MBE Questions Flashcards
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.”
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
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.
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
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
