Missed MBE

Question 1

Q 87

when do third party beneficiary rights vest?

Answer 1

1. learn of K and agree to K in the manner requested by the benefactor
2. learn of K and rely on it (materially changes position in justifiable reliance on promise)
3. learn of K and immediately sue to protect their rights in the K

merely being informed of your rights DOES NOT mean the rights have vested…need justifiable reliance

Question 2

Parol evidence is admissible when used to prove

Answer 2

That the contract is void or voidable

Question 3

the parol evidence rule does not bar prior statements when

Answer 3

the cause of action is for misrepresentation, which is attacking the validity of the agreement.

Question 4

Question ID: MK035

The owner of a cookie factory contracted with an industrial oven manufacturer for the installation of new baking equipment. The written contract included the following provisions: “On installation of the new cookie baking system, the owner will pay to the oven manufacturer a total price of $120,000. Installation must be completed by January 15.”

Installation of the new system at the client’s plant was completed on January 30. The factory began using it and found that it resulted in a great increase of cookie production through faster baking. The oven manufacturer sent his bill to the cookie factory owner, stating that the new baking equipment system was in place and operating as promised, and demanding the $120,000 payment. The owner refused to make any payment, noting in her reply letter that the system had not been installed by January 15, as promised.

If the oven manufacturer is found to be in breach because of the late installation of the baking equipment system, may he successfully bring an action to recover the reasonable value of his services?

Answer 4

Yes, because the factory owner would otherwise be unjustly enriched.

Question 5

Courts will look primarily at the __________ of the surety’s promise in determining whether a gratuitous suretyship contract is supported by proper consideration.

Answer 5

timing

Question 6

list (2); liquidated damages

A liquidated damages clause will be enforceable if:

Answer 6

1. Damages are difficult to ascertain at the time of the making of the contract, and
2. The damages are a reasonable forecast of compensatory damages.

Question 7

If a buyer accepts nonconforming goods, the buyer may recover

Answer 7

warranty damages.

Question 8

Formula for warranty damages is

Answer 8

(V_gd - V_k )+ incidental + consequential

difference between the value of the goods delivered (V_gd) and the value they would have had if they had been as warranted in the contract (V_k ), plus incidental and consequential damages.

Question 9

A retailer of personal watercraft agreed to sell to a buyer a speedboat for $10,000. The written contract specified delivery within 30 days and a down payment of $2,000, but did not contain a liquidated damages clause. Two weeks after making the down payment, the buyer told the retailer that he could not afford to go through with the purchase, and asked for his down payment back. The retailer, which could get as many of that model of speedboat as it required from the manufacturer for a wholesale price of $7,000, put the boat back in its inventory. The retailer then sold it to someone else for $10,500. The buyer sues the retailer to get back his deposit; the retailer counterclaims for damages.

Excluding incidental costs, which of the following amounts represents the most likely recovery?

A - The buyer will recover $2,000.

B - The retailer will recover $500.

C - The retailer will recover $1,000.

D- The retailer will recover $2,500.

Answer 9

C - The retailer will recover $1,000.

Lost profit - Down Payment

LP = 3,000 (10,000 - 7,000)

DP = 2,000

3,000 - 2,000 = 1,000

Question 10

surety

If the main purpose of the promisor in a suretyship agreement is to secure a benefit for himself, the contract is not within SOF, even if the effect is still to pay the debt of another.

see flip for example

Answer 10

A nephew asked his uncle, who like him was a farmer, to guarantee a loan to buy a new tractor. The local bank had already refused to extend credit to the nephew alone to buy the tractor. The uncle was inclined to refuse, but then decided that he could benefit from his own use of the tractor, so he told his nephew that he would guarantee the loan if he could use the new tractor without cost for 10 days during his harvest season. The nephew agreed to his uncle’s proposal. The uncle went to the bank and told the loan officer that he was willing to guarantee the proposed loan to his nephew. This prompted the loan officer to agree to extend the requested credit to the nephew. Although the loan officer did not make the uncle sign any papers, the uncle provided consideration and the bank issued the nephew a loan commitment statement. That evening, the uncle had a change of heart. The next day, he telephoned the loan officer and told him to forget about his guaranteeing any loan to his nephew. Despite the uncle’s phone call, the loan officer did not stop the check from being issued, and the nephew received the money to purchase the tractor. He drove the tractor over to the uncle’s farm and delivered it for the uncle’s 10-day use, as promised. The uncle told his nephew that he did not want to use the tractor and that he was not guaranteeing his loan. Within six months, it became clear that the nephew could not make good on the loan.

If the bank sues the uncle for the unpaid portion of the loan, who will likely win?

The bank, because the uncle’s main purpose in making the agreement with the bank was to benefit himself, not his nephew.

Question 11

unconscionability

Unconscionability is tested at the time a contract is formed.

Question 12

modifications

For sale of goods contracts, a modification must be in writing _if_the contract _as modified_ falls within SOF

Question 13

accords

An accord is an agreement in which one party to an existing contract agrees to accept, in lieu of the performance that he is supposed to receive from the other party, some other, different performance.

Question 14

counteroffers

The test of whether a reply is a counteroffer or inquiry is whether a reasonable person would believe that the original offer was being rejected

Question 15

repudiation

Anticipatory repudiation requires that the promisor unequivocally indicate that he cannot or will not perform when the time comes, or act in a manner rendering him unable to perform.

An expression of doubt does not constitute an anticipatory repudiation.

see example on flip

Answer 15

On January 1, a singer entered into a written contract with the owner of a nightclub to sing nightly at the nightclub for a period of two years at $54,000 per year, commencing February 1. On January 25, the singer phoned the nightclub owner and told him that he had not finished relocating from out of state and might not be ready to start singing until February 10. Furious, the nightclub owner located a substitute act for the month of February.

Can the nightclub owner bring an immediate suit against the singer?

No because singer’s call did not constitute a repudiation

Question 16

When a party that offers a rare or unique service has breached a service contract, the court may grant __________ to the nonbreaching party.

Answer 16

injunctive relief

A court may grant injunctive relief to enjoin a breaching party from working for a competitor throughout the duration of the contract if the services contracted for are rare or unique.

Question 17

Restitution is available as an alternative to contract damages in a non-contract situation to prevent unjust enrichment. Here there is a contract and there are no facts indicating unjust enrichment.

Question 18

The right to specific performance in a land sale contract is cut off if the subject matter of the contract has already been sold to another who purchased for value and in good faith.

This is known as the equitable defense of:

Answer 18

Sale to a bona fide purchaser

Question 19

The equitable defense of laches arises when a party delays in bringing an equitable action and the delay prejudices the defendant. Note that mere delay itself is not a ground for this defense.

Question 20

A gift is a voluntary transfer of property from one person to another without compensation or consideration.

Question 21

A distributor of electric toy trains and a hobby shop owner entered into a written contract providing that the distributor will tender to the shop owner four dozen of a popular electric train set at a price of $100 apiece, to be delivered no later than October 31, to take advantage of the holiday shopping season. The shop owner chose to order from this distributor because its price for the train set was lower than that of other distributors. Shortly after the shop owner placed his order, the distributor raised its prices due to a sudden surge in popularity of that train set. Because the distributor did not have enough train sets to accommodate everyone due to the surge of orders, it decided to deliver train sets only to those buyers who had ordered them at the increased price. The distributor notified the shop owner that it would not deliver the train sets it ordered. The shop owner filed an action to force the distributor to deliver the train sets at the agreed-upon price.

Will the court compel the distributor to deliver the train sets to the shop owner?

A No, because a contract for the sale of goods is not subject to specific performance.No, because a contract for the sale of goods is not subject to specific performance.

B No, because the shop owner can buy them from another distributor.No, because the shop owner can buy them from another distributor.

C Yes, because the shop owner will not be able to buy them from another source at the contract price.Yes, because the shop owner will not be able to buy them from another source at the contract price.

D Yes, because time is of the essence.

Answer 21

B No, because the shop owner can buy them from another distributor.No, because the shop owner can buy them from another distributor.

Shop owner can get from a different distributor (at higher price). This is called cover. Then shop owner can sue the distributor for the difference (Kp - Cover)

Question 22

In a contract dispute, (1) the parol evidence rule can exclude evidence that contradicts a written contract, (2) the failure of an express condition can excuse a duty to perform, (3) the statute of frauds can invalidate an unwritten or unsigned contract, and (4) the preexisting duty rule can make a contract unenforceable for lack of consideration.