trade or by course of performance.”

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The owner of a rare eighteenth-century chest offered to sell it to a connoisseur of antiques for $75,000. The connoisseur countered that she would buy the chest for $50,000. The owner rejected this price. The owner and the connoisseur then executed a written agreement for the sale of the chest at a price to be determined only by a particular antiques dealer whose expertise in valuing this rare item they both trusted.

Two weeks later, the agreed-upon antiques dealer examined the chest. He told the owner and the connoisseur that he had to do further research on the chest but that he would let them know his decision in several days. Unfortunately, the dealer died before doing so. A reasonable price for the chest can be established by the court.

Is there likely an enforceable contract?

A) No, because the owner and the connoisseur did not intend to be bound unless the dealer set the price of the chest.
B) No, because the price of the chest was not determined at the time the agreement was executed.
C) Yes, because a reasonable price for the chest can be established by the court.
D) Yes, because the owner and the connoisseur executed a written agreement for the sale of the chest.

A) No, because the owner and the connoisseur did not intend to be bound unless the dealer set the price of the chest.

UCC = contract for the sale of goods is formed if both parties intend to contract and there is a reasonably certain basis for giving a remedy in the event of a breach. Intent to contract is judged by outward, objective manifestations of intent, as interpreted by a reasonable person.

So when an agreement reflects an intent to be bound only if the price is subsequently set, no contract is formed until the price is set

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A licensing agreement provided that a manufacturer could use an inventor’s patent in manufacturing its products for 10 years. Immediately thereafter, the inventor assigned his rights to receive payments pursuant to the licensing agreement to a corporation. The inventor did not receive compensation for this assignment. The inventor, upon his death five years later, devised his stock in the corporation to his daughter and all of his remaining property to his son.

To whom should the manufacturer make its payments under the licensing agreement?

A) The corporation.
B) The inventor’s daughter.
C) The inventor’s son.
D) No one, because the manufacturer’s obligation to make payments under the licensing agreement terminated upon the death of the inventor.

C) The inventor’s son.

Assignment = transfer of contractual rights to a third party.

If an assignment is not supported by consideration, then it is a gratuitous assignment and is generally revocable. A revocable assignment is automatically revoked upon the death, incapacity, or bankruptcy of the assignor.

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A jeweler and a goldsmith signed a written agreement that provided as follows: “For $3,000, the goldsmith shall sell to the jeweler a size six gold ring setting that the jeweler shall select from only the goldsmith’s white gold ring designs.” The agreement did not address any other specific terms with regard to the business arrangement between the jeweler and the goldsmith.

When the jeweler arrived to select a ring, he refused to select one of the goldsmith’s white gold ring designs. The jeweler claimed that the goldsmith, immediately prior to the execution of the written agreement, had orally agreed to broaden the jeweler’s choices to also include rose gold ring designs. The jeweler also claimed that the goldsmith had, at the same time, orally agreed to include a set of earring settings, valued at $1,000, as an incentive for the jeweler’s continued business. The goldsmith refused to sell to the jeweler any of his rose gold ring designs or include the earring settings.

If the jeweler sues the goldsmith for damages, how should the court handle the evidence of the alleged oral agreements?

A) The court should admit the evidence as to both the promise to include the earring settings and the option to choose a rose gold ring design.
B) The court should admit the evidence as to the promise to include the earring settings but not the option to choose a rose gold ring design.
C) The court should admit the evidence as to the option to choose a rose gold ring design but not the promise to include the earring settings.
D) The court should exclude the evidence as to both the option to choose a rose gold ring design and the promise to include the earring settings.

B) The court should admit the evidence as to the promise to include the earring settings but not the option to choose a rose gold ring design.

Here, the written agreement between the jeweler and the goldsmith is partially integrated because it represents the parties’ final agreement for the sale of a ring—including the price, size, and type of gold.

BUT the writing made no mention of earrings. This means that the goldsmith’s prior oral statement to include a set of earring settings merely supplements the writing and is not barred by the parol evidence rule.

Note: A contract for the sale of goods will be deemed fully integrated if the court concludes that the parties “certainly” would have included the term in the written contract. However, this is a difficult standard to meet

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A builder ordered 100 squares of shingles from a home-supply store for installation on the roofs of homes that he was building. The builder agreed to a price of $120 per square. Delivery to the construction site was set for no later than noon on the following Monday. The store’s truck with the ordered shingles arrived at 1:00 p.m. the following Monday. The builder rejected the shipment due to its failure to arrive on time. The store, which regularly sold 600 squares of shingles per week, resold the squares that had been rejected by the builder at a price of $110 per square. The store would have made a profit of $3,000 had the builder accepted the shingles.

If the store sues the builder for breach of contract, how much can the store recover from the builder?

A) Nothing.
B) $1,000, the contract price minus the resale price.
C) $3,000, the store’s lost profit on the initial sale.
D) $4,000, to recover the store’s total expectation damages.

A) Nothing.

The UCC requires perfect tender. If the buyer rejects goods for imperfect tender and the seller is unable to cure, then the seller is in breach and cannot recover damages under the contract.

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A dancer signed a contract with a traveling circus to travel and perform as an aerialist for six months. The contract provided that the dancer would be paid $500 per week and would be guaranteed employment for the full six months, with an option to renew the contract for the next traveling season. Excited for the opportunity to perform for a traveling circus, the dancer turned down an invitation to dance with a theatre group for the same time period as the circus contract. After two weeks of traveling and dancing for the circus, the dancer sprained her ankle and was briefly hospitalized for one week. The circus was forced to hire another aerialist. After an additional week, the dancer’s doctor gave her approval to return to work, but the circus refused to honor the remainder of the contract. The dancer brought an action against the circus for breach of contract.

If the dancer wants to recover the highest possible amount of damages, which of the following is the dancer’s best legal theory?

A) The dancer detrimentally relied on the contract by declining the other dancing job.
B) The dancer’s failure to perform for two weeks was not a material breach of the contract.
C) The dancer’s performance of the terms of the contract was impracticable given her injury.
D) The dancing contract with the circus is legally severable into weekly units.

B) The dancer’s failure to perform for two weeks was not a material breach of the contract.

Substantial performance = generally recover the contract price minus any cost that the nonbreaching party incurred to receive full performance.

Material breach = recover only for any benefit conferred on the nonbreaching party minus damages for the breach.\

The dancer can argue that missing only two weeks out of a six-month period was a minor breach—especially if she could perform for the rest of the contract period. Therefore, she is entitled to the full benefit of the contract (minus any costs incurred due to her breach).

Note: A divisible contract can be separated into distinct performance periods (here, weekly). However, recovery is limited to the portion of the contract that has been performed. As a result, this legal theory would limit the dancer’s recovery to the two weeks that she actually performed rather than the entire six-month contract.

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A student inherited a large tract of undeveloped land from an eccentric uncle. The student had no present need for the land, and because he had numerous student loans, he decided to sell the land. He advertised a proposed sale of the property, and he was soon contacted by a rancher who owned property adjacent to the offered land. The rancher wanted to purchase the student’s property to expand his ranch and to build facilities for dairy production. The student told the rancher that his car had just broken down and that he was eager to sell the property quickly so that he could repair his car for his commute to class. Although the rancher was fully aware of the fair market value of the property, he offered the student a cash price 80 percent less than the property was worth. The student, disappointed with the low price but desperate to repair his car, accepted the rancher’s offer.

On these facts, which of the following legal concepts would give the student the best chance of canceling the contract with the rancher?

A) Bad faith.
B) Duress.
C) Equitable estoppel.
D) Unconscionability.

D) Unconscionability.

Unconscionability = so unfair to one party that no reasonable person in that party’s position would have agreed to it.

No reasonable person would agree to sell a piece of real property for 80 percent less than it is worth . The actual terms of the contract are so unfair that the court could refuse to enforce the contract.

Note: Duress is an improper threat that deprives a party of meaningful choice.

Examples of improper threats include threats of a crime, a tort, criminal prosecution, or pursuing a civil action in bad faith. Here, the rancher did not make any threats, and there is no indication that the student was deprived of a meaningful choice to sell the property to someone else.

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An honest dispute developed between a condominium owner and a plumber over whether plumbing installed in the kitchen and bathrooms of the condominium satisfied contractual specifications. If the plumbing met those specifications, the condominium owner would owe the plumber $15,000 under the terms of the contract. The condominium owner offered to pay the plumber $10,000 in satisfaction of the owner’s contractual obligations if the plumber replaced the plumbing in the kitchen with another grade of pipe. The plumber accepted the condominium owner’s offer. After the plumber replaced the kitchen plumbing, the condominium owner refused to pay the plumber.

In a breach-of-contract action brought by the plumber, the fact finder determined that the plumbing originally installed by the plumber did satisfy the contract specifications. The fact finder also determined that the plumber and the condominium owner entered into a substitute agreement under which the owner failed to deliver the required performance.

What is the maximum amount that the plumber can recover in damages from the condominium owner?

A) $25,000.
B) $15,000.
C) $10,000.
D) Nothing.

C) $10,000.

Substitute contract – when the parties form a second agreement that immediately discharges the original contract; after breach, a party can sue under the substitute contract only.

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An independent trucker and a manufacturer entered a written contract for the delivery of a farming implement from the manufacturer to a farmer. Under the terms of the contract, the trucker promised “to deliver a farming implement from the manufacturer to the farmer,” and in exchange, the manufacturer promised “to pay the trucker if the trucker delivers the implement directly to the farmer after picking it up.” The trucker picked up the implement but, instead of driving directly to the farmer, drove 100 miles out of his way to pick up another item from a third party before delivering the implement to the farmer. The manufacturer, unaware that the trucker had failed to deliver the implement directly to the farmer, refused to pay the trucker.

Who has breached this contract?

A) Both the trucker and the manufacturer.
B) The trucker only.
C) The manufacturer only.
D) Neither the trucker nor the manufacturer.

D) Neither the trucker nor the manufacturer.

If contracting parties expressly agree to a condition precedent—an uncertain future event that must occur before a party’s obligation to perform arises—then performance is not due until the condition is fully satisfied.

Here, the trucker fully performed his promise to deliver a farming implement from the manufacturer to the farmer, so the trucker has not breached the contract.

However, the manufacturer’s duty to pay the trucker was expressly predicated on the trucker’s direct delivery of the implement to the farmer. The trucker did not fully satisfy this condition precedent because he took a 100-mile detour, so the manufacturer’s performance is not due.

Therefore, neither party has breached the contract.

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During the warm months of the year, the owner of a fur coat stored it with the furrier from whom she had bought it. While the coat was at the furrier’s store, a salesperson, mistakenly thinking that the coat was for sale, sold it to a customer. The customer was allowed to reduce the purchase price by the amount of an outstanding debt owed by the furrier to the customer; the customer paid the remainder in cash. In the process of purchasing the coat, the customer was told by the salesperson about the furrier’s storage service but, like the salesperson, was unaware that the coat was not part of the store’s merchandise. After the sale, the owner learned of the transaction between the furrier and the customer. Since the coat had significant sentimental value to the owner, she sought its return from the customer. When the customer refused, the owner filed an action to recover the coat from the customer.

Will the owner likely prevail?

A) No, because the customer was a good-faith purchaser of the coat that had been entrusted to the furrier.
B) No, because the owner is entitled to damages from the furrier.
C) Yes, because the customer did not give full value in acquiring the coat.
D) Yes, because the furrier transferred only voidable title in the coat to the customer.

A) No, because the customer was a good-faith purchaser of the coat that had been entrusted to the furrier.

UCC = entrustment of goods by the owner to someone who sells goods of that kind (i.e., a merchant) gives the merchant the power to convey good title.

Good title can be conveyed to a buyer in the ordinary course of business—i.e., someone who buys goods:
1) in good faith
2) without knowledge that the sale violates the owner’s rights to the goods and
3) from a merchant in the business of selling goods of that kind.

Here, the owner stored her coat with, and thereby entrusted the coat to, the furrier—a merchant in the business of selling fur coats. The customer then purchased the coat in good faith and without knowledge that it actually belonged to the owner. As such, the customer is a buyer in the ordinary course who took good title (not voidable title) to the coat

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As part of a divorce settlement, an ex-husband purchased an annuity from an insurance company to be paid to his ex-wife so that she would receive a fixed amount quarterly for the duration of her life. Within a week after the purchase, the ex-wife learned that she had a fatal illness, which had not previously manifested itself but had existed for some time. She died two months later, prior to receiving any payments from the annuity.

The ex-husband has filed suit to rescind the annuity contract.

Will the ex-husband be likely to prevail?

A) No, because the annuity contract was a third-party beneficiary contract.
B) No, because the ex-husband assumed the risk of his ex-wife’s death.
C) Yes, because the ex-wife’s death frustrated the purpose of the annuity.
D) Yes, because the ex-husband and the insurance company made a mutual mistake as to the ex-wife’s health.

B) No, because the ex-husband assumed the risk of his ex-wife’s death.

An annuity contract for the duration of someone’s life assumes that the person will die but does not predict when the death will occur. As such, there is an inherent risk of death before the purchase price is recouped.* Therefore, the ex-husband assumed the risk of the ex-wife’s death and is unlikely to prevail.

*Note that there also is an inherent risk that the person lives longer than predicted, impacting the profitability of the annuity. The insurance company assumed that risk when it sold the annuity to the ex-husband.

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The owner of a ferry boat operated the boat only during daylight hours during the summer months of June, July, and August. On March 1, the owner entered into a written agreement with a man to serve as the captain of the boat for the upcoming season. On May 1, the owner contracted with a woman to serve as the captain of the boat. On May 30, the man was diagnosed with an illness, and the treatment for this illness prevented him from being employed until the following year. On May 31, the owner learned of the man’s illness and told the man not to worry about their contract as he had found someone else to serve as captain of the boat. The woman served as captain of the boat for the summer months of June, July, and August that year.

On September 1, the man sued the owner for damages based on a breach of their contract.

Can the man recover damages based on breach of contract?

A) No, because the man was unable to serve as the captain of the boat during the summer months.
B) No, because the owner informed the man about the owner’s contract with the woman prior to June 1.
C) Yes, because the owner did not inform the man of the owner’s contract with the woman until after the owner learned of the man’s illness.
D) Yes, because the owner’s contract with the woman constituted an anticipatory breach of the owner’s contract with the man.

A) No, because the man was unable to serve as the captain of the boat during the summer months.

A nonrepudiating party who materially breaches the contract cannot recover damages for the other party’s anticipatory breach because the material breach discharges the other party’s duty to perform.

Here, the parties formed a bilateral contract when the man promised to captain the boat and, in exchange, the owner promised to pay for the service. The owner then committed an anticipatory breach by contracting with the woman on May 1.

However, the man was unable to serve as the boat captain during the summer months because he was diagnosed with an illness on May 30. This material breach discharged the owner’s duty to pay for the man’s services, so the man cannot recover breach-of-contract damages.

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A private port authority contracted with a company that manufactures and operates cranes to assist with loading and unloading containers from ships docked at the port. One of the company’s cranes was defectively manufactured. Due to this defect, a container was dropped, injuring an individual below.

The individual sued the port authority, alleging negligence. Neither the individual nor the port authority notified the crane company of this lawsuit. The port authority settled its claim with the individual before trial for a reasonable amount. The port authority seeks to recover the cost of the settlement from the crane company under a breach-of-contract action.

Is the port authority likely to prevail?

A) No, because damages for personal injury cannot be recovered in a breach-of-contract action.
B) No, because the port authority settled the lawsuit rather than litigating the matter to a final judgment.
C) Yes, because the crane company is liable for all consequences flowing from its breach of the contract.
D) Yes, because the settlement was reasonably foreseeable at the time the contract was formed.

D) Yes, because the settlement was reasonably foreseeable at the time the contract was formed.

Consequential damages—i.e., losses arising from the parties’ special circumstances—are recoverable only if they were reasonably foreseeable to the breaching party when the contract was entered.

It was reasonably foreseeable that a defect in the crane might cause personal injury and that the port authority, as the dock operator, would be sued for that injury. Therefore, the port authority will likely prevail in its breach-of-contract suit to recover the settlement cost.

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The owner of a retail clothing store regularly displayed for-sale works by local artists on a wall in the store. An art collector who came into the store inquired about purchasing a particular work for display at his home. The two agreed upon a price, but the collector was not ready to commit to purchasing it immediately. Confident that the collector would purchase the work, the owner promised in a signed writing to sell the work to the collector at the agreed-upon price at any time before the end of the month. On the last day of the month, the collector sent the owner a check for the agreed-upon price, which the owner received on the following day.

If the owner returns the collector’s check and refuses to sell the artwork to the collector, which of the following best supports the owner’s position that a contract had not been formed?

A) The collector could not accept the owner’s offer by mailing a check.
B) The collector’s acceptance of the owner’s offer was not timely.
C) The firm-offer rule is not applicable because the collector was not a merchant with respect to the artwork.
D) The firm-offer rule is not applicable because the owner was not a merchant with respect to the artwork.

B) The collector’s acceptance of the owner’s offer was not timely.

UCC Firm offer = irrevocable if it is made in a signed writing that assures that the offer will remain open. Acceptance of a firm or otherwise irrevocable offer is effective only if it is received by the offeror before the offer expires.

Mailbox rule does not apply to UCC!

Here, the owner’s signed writing that promised to sell the work to the collector was a firm offer that remained open until the end of the month. Although the collector sent a check to accept the offer on the last day of the month, it was not received by the owner until the following day.

Note: Merchant can be defined as a any businessperson when the transaction is of commercial nature.

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On January 5, a buyer and a seller contracted for the delivery of 100 widgets if they could be delivered by February 20. The agreement was made in a writing signed by both parties and provided that the buyer would pay the contract price of $1,000 upon delivery. On February 3, the buyer and the seller orally agreed to postpone delivery until March 1. However, when the widgets arrived on March 1, the buyer refused to accept or pay for the widgets.

If the seller sues the buyer for breach of contract, who is most likely to succeed in the action?

A) The buyer, because any modification of the parties’ contract must satisfy the statute of frauds.
B) The buyer, because the agreement on February 3 was not supported by consideration.
C) The seller, because the contract modification on February 3 was immediately binding on both parties.
D) The seller, because the oral agreement on February 3 waived the February 20 delivery date.

D) The seller, because the oral agreement on February 3 waived the February 20 delivery date.

The nonoccurrence of a condition may be excused if the party who would benefit from the condition waives it by words or conduct.

The waiving party cannot retract the waiver once the other party has detrimentally relied on it.

Here, the buyer’s duty to pay under the original contract was conditioned on the seller’s delivery by February 20. However, the buyer waived the original delivery date by orally agreeing on February 3 to postpone delivery to March 1. The seller detrimentally relied on that waiver by delivering the widgets on March 1, so the buyer cannot retract the waiver.

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A caterer contracted with a local farmer for the delivery of three dozen fresh local eggs. The contract provided that because the caterer planned to use the eggshells to serve one of her signature dessert recipes, the eggs needed to be a uniform color.

The farmer delivered the caterer 20 white eggs and 16 speckled eggs. The caterer immediately emailed the farmer and informed him that she was rejecting the eggs because she could not use the inconsistent shells to serve her desserts. The caterer also told the farmer that she did not have the ability to refrigerate the eggs or the space to store them for long and that she would wait for his instructions. The caterer stored the eggs on her countertop for a week and had not heard from the farmer. Concerned that the unrefrigerated eggs would soon spoil, the caterer promptly returned the eggs to the farmer. Due to the perishable nature of the eggs, the farmer had to resell the eggs at half the normal price.

If the farmer brings a breach-of-contract claim against the caterer to recover the full contract price of the eggs, will he succeed?

A) No, because the caterer behaved appropriately after rightfully rejecting the eggs.
B) No, because the caterer had no obligations regarding the nonconforming eggs.
C) Yes, because the caterer had a duty to retain the eggs until the farmer retrieved them.
D) Yes, because the caterer was required to sell the eggs on the farmer’s behalf.

A) No, because the caterer behaved appropriately after rightfully rejecting the eggs.

After rejection, the buyer has an obligation to take reasonable care of any goods in its possession until the seller has had a reasonable amount of time to retrieve them.

Note: Buyer may generally choose to store, reship, or sell the goods on the seller’s behalf.

BUT if the buyer is a merchant, the goods are perishable, or the seller has no local agent, the buyer is required to sell the goods on the seller’s account.

Here, the eggs are perishable and there is no indication that the seller had a local agent to whom the eggs could be returned. But since the caterer is not in the business of selling eggs, she was not a merchant required to sell the perishable eggs on the farmer’s behalf

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A wheat farmer contacted an agricultural services company in May to inquire about hiring workers for a five-day period toward the beginning of the summer-long harvest season to assist the farmer in harvesting his wheat crop. After some negotiations, the farmer entered into a written contract with the company “to provide five workers for a five-day period starting in the first week of June for a cost of $5,000.” On May 31, the company’s workers went on strike. On June 9, the strike ended, and the company’s workers began harvesting wheat on the farmer’s farm for the next five days. The farmer subsequently refused to pay the company, claiming that the company’s delay in performance excused his obligation to pay.

Is the farmer’s obligation to pay excused?

A) No, because the delay did not deprive the farmer of the substantial benefit of the bargain.
B) Yes, because starting in the first week of June was an express condition of the contract.
C) Yes, because substantial performance does not excuse a breach for commercial contracts.
D) Yes, because the delay was a material breach as the harvesting season had already begun.

A) No, because the delay did not deprive the farmer of the substantial benefit of the bargain.

Material breach = Nonbreaching party does not receive the substantial benefit of its bargain. As a result, substantial performance—i.e., less-than-full performance that, while imperfect, does not defeat the contract’s main purpose—does not typically constitute a material breach.

Here, the company did not perform in the first week of June. BUT the company substantially performed if its delay did not deprive the farmer of the benefit for which he contracted—five days of work from five people. Since the farmer’s wheat was still harvested within the summer-long harvest season, the delay did not deprive him of the substantial benefit of his bargain.

Note: Unless there is specific language like “on the condition that” or “provided that” there is no express condition and substantial performance will suffice.

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A refrigeration-unit manufacturer contracted with a kitchen appliance store to sell and deliver 100 refrigeration units to the store at a price substantially lower than market value. The written and signed contract included the term “F.O.B. kitchen appliance store, on or before March 30.” The shipping company that the manufacturer normally used to deliver its refrigeration units experienced an unforeseen strike at the end of March. As a result, the manufacturer personally delivered the units to the store on April 18. The store suffered no material harm due to the delay. The refrigeration appliance industry generally allows appliance manufacturers a 30-day leeway for any contractually specified time of delivery, unless such leeway is expressly prohibited by the contract.

If the store brings suit against the manufacturer for breach of contract, which of the following facts provides the manufacturer with the strongest defense to the store’s claim?

A) The delay was caused by an unforeseeable strike.
B) The manufacturer believed that due to the price at which it offered the refrigeration units, the store would accept a late delivery.
C) The store suffered no material harm from the delay.
D) There is evidence of a trade usage in the refrigeration appliance industry allowing a 30-day leeway for appliance deliveries.

D) There is evidence of a trade usage in the refrigeration appliance industry allowing a 30-day leeway for appliance deliveries.

UCC = party may explain or supplement the terms of a written contract with evidence of trade usage—i.e., any practice or method of dealing in the particular business or industry that is observed with such regularity so as to justify an expectation that it will be observed in the instant case.

Here, the contract stated that delivery was due on or before March 30. However, the refrigeration appliance industry generally allows appliance manufacturers a 30-day leeway for a contractually specified delivery date unless expressly prohibited by the contract (not seen here). Therefore, this evidence of trade usage would provide a strong defense against the store’s breach-of-contract claim because it shows that the manufacturer was not in breach when it delivered the units on April 18—within 30 days of March 30.

Note: Material harm not a necessary element of breach claim.

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On November 1, the owner of a yacht posted a flyer at a local coffee shop reading, “Yacht for Sale: Make me an offer!” The flyer also included the owner’s phone number. A buyer called the owner on November 3 to ask how much the owner wanted for the yacht. The owner said, “Well, I’d hate to part with it for less than $55,000, but if you can pay me $50,000 by November 20, I’d sell it to you. I’ll hold onto the yacht for you until then.” Elated, the buyer took steps to obtain a loan by November 20. On November 15, a second buyer called the owner and offered to buy the yacht for $60,000. The owner immediately accepted, and the second buyer picked up the yacht the next day. On November 20, having obtained a loan, the first buyer visited the owner with a check for $50,000. The first buyer then learned the owner had already sold the yacht.

Can the first buyer bring a successful suit against the owner for breach of contract?

A) No, because the owner’s statement to the first buyer was only an invitation to deal.
B) No, because the second buyer offered more money for the yacht than the first buyer agreed to pay.
C) Yes, because the owner promised to keep the offer open for a specific period of time.
D) Yes, because the owner’s offer to the first buyer was still outstanding on November 20.

D) Yes, because the owner’s offer to the first buyer was still outstanding on November 20.

An offer can be revoked by the offeror
(1) expressly, when the offeror communicates the revocation directly to the offeree or
(2) constructively, when the offeree acquires reliable information that the offeror has taken definite action inconsistent with the offer.

Here, the owner never revoked the offer made to the first buyer, and the first buyer did not otherwise learn of the sale prior to accepting the offer.* Therefore, a valid contract was formed when the first buyer accepted the offer on November 20, and the first buyer can bring a successful suit against the owner for breach of contract.

*Had the first buyer learned of the sale from a reliable source prior to acceptance, then the offer would have been terminated through constructive revocation.

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A manufacturer of T-shirts contracted with a brand-new clothing store to sell the store 1,000 T-shirts per month for a period of two years. The clothing store’s signature color for its clothing was an orange-tinted red color, called coquelicot, which is very difficult to replicate on a consistent basis. The final, written contract specified that any T-shirts that were not coquelicot could be returned, but it was silent with regard to the return of T-shirts for other reasons.

One year into the contract, the store decided to switch to coquelicot-colored baseball caps instead of T-shirts. As a result, the store returned the most recent shipment of coquelicot-colored T-shirts to the manufacturer and demanded a refund. The manufacturer refused to grant the refund, and the store sued the manufacturer for damages.

At trial, the manufacturer introduced the contract, which clearly stated that T-shirts that were not coquelicot could be returned. The store then attempted to introduce evidence that it had returned coquelicot-colored T-shirts to the manufacturer over the past year without objection and received a refund.

Is this evidence admissible?

A) No, because evidence regarding the return of the T-shirts violates the parol evidence rule.
B) No, because the express term in the contract regarding the return of T-shirts takes precedence over the course of performance.
C) Yes, because the evidence can reasonably establish the parties’ course of dealing on this issue.
D) Yes, because the evidence is relevant to show that the manufacturer had accepted the return of coquelicot-colored T-shirts in the past.

D) Yes, because the evidence is relevant to show that the manufacturer had accepted the return of coquelicot-colored T-shirts in the past.

Under the UCC parol evidence rule, course of performance can be used to supplement or explain the terms of a final written agreement.

Here, the manufacturer entered into a final written contract with the clothing store to sell 1,000 T-shirts per month for two years. The contract stated that non-coquelicot T-shirts could be returned but was silent with regard to the return of coquelicot T-shirts.

This means that the contract’s terms can be supplemented with evidence that the store had returned coquelicot T-shirts over the past year without objection and received a refund. Evidence of this course of performance is therefore admissible.

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A widow offered to sell her small business, together with all of the business’s assets, to a nonprofit organization. The organization accepted, and on June 1, it signed and executed a contract providing for the sale of the business for $25,000 at the end of the month. When the organization’s agent signed the contract, she orally informed the widow that the organization’s duty to purchase the business was conditioned on obtaining approval from a local zoning board to convert the business’s primary office into an affordable-healthcare clinic. A week later, the woman received another offer to purchase her business for $35,000. At the end of the month, seeking to accept the other offer, the widow refused to honor the contract with the organization because it had neglected to request the necessary approval from the zoning board.

The organization sued the widow for breach of contract. The organization presented clear evidence that it had the necessary funds to perform on the contract at the end of the month, and that the zoning board would have routinely approved the organization’s plans for the office.

Is the organization likely to prevail in its action against the widow?

A) No, because the express condition of the zoning board’s approval had not occurred by the end of the month.
B) No, because the organization’s failure to seek approval from the zoning board was a repudiation of the contract.
C) Yes, because the condition of approval by the zoning board has been waived by the organization.
D) Yes, because the condition of approval by the zoning board was not included in the written contract.

C) Yes, because the condition of approval by the zoning board has been waived by the organization.

A party whose duty is subject to the condition can waive the condition by words or conduct.

Here, the organization’s duty to perform the contract was subject to the condition that it first obtain approval from the local zoning board.

Since the organization did not have to perform until this condition occurred, it had the ability to waive the condition. It did so by making no attempt to obtain approval. As a result, the organization can likely enforce the contract without satisfying the condition.

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In January, a local farmer contracted with a chef to sell the chef a specified amount of local organic tomatoes to be delivered on August 1. On June 15, the farmer called the chef to tell him that part of his crop was infested with tomato fruitworms and he was unsure that he would be able to deliver the full amount requested by August 1. The chef told the farmer that it was absolutely essential that he receive those tomatoes on time to make organic tomato sauce for a restaurant scheduled to open in late August. The farmer assured the chef that he would do his very best to save the crop and deliver by August 1.

Does the chef have valid legal grounds to cancel the contract and order tomatoes from another source?

A) No, because the farmer did not state unequivocally that he could not deliver the tomatoes on time.
B) No, because the farmer still had more than 30 days to deliver the tomatoes.
C) Yes, because the farmer committed an anticipatory repudiation of the contract by causing the chef to feel insecure about the farmer’s performance.
D) Yes, because the farmer failed to provide adequate assurances to the chef.

A) No, because the farmer did not state unequivocally that he could not deliver the tomatoes on time.

Anticipatory repudiation = when one party to a contract clearly and unequivocally communicates (through words or conduct) to the other party that it will not perform. The other party can treat the repudiation as a breach and sue immediately.

insecurity about the party’s prospective ability to perform = not repudiation, but it does give the other party the right to demand assurance of performance.

UCC = demands for assurances must be made in writing and require response within a reasonable time (not to exceed 30 days)

Here, the farmer told the chef that he was “unsure” whether he could deliver the full amount of tomatoes by August 1. Since the farmer did not state unequivocally that he could not deliver the tomatoes on time, this did not constitute an anticipatory repudiation.

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A farmer owned a tractor and offered his brother the chance to purchase it. The farmer told the brother that he had to decide whether he wanted to purchase the tractor within “six months of today’s date.” The brother paid the farmer $200 that day to keep the option open. The agreement was reduced to writing, signed by both men, and dated May 15. The farmer died on July 1. On August 15, the brother notified the executor of the farmer’s estate that he wanted to accept the offer to buy the tractor. The executor refused to sell, and the brother filed suit for the enforcement of the contract.

Is the brother likely to prevail?

A) No, because at the time of the farmer’s death, the tractor went to his estate.
B) No, because the offer terminated on July 1.
C) Yes, because the brother made an enforceable contract to buy the tractor on May 15.
D) Yes, because the brother paid $200 to keep the option open.

D) Yes, because the brother paid $200 to keep the option open.

An offer terminates when the offeror dies or becomes mentally incapacitated—unless the parties formed an option contract. An option contract will not terminate under such circumstances because the offeree gave separate consideration to keep the offer open for a specified period of time.*

*Under the UCC firm-offer rule, no consideration by the offeree is needed to keep the offer open. But this rule only applies in a contract with a merchant, which is not the case here.

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A recent college graduate offered to buy all of the computers from a failing online retailer for which he had been an intern during college, and the retailer accepted. The terms of the written agreement were such that the graduate would pay $10,000 for a “reasonable number of computers” since the retailer was winding up its business and no longer needed them all. Due to his internship with the retailer, the graduate knew that there were 50 computers in the office and that nearly all of them were unused, so he believed that he would receive all 50 computers once the retailer closed. He gave the retailer a check for $10,000 and, in return, took 10 computers from the office that day.

With the help of the $10,000 and a sudden upswing in the online retail market, the retailer became profitable. When the graduate demanded the remaining 40 computers, the retailer refused. Instead, the retailer returned the $10,000 to the graduate and demanded the return of the 10 computers that were in the graduate’s possession.

The graduate sued the retailer for breach of contract. The retailer has moved to dismiss the suit, arguing that no valid contract existed.

How is the court likely to rule?

A) Deny the motion, because the court may supply missing terms in a contract.
B) Deny the motion, because the parties formed a requirements contract.
C) Grant the motion, because the retailer’s increased profitability constituted a supervening event.
D) Grant the motion, because there was no agreement as to quantity.

D) Grant the motion, because there was no agreement as to quantity.

The UCC “fills the gap” for missing contract terms other than the parties, subject matter, and quantity. The quantity term must specify an amount that is certain or capable of being made certain by reference to objective facts.

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A woman emailed her friend, stating that someday, she would like to buy the friend's teacup collection. The email stated, "When times aren't so tough, I would gladly pay $1,000 for them." The friend responded with an email stating, "That would be fine with me. I'd love for you to have them." The women did not exchange money or the teacups and did not see each other until a year later. When they did see each other, the friend apologized for forgetting about their discussion and told the woman she would deliver the teacups the next weekend and would accept a check at that time. The woman said that she did not remember the discussion but would pay $750 for the teacups. The friend responded, "Haven't we already discussed this? Sold." The next day, the friend turned the teacups over to the woman, who provided the friend with a check for $750. The friend immediately responded that she needed the check for the remaining $250. The woman kept the teacups. Is the woman liable for the remaining $250? A) No, because a contract was not formed until the day the women spoke in person. B) No, because oral agreements for the sale of goods are not enforceable. C) Yes, because the original contract was for $1,000. D) Yes, because the woman kept the teacups.

A) No, because a contract was not formed until the day the women spoke in person. An offer is an objective manifestation of a present intent to enter into an agreement, which is determined by whether an individual receiving the offeror's communication would believe that acceptance would create an enforceable contract.

A party-planning company specialized in creating and selling nine different kits for themed parties. A store that sells party-related items entered into a written agreement with the company. Under this agreement, the company was to deliver 500 kits to the store by November 1. The agreement stated that selections regarding the types of kits and the number of each were to be made by October 15, but the agreement did not specify who was to make the selections. Neither the store nor the company selected any assortment of the kits by October 15. On October 16, the company notified the store that due to its breach, the company would not be shipping the party kits. On October 17, after receiving the company's notification, the store informed the company of its selections. The company refused to send the kits that the store selected even though it had a surplus of all of the merchandise and could have filled the store's order with any combination of themed kits. If the store sues the company for breach of contract on November 2, is the store likely to prevail? A) No, because the company had no duty to perform since an assortment was not selected by October 15. B) No, because the failure to specify the party responsible for selecting the types and numbers of each kit renders the contract unenforceable due to the indefiniteness of its terms. C) Yes, because the company was required to make a reasonable selection of available merchandise to fill the order. D) Yes, because the store's two-day delay in making its selections did not have a material effect on the company's ability to perform the contract.

D) Yes, because the store's two-day delay in making its selections did not have a material effect on the company's ability to perform the contract. The UCC imposes a duty on the buyer of assorted goods to specify the assortment unless the contract states otherwise. The seller can treat the buyer's failure to specify the assortment as a breach only if it materially impacts the seller's performance.

The owner of a beauty products store mentioned to a longtime customer that she was selling her car. The storeowner showed the customer a picture of the car and told her its year, make, model, and mileage. When the customer expressed an interest, the storeowner gave her the keys and told her to check it out for herself. The customer took the keys, looked over the inside and the outside of the car, and drove it around the block. When the customer returned to the store, the storeowner honestly stated that she knew little about cars and was selling the car with all its faults. The storeowner and the customer agreed upon a price of several thousand dollars for the car. Several days after the customer paid for the car and took ownership of it, the car stopped running. The customer towed the car to a mechanic and learned that it required a costly engine overhaul that neither the storeowner nor the customer was aware of at the time of the sale and that could not have been detected without a specialized inspection. The customer has filed a lawsuit against the storeowner for breach of the warranty of merchantability. Is the customer likely to be successful? A) No, because the storeowner was not a merchant with respect to the car. B) No, because the storeowner was unaware of the problem with the car's engine. C) Yes, because the defect could not have been detected without a specialized inspection. D) Yes, because the warranty of merchantability cannot be orally disclaimed.

A) No, because the storeowner was not a merchant with respect to the car. The implied warranty of merchantability warrants that the goods sold are fit for their ordinary purpose, but this warranty is implied only when the seller is a merchant with respect to the goods sold.

A buyer at a local market offered to purchase a large mirror from an artist for $1,000. The artist stated that he wanted to wait to see how many people went through the market that day before he decided on whether he would accept the offer. The buyer agreed to wait until the next morning for the artist's decision. The next morning, the buyer returned to the market only to learn that the mirror had been dropped and shattered. The buyer believed that the destruction of the mirror terminated his original offer, but because the frame of the mirror was still in good condition, the buyer decided to buy the frame instead. The buyer wrote a check for $500 and gave it to the artist without further remark. The artist loaded the empty frame into the buyer's vehicle and, believing that he had accepted the buyer's original offer, demanded the remaining $500 the buyer had offered the day before. Is the buyer liable for the remaining $500? A) No, because the buyer believed that the original offer had terminated. B) No, because the original offer terminated. C) Yes, because the artist thought that he had accepted the original offer. D: Yes, because the original offer was still valid.

B) No, because the original offer terminated. An offer can be terminated by operation of law—e.g., when the subject matter of the offer is destroyed.

The owner of a coffee shop saw the work of an eccentric local artist at an art show. The owner discovered that the artist operated a small interior-decorating business and, wanting the artist's unique style reflected in her own business, hired the artist to decorate her coffee shop. A week before the artist was scheduled to decorate the coffee shop, the artist sold her decorating business to a young art school graduate and delegated all of her outstanding contracts to him. The graduate took over all financial and creative management of the business. If the coffee shop owner refuses to accept performance by the art school graduate, is the owner liable for breach of contract? A) No, because the artist's duty under the contract involved her taste and skill. B) No, because the delegation created reasonable grounds for insecurity. C) Yes, because the art school graduate is completely capable of performing the contract. D) Yes, because the contract did not prohibit delegation of duty.

A) No, because the artist's duty under the contract involved her taste and skill. Delegation of contractual duties is NOT permitted when (1) the other party to the contract has a substantial interest in having the delegating party perform or (2) the contract prohibits delegation.

A construction company contracted with a manufacturer to purchase 100 identical prefabricated windows to use while constructing houses in a gated community. The windows were to be delivered in shipments of 25 windows each on April 1, May 15, July 1, and August 15. The written contract, signed by both parties, was silent as to when payment for each shipment would be due. The manufacturer made the first two shipments in conformity with the contract requirements, and the construction company paid one-fourth of the full contract price upon each delivery. However, on June 1, the manufacturer demanded that the construction company pay the entire remainder of the contract price before the manufacturer made any further shipments. Which of the following statements is true?: A) The construction company has no duty under the contract to make any payments until the final delivery is made. B) The construction company must pay the manufacturer one-fourth of the contract price upon delivery of each conforming shipment of windows. C) The construction company's failure to pay the requested sum will amount to a repudiation of the contract. D) The manufacturer waived his right to demand immediate payment of the full contract price when he accepted the first payment of one-fourth of the contract price on April 1.

A) The construction company has no duty under the contract to make any payments until the final delivery is made. Under the UCC, an installment contract is defined as a contract in which the goods are to be delivered in multiple shipments, and each shipment is to be separately accepted by the buyer. Payment by the buyer is due upon each delivery unless the price cannot be apportioned. Here, the parties formed an installment contract in which 100 identical windows were to be delivered to the construction company in four equal shipments on four separate dates. The price of these windows can be easily apportioned between the shipments. Therefore, the construction company is obligated to pay the manufacturer one-fourth of the full contract price upon each conforming delivery.

A groom left his bride at the altar on the day of their wedding. The bride could not bear to keep any painful reminders of the occasion, so she offered to sell her wedding dress to one of her bridesmaids for $5,000. The bride stated that the offer would remain open for 30 days. The bridesmaid said that she was interested but would have to think about it. A week later, the bridesmaid emailed the bride to ask if the price included the custom-made veil that the bride had worn. The bride did not respond to the bridesmaid's question. Within the 30-day period, the bridesmaid accepted the bride's initial offer of $5,000 for the wedding dress. In response, the bride stated that the bridesmaid could only buy the wedding dress for $6,000. Was a contract formed when the bridesmaid accepted the initial offer of $5,000? A) No, because the bride raised the price of the dress to $6,000. B) No, because the bridesmaid's question acted as a counteroffer and a rejection of the $5,000 offer price. C) Yes, because the bride was required to keep the initial offer open for the 30-day period. D) Yes, because the bridesmaid's question did not constitute a counteroffer.

D) Yes, because the bridesmaid's question did not constitute a counteroffer. Here, the bride offered to sell her wedding dress to the bridesmaid for $5,000 and stated that her offer would remain open for 30 days. But since the bridesmaid gave no consideration for the option, the bride's offer could be terminated before the 30-day deadline. Note: Had the bride revoked her original offer to sell the wedding dress for $5,000 before the offer was accepted, then the bride could have then raised the price to $6,000. But since the bridesmaid timely accepted the original offer, the bride could not subsequently raise the price.

The owner of a high-rise building entered into a written contract with a company to maintain and service the elevators in the building. The written contract contained the following provision: "This contract is the entire and final agreement of the parties regarding the maintenance and servicing of the elevators in Building. It supersedes any prior agreements, understandings, or negotiations." On the starting date of the contract, the company discovered that the building's elevators were significantly older than the owner had orally represented to the company during the negotiations prior to the signing of the contract. The company refused to maintain and service the elevators unless the owner agreed to a sizable increase in the monthly payments called for in the contract. The owner refused and found another entity to maintain and service the elevators at a cost below what the company wanted but above the original contract price. The owner then sued the company for breach of contract, seeking the difference between the contract price and the amount paid to the entity that was currently providing elevator maintenance and service. At trial, the company seeks to introduce evidence of the owner's oral statement as to the age of the elevators during contract negotiations. Should the court permit the introduction of this statement? A) No, because of the parol evidence rule. B) No, because the contract for services is governed by common law. C) Yes, because the statement relates to a contract defense. D) Yes, because the statement was oral, not written.

C) Yes, because the statement relates to a contract defense. The parol evidence rule does not bar evidence of prior or contemporaneous communications between contracting parties when the evidence is offered to establish a defense to contract formation (e.g., misrepresentation).

A library contacted a local artist expressing an interest in purchasing a particular one of the artist's sculptures for display at the library. The library's agent and the artist executed a written contract that was signed by both parties and provided that the library would purchase the sculpture for $1,000 due upon delivery of the sculpture to the library. Just before they signed the contract, the agent told the artist, "Plan on delivering the sculpture in 10 days, but please remember that the library's obligation to purchase the sculpture will be conditioned on the approval of the chairperson of the Artistic Patronage Council, as it will be providing the library with the funds for this sale." The chairperson of the Artistic Patronage Council orally approved the sale the next day. However, 10 days after the contract was executed, the artist decided that he did not want to sell the sculpture. If the library sues the artist for breach of contract, is the library likely to prevail? A) No, because the library's agent made an illusory promise. B) No, because there was no mutuality of remedy when the contract was executed. C) Yes, because the agreement was supported by good consideration even though it was conditioned on an uncertain event. D) Yes, because the artist waived any lack of consideration by signing the contract.

C) Yes, because the agreement was supported by good consideration even though it was conditioned on an uncertain event. To be enforceable, a contract must generally be supported by valuable consideration—i.e., a bargained-for change in the legal position between the parties. Performance under a contract may be conditioned upon a condition precedent (which delays performance) or a condition subsequent (which excuses performance).

The owner of a bed and breakfast hired an artist to paint nature-themed murals in each of the five bedrooms. The contract provided that payment was due upon the satisfactory completion of all five rooms. The owner told the artist that each mural should relate to the name of the bedroom, but she otherwise gave the artist broad discretion in designing each mural. When the owner checked the artist's progress a few weeks later, she found that although the murals in the three completed rooms related to the theme of the rooms, the color choices clashed with the overall décor of the bed and breakfast. The owner told the artist that she would accept his performance on the first three rooms, but she asked him to incorporate a different color palette in the remaining rooms. The artist, unwilling to compromise his artistic autonomy, refused to paint the remaining two rooms and immediately terminated the contract. What is the artist entitled to recover from the owner of the bed and breakfast? A) Nothing, because the contract expressly provided that payment would be due upon the completion of all five rooms. B) Nothing, because the murals in the three completed rooms clash with the overall décor of the bed and breakfast. C) The artist's expenditures in painting the first three rooms and the artist's anticipated profit for painting the last two rooms. D) The reasonable value of the artist's services in painting the first three rooms, less any damages the owner may suffer from the artist's failure to paint the last two rooms.

D) The reasonable value of the artist's services in painting the first three rooms, less any damages the owner may suffer from the artist's failure to paint the last two rooms. A party who breaches a contract can recover restitutionary damages for the reasonable value of the work performed before the breach, less any damages suffered by the nonbreaching party due to the breach.

A jeweler who specialized in engagement rings assisted a man who was trying to pick out the perfect engagement ring. The man was inexperienced with the various cuts of diamonds and types of ring settings. Over the course of a few weeks, the jeweler and the man looked at all of the ring styles and discussed pricing based on the man's budget of $5,000. The man finally settled upon a square-cut diamond with a prong setting that was priced at $5,500. The man initially offered the jeweler $4,500 for the ring. While the man and the jeweler were negotiating the price, the jeweler received a phone call regarding a family emergency. The jeweler told the man that he would email him an offer in the evening, and if they could "meet halfway," the jeweler would sell the ring to the man. The man agreed. That evening, the jeweler and the man received emails from one another at the same time. The jeweler's email contained an offer to sell the ring for $5,000, and the man's email contained an offer to buy the ring for $5,000. Both emails (i) specified the same style of ring that the two parties had discussed earlier that day, (ii) required payment upon receipt of the ring in two weeks, and (iii) were signed with an electronic signature. Based upon their earlier discussions and the jeweler's email offer to sell the ring to him for $5,000, the man did not look for an engagement ring at any other jewelry store. When the man showed up two weeks later to pick up and pay for the ring, the jeweler denied that they had a binding contract and would not sell the ring. If the man sues the jeweler for breach of contract, which of the following most persuasively supports the man's position? A) A sale-of-goods contract does not require that an acceptance be a mirror image of the offer. B) Both parties conveyed an intent to contract with one another through prior negotiations and the simultaneous emails. C) Since the jeweler was the only merchant in the transaction, the jeweler is estopped from denying that the parties' correspondence created a binding contract. D) The man detrimentally relied upon the jeweler's offer to "meet halfway" and the email offer to sell the ring to him.

B) Both parties conveyed an intent to contract with one another through prior negotiations and the simultaneous emails. Under the UCC, a contract is formed if the parties intended to contract and there is a reasonably certain basis for giving a remedy—even if the moment of formation is uncertain. Here, it is uncertain whether a contract between the man and the jeweler was formed during prior negotiations when they agreed to "meet halfway" or when they simultaneously exchanged emails presenting similar offers. However, the negotiations and emails both show their intent to contract, and the emails give a clear basis for a remedy against the jeweler. Therefore, this is the strongest argument supporting the man's position that a valid contract was formed and breached by the jeweler.

A man was moving to another state and decided that he wanted to give away some of his belongings. The man knew that his brother had always expressed interest in the man's antique desk. The man called the brother and said, "I'm going to be moving in two weeks. I would like to give you the antique desk as a gift. I'll drop it off at your house on my way out of town." The brother told the man that he was very grateful for the gift and was looking forward to having the desk in his home office. The brother, in reasonable reliance on the man's promise, immediately disposed of his old desk and made room for the antique one. A couple of days later, an appraiser, who was a friend of the man, visited the man's house for dinner. While at his house, the appraiser saw the antique desk and informed the man that it was worth well over $20,000. The man decided to keep the desk and did not drop it off at the brother's house on his way out of town. The brother brought suit against the man to recover the antique desk. If the court finds in favor of the man on these facts, what is the most likely reason? A) A promise to make a gift in the future cannot be enforced. B) The brother did not rely to his detriment on the man's promise. C) The man's promise was not in writing. D) The man's refusal to give the antique desk did not cause injustice.

D) The man's refusal to give the antique desk did not cause injustice. Under the doctrine of promissory estoppel, a party's promise to make a gift is enforceable if (1) the promisor should reasonably expect the promisee to rely on the promise, (2) the promisee detrimentally relies on the promise, and (3) injustice can be avoided only by enforcement of the promise. In this case, the man's promise to gift the antique desk to his brother will only be enforced if all three of these requirements are met. The facts indicate that the brother did reasonably and detrimentally rely on the promise by disposing of his old desk Therefore, if the court finds in favor of the man, the court must have concluded that the man's failure to give the antique desk to the brother as promised did not cause injustice.

A company leased office space in a downtown building and subsequently entered into a written contract with a supplier to purchase furniture for the office. A dispute later arose over the tables and desks delivered by the supplier. The contract called for "cherry tables and desks" of designated designs. The company contended that the word "cherry" indicated the type of wood from which the tables and desks were made. The supplier, having delivered tables and desks made of a less expensive wood and finished with a cherry veneer, asserted that the use of the word "cherry" referred to the appearance of these items and did not require that the furniture be made solely of cherry wood. In the litigation of this dispute, the company sought to introduce a statement made by the supplier during negotiations that the tables and desks were of "solid-wood construction." In determining whether the parties intended the contract to be their final agreement, which of the following best reflects the rule of interpretation that the court should apply? A) The court can find that the contract is integrated only if it contains a merger clause. B) The court is permitted to look only within the "four corners" of the document for evidence of intent. C) The court must presume that the written contract is fully integrated. D) The court should presume that the written contract is partially integrated.

D) The court should presume that the written contract is partially integrated. Under the UCC, a court should presume that a written contract for the sale of goods is only partially integrated. As a result, evidence of additional consistent terms is admissible unless the court concludes that the parties certainly would have included those terms in the writing.

A produce wholesaler sent a written offer to a farmer to purchase all of the corn that the wholesaler required for his business from the farmer for a period of two years. Excited at the prospect of having a guaranteed sale for his corn, the farmer immediately communicated his acceptance to the wholesaler. The wholesaler and the farmer entered into a written contract reflecting the basic terms set forth in the wholesaler's offer. Six months after the contract was executed, the wholesaler determined that, while the farmer's corn was returning a profit, the farmer's corn was not selling as well as corn that the wholesaler could acquire from other sources. The wholesaler contacted the farmer and informed him that he no longer required any of the farmer's corn and would not be placing another order. The wholesaler immediately started buying his corn from another source. If the farmer sues the wholesaler for breach of contract, is he likely to prevail? A) No, because the contract did not contain a specific quantity term. B) No, because the wholesaler no longer needed the farmer's goods. C) Yes, because the farmer relied on the wholesaler's promise. D) Yes, because the wholesaler purchased corn from another source.

D) Yes, because the wholesaler purchased corn from another source. Requirements K= an exclusive agreement between a buyer The buyer's purchase of the goods from another seller violates the implied duty of good faith and fair dealing and constitutes a breach of contract.

Prior to her death, a celebrity commissioned an artist to paint a portrait of her. The celebrity hired this particular artist because he painted using an old-fashioned and rarely used style that required two months of daily appointments during which the subject would sit for a few hours each day. The contract between the parties specified that this live-model method would be used and that the celebrity would deliver increasing payments throughout the process, with the first payment occurring after two weeks of painting. One week into the process, after the painting had begun, the celebrity died. Her family demanded that the artist continue with the painting, using photographs as a substitute for the daily sessions. Is the artist required to complete a painting of the celebrity? A) No, because no payment had yet occurred. B) No, because the celebrity died after only one week. C) Yes, because the artist can complete the painting by relying on photos of the celebrity. D) Yes, because the artist had already begun painting the celebrity.

B) No, because the celebrity died after only one week. A contracting party's duty to perform is discharged by impracticability when (1) an unanticipated or extraordinary event makes it impracticable for the party to perform, (2) the contract was formed under a basic assumption that the event would not occur, and (3) the party seeking discharge was not at fault in causing the event to occur.

A homeowner called and entered into an oral contract with an engineer to build a retaining wall at his home. The engineer had recently created her own professional website to advertise her services. Two days after their conversation, but before the engineer began work on the wall, the homeowner lost his job. As a result, the homeowner immediately called the engineer to tell her that he could not go through with their contract at that time. The engineer stated that she had already purchased materials for the job. She had also paid for a temporary city permit to park the necessary equipment on the street where the homeowner lived and hired a photographer to take pictures of the finished wall for her website. Which of the following would NOT be a possible liability for the homeowner? A) The contract price minus the market cost of performance. B) The cost of the materials. C) The cost of the permit. D) The cost of the photographer.

D) The cost of the photographer. A nonbreaching party to a contract can recover expectation damages, which arise naturally and obviously from the breach. Alternatively, the nonbreaching party may recover reliance damages for foreseeable expenses incurred in reasonable reliance upon the promise that the other party would perform.

At the auction of construction equipment owned by a contractor, several lots were offered for bidding and the highest bids for each were accepted by the auctioneer. The auctioneer then announced that a lot that consisted of a backhoe was being auctioned off. Several bids for the backhoe were acknowledged by the auctioneer. Just before the auctioneer brought down her gavel, she glanced at the contractor. The contractor gave the auctioneer a prearranged signal. Acting in accord with the signal, the auctioneer stated that the backhoe was being removed from the auction. There had been no indication as to whether the auction was being held with or without reserve. The highest bidder on the backhoe, contending that he is now its owner, has brought suit against the contractor. How is the court likely to rule? A) For the contractor, because the auctioneer had not brought down the gavel, announcing the completion of the sale of the backhoe. B) For the contractor, because the backhoe constituted equipment. C) For the highest bidder, because the contractor forfeited his right to withdraw the backhoe by prearranging a signal with the auctioneer. D) For the highest bidder, because the contractor lost the right to withdraw the backhoe once the auction began.

A) For the contractor, because the auctioneer had not brought down the gavel, announcing the completion of the sale of the backhoe. During a reserve auction, the auctioneer may withdraw goods from auction prior to completion of the sale (e.g., before the auctioneer's hammer falls). At a no-reserve auction, goods generally cannot be withdrawn after the auctioneer calls for bids.

A woman sent an offer to sell her office printer to her friend for $450. In her offer, the woman said that the friend was welcome to mail her acceptance to the woman's business address but that the friend had to let the woman know within the next week whether she was interested. The friend needed an office printer, so she immediately accepted the woman's offer by mailing a letter to the woman's home address. Later that same week, thinking that the friend was not interested, the woman sold the office printer to a different person. A few days later, after the one-week deadline had passed, the friend's letter was delivered to the woman's house. The woman called the friend thereafter and told her that the office printer had already been sold. Will the friend likely succeed in an action for breach of contract? A) No, because the offeror determines the manner and means by which an offer may be accepted. B) No, because the woman did not receive the friend's acceptance letter until after the one-week deadline had passed. C) Yes, because the offer was irrevocable for at least one week. D) Yes, because the woman did not specify that mailing an acceptance to her business address was the only mode of acceptance.

D) Yes, because the woman did not specify that mailing an acceptance to her business address was the only mode of acceptance. Here, the woman did not dictate that an acceptance must be mailed to her business address; she merely welcomed the friend to mail it there. Therefore, the friend could accept the offer by another reasonable means. The friend did so by immediately mailing her acceptance to the woman's home address. Since that acceptance was effective upon dispatch, the friend accepted the woman's offer before the one-week deadline had passed. As a result, the friend will likely succeed in her breach-of-contract action.

On April 1, a buyer agreed in writing to purchase an antique car from a seller for $20,000. The parties met on April 10, the scheduled date of the sale, at which time the buyer accepted the car and gave the seller a check for $15,000. The buyer, seeking to create an accord and satisfaction, had added the following conspicuous notation on the check: "This check is in full and final satisfaction of my obligation under our April 1 agreement." The seller did not realize that the check was for only $15,000 and that it contained the notation until the seller sought to deposit it at her bank later that day. Needing the money, the seller deposited the check anyway. If the seller sues the buyer for breach of contract seeking damages of $5,000, the difference between the amount paid and the contract price, will the buyer's accord and satisfaction defense likely succeed? A) No, because the buyer could not modify the agreement without consideration. B) No, because the buyer did not dispute the initial purchase price of the car. C) Yes, because the notation on the check formed a substituted contract. D) Yes, because the seller deposited the check knowing it was offered in full and final satisfaction of the buyer's obligation.

B) No, because the buyer did not dispute the initial purchase price of the car. If a debt is disputed in good faith, then the debtor can offer to satisfy the debt by giving the creditor a check with a conspicuous "payment in full" notation. But if the debt is certain and undisputed, then it cannot be satisfied by a check for a lesser amount—even if the creditor cashes the check. Here, the seller (obligee) cashed the buyer's (obligor's) $15,000 check, which contained a conspicuous statement that it was "in full and final satisfaction" of the buyer's obligation to purchase the car for $20,000. However, the buyer did not dispute the initial purchase price of the car for $20,000—a certain amount. Absent a dispute, the check could not have been offered in good faith. Therefore, the buyer's accord and satisfaction defense is unlikely to succeed.

A law student attended law school on a full scholarship. At the end of the law student's second year, she lost her scholarship. In order to fund her third year, she borrowed $50,000 from her rich uncle. They executed a written agreement stating that the law student would repay the loan two years from May 15, the date of her law school graduation. On May 15, two years after her graduation, the law student did not pay her uncle back because she had been unable to find a job as a lawyer. Instead, she was working as a server at a coffee shop. The uncle took no legal action. Four years later, the law student was still unable to pay the uncle back, but she did write him a signed letter stating that "I know I still owe you $50,000. I will repay you $50,000 if I get a law firm job." The statute of limitations for suits to collect debts in the jurisdiction is three years. Is the law student's promise contained in the letter to repay the loan enforceable? A) No, because the promise to repay is not supported by consideration. B) No, because the statute of limitations for collecting debts in the jurisdiction is three years. C) Yes, because the promise was made after the statute of limitations had run. D) Yes, because the uncle's foregoing of legal action constitutes consideration.

C) Yes, because the promise was made after the statute of limitations had run. A new promise to pay a debt after the statute of limitations has run is enforceable without any new consideration.

In June, a local chef learned of a new business that opened in the area. Hoping to attract the business as a new client, the chef sent the business an offer consisting of a catalog of menus available through his catering service and a form letter that he sent to all new businesses in the area. The letter was signed by the chef and included the following language: "Welcome! I specialize in creating delicious meals with local and organic ingredients, and I would be honored to be your catering source for all your business, promotional, and personal needs! To welcome you to the community, I would like to offer you a 25% discount off my catalog prices on any three-course meal order, for up to 100 people, submitted this calendar year. I hope to hear from you soon, and I look forward to doing business with you!" No communication occurred between the parties until the end of November, when the business faxed an order form to the chef requesting a catered meal for 60 people at a promotional event for a 25% discount. The chef refused to provide the business with the catered meals at a 25% discount. As a result, the business sued the chef for breach of contract. The court found that both parties are merchants with respect to this transaction. Is the business likely to succeed in its action? A) No, because the business's power of acceptance terminated after a reasonable period of time. B) No, because the form letter was only an invitation to deal. C) Yes, because the chef had not revoked the offer before the end of the calendar year. D) Yes, because the signed promotional letter created a firm offer.

C) Yes, because the chef had not revoked the offer before the end of the calendar year. An offer terminates by lapse if it is not accepted by a specified date or, if no date is specified, after a reasonable time. And a revocable offer terminates by revocation if it is revoked by the offeror prior to acceptance. Here, the chef offered the business a 25% discount on any three-course meal order submitted within the calendar year. The offer had to be accepted by that specified time (not a reasonable time) or it would lapse. The offer was accepted before it lapsed because the business faxed the chef an order accepting his offer in November of that same calendar year. Since the chef had not revoked the offer before it was accepted, the business's acceptance created an enforceable contract. Note: Under the UCC firm-offer rule, the period of irrevocability cannot exceed three months ****unless the offeree gives consideration.**** Since the business provided no such consideration, the chef's June offer was irrevocable until September. The chef was then free to revoke the offer but did not do so.

A bank that held a security interest in a delivery van conducted a forced sale of the van at an auction after the owner of the van defaulted on his loan from the bank. The proceeds of the loan had been used to purchase the van, which the owner had used in his floral business. At the auction, which was held in accordance with statutory requirements, the owner made a good-faith bid on the van but did not disclose his ownership interest. Twelve days after the auction, the highest bidder filed an action to void the sale after learning that one of the bidders had been the owner of the van. Is the highest bidder likely to succeed? A) No, because the auction was a forced sale of the van. B) No, because the highest bidder did not file his action to void the sale within 10 days of the auction. C) Yes, because the owner bid at the auction without disclosing his interest in the van. D) Yes, because the owner was a merchant.

A) No, because the auction was a forced sale of the van. A winning bidder may avoid an auction sale or pay the price of the last good-faith bid if the auctioneer (1) knowingly accepted a bid by the seller or on the seller's behalf OR (2) procured the seller's bid to drive up the price. BUT the winning bidder may not do so if the seller bid at a forced sale or gave notice reserving the right to bid.

After the death of a farmer, the executor of his estate held an auction sale of his farm equipment. The executor specified that she reserved the right to withdraw any item from the sale. A neighbor placed a bid on a tractor. The bid was acknowledged by the auctioneer. Before another bid was placed, and before the auctioneer announced the completion of the sale, the neighbor informed the auctioneer that he was withdrawing his bid. Must the auctioneer permit the neighbor to withdraw his bid? A) No, because the auctioneer may, but is not required to, accept the neighbor's withdrawal of his bid. B) No, because there is no right to withdraw a bid. C) Yes, because the auctioneer had not announced the completion of the sale. D) Yes, because the seller retained the right to withdraw any item from the sale.

C) Yes, because the auctioneer had not announced the completion of the sale. At a reserve or no-reserve auction, a bidder has the right to withdraw a bid until the auctioneer announces the completion of the auction sale.

A theater owner wanted to renovate the interior of the classic theater that he owned. The theater owner contacted a light vendor, and the parties began negotiating a deal for the purchase of unique stage and overhead lighting for the theater. After several phone calls, the light vendor sent a letter to the theater owner that stated: "40 overhead fixtures and 14 stage lights to be delivered on the first of the month." The theater owner, intending to form a contract, responded with a signed letter containing the following: "Delivery, fixtures, and stage lights sound good. Installation would also be helpful." The light vendor received the theater owner's letter. Does a contract that binds the theater owner and the light vendor exist? A) No, because the light vendor is a merchant and the theater owner's acceptance materially altered the original offer. B) No, because the price of the lighting fixtures was not specified in the written offer or acceptance. C) No, because the theater owner's counteroffer acted as a rejection of the original offer. D) Yes, because the theater owner and the light vendor intended to create a contract.

D) Yes, because the theater owner and the light vendor intended to create a contract. *Here, the predominant purpose of the agreement was to purchase lighting (sell goods)—not to have lighting installed (provide services). Under the UCC, an acceptance that includes new or revised terms is effective so long as it is not conditioned upon the offeror's agreement to such terms.

A mechanic and a farmer contracted in writing for the repair of the farmer's tractor, with a payment of $2,000 due upon completion. The mechanic called the farmer on April 15 to inform him that the work was complete. When the farmer went to pick up the tractor the next day, he told the mechanic that due to an unforeseen rise in feed costs, he could not pay the full contract price. The farmer paid the mechanic $1,000. The mechanic told the farmer that, if the farmer promised to pay the remainder by June 1, then the mechanic would not sue to recover the remaining $1,000. The farmer orally agreed. On May 1, the mechanic sued the farmer for the unpaid $1,000, and the farmer filed a motion to dismiss. Should the court grant the motion to dismiss? A) No, because the new cost of feed is not an unforeseen difficulty that would allow for modification of the existing contract. B) No, because there is no consideration to support the mechanic's promise not to sue. C) Yes, because a promise to allow a debtor to delay payment on a past debt is enforceable without consideration. D) Yes, because the payment of $1,000 was sufficient consideration to support the mechanic's promise not to sue.

B) No, because there is no consideration to support the mechanic's promise not to sue. Under the preexisting-duty rule, a promise to perform a duty that a party is already legally bound to perform is not consideration. Here, the farmer had a duty to pay the mechanic $2,000, which was due when the repairs were finished. Because the farmer was only able to pay $1,000 upon completion of the repairs, he attempted to settle the debt by promising to pay the remaining $1,000 by June 1 if the mechanic promised not to sue. But since the farmer had a preexisting duty to pay that amount, there was no consideration to support the mechanic's return promise

A motorcyclist and his friend were discussing an old motorcycle that the motorcyclist was interested in selling. The friend demonstrated an interest in purchasing the motorcycle, and the two began to negotiate a possible purchase price. After a couple hours of negotiations, the motorcyclist and the friend orally agreed upon a price of $8,500. They also agreed that their oral agreement should be put into writing. The motorcyclist and the friend had their mutual friend, an attorney, draw up a simple contract for the sale of the motorcycle. Without reading the contract, the motorcyclist and the friend both signed it. Unbeknownst to both of them, the price set forth in the contract was $850 instead of $8,500 due to an error by the attorney. Is the motorcyclist likely to prevail in an action seeking reformation of the contract to conform to the parties' oral agreement? A) No, because both parties must agree to the reformation of a written contract. B) No, because the formal written contract controls over the oral agreement. C) Yes, because at least one party was mistaken as to the terms of the contract. D) Yes, because both the motorcyclist and the friend were mistaken as to the price term in the written contract.

D) Yes, because both the motorcyclist and the friend were mistaken as to the price term in the written contract. A court may reform a written contract due to mutual mistake if: (1) there was a prior agreement; (2) the parties agreed to put the prior agreement in writing; and (3) there is a difference between the prior agreement and the writing due to the mistake. Since both the motorcyclist and the friend were mistaken as to the price term in the written contract, the motorcyclist is likely to prevail in an action to reform the contract.

A charity, seeking to raise funds, held a legally permitted raffle in which the prize was a new automobile. A week before the raffle, the organizer of the raffle contacted a friend who had purchased a raffle ticket. The organizer promised to ensure that the friend would win the raffle if the friend gave the organizer $1,000. The friend agreed and gave the organizer $1,000. On the day before the raffle, the friend began to feel guilty. He went to the organizer, renounced the scheme, and demanded his $1,000 back. The organizer refused. The next day at the raffle, the automobile was awarded to someone else. The applicable jurisdiction makes it a crime to fraudulently conduct a contest, lottery, or prize drawing. If the friend sues the organizer for the $1,000, will the friend be likely to prevail? A) No, because the agreement between the friend and the organizer was illegal. B) No, because the friend failed to take any action to prevent the raffle from being held. C) Yes, because the friend is entitled to a return of the $1,000 paid to the organizer. D) Yes, because there was a valid contract between the organizer and the friend.

C) Yes, because the friend is entitled to a return of the $1,000 paid to the organizer. A party to an illegal contract may recover restitution damages if that party conferred a benefit on the other party and (1) was justifiably ignorant of the facts that made the contract illegal; (2) was less culpable than the other party; OR (3) withdrew before the contract's illegal purpose was achieved and did not engage in serious misconduct. Here, fraudulently conducting a prize drawing (e.g., raffle) is a crime in this jurisdiction, so the parties' contract to ensure that the friend would win the raffle for $1,000 was illegal and therefore invalid. However, the friend withdrew from the transaction prior to the raffle. And since there is no evidence of serious misconduct on his part, the friend is entitled to restitution of the $1,000 that he paid to the organizer.

A plastics manufacturer saw an advertisement for a plastic extruding machine. The manufacturer contacted the seller, who was a merchant of plastic extruding machines, and made arrangements to inspect the machine at the seller's place of business. The manufacturer walked around the machine once and stated: "Yes, this looks like what I need." When the manufacturer asked the price, the seller stated a price that was less than half the amount a similar, functioning, used machine commanded on the market. The manufacturer was surprised at the low price but did not inquire as to the reason. The seller encouraged the manufacturer to perform a closer inspection before finalizing the purchase and offered to open the motor housing so that the motor could be examined, but the manufacturer declined. The parties completed the sale. The manufacturer transported the machine to his factory. When it arrived, he first learned that the motor was burned out and required complete replacement, as would have been readily apparent upon visual inspection had the motor housing been opened. Replacing the motor would cost roughly the amount that the manufacturer had paid for the machine. The manufacturer contacted the seller to return the machine, but the seller refused to take it back. The manufacturer then filed suit against the seller. Will the manufacturer likely prevail? A) No, because the manufacturer waived any implied warranties by failing to inspect the machine. B) No, because the seller made no claims regarding the operability of the machine. C) Yes, because the manufacturer's unilateral mistake regarding the condition of the machine was caused by the seller. D) Yes, because the seller violated the implied warranty of merchantability by selling a machine with a burned-out motor.

A) No, because the manufacturer waived any implied warranties by failing to inspect the machine. Implied warranty of merchantability = may be disclaimed for defects that an examination would have revealed if, before entering the contract, the buyer examined the goods as fully as desired or refused to examine them. Here, the machine was not fit for its ordinary purpose because its motor was inoperable at the time the contract was entered. But since the manufacturer declined to inspect the machine before purchasing it and a visual inspection would have revealed the damaged motor, the warranty was disclaimed by the manufacturer—not violated by the seller.

A buyer contracted with an owner of commercial property located in a strip mall to purchase the property for $750,000. The contract called for closing and delivery of possession to occur on March 1. At the time of contracting, the owner informed the buyer that the current tenants were wrongfully refusing to vacate the premises and would not do so until March 31. The owner notified the current tenants, who ran a call center on the premises, that they would need to vacate the premises before April 1. Although the current tenants stopped operating the call center before April 1, they were not able to empty the space completely because they had attached numerous cubicles to the floor, and the cubicles occupied the entire space of the property. Shortly after entering the contract, the buyer ordered gymnastic equipment that was to be delivered on March 2. Unbeknownst to the owner, the buyer planned on using the property as a gymnastics studio. Due to the delay, the buyer was forced to rent a storage unit for this equipment for $1,000. By April 1, the fair market value of the property had risen to $755,000. In addition, the monthly fair market rental value of the property was $3,000. If the buyer files an action against the owner for damages, what will she likely recover? A) Consequential damages of $1,000 in storage-unit costs, and expectation damages of $3,000 for the fair rental value of the property for the month of March. B) Expectation damages of $3,000 for the fair rental value of the property for the month of March. C) Nothing, because the delay was attributable to the tenants, not the owner. D) Nothing, because the property increased in value during the month of March.

B) Expectation damages of $3,000 for the fair rental value of the property for the month of March. Compensatory damages consist of expectation, consequential, and incidental damages. In real-estate contracts requiring delivery of possession, late delivery is a breach that entitles the buyer to expectation damages measured by the fair market rental value of the property for the time the buyer was denied possession. Here, the buyer can recover expectation damages, which are measured by the fair market rental value of the property for the month of March that she was denied possession ($3,000). Note: the storage-unit costs ($1,000) are not recoverable because it was neither foreseeable (consequential) nor commercially reasonable (incidental)

Due to recent financial difficulties, a man asked his brother if he would be willing to loan him $3,000. The brother agreed to make the $3,000 loan to the man. Under the terms of their agreement entered into on December 31, the man would be responsible for making monthly payments of $125 plus interest for the next two years at the beginning of each month, starting January 1. Pursuant to the agreement with his brother, the man made payments each month for the first six months. However, he failed to make the agreed-upon payments for July and August. On August 30, the man told his brother that he could no longer afford to repay him. The brother filed suit against the man on August 31 for breach of contract. What amount, if any, is the brother able to recover on August 31? A) Nothing, because the agreement did not contain an acceleration clause. B) $250 plus interest, the amount owed for July and August. C) $375 plus interest, the amount owed for July, August, and September. D) $2,250 plus interest, the amount outstanding on the loan, because the man repudiated the contract.

B) $250 plus interest, the amount owed for July and August. Nonperformance accompanied by a repudiation of an installment contract generally constitutes a total breach. But if the only remaining duty is held by the breaching party and is for the payment of money in unrelated installments, then nonperformance is merely a partial breach. Here, the man breached the installment contract when he missed two monthly payments on the brother's loan. The man then repudiated the contract when he told the brother that he could no longer repay the loan. But because the installments are unrelated—i.e., each payment is independent of the others—this amounted to a partial breach. The brother can therefore recover $250 plus interest, the amount of the two missed payments, on August 31.

A card collector decided to sell a rare baseball card. He had a friend who had always shown interest in the card. The card collector called the friend and stated, “I’m selling the baseball card that you like. It’s yours for $475. I’ll give you two weeks to think about it and let me know.” The friend informed the card collector that he would get back to him soon. Three days later, a dealer in rare sports cards contacted the card collector and offered him $800 for the sports card. The card collector immediately accepted and sold the card to the dealer. The next day, the friend called the card collector and stated, “I accept your offer and will bring you the money later today.” Does an enforceable contract exist between the card collector and the friend? A) No, because the contract was not in writing. B) No, because the card collector’s offer was automatically revoked by the sale to the dealer. C) Yes, because the friend accepted the card collector’s offer within two weeks. D Yes, because the card collector’s offer was irrevocable for two weeks.

C) Yes, because the friend accepted the card collector’s offer within two weeks. The friend communicated his acceptance of the card collector’s offer by calling the card collector. The friend’s acceptance was communicated within the two-week period provided by the card collector in his offer. Revocation is not effective until communicated to the offeree. Because the card collector did not communicate the revocation of the offer to the friend, the offer remained open and the friend could properly accept. Note: There is no requirement that this type of contract be in writing to be enforceable, as it constitutes a sale of a good for less than $500. Note: The card collector’s statement that the friend could have two weeks to contemplate the offer did not make the offer irrevocable for two weeks.

A restaurant owner sent a signed order form to a produce supplier that read: “Please ship us 100 pounds of potatoes at your current price.” The supplier received the order form on November 9. Later the same day, the supplier mailed the owner a letter with the proper address and postage. The letter stated that the order had been accepted at the supplier’s current price for potatoes. On November 10, before receiving the supplier’s reply, the owner telephoned the supplier to inform the supplier that the owner had found a closer supplier and was canceling the order. The supplier asked the owner to reconsider, but the owner refused. On November 11, the owner received the supplier’s letter. Relying on the owner’s telephone call, the supplier never shipped any potatoes to the restaurant. As of November 12, is there an enforceable contract between the supplier and the owner? A) No, because the owner effectively revoked its offer before it was properly accepted. B) No, because the owner’s offer could be accepted only by shipment of the goods, and the supplier never shipped the potatoes. C) Yes, because the owner’s offer was irrevocable for a reasonable time. D) Yes, because the supplier effectively accepted the owner’s offer before the owner revoked it.

An acceptance that is mailed within the allotted response time is effective when sent rather than upon receipt, unless the offer provides otherwise. Offers revoked by the offeror are effective upon receipt. Therefore, the supplier effectively accepted the offer before receiving the owner’s revocation of the offer, and a contract was formed upon acceptance

A local university kept a pet hog, its mascot, to use during its halftime shows at home football games. One day, the university discovered that the hog was missing. Twice a day for the next month, the university made an announcement on its popular student-operated radio station offering a $5,000 reward to anyone who could “identify who stole the hog.” After that month, a coach from a rival college discovered that his team had stolen the hog as a prank. The coach immediately returned the hog. The university posted a bulletin on its website explaining that the hog had been located and that the reward offer had been revoked. Because the website did not have as wide of an audience as the radio station, many students never learned that the hog had been located. Two days after the bulletin was posted on the website, a student at the university, who did not know that the hog had been returned, heard a rumor about the rival college’s prank. Because he had never visited the university’s website, the student called the university to identify who stole the hog. The university’s representative thanked the student but explained to him that the reward offer had been revoked. Can the student successfully sue to enforce a contract with the university? A) No, because the coach at the rival college had already returned the hog. B) No, because the revocation on the website was effective as to the student. C) Yes, because the student had not yet visited the university’s website. D) Yes, because the university’s radio station had a wider audience than its website.

D) Yes, because the university’s radio station had a wider audience than its website. A general offer can be revoked only by notice that is given at least the same level of publicity as the offer. So long as the appropriate level of publicity is met, the revocation will be effective even if a potential offeree does not learn of the revocation and acts in reliance on the offer. Here, the revocation on the website did not meet the same level of publicity as the initial offer on the radio station.

A landscaper entered into a written six-month service contract with a homeowner to mow the homeowner’s lawn every two weeks. After one month, the homeowner requested that the contract be modified to require that the landscaper mow the lawn every week for the same price originally agreed upon. The landscaper agreed. The parties signed a new copy of the contract that simply changed the frequency of the mowing. Before signing the modified contract, the parties tore up the original contract. The next day, before the homeowner took any action on the modified agreement, the landscaper notified the homeowner that he had changed his mind and would mow the lawn every two weeks as they had originally agreed. The homeowner sued for breach of contract. Is the homeowner contractually entitled to have the landscaper mow his lawn every week? A) Yes, because the parties rescinded the original contract and entered into a valid new contract. B) Yes, because the landscaper is estopped from repudiating his promise to mow the lawn every week. C) No, because there was no consideration for the modification to the original contract. D) No, because there were not unforeseen difficulties that made performance of the original contract impracticable.

A) Yes, because the parties rescinded the original contract and entered into a valid new contract. CL = Agreements to modify a contract may still be enforced if 1. 1. There is a rescission of the existing contract by destroying the contract, or some other outward sign, and 2. then entering into a new contract, whereby one of the parties must perform more than required under the original contract

An honest dispute develops between a homeowner and an electrician over whether wiring and circuit breakers installed by the electrician satisfied contractual specifications. If the wiring and circuit breakers meet those specifications, the homeowner owes the electrician $10,000 under the terms of the contract. The homeowner offers to pay the electrician $8,000 in satisfaction of the homeowner's contractual obligations, if the electrician replaces the circuit breakers with a different brand. The electrician accepts the homeowner's offer. After the electrician replaces the circuit breakers, the homeowner refuses to pay the electrician. In a breach of contract action brought by the electrician, the fact-finder determines that the wiring and circuit breakers originally installed by the electrician did satisfy the contract specifications. The fact-finder also determines that the electrician and the homeowner entered into an accord for which the homeowner failed to provide the required satisfaction. What is maximum amount that the electrician can seek in damages from the homeowner? A) $18,000 B) $10,000 C) $8,000 D) Nothing

B) $10,000 Since the electrician and the homeowner entered into an accord for which the homeowner failed to provide the required satisfaction, the electrician may seek damages under the accord of $8,000 or may seek damages under the original contract of $10,000.

A seventeen-year-old buyer, who was one month shy of her eighteenth birthday, purchased a used motorcycle from its owner. The owner was aware of the buyer’s age, but, having known the buyer and her family for many years, agreed to the sale. Under the terms of sale, which were agreed to by both parties orally, the owner immediately transferred title to the motorcycle to the buyer, and the buyer agreed to pay the purchase price of $6000 by making monthly payments of $250 for two years. Shortly after turning eighteen years old and before the first payment was due, the buyer, while carelessly riding the motorcycle, skidded off the road and hit a tree. She suffered serious injuries, and the motorcycle was unsalvageable. The buyer contacted the owner and told the owner that she did not intend to pay for the motorcycle. The age of majority in the applicable jurisdiction is eighteen years old. The owner of the motorcycle has filed a breach of contract complaint against the buyer to recover the contract price of $6,000. Who is likely to be successful in this action? A) The buyer, because she told the owner that she did not intend to pay for the motorcycle. B) The buyer, because the contract was oral. C) The owner, because the buyer had anticipatorily repudiated her contractual obligation to pay for the motorcycle. D) The owner, because the motorcycle was totaled due to the buyer’s carelessness.

A) The buyer, because she told the owner that she did not intend to pay for the motorcycle. Here, the buyer disaffirmed the contract for the sale of the motorcycle that she had entered into when she was seventeen years old by refusing to make the payments required under the contract shortly after she turned eighteen years old

On March 1, a retailer contracted with a computer chip manufacturer to purchase an order of computer chips. The manufacturer sent the retailer a form contract providing that the computer chips would be delivered to the retailer on April 15, and that the retailer would pay the manufacturer the contract price on the following day. The form contract also contained a boilerplate clause stating that “all parties to this contract covenant not to assign their rights under this contract to a third party.” On April 10, the manufacturer emailed the retailer telling it that the manufacturer was assigning its right to payment under the contract to a local bank in order to satisfy an outstanding debt. The retailer received the email but did not respond to it. The manufacturer also told the bank about the assignment, and the bank consented. On April 15, the manufacturer properly delivered the computer chips to the retailer, and the retailer accepted them. The next day, when the bank called the retailer to ask for payment, the retailer refused. The bank has brought a contract claim against the retailer for the contract price of the computer chips. Is the bank likely to succeed in its action against the retailer? A) No, because the contract terms expressly prohibited the assignment of rights to a third party. B) No, because the retailer never expressly consented to the assignment. C) Yes, because prohibitions against assignment in a contract are not strictly construed. D) Yes, because the bank can enforce the manufacturer’s right to payment under the contact.

D) Yes, because the bank can enforce the manufacturer’s right to payment under the contact. Even if validly prohibited by the contract, the power to assign is retained by the parties, and the only consequence is that an assignment operates as a breach of the contract. Thus, even when an assignment is a breach of the contract by the assignor, the assignee takes all of the rights of the assignor as the contract stands at the time of the assignment.

On June 1, a writer entered into negotiations with a printer to print a book the writer had recently completed. During their negotiations, the writer specified that the pictures in the book had to be in color, and that the books should be hard cover, not paperback. The printer told the writer that a hardcover book with colored pictures would cost $5 per book, whereas a paperback book with black and white pictures would only cost $4 per book. On June 15, the parties orally agreed that the printer would print 1,000 hardcover books with colored pictures at a cost of $5 per book, to be delivered to the writer’s home on August 15. On June 20, the printer and the writer signed a document stating that the printer would print 1,000 paperback books with colored pictures for $5,000. The document did not state the delivery date or location. On August 20, the writer received a bill for $5,000 for 1,000 paperback books with colored pictures, with a note stating that the books were ready for pick up. The writer refused to pay for the books, and the printer sued him for breach of contract. At trial, the writer sought to submit evidence of the oral agreement on June 15 to show that the printer was to print hardcover books, not paperback books. Is this evidence admissible? A) No, because the written document was a total integration of the parties’ agreement. B) No, because the oral agreement was inconsistent with the written document. C) Yes, because the written document was only a partial integration of the parties’ agreement. D) Yes, because the parol evidence rule permits the admission of extrinsic evidence whenever it will help to clarify a written document.

B) No, because the oral agreement was inconsistent with the written document. Here, the writing was only a partial integration because it did not mention the delivery date or the location for delivery. However, the extrinsic evidence that the books were supposed to be hardcover was inconsistent with the terms of the written agreement, and thus is not admissible

A sporting goods store placed the following order on April 1 with a manufacturer of softballs: “Please immediately ship ten gross (i.e., a dozen dozen) 12-inch softballs.” On April 2, the manufacturer shipped ten gross 11-inch softballs instead. On April 5, when the softballs arrived in 10 boxes, each box containing a gross, the store accepted delivery of the boxes from the third-party carrier. Later that day, the store, upon discovering that the softballs were 11-inch softballs rather than 12-inch softballs, notified the manufacturer that it was rejecting 9 gross of the 11-inch softballs, but took no further action with regard to them. The manufacturer sent the store an invoice for the ten gross 11-inch softballs. For how many 11-inch softballs is the store obligated to pay the manufacturer? A) None, because the store did not order the 11-inch softballs. B) One gross, because the store accepted these softballs and rejected the other nine gross. C) Ten gross, because the store accepted delivery of these softballs from the third-party carrier. D) Ten gross, because the store did not promptly return the rejected softballs to the manufacturer.

B) One gross, because the store accepted these softballs and rejected the other nine gross. Because the store did not seasonably notify the manufacturer with regard to the 10th gross of 11-inch softballs, but instead retained them, the store is obligated to pay for one gross of the 11-inch softballs.

A rancher and a carpenter executed a contract under which the carpenter agreed to make replacement gates for five stalls in the rancher’s horse stable at a total cost of $5,000. The carpenter began work as scheduled and completed four of the gates before quarreling with the rancher about another matter. The carpenter refused to complete the job. The rancher hired another carpenter who completed the last gate for $2,000 in the same time frame as was contemplated in the rancher’s contract with the carpenter; this price was reasonable given the short notice and scarcity of carpenters in the area. If the first carpenter sues the rancher for restitution damages, how much will a court likely award? A) $0 B) $3,000 C) $4,000 D) $5,000

B) $3,000 Here, the carpenter conferred roughly $4,000 of benefit on the rancher (four-fifths of the value of the original contract, assuming the contract price reflected the value conferred), and because the second carpenter charged double for the last gate, the rancher incurred $1,000 in extra costs as a result of the carpenter’s breach. Accordingly, the carpenter is entitled to $3,000, or the value of the benefit the carpenter conferred upon the rancher.

In a telephone conversation, a jewelry maker offered to buy 100 ounces of gold from a precious metals company if delivery could be made within 10 days. The jewelry maker did not specify a price, but the market price for 100 oz of gold at the time of the conversation was approximately $65,000. Without otherwise responding, the company delivered the gold 60 days later. In the meantime, the project for which the jewelry maker planned to use the gold was canceled. The jewelry maker therefore refused to accept delivery of the gold or to pay the $65,000 demanded. Is there an enforceable K between the parties?

NO because the parties did not put their agreement in writing and there is not performance (not acceptance)

A buyer agreed in writing to purchase a car from a seller for $15,000 with the price to be paid on a specified date at the seller's house. The contract provided and both parties intended that time was of the essence. Before the specified date, however, the seller sold the car to a third party for $18,000. On the specified date, the buyer arrived at the seller's home prepared to tender payment. The seller was not there, so the buyer called the seller to ask where he was. The seller then told the buyer that he had sold the car to a third party. If the buyer sues the seller for breach of contract, will the buyer prevail? A) No because the contractual obligations were discharged on the grounds of impossibility B) No because the buyer did not tender her performance on the specified date C) Yes because the seller did not inform the buyer of his repudiation D) Yes, because the seller anticipatorily repudiated the contract when he sold the car to the third party

D) Yes, because the seller anticipatorily repudiated the contract when he sold the car to the third party Anticipatory repudiation: clear and unequivocal words OR actions. Here, by not showing up for the exchange, the seller anitcipatorily repudiated the contract.

A businesswoman sold her business to a company for $25 million in cash pursuant to a written contract signed by both parties. Under the contract, the company agreed to employ the businesswoman for two years as a VP for a salary of $150K per year. After six months, the company, without cause, fired the businesswoman. Which of the following statements best describes the businesswoman's rights after being fired? A) She can recover the promised salary for the remainder of the two years if she remains ready to work B) She can recover the promised salary for the remainder of the two years if no comparable job is reasonably available and she does not take another job. C) She can rescind the contract of sale and get back her business upon tender to the company of $25 million. D) She can get specific performance of her right to serve as VP of the company for two years

B) She can recover the promised salary for the remainder of the two years if no comparable job is reasonably available and she does not take another job. Benefit of the bargain = needs to be made whole Duty to mitigate does not include taking a lesser position

The chief executive officer (CEO) of a water bottle company sent a memo on March 1 to 10 scientists stating that the first scientist to design and submit a water bottle made from 100% biodegradable materials would receive a $100,000 prize. The memo stated that the water bottle needed to be submitted to the company by September 1 in order to be considered for the prize. In response to the memo, an environmental scientist sent a letter to the CEO on March 15 stating that he accepted the CEO's offer to create the water bottle and that he intended to submit one by September 1. The scientist then incurred $2,000 in expenses for materials that he purchased in preparation for experiments needed to develop a biodegradable water bottle. On April 1, before the scientist began any experiments, the CEO sent another memo to the 10 scientists stating that the company was no longer interested in a 100% biodegradable water bottle. The scientist subsequently sued the water bottle company to recover the $2,000 he spent in preparation for his experiments. Is the scientist likely to recover this amount? A) No, because the CEO effectively revoked the initial offer in his April 1 memo. B) No, because the scientist's acceptance was not effective until he made the water bottle. C) Yes, because the scientist accepted the CEO's offer on March 15. D) Yes, because the scientist relied on the CEO's offer before it was withdrawn.

D) Yes, because the scientist relied on the CEO's offer before it was withdrawn. Uni K and revocation = if offeree relies on the offeror's promise and incurs expenses in mere preparation for performance, the offeree may be entitled to reliance damages.

A movie director entered into a two-year rental agreement with the CEO of a production company to rent one of the company's 20 studios for $3,000 a month. The agreement also included an option that stated in its entirety, "At his option, [the director] may purchase one of the company's studios prior to the end of the rental agreement." Prior to signing the agreement, the CEO made an oral promise to add new editing equipment to the rented studio but did not follow through on the promise. Before the rental agreement expired, the director refurbished the studio he was renting in order to enhance its editing quality. The director then attempted to pay $100,000 in order to exercise his option and purchase the studio. The CEO refused to sell the studio to the director. What is the strongest argument in favor of the CEO if the director sues him for specific performance? A) The CEO's oral promise to add editing equipment was a condition precedent to his duty to perform. B) The director's option to purchase the studio violates the parol evidence rule. C) The terms of the option to purchase a studio are too indefinite. D) There is no consideration to support the option to purchase a studio at the production company.

C) The terms of the option to purchase a studio are too indefinite. Essential terms for land contract: sufficiently certain + Price: sufficiently certain if there is a practicable method to determine price + Subject matter: sufficiently certain if the property description allows the court to determine the exact property to be sold Note: If an option is contained within another contract (as seen here), then the consideration that supports the other contract is sufficient to support the option contract as well.

On May 1, a tourist went on a rock-climbing trip with a rock-climbing guide. While on their climb, an anchor used to attach a climber to the climbing surface was placed on the cliff face by the guide. However, the anchor broke loose, and the guide fell, nearly taking the tourist with him. Luckily, the tourist caught a stone outcropping, saving both himself and the guide. The guide, fearing that the anchor had failed because he had placed it negligently, entered into a written contract with the tourist providing that the guide promised to pay the tourist $200,000 in consideration for saving the guide's life and for the tourist's promise not to bring a negligence action against the guide for his injuries related to the fall. The contract also provided that the guide would pay the money by August 1. Honestly believing that he had a valid negligence claim against the guide but hesitant to pay the legal costs of bringing such an action, the tourist signed the contract. A month later, an investigation revealed that the guide had not attached the anchor negligently and that the failure was due to a manufacturing defect of the anchor. This discovery made it clear that in the applicable jurisdiction, the guide could not have been found liable to the tourist for negligence. On August 1, the tourist demanded payment under the written contract, but the guide refused to pay. The tourist sued the guide to recover $200,000 under the contract. Will the tourist likely succeed in his action? A) No, because past acts are typically insufficient consideration. B) No, because the tourist had no valid cause of action against the guide. C) Yes, because the contract was in writing and signed by the guide. D) Yes, because the tourist believed that he had a valid negligence claim against the guide.

D) Yes, because the tourist believed that he had a valid negligence claim against the guide. Counts as consideration for settlement agreement IF 1) claim or defense is valid or subject to good-faith dispute OR 2) surrendering party honestly believes that the claim or defense may be valid

The chief financial officer (CFO) of a large publicly traded corporation owned stock in an unaffiliated company, which he was looking to offload. The CFO, hoping to convince his friend to buy his stock in the company, told her that the value of the company's stock would increase dramatically over the next three years, though he had no reason to believe that this was true. However, based on the CFO's statement, the friend reasonably believed that the CFO had such knowledge. The friend did not attempt to investigate the company's finances. Instead, relying on the CFO's statement and his general financial expertise, the friend entered into a contract with the CFO to purchase half of the CFO's stock in the company. The following day, the company filed for bankruptcy. Can the friend rescind the contract due to misrepresentation? A) No, because the CFO's statement was merely his opinion as to the future profitability of the company. B) No, because the friend failed to investigate the financial health of the company. C) Yes, because the CFO's statement regarding the future profitability of the company went to a basic assumption on which the contract was made. D) Yes, because the friend's reliance on the CFO's opinion was justifiable.

D) Yes, because the friend's reliance on the CFO's opinion was justifiable. A misrepresentation renders a contract voidable by the adversely affected party IF 1) the misrepresentation was fraudulent or material; 2) it induced assent to the contract; and 3) the adversely affected party justifiably relied on it Note: A party's failure to exercise reasonable care to discover a misrepresentation before entering into a contract generally does not make reliance on that misrepresentation unjustified.* *A party's reliance on a misrepresentation is unjustified when the party's failure to discover the misrepresentation is due to the party's failure to act in good faith and reasonable standards of fair dealing–e.g., when a cursory examination would have revealed the misrepresentation.

An accident victim won a judgment against his tortfeasor. The victim entered into an agreement to receive quarterly payments from the tortfeasor's insurance company for 10 years. The following year, the victim orally assigned his rights under this agreement to his son as a gift. Before the insurance company made any payments to the son, the victim was named as a defendant in a lawsuit. The plaintiff in that lawsuit obtained a judgment against the victim. The victim assigned his rights under his agreement with the insurance company to the plaintiff, who was aware of the victim's previous assignment of these rights to his son. The insurance company has properly filed an interpleader action. To whom should the court order the insurance company to make the quarterly payments called for under its agreement with the victim? A) The plaintiff, because the plaintiff obtained a judgment against the victim. B) The plaintiff, because the victim's assignment to his son was gratuitous . C) The victim, because the conflicting assignments cancel each other. D) The victim's son, because the plaintiff had knowledge of the assignment to him.

B) The plaintiff, because the victim's assignment to his son was gratuitous . There are two types of assignment: for value and gratuitous. An assignment for value is irrevocable, but a gratuitous assignment can be revoked (e.g., by subsequently assigning the same right) unless an exception applies.

In March, a woman entered into a written contract with an artist to deliver a set of postcards to use as placeholders at her wedding reception. The contract provided that the woman would pay $1,000 for the postcards if the artist delivered them by July 15. In May, the woman and her fiancé had a fight and cancelled their wedding. The woman contacted the artist and told him that she no longer needed the cards by July 15, but since she still wanted the cards for her personal use, she did not want to cancel their contract. The artist agreed to complete the cards and deliver them as soon as possible. However, because he no longer needed to meet the July 15 deadline, the artist accepted another job and took a break from painting the cards. On June 25, the woman and her fiancé reconciled and decided to proceed with the wedding as planned. The woman contacted the artist and told him that she needed the cards delivered by July 15. The artist had to breach another contract to finish the cards and only managed to deliver them on July 18. The woman refused to pay for the cards. If the artist sues to enforce the woman's duty to pay under the March contract, is he likely to succeed? A) No, because a contract for the sale of goods requires perfect tender. B) No, because the woman retracted her waiver of the deadline before the condition of timely delivery was to occur. C) Yes, because the artist substantially performed under the contract. D) Yes, because the woman impermissibly reinstated the July 15 deadline.

D) Yes, because the woman impermissibly reinstated the July 15 deadline. Nonoccurrence of a condition may be excused if the party who would benefit from the condition waives it by words or conduct. That waiver cannot be retracted if the other party has detrimentally relied on it.

In response to a phone query by a manufacturer of fans, a supplier of motors offered to sell the manufacturer up to 10,000 motors at the price of $15 each. The supplier assured the manufacturer before ending the call that this price was good for 60 days. One month later, the manufacturer ordered 5,000 motors from the supplier. The supplier informed the manufacturer that the price was now $20 per motor. Of the following, which is the manufacturer's weakest argument that the price is $15 per motor? A) The supplier's assurance of the $15 price was irrevocable for 60 days. B) A month is a reasonable time in which to accept the offer. C) The supplier could reasonably foresee that the manufacturer would rely on the supplier's offer. D) The supplier had not revoked its offer.

A) The supplier's assurance of the $15 price was irrevocable for 60 days. UCC firm offer = requires a writing with the merchant's signature. Here, we have an oral offer only. Note: The doctrine of promissory estoppel makes an offer irrevocable when the offeror could reasonably foresee that the offeree would rely, and the offeree reasonably and detrimentally relies, on the offer -- strong argument

In need of money, the owner of a ring prepared an email one evening proposing to sell the ring to a friend for $500, but only if he responded within 24 hours. Unable to bring herself to send the email, the owner, who normally was a teetotaler, began drinking. When she was thoroughly intoxicated, she sent the email without realizing it. After the owner sobered up the following afternoon, she called her friend and said that she had never meant to send the email, but her friend informed her that he had already responded by email, agreeing to the transaction. Does a valid contract exist? A) Yes, because the friend accepted the owner's offer to sell the ring. B) Yes, because the friend had 24 hours in which to respond. C) No, because the owner lacked capacity at the time that she made the offer. D) No, because the contract was executory.

A) Yes, because the friend accepted the owner's offer to sell the ring. Here, the owner emailed the friend and offered to sell him the ring for $500 if he responded within 24 hours. The offer had to be accepted by that specified time or it would lapse. The friend accepted the offer before it lapsed by emailing the owner and agreeing to the transaction Note: A person lacks the capacity to enter into a contract if (1) that person was too intoxicated to reasonably understand the nature or consequences of the contract and (2) the other party had reason to know of the intoxication. Here, the friend had no reason to know that the owner was intoxicated because the offer was made in an email, so the owner cannot avoid the contract on this basis.

At the beginning of the month, an aunt called her niece who lived in a distant city. During the conversation, the aunt promised to give a family heirloom worth $50,000 to her niece if the niece came to the aunt's home to retrieve it. The niece promised to come. The following day the niece bought an airline ticket to fly to the city where her aunt lived at the end of the month. The day before the niece was to make the trip, her aunt died. Under the terms of the aunt's will, the heirloom was left to someone else. Can the niece acquire the heirloom by enforcing her aunt's promise against the aunt's estate? A) Yes, under the doctrine of promissory estoppel. B) Yes, because there was an exchange of promises. C) No, because the aunt's promise was oral. D) No, because the aunt promised to make a gift.

D) No, because the aunt promised to make a gift. No consideration: Here, the aunt promised to give her niece a family heirloom worth $50,000. The aunt conditioned the heirloom on the niece's promise to retrieve it from the aunt's home, but the aunt's promise was not induced by the niece's promise Note: Under the doctrine of promissory estoppel, a party that reasonably and detrimentally relies on another party's promise may recover the costs of relying on that promise—but not the value of the promise itself. Therefore, the niece would be able to recover the cost of the airplane ticket she bought in reliance on the aunt's promise to give her the heirloom—but not the heirloom itself.

Based on an honest belief, an employer terminated a bookkeeper for embezzlement. The employer also threatened to file a criminal complaint unless the bookkeeper agreed to repay the stolen funds. The bookkeeper, seeking to avoid criminal prosecution, agreed, and signed a promissory note payable to the employer in the amount of the embezzled funds. The bookkeeper subsequently admitted to having embezzled the money. Can the bookkeeper avoid the promissory note? A) No, because the bookkeeper admitted to embezzling from her employer. B) No, because the employer's threat was based on an honest belief that the bookkeeper was an embezzler. C) Yes, because the bookkeeper signed the note under duress. D) Yes, because the employer terminated the bookkeeper.

C) Yes, because the bookkeeper signed the note under duress. A contract is voidable due to duress if either party's assent was induced by an improper threat (e.g., threat of criminal prosecution) that left the recipient with no reasonable alternative but to assent. Note: A threat of criminal prosecution is an improper threat even when the threatening party (e.g., the employer) honestly believes that the threatened party (e.g., the bookkeeper) is guilty of the crime.

An attorney entered into a valid contract with a client to provide legal services for a set fee of $5,000. The contract provides that rather than paying the attorney, the client is to pay the fee to the attorney's daughter. The daughter, upon learning of the contract from her father, decided to donate this money to a local animal shelter. She told the manager of a local animal shelter that she planned to donate $5,000 to the shelter. The manager, relying on this, purchased $5,000 worth of pet supplies and medicine. The lawyer rendered the legal services, but the client ultimately failed to pay the daughter, who in turn did not donate the money to the shelter. The animal shelter files suit against the client for breach of contract. Will the animal shelter prevail in its action against the client? A) Yes, because of the animal shelter's detrimental reliance. B) Yes, because the shelter is a donee beneficiary. C) No, because the attorney had no intention to benefit the animal shelter. D) No, because delegation of duties is not permitted under a services contract.

C) No, because the attorney had no intention to benefit the animal shelter. An incidental beneficiary is a third party who benefits from a contract, even though the contracting parties did not intend to benefit the third party. Here, the daughter is the intended beneficiary of the contract between the attorney and the client since the contract requires the client to pay the attorney's fee to her. The animal shelter benefits from the contract because the daughter promised to donate the fee to the shelter. But since the attorney and the client had no intention to benefit the shelter, it is merely an incidental beneficiary that cannot enforce the contract.

A client entered into a written contract with his lawyer for the lawyer to provide legal services with regard to the purchase of land. The contract specified that the lawyer was to be paid a flat fee of $2,000 for his services. Prior to completion of the purchase, the lawyer orally assigned his interest in the contract to a third-party landscaper, in exchange for services the landscaper had performed for the lawyer. The lawyer then rendered the legal services necessary for the completion of the purchase of the land. Can the third-party landscaper collect the lawyer's fee from the client? A) No, because the assignment was not in writing. B) No, because the contract between the client and the lawyer was for services. C) Yes, because the assignment was supported by consideration. D) Yes, because the lawyer assigned his interest to the third party.

D) Yes, because the lawyer assigned his interest to the third party. An assignment occurs when a contracting party (assignor) transfers his rights under a contract to a third party (assignee). The assignee then assumes all of the assignor's contractual rights to the obligor's performance as they stand at the time of the assignment. Note: the assignment was a contract for legal services, not land. Legal service contracts do not require a writing.

The owner of a new and unnamed store selling musical instruments was talking by telephone with a famous violinist who was known for her signature red violin. The owner asked whether the violinist would be able to perform at the store's opening and the violinist agreed. The next day, the owner and the violinist executed a valid written contract for the violinist to perform at the opening. The contract contained a clause stating that the contract was the complete and final agreement between the parties. When the violinist appeared at the store to perform, the owner refused to let her play. The violinist sued the owner for breach of contract. The owner moved to introduce evidence that during the telephone conversation, the owner had told the violinist that he would need her services only if he was able to secure the rights to use "theredviolin.com" as the domain name of the store; the violinist objected that the evidence was inadmissible. The contract contains no mention of this condition. Is the court likely to admit evidence of the conversation regarding the domain name? A) Yes, because the conversation is evidence of a condition precedent to the existence of the contract. B) Yes, because this evidence does not contradict the written contract. C) No, because the parol evidence rule prohibits the introduction of prior extrinsic evidence. D) No, because the written contract was a complete integration of the parties' agreement.

A) Yes, because the conversation is evidence of a condition precedent to the existence of the contract. Evidence allowed to prove a condition precedent to the existence of K

A homeowner hired a roofer to install a new roof on his house. The homeowner scheduled the installation to take place during a week when he was to be on vacation. Although the contract specified that the color of the shingles was to be brown, the homeowner returned to find that the roofer instead had installed red shingles. Although the new roof was structurally sound, the homeowner refused the pay the roofer. The roofer sued the homeowner. The fact-finder determined that the roofer had materially breached the contract. Under what theory of damages is the roofer most likely to recover? A) Expectancy damages. B) Restitution damages. C) Reliance damages. D) None, because the roofer materially breached the contract.

B) Restitution damages A party who substantially but not fully performs his/her contractual obligations (i.e., commits a minor breach) can recover expectancy or reliance damages. A party who fails to substantially perform (i.e., commits a material breach) can only recover restitution damages. Here, the fact-finder determined that the roofer materially breached the contract by installing red shingles instead of brown shingles.

In July, a toy store entered into a written agreement with a local supplier for 500 Halloween costumes at $25 per costume. Under the agreement, the costumes were to be delivered on or before October 1. On August 17, the supplier told the store that it would not under any circumstances be able to supply the costumes. The next day, the store contracted with a company to supply 500 similar Halloween costumes for $30 each for delivery on or before October 5. On September 1, the store filed a complaint against the local supplier for breach of contract. The supplier moves to dismiss the complaint. How should the court rule on this motion? A) Deny it, because the complaint for breach was brought within 15 days of the supplier notifying the store it would not be able to supply the costumes. B) Deny it, because the supplier repudiated its contractual obligation. C) Grant it, because less than 30 days had expired since the supplier told the store it would not be able to supply the costumes before the store filed its complaint. D) Grant it, because the time for performance of the contract has not yet passed.

B) Deny it, because the supplier repudiated its contractual obligation. On August 17, the supplier clearly and unequivocally repudiated that promise when it told the store that it would not be able to supply the costumes under any circumstances. The store treated the supplier's repudiation of its contractual obligation as a breach, which entitled the store to contract with the company to supply similar costumes. Therefore, the court should deny the supplier's motion to dismiss. Note: When a party repudiates a contract before performance is due, the nonrepudiating party may file suit against the repudiating party at any time

A tool distributor sold a retailer an assortment of tools on credit. Immediately prior to the sale, the distributor, concerned about the retailer's financial health, telephoned the retailer to ask if the retailer would be able to pay for the tools. The retailer assured the distributor that it was solvent, even though the retailer knew it might not be before it paid for the tools. Twelve days after the retailer received the tools, the distributor learned that the retailer was insolvent and immediately sought to reclaim the tools. Can the distributor do so? A) No, because the retailer had retained the tools for twelve days. B) No, because the retailer had received the tools. C) Yes, because the retailer had falsely assured the distributor that it was solvent. D) Yes, because the distributor acted immediately upon learning that the retailer was insolvent.

A) No, because the retailer had retained the tools for twelve days. A nonbreaching seller may reclaim goods from a buyer when the seller (1) discovers the buyer received the goods on credit while insolvent; and (2) demands the goods be returned within 10 days after their receipt. BUT this 10-day limitation does not apply if the buyer misrepresented its solvency in writing within three months before delivery. Here, since the retailer had orally misrepresented its solvency over the phone, the distributor needed to demand the tools' return within 10 days after the retailer received them. Therefore, the distributor cannot reclaim the tools.

A manufacturer entered into a 30-year lease with the owner of a building zoned for commercial use. The lease contained a term that gave the manufacturer the right of first refusal if the owner ever decided to sell the building. Ten years later, the owner entered into a contract to sell the building to a third party. The owner has refused to honor the manufacturer's right of first refusal, contending that it violates the Rule Against Perpetuities. The jurisdiction recognizes the common-law Rule Against Perpetuities and its application to rights of first refusal. Which of the following is the manufacturer's best argument that the Rule Against Perpetuities does not apply to the manufacturer's right of first refusal? A) The right of first refusal was granted in conjunction with a lease. B) The right of first refusal was granted as part of a commercial transaction. C) There is no life in being against which the right of first refusal is measured. D) The manufacturer exercised the right of first refusal before the expiration of the 21-year period.

A) The right of first refusal was granted in conjunction with a lease. A right of first refusal is subject to RAP unless the right is granted in a lease to a current leasehold tenant. In the majority of jurisdictions that have adopted the Uniform Statutory Rule Against Perpetuities, RAP does not apply to a right of first refusal when the property right is created in a commercial transaction. But there is no such exception in this jurisdiction, which recognizes common-law RAP.

A seller and a buyer entered into a contract obligating the seller to convey title to a parcel of land to the buyer in exchange for $100,000. The agreement provided that the buyer’s obligation to purchase the parcel was expressly conditioned upon the buyer’s obtaining a loan at an interest rate no higher than 10%. The buyer was unable to do so but did obtain a loan at an interest rate of 10.5% and timely tendered the purchase price. Because the value of the land had increased since the time of contracting, the seller refused to perform. The buyer sued the seller. Is the buyer likely to prevail? (A) No, because an express condition will be excused only to avoid forfeiture. (B) No, because the contract called for a loan at an interest rate not to exceed 10% and it could not be modified without the consent of the seller. (C) Yes, because the buyer detrimentally changed position in reliance on the seller’s promise to convey. (D) Yes, because the buyer’s obtaining a loan at an interest rate no higher than 10% was not a condition to the seller’s duty to perform.

(D) Yes, because the buyer’s obtaining a loan at an interest rate no higher than 10% was not a condition to the seller’s duty to perform. Courts look beyond the words of a condition, and if it is clear that the intent of the condition was to benefit or protect one of the parties, the language of the condition will be interpreted as if that intent had been clearly expressed in the contract terms. In this case, it is clear that the condition was intended for the benefit of the buyer as a condition to the buyer’s duty. The buyer’s waiver of the condition required the seller to perform despite the nonoccurrence of the condition.

A debtor’s liquidated and undisputed $1,000 debt to a creditor was due on March 1. When the debt was still unpaid on March 15, the creditor told the debtor that if the debtor promised to pay the $1,000 on or before December 1, then the creditor would not sue to collect the debt. The debtor orally agreed. On April 1, the creditor sued the debtor to collect the debt that had become due on March 1. The debtor moved to dismiss the creditor’s complaint. Should the court grant the debtor’s motion? (A) No, because there was no consideration to support the creditor’s promise not to sue. (B) No, because there was no consideration to support the debtor’s promise to pay $1,000 on December 1. (C) Yes, because a promise to allow a debtor to delay payment on a past debt is enforceable without consideration. (D) Yes, because the debtor bargained for the creditor’s forbearance.

(A) No, because there was no consideration to support the creditor’s promise not to sue. The law supports the settlement of debts and claims. However, consideration is required for a settlement to be enforceable. Under the preexisting duty rule, the creditor’s promise to forbear from suing to collect was not supported by consideration from the debtor, because the amount due was liquidated and the debtor promised to do nothing more than he was already obligated to do. The creditor’s promise was not supported by consideration from the debtor because it allowed for payment of an undisputed amount, $1,000, after the time for payment of the debt had passed. Note: The debtor may have hoped that the creditor would forbear, but the debtor provided no consideration to support the creditor’s forbearance. Thus, the creditor’s promise to forbear is not enforceable.

A buyer ordered a new machine from a manufacturer. The machine arrived on time and conformed in all respects to the contract. The buyer, however, rejected the machine because he no longer needed it in his business and returned the machine to the manufacturer. The manufacturer sold many such machines each year, and its factory was not operating at full capacity. In an action by the manufacturer against the buyer for breach of contract, which of the following is NOT a proper measure of the manufacturer’s damages? (A) The contract price of the machine. (B) The difference between the contract price and the market price of the machine. (C) The difference between the contract price and the price obtained from a proper resale of the machine. (D) The profit the manufacturer would have made on the sale of the machine to the buyer.

(A) The contract price of the machine. The manufacturer does not have an action for the price. Such an action is available under three circumstances, none of which is present here— (1) where the buyer has accepted the goods, (2) where the goods are lost or damaged within a commercially reasonable time after the risk of loss has passed to the buyer, or (3) where the buyer has returned or rejected the goods and the seller is unable after reasonable efforts to resell the goods. UCC § 2-709. Note: The manufacturer is a lost volume seller

A homeowner went to a home improvement store specializing in plumbing supplies to purchase a filter for the water filtration system in her house. After telling a store clerk that she needed the appropriate filter for her system, the clerk excused himself, went to the storeroom, and inadvertently returned with a filter for another water filtration system. The clerk, who became engaged in a conversation with another employee, handed the filter to the homeowner but said nothing to her. The homeowner took the filter to the register and paid for it. The cashier noticed that the filter was discounted and told the homeowner that the filter was sold “without the store’s usual warranties.” The homeowner installed the filter, and as a consequence, suffered a debilitating disease from the improperly filtered water. The homeowner has sued the store for breach of the warranty of fitness for a particular purpose. Is she likely to succeed? A) No, because no store employee made any express promise to the homeowner regarding the filter she purchased. B) No, because the cashier’s comment that the filter was sold “without the store's usual warranties” effectively disclaimed any implied warranty. C) Yes, because the clerk knew that the homeowner wanted an appropriate filter for her water filtration system, and the homeowner relied on the clerk’s knowledge. D) Yes, because the home improvement store was a merchant that specialized in selling plumbing supplies.

C) Yes, because the clerk knew that the homeowner wanted an appropriate filter for her water filtration system, and the homeowner relied on the clerk’s knowledge. Note: implied warranties of fitness for a particular purpose may be excluded by general language, but ***only if in writing and conspicuous***

A company entered into a written agreement to design a stone fireplace and chimney for a builder who was building a residence for himself. As part of the agreement, the company was to acquire the stones for the chimney and deliver them in a tractor-trailer to the site owned by the builder. The builder was responsible for providing the equipment for removing the stones from the company’s tractor-trailer and constructing the fireplace and chimney using the stones and plans provided by the company. The agreement called for the builder to make a final payment to the company prior to delivery of the stones. The company prepared the design plans and the stones, but before the builder made his final payment, the company demanded in writing to know how the builder planned to remove the stones from its tractor-trailer. The company made this demand in good faith based on safety concerns, but in the mistaken belief that it had the right to do so under the contract. When the builder refused to comply, the company informed the builder that it would not deliver the stones. As a consequence, the builder refused to make his final payment under the contract. Which party has breached its contractual obligation? A) The builder, because he refused to comply with the company’s demand to disclose how he intended to remove the stones from the company’s tractor-trailer. B) The builder, because he refused to make his final payment under the contract. C) The company, because it anticipatorily repudiated its contractual duty to deliver the stones. D) The company, because it demanded that the builder provide information that the builder was not contractually obligated to provide.

C) The company, because it anticipatorily repudiated its contractual duty to deliver the stones. Here, the company, mistakenly believing it had the right to do so, demanded that the builder disclose how he planned to remove the stones from the company’s tractor-trailer. When the builder refused to comply, the company’s unequivocal statement that it would not deliver the stones constituted an anticipatory breach of its contractual obligation.

A large accounting firm entered into a written contract to purchase 1000 computer monitors from a manufacturer. In the contract, the firm reserved the right to cancel the order “within 5 days” of the date on which the contract was executed, which was a Friday. The following Friday, the firm contacted the manufacturer and informed the manufacturer that the firm was canceling the order. The manufacturer sued the firm contending that the firm’s cancellation of its order was untimely since the order was canceled more than five calendar days after the contract had been executed. The firm responded that it had canceled the order within five business days of the execution of the contract. The court has found that the term “days” in the contract is ambiguous. The firm seeks to admit evidence from the pre-contract negotiations between the parties that the term “days” in the contract was understood by both parties to mean business days. Is the firm’s proffered evidence admissible? A) No, because the “four-corners” rule requires that the objective definitions of ambiguous contract terms control the meaning of the contract. B) No, because the parol evidence rule makes this evidence inadmissible. C) Yes, because the court has found that the term “days” is ambiguous. D) Yes, because the UCC permits the admission of this evidence even if the term was unambiguous.

C) Yes, because the court has found that the term “days” is ambiguous. Note: When the terms of a written contract for the sale of goods appear to be unambiguous, a party may still explain the terms with evidence of trade usage, course of dealings, or course of performance. Here, the firm is not offering evidence of trade usage, course of dealing, or course of performance. Therefore, the UCC would not allow the admission of this evidence if the contract were unambiguous

A bricklayer had contracted to build a wall. The bricklayer estimated that he would need 19,500 bricks to build the wall. He ordered 20,000 bricks from a masonry company at a cost of $400 per thousand bricks to be delivered on March 15. On March 15, the company delivered 12,000 bricks to the job site. The bricklayer accepted the shipment, with the company’s assurance that the company would deliver the remaining 8,000 bricks within a week. Seven days later, the company delivered 7,000 bricks to the job site. The bricklayer rejected the delivery and revoked his acceptance of the first shipment. In the intervening week, the bricklayer had begun to build the wall, using 3,000 of the delivered bricks during that time. How many bricks is the bricklayer contractually obligated to purchase? A) 19,000 B) 12,000 C) 3,000 D) : None

C) 3,000 Here, the masonry company failed to make a perfect tender of the bricks, supplying only 12,000 out of the 20,000 bricks called for under the contract on the March 15 delivery date. When a seller makes a nonconforming tender of the goods, a buyer may accept or reject all or part of the goods. A buyer in a contract for the sale of goods is required to pay the contract price for goods that he has accepted, unless he has properly revoked his acceptance of those goods. Because the company, despite its promise, delivered only 7,000 of the 8,000 bricks ordered, and the bricklayer required at least 7,500 additional bricks in order to complete the wall, the company failed to cure the nonconformity and this failure substantially impaired the value of the bricks to the bricklayer. Thus, the bricklayer could revoke his acceptance of the 12,000 bricks. However, because the bricklayer used 3,000 bricks to begin building the wall, the bricklayer has accepted those bricks and must pay for them.

Prior to the beginning of the season for a recreational softball league, the manager of one of the teams phoned a friend who has a shop that imprints and sells various types of clothing. The manager told the friend that he needed 20 customized jerseys in the team’s color, green, with the team’s name imprinted on the front and each player’s name on the back. The friend agreed to do so at the cost of $30 per jersey. The friend asked the manager to send her an e-mail, as a reminder of their agreement. The manager sent a signed e-mail the following day that contained the terms of the agreement, except that the manager mistakenly typed “17” rather than “20” as the number of jerseys needed. The friend imprinted 20 green jerseys with the team’s name and each player’s name, and called the manager to tell him to come pick up the jerseys. The manager informed the friend that he no longer needed the jerseys because the league had disbanded due to an inability to field enough teams. When the manager refused to pay for the jerseys, the friend sued him for $600 in damages. The manager asserted the Statute of Frauds as a defense. What amount of damages is the court likely to award the friend? A) $600, because the jerseys were specially manufactured goods. B) $600, because the written agreement may be reformed to reflect the parties’ agreed-upon quantity. C) $510, because the contract is enforceable only to the quantity stated in the manager’s signed e-mail. D) $0, because there is no writing signed by the manager that reflects the agreed-upon quantity.

A) $600, because the jerseys were specially manufactured goods. UCC: A writing is not required if (i) the goods are to be specially manufactured for the buyer (ii) the goods are not suitable for sale to others, and (iii) the seller has made “either a substantial beginning of their manufacture or commitments for their procurement.” Here, the jerseys were to be specially made for the manager, the jerseys with the team’s name and players’ names on them are not suitable for sale to someone else, and the friend has not only made a substantial beginning on their manufacture, but has completed imprinting the jerseys. Accordingly, the full contract can be enforced.

A public utility that operated in several states and a manufacturer of electrical equipment entered into an agreement under which the utility was to purchase equipment from the manufacturer for a specific price. Among the provisions in the written agreement was a provision that disclaimed the manufacturer’s liability for consequential damages. When the manufacturer’s equipment failed in breach of the manufacturer’s express and implied warranties, the manufacturer repaired the equipment. However, while the manufacturer was doing so, the utility had to purchase electricity from other sources and suffered lost profits as a consequence. The utility brought a breach of warranty action against the manufacturer seeking to recover its lost profits. Is the utility likely to be successful in this action? A) Yes, because a disclaimer of liability for consequential damages is unenforceable. B) Yes, because these damages were foreseeable. C) No, because of the consequential damages disclaimer. D) No, because consequential damages are not available for breach of a warranty.

C) No, because of the consequential damages disclaimer. Although limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable, a limitation of damages when the loss is commercial is not. Here, because the public utility operates in several states, it is unlikely that a court would find that the clause was the product of greatly unequal bargaining power between the utility and the manufacturer.

A first-year law student needed to purchase her law school books, but she did not have enough money to pay for them. The law student decided to ask her aunt, who was a lawyer, if she could borrow $1,000 to pay for her books. The aunt agreed to lend her the money. The law student put her promise to repay the $1,000 in six months in writing, signed the document, and gave it to her aunt, and the aunt gave her the $1,000. Four years later, the aunt called the law student and said, “I need you to pay me back the $1,000 I lent to you a long time ago. I can’t find the note where you promised to pay me back, but I know that I lent it to you.” The law student told her aunt, “I don’t remember how much you gave me, but I will send you $500 in one month.” The aunt agreed to accept $500. However, one month later, the law student had not sent $500 to her aunt. Assume that the applicable statute of limitations for written contracts in the jurisdiction is three years. If the aunt sues the law student to recover $500, will she succeed? A) Yes, because the original contract has not been discharged. B) Yes, because there was a dispute as to the amount of the loan. C) No, because the oral promise to pay $500 violates the Statute of Frauds. D) No, because there was no consideration for the law student’s promise to pay $500.

B) Yes, because there was a dispute as to the amount of the loan. Accord: a party to a contract agrees to accept a performance from the other party that differs from the performance that was promised in the existing contract, in satisfaction of the other party’s existing duty. When a party agrees to accept a lesser amount in full satisfaction of its monetary claim, there must be consideration or a consideration substitute for the party’s promise to accept the lesser amount. Consideration can exist if the other party honestly disputes the claim or agrees to forego an asserted defense.

The owner of a boat contracted with a sail maker to make a replacement sail for the boat at a price of $1,500. Under the terms of their written contract, which did not contain a liquidated damages clause, the owner made a deposit of $750. The owner sold the boat before the sail maker finished making the sail. Despite the unusual configuration of the sail, the sail maker was able to sell the finished sail to another boat owner for $1,500. The owner has sued the sail maker in restitution for the return of his deposit. How much of his deposit is the boat owner entitled to receive? A) $0 B) $450 C) $500 D) $750

B) $450 UCC: a defaulting buyer is entitled to a refund of any payments made on the contract less damages provable by the seller and either (i) the amount to which the seller is entitled by virtue of an enforceable liquidated-damages provision or (ii) a penalty of “20 percent of the value of the total performance for which the buyer is obligated under the contract, or $500, whichever is smaller.”

A collector owned a painting that needed professional restoration. The collector brought the painting to a restorer and, after examining the painting, the restorer quoted the collector a price for the restoration. The restorer told the collector that since she was going on a vacation and would be unreachable, the collector had a month to make his decision. Two days later, the collector mailed a letter to the restorer accepting the restorer’s price. Through no fault of the collector, this letter was lost in the mail and never delivered. The next day, the collector learned of another person who would do the restoration for a lower price and would begin immediately. The collector mailed a second letter to the restorer that stated that he did not require her services. On arriving home from her vacation, the restorer received the collector’s second letter. As a consequence, she contacted another art owner and began restoration work for that owner. In the meantime, the collector became dissatisfied with the work of the second restorer. He contacted the original restorer and demanded that she begin the restoration work on his painting, which she refused to do. The collector is suing the restorer for breach of contract in a jurisdiction that follows the mailbox rule. Will the collector prevail? A) No, because the restorer relied on the collector’s rejection. B) No, because the restorer never received the collector’s acceptance. C) Yes, because the collector had timely accepted the restorer’s offer. D) Yes, because the “mailbox rule” does not apply when both a rejection and an acceptance are sent.

A) No, because the restorer relied on the collector’s rejection. The restorer’s reliance on the collector’s rejection estops the collector from asserting the existence of a contract Note: although the collector’s letter constituted a valid acceptance, as he had mailed it within the month that the restorer stated that her offer would remain open, because the restorer received the collector’s subsequent rejection first and relied on that rejection, the collector is estopped from asserting the existence of a contract

During a severe storm, a horse came onto a rancher's property. The rancher discovered the horse the next morning, and saw a serious wound on one of its legs. The rancher paid a veterinarian to examine and treat the horse, and the rancher then provided the horse with food and shelter. Two weeks later, the horse's owner arrived at the rancher's home and asked for the return of his horse. The rancher returned the horse to its owner, and asked the owner for reimbursement for the veterinary visit and for the expenses incurred in feeding and sheltering the horse. The horse's owner refused to pay. The rancher sued the horse's owner for the costs of veterinary care, food, and shelter. Is he likely to prevail? A) Yes, because the rancher's conduct created an implied-in-fact contract. B) Yes, because the horse's owner would be unjustly enriched if he is not forced to pay the rancher's expenses. C) No, because a valid contract was never formed between the rancher and the horse's owner. D) No, because the horse's owner never engaged in any conduct to signify that he assented to the rancher's expenditures.

B) Yes, because the horse's owner would be unjustly enriched if he is not forced to pay the rancher's expenses Implied-in-law contract ("quasi-contract"): one party confers a benefit on another and has a reasonable expectation of compensation. Otherwise, the benefited party would be unjustly enriched. (i) the plaintiff has conferred a "measurable benefit" on the defendant; (ii) the plaintiff acted without gratuitous intent; and (iii) it would be unfair to let the defendant retain the benefit because either the defendant had an opportunity to decline the benefit but knowingly accepted it, or the plaintiff had a reasonable excuse for not giving the defendant such opportunity, usually because of an emergency Note: an implied-in-fact contract is created only when conduct indicates assent or agreement

A large clothing retailer contracted with a firm that specialized in custom printing to print the logo of a major sporting event onto 5,000 jerseys. The logo was coupled with an identifying landmark of the city in which the event was to take place. The retailer planned to sell the jerseys as souvenirs at the event. As called for in the contract, the retailer supplied the firm with the jerseys and paid half the contract price. Shortly before the event and before any shirts had been printed, the stadium where the game was to be held was damaged by an earthquake. As a consequence, the event was moved to another city. The retailer demanded the return of its payment and the jerseys. The supplier, claiming that it was entitled to the benefit of its bargain, kept its anticipated profit of $2,000 but returned the jerseys and the remainder of the payment to the retailer. The retailer filed a lawsuit seeking rescission of the contract and return of the $2,000. What is the retailer’s best argument in support of its suit? A) Performance of the contract has become impracticable because the relocation of the sporting event was an unforeseeable occurrence. B) The relocation of the sporting event has made enforcement of the contract on its original terms unconscionable. C) The contract is void due to mutual mistake, as both parties were mistaken as to an essential element of the contract. D) The retailer’s contractual duties are discharged because the game’s relocation frustrated the purpose of the contract.

D) The retailer’s contractual duties are discharged because the game’s relocation frustrated the purpose of the contract. Frustration of purpose: when an unexpected event arises that destroys one party’s purpose in entering into the contract, even if performance of the contract is not rendered impossible. The frustrated party is entitled to rescind the contract without paying damages. 1) The event that arises must not be the fault of the frustrated party 2) Nonoccurrence must have been a basic assumption of the contract. Here, relocation of the sporting event was not a foreseeable prospect, and only occurred because of an improbable event—an earthquake that damaged the stadium. Note: impracticability applies when the specific subject matter of the contract is destroyed, or when performance becomes impracticable. Here, the shirts have not been destroyed and could be printed in the manner called for in the contract

A buyer who was not a merchant entered into a written contract to purchase a new car from a dealer at a cost of $35,000. Since the buyer desired a particular combination of features on the car and the dealer did not have a car with such features in its inventory, the dealer ordered the car from the manufacturer. When the car arrived, the dealer discovered that the manufacturer had increased the dealer’s price for the car by five percent. Acting in good faith, the dealer sought to increase the buyer’s price of the new car by a similar percentage. Reluctantly, the buyer orally agreed to the price increase, then had a change of heart and refused to complete the purchase. The car dealer eventually sold the car to another customer for $35,000. The dealer sued the buyer to recover damages for breach of contract. Will the dealer be entitled to damages? A) No, because the dealer had a preexisting duty to sell the car for the original contract price. B) No, because the price increase was not in writing. C) Yes, because the dealer sought the price increase in good faith. C) Yes, because the car was specially manufactured for the buyer.

B) No, because the price increase was not in writing. The UCC Statute of Frauds generally requires that a modified contract be in writing where the value of the goods is $500 or more. There is an exception for specially manufactured goods, but for this exception to apply, the goods cannot be suitable for sale to others in the ordinary course of the seller’s business. Because the dealer sold the car to another customer, this exception would not apply

A publishing company entered into a contract to purchase a newspaper company. The contract specified that “it shall be a condition precedent to buyer’s obligation to pay that the newspaper shall have 200,000 subscribers by December 31 of this year.” In anticipation of the purchase, the publishing company purchased $200,000 of new equipment to be used in printing the newspaper; the newspaper was aware of the investment. At the end of the business day on December 31, the newspaper had only 199,750 subscribers, and had no justification for the shortfall. The publishing company immediately redirected $100,000 of the new equipment to print one of its magazines, but the other $100,000 of equipment was custom-made for the newspaper and could not be used elsewhere. The publishing company refused to go through with the sale, and then sued the newspaper company for $100,000. Is the publishing company likely to prevail? A) Yes, because the newspaper company did not comply with the condition precedent. B) Yes, because the publishing company mitigated its damages to the maximum extent reasonably possible. C) No, because the newspaper company substantially complied with the condition precedent. D) No, because failure of a condition precedent does not give rise to damages.

D) No, because failure of a condition precedent does not give rise to damages. The claim for $100,000 is a claim for reliance damages, which may be recovered if the nonbreaching party incurs expenses in reasonable reliance upon the promise that the other would perform. Here, however, there is no breach, because the 200,000 subscriber requirement was a condition precedent, and not a promise. The failure of a promise is a breach, and gives rise to damages, while the failure of a condition merely relieves a party of the obligation to perform. Note: condition precedent was express, it must be complied with fully; substantial compliance is not sufficient.

A homebuyer was discussing the purchase of a house with the seller. Of particular concern to the buyer was whether the house had a termite problem. The seller, aware of the buyer’s concern, ordered an inspection from a licensed inspection company. The company issued a report stating that the house was free of termites. In fact, the company’s inspector was negligent, and the house’s foundation had a modest termite problem. Relying on the report, the seller told the buyer that the house was free of termites. The buyer is seeking to avoid the contract. Will he prevail? A) Yes, because the buyer reasonably relied on the misrepresentation. B) Yes, because enforcing the contract would be unconscionable. C) No, because the misrepresentation did not rise to the level of a mutual mistake. D) No, because the inspector, not the seller, was negligent.

A) Yes, because the buyer reasonably relied on the misrepresentation. Even though the misrepresentation was not fraudulent, it nevertheless renders the contract voidable. Here, the buyer justifiably relied on a certified inspection, and it was a material misrepresentation because the presence of termites was a major factor in the buyer’s decision. Note: while it is possible that the inspector’s negligence would be imputed to the seller who employed the inspector, whether the seller’s misrepresentation was innocent or negligent, it still would provide grounds for avoiding the contract.

On April 1 of Year 1, a teacher orally agreed with a school principal to teach for nine months beginning on September 1 of Year 1. The agreement required that the teacher be paid $1,000 per month in advance on the first of each month. The teacher taught for eight months, for which he was paid in accordance with the agreement. On May 1 of Year 2, the principal paid the teacher $1,000, but he refused to teach. The principal sued the teacher to recover the $1,000 she paid him. In his defense, the teacher pleads the Statute of Frauds. Is the teacher’s defense likely to be successful? A) No, because the agreement provided for the teacher to teach for only nine months. B) No, because the principal had fully performed her obligation under the agreement. C) Yes, because the agreement could not be completed within one year of its formation. D) Yes, because the value of the services was more than $500.

B) No, because the principal had fully performed her obligation under the agreement. Full performance by either party to the contract will generally take the contract out of the Statute of Frauds. Here, the principal made her final payment to the teacher on May 1 of Year 2, thereby fully performing under the agreement and removing the contract from the Statute of Frauds.

Federal agents were investigating a drug trafficking ring. The agents received reliable information that the drug ring used a drug dealer’s basement as the primary storage site for their drugs. Relying on this information, the agents obtained a warrant to search the drug dealer’s basement for drugs and related paraphernalia. After failing to find any evidence in the basement, the agents searched the drug dealer’s bedroom and seized a notebook they found on the dresser. The notebook contained a ledger, with the names of the drug dealer’s suppliers and clients, as well as statements of their accounts. One of the drug dealer’s suppliers named in the ledger was later arrested, charged, and tried jointly with the drug dealer. The drug dealer’s supplier seeks to suppress evidence of the ledger at trial, arguing that the seizure of the ledger was illegal. Should the judge grant the supplier’s motion? A) No, because the supplier lacks standing to challenge the seizure of the ledger. B) No, because the ledger was seized legally. C) Yes, because the ledger was not specifically named in the warrant. D) Yes, because the agents exceeded the scope of the warrant when they searched the drug dealer’s bedroom.

A) No, because the supplier lacks standing to challenge the seizure of the ledger. Fourth Amendment rights are personal and may not be asserted vicariously. The defendant must be the alleged victim of the unreasonable search or seizure in order to assert a claim. A defendant cannot raise the constitutional rights of a co-defendant.