Short Questions

Question 1

MBE Tip: There is a valid contract. Which option is better for the party?

1. Prevail by promissory estoppel
2. Prevail by enforcing the contract

Answer 1

If there is a valid contract, always choose the option that say that is enforceable over the option that says that is enforceable with promissory estoppel

Question 2

Unilateral contract (reward) is made by O, A performs without knowing about the reward, he later finds out. Enforceable?

Answer 2

No, O the offeror has no contractual right to give the reward to A

Question 3

What is the distinction between an anticipatory repudiation and a prospective failure to perform?

Answer 3

Repudiation must be unequivocal, whereas prospective failure to perform is determined by the subjective beliefs of the other party.

Question 4

What requirements need to have an offer by a Merchant to be a firm offer?

Answer 4

• Signed
• Give assurances that the offer will be held open

Question 5

How do you fix in an UCC agreement:

• Vague Terms
• Missing Terms

Answer 5

• Vague Terms:
  
  • Past performance
• Missing Terms
  
  • Gap filling terms of UCC apply
  • Presumption that the parties’ intent was to include a reasonable term

Question 6

What is a constructive condition?

Answer 6

A condition that is implied by a court even though it is not explicitly stated in the contract.

Common examples of constructive conditions are the conditions of cooperation and notice. Constructive conditions are also known as implied conditions.

Question 7

What is the key distinction between an anticipatory repudiation and a prospective failure to perform (insecurity)?

Answer 7

Repudiation must be unequivocal, whereas prospective failure to perform involves mere doubts.

The effect of Repudiation is that the non-breaching party can sue (it can also wait, suspend his performance, take the repudiation as rescission or urge performance)

The effect of a prospective failure is to allow the innocent party to suspend performance until she receives adequate assurances. She may treat this situation as a breach only if the assurances are not given. If a defaulting party regains his ability or willingness to perform, he must communicate that to the other party.

Question 8

Is this correct?

Once an offeree of a unilateral contract has fully performed, the contract cannot be rescinded under any circumstances

Answer 8

No, normally the contract cannot be rescinded, but there is an exception:

Once an offeree of a unilateral contract has fully performed, the contract can be rescinded, but only if the rescission promise is supported by any of these:

• (i) An offer of new consideration by the nonperforming party;
• (ii) Elements of promissory estoppel; or
• (iii) Manifestation of an intent by the offeree to make a gift of the obligation owed to her.

Question 9

A mutual rescission agreement must be in writing if the contract so provides it

Is this true?

Answer 9

A mutual rescission agreement may be oral, even if the contract to be rescinded expressly states that it can be rescinded only by a writing.

• However, note that UCC rules or SoF rules would require the rescission contract to be written in order to be enforceable

Question 10

When should the nonbreaching party treat an otherwise minor breach as a material breach?

Answer 10

• When the breach is coupled with an anticipatory repudiation
• Contract by its terms provides that time is of the essence

Question 11

In a sale of goods contract:

• Which party can recover incidental damages?
• Which party can recover consequential damages?

Answer 11

• Consequential damages: Only the buyer. Consequential damages are special damages over and above standard expectation damages. These damages result from the nonbreaching party’s particular circumstances and are recoverable only if a reasonable person would have foreseen them as a probable result of breach. Note that in contracts for the sale of goods, only a buyer may recover consequential damages
• Incidental damages: Both (nonbreaching) buyer and seller. Incidental damages include expenses reasonably incurred by the buyer in inspection, receipt, transportation, care, and custody of goods rightfully rejected and other expenses reasonably incident to the seller’s breach, and by the seller in storing, shipping, returning, and reselling the goods as a result of the buyer’s breach.

Question 12

What is a suit for restitution? What can you recover with it?

Answer 12

Restitution is based on preventing unjust enrichment when one has conferred a benefit on another without gratuitous intent.

In a suit for restitution, the measure of recovery is the value of the benefit conferred.

Question 13

Of these, what would not be included in the scope of a parol evidence rule?

1. Evidence of a condition precedent
2. Evidence of a contemporaneous oral agreement
3. Evidence of a prior oral agreement
4. Evidence of a condition subsequent

Answer 13

Evidence of a condition precedent.

Remember, the parol evidence rule prohibits admissibility of extrinsic evidence that seeks to vary, contradict, or add to an integration

The rationale is that one is not altering a written agreement by means of parol evidence if the written agreement never came into being. It should be borne in mind that parol evidence of such a condition precedent will not be admitted if it contradicts the express language of the written contract.

Question 14

When are these warranties included?

1. Warranty against infringement
2. Warranty of title
3. Implied warranty of merchantability
4. Implied warranty of fitness for a particular purpose

Answer 14

1. Warranty against infringement: only on sale of goods made by merchant sellers
2. Warranty of title: every contract for the sale of goods includes it
3. Implied warranty of merchantability: only on sale of goods made by merchant sellers
4. Implied warranty of fitness for a particular purpose: the seller has reason to know the particular purpose for which the goods are to be used and that the buyer is relying on the seller’s skill and judgment to select suitable goods, and the buyer in fact so relies.

Question 15

Is a promise conditioned on the promisor’s satisfaction an illusory promise?

Answer 15

No, is a valid condition, promise conditioned on the promisor’s satisfaction is not illusory because the promisor is constrained by good faith (for contracts involving personal taste) and a reasonable person standard (for contracts involving mechanical fitness, utility, or marketability).

Question 16

One of these is not an exception to the preexisting legal duty rule (no consideration)

1. A minor’s ratification of a contract upon reaching the age of majority.
2. A compromise based on an honest dispute as to duty.
3. Payment of a smaller sum to settle an existing debt.
4. An acceleration of the performance of the duty.

Answer 16

A compromise based on an honest dispute as to duty.

In the case of an existing debt, payment by the debtor of a smaller sum than due will not be sufficient consideration for a promise by the creditor to discharge the debt. However, because courts are anxious to avoid the preexisting duty rule, payment of a smaller debt may be sufficient consideration if the payment was in any way different (e.g., stock instead of cash) or if the debt was honestly disputed. lmost any variation, such as accelerating performance, is considered adequate consideration. A promise to perform a voidable obligation (e.g., a minor’s ratification of a contract upon reaching the age of majority) is also enforceable despite the absence of new consideration. If the scope of the legal duty owed is the subject of honest dispute, then a modifying agreement relating to it will ordinarily be given effect.

Question 17

Mutual mistake can be a defense to the formation of a contract if _____?

Answer 17

The mistake concerns a basic assumption on which the contract is made

Such a mistake renders the contract voidable by the adversely affected party if the mistake has a material effect on the agreed-upon exchange (not any effect on the agreed-upon exchange) and the party seeking avoidance did not assume the risk of the mistake.

Question 18

In an Art 2 sale of goods, what is the effect when in an offer and acceptance between to merchants:

1. The offeree includes Additional Terms
2. The offeree includes Different Terms

Answer 18

Additional Terms: Additional terms that do not materially alter the original terms of the offer will be included in the contract. Unless they materially alter the original terms, the offer expressly limits acceptance to the terms of the offer, or the offeror has already objected to the particular terms or objects within a reasonable time.

Different terms may be knocked out of the contract. There is a split of authority on different terms. Some states follow the same rules as for additional terms, but others employ the knockout rule. Under the knockout rule, conflicting terms are knocked out of the contract and gaps are filled by the UCC gap-filler provisions.

Question 19

Art 2 sale: What is the consequence of including terms that materially alter the original terms of the offer?

Answer 19

The contract is formed without the inclusion of the additional terms

Between merchants, additional terms proposed by the offeree in an acceptance automatically become part of the contract unless (i) they materially alter the original terms of the offer (e.g., they change a party’s risk or the remedies available); (ii) the offer expressly limits acceptance to the terms of the offer; or (iii) the offeror had already objected to the additional terms or objects within a reasonable time.

Question 20

Merchant A calls Merchant B and offers him to sell goods for $1000.

Was a contract formed?

Is the contract enforceable?

Answer 20

The fact that this was an oral conversation does not prevent formation of the contract. To be enforceable, any contract for the sale of goods priced at $500 or more must be evidenced by a writing signed by the party to be charged. This affects enforceability, not formation. For this contract to be enforceable, some form of signed writing (e.g., a merchant’s confirmatory memo) would be necessary.

Question 21

A letter of revocation of an offer becomes effective at the moment it is __________.

Answer 21

Received by the Offeree

At common law, a written communication is considered to have been “received” when it comes into the possession of the person addressed (or of someone authorized by him to receive it) or when it is deposited in some place authorized as the place for this or similar communications to be deposited.

Similarly, under the UCC, a person receives notice when it comes to his attention, or it is delivered at a place of business through which the contract was made or another location held out by that person as the place for receipt of such communications. An organization receives a communication at the time it is brought (or should have been brought) to the attention of the individual conducting the transaction.

Question 22

What happens when you dispatch an acceptance of an offer, but you made a mistake on the offeror address? what happens if you included the correct address but the mail got lost?

Answer 22

if the acceptance is included in the mail with the proper address and when the Offeror had reasons to expect that that would be the reason that the offer would be accepted. Then even if the letter got lost in the mail, the offer would be deemed as accepted.

If the

Question 23

Typical Hypo: Offeror sends an offer. Offeree accepts it by mailing it. But before Offeror receives it, he calls him and tells him that the offer acceptance is off.

Was a contract formed?

Answer 23

Yes, under the mailbox rule, acceptance of an offer by mail creates a contract at the moment the acceptance is posted, properly stamped, and addressed.

If the offeree sends both an acceptance and a rejection, whether the mailbox rule will apply depends on which the offeree sent first, the acceptance or the rejection If the offeree first sends an acceptance and later sends her rejection, the mailbox rule does apply. Thus, even if the rejection arrives first, the acceptance is effective upon mailing (and so a contract is formed) unless the offeror changes his position in reliance on the rejection. Here, the classmate first sent an acceptance, then called with her rejection. The mailbox rule applies, and because there is nothing in the facts to show that the nurse relied on the rejection, a contract was formed.

Question 24

Schizophrenic acceptance: A sents offer to B. B mails rejection to A, but later changes her mind and sent acceptance. Which controls? What happens if A never reads the rejection and only reads the acceptance?

Answer 24

Whatever is received first. This is one exception of the mailbox rule

The fact that A did not read the rejection does not matter; it still was received by her before the acceptance.

The parties do not have a contract, because the mailbox rule does not apply when the offeree sends a rejection, followed by an acceptance. In such a case, whichever is received first controls. Under the mailbox rule, acceptance by mail or similar means creates a contract at the moment of posting, with a couple of exceptions not relevant here. Rejection, on the other hand, is effective when received. So, if the mailbox rule had applied, there would have been a contract, because the friend’s acceptance was mailed before his rejection letter was received. But because the mailbox rule does not apply here, and the matter is decided based on which letter was received first, there is no contract, because the friend’s rejection letter was received by the bicycle owner a day before his acceptance letter was received by her

Question 25

Option Contract: what are the differences regarding the Mailbox rule?

Answer 25

• An acceptance under an option contract is effective only upon receipt (not dispatch)
• Therefore under an option contract, the offer must be received by the offeror BEFORE the termtnation of the option period.

Question 26

Merchant’s firm offer: An Ice Bucket supplier makes a letter staying that he will sell 200 buckets to a hotel, and will keep the offer for the next 6 months.

The Supplier one week later sents another letter revoking the letter.

The Hotel one month later sends an acceptance to the offer

Who will prevail?

Answer 26

The hotelier will prevail. This is a sale of goods, and the supplier is a merchant, therefore the letter promising to keep the offer open is a firm offer that is irrevocable.

When a period of an offer is stated, the period of irrevocability is that period, except that the period cannot exceed three months. Here, the three-month period would end before the invalid attempt at revocation, because it is within the three-month period of irrevocability.

Section 2-205 does not require that the offeree of a firm offer be a merchant; it requires that the offeror be a merchant, and the company is (see above).

A firm offer that states a period longer than three months is still firm for the first three months.

The hotelier’s knowledge, or lack thereof, of the “revocation” of the company’s offer is irrelevant because it was invalid; the fact that the company made a firm offer prevents it from revoking the offer within the stated time, not to exceed three months.

Question 27

When a contractor is under a contractual duty to construct a building and the building is destroyed by an act of nature while it is still a work in progress, the destruction __________.

• will discharge the contractor’s duty to perform
• will not discharge the contractor’s duty to perform, but will extend the date of performance
• will discharge the contractor’s duty to perform if rebuilding cannot be reasonably completed by the date of performance

Answer 27

will not discharge the contractor’s duty to perform, but will extend the date of performance

A contractor’s duty to construct a building is not discharged by destruction of the work in progress. However, if the destruction was not caused by the contractor, such as by an act of nature, most courts will extend the date of performance beyond the original deadline.

Question 28

A building that is the subject of a contract between its owner and a contractor is completely destroyed by an act of nature.

If the contractor was working on a renovation, the destruction _____________; if the contractor was constructing the building, the destruction ________________.

1. Discharges the contractor’s duties by impossibility; does not discharge the contractor’s duties
2. Does not discharge the contractor’s duties; discharges the contractor’s duties by impossibility

Answer 28

If the contractor was working on a renovation, the destruction discharges the contractor’s duties by impossibility​; if the contractor was constructing the building, the destruction Does not discharge the contractor’s duties.

The total destruction by an act of nature of a renovation in progress discharges the contractor’s duties by impossibility. If a contract’s subject matter is destroyed without the fault of either party, the contractual duties are discharged. If the original building no longer exists, it is impossible to renovate it. The construction of a new building, even if destroyed during progress, is not impossible and thus will not discharge the contractor’s duty to perform. However, if the destruction was not caused by the contractor, courts typically will extend the time for the contractor to perform.

Discharge by impracticability occurs when performance is possible, but can be accomplished only with extreme and unreasonable difficulty or expense. It is impossible, not impracticable, to renovate a building that no longer exists. Moreover, discharge by frustration may not be raised by the contractor in either case. His purpose in entering into the contract was to make money. Frustration occurs when the purpose of the contract has become valueless by virtue of a supervening event. Frustration of purpose would be a valid defense of the owner in the contract for renovation. Without the building, there is no point in paying to renovate it.

Question 29

A farmer contracts with a mechanic to repaint his antique tractor for display in the upcoming county fair.

Which of the following would discharge the contract by impossibility?

1. The unexpected death of the mechanic
2. The destruction of the tractor by a tornado
3. The cancellation of the county fair due to a drought
4. The unexpected death of the farmer

Answer 29

The destruction of the tractor by a tornado

The destruction of the tractor by a tornado would discharge the mechanic’s performance due to impossibility. If a contract’s subject matter is destroyed without the fault of either party, contractual duties are discharged. If the tractor was destroyed by an act of nature, it is impossible for the mechanic to repaint it.

Neither the death of the farmer nor the death of the mechanic would discharge the contract by impossibility. Death or physical incapacity of a person necessary to effectuate the contract serves to discharge it, but this applies in personal service contracts where the services involved are “unique.” If the services are the kind that could be delegated, the contract is not discharged by the death of the person who was to perform them. Painting a tractor probably does not qualify as a unique or artistic service that could not be delegated, so the death of the mechanic would not discharge his duties under the contract. The farmer’s duty to pay for the painting could easily be performed by his estate after his death, so his death also will not result in a discharge of the contract by impossibility.

The cancellation of the county fair would not make fulfillment of the contract impossible. The mechanic’s duty is to paint the tractor, which he can do even if the fair is cancelled, and the farmer’s duty is to pay the mechanic for his painting, which again he can do even if the fair is cancelled. It could be argued that the purpose of the contract was frustrated, but the contract would not be discharged by impossibility.

Question 30

A woman entered into a contract with a famous painter for a portrait of her cat. Tragically, the painter, the cat, and the half-completed portrait perished together in a fire.

If the woman sues the painter’s estate for breach of contract, a court will likely find that the fire caused the painter’s contractual duties to be discharged by:

1. Frustration
2. Impossibility
3. Impracticability
4. Destruction of the subject matter

Answer 30

Impossibility

The painter’s contractual duties will be discharged by impossibility due to the death of the painter. The death of a person necessary to effectuate the contract serves to discharge it for impossibility. Personal service contracts are discharged in this manner only if the services involved are unique. If the services are the kind that can be delegated, the contract is not discharged by the death of the person who was to perform them. Here the woman contracted with a famous painter for the portrait of her cat. His artistic skills would be considered unique, and his death would serve to discharge the contract.

This is not a case for discharge by impracticability. The test for a finding of impracticability is that the party to perform has encountered extreme and unreasonable difficulty and/or expense, and its nonoccurrence was a basic assumption of the parties. As discussed above, due to painter’s death, his unique performance is now impossible, not merely more difficult or more expensive.

The contract was not discharged due to destruction of the subject matter. The cat’s death is not destruction of the subject matter. The painting, not the cat, is the subject matter of the contract. If the painter had lived, he still could have painted the cat from memory or from a prior photograph of the cat. Although the painting itself was destroyed as a work in progress, if the painter had survived, he would still be expected to deliver a portrait of the cat, although he may have been given additional time to perform due to the fire. This is similar to when a building in progress is destroyed by an act of nature before completion; the contractor’s duty to build is not discharged, but he may be given additional time to perform.

This was not a case of frustration. Frustration will exist if the purpose of the contract has become valueless by virtue of some supervening event not the fault of the party seeking discharge. Although the cat has now died, this does not mean that the woman would no longer want the portrait. In fact, she may want the portrait even more as a remembrance of her pet.

Question 31

A homeowner and a contractor duly executed a contract providing that the contractor was to construct a residence on a specified lot. No date was included in the contract for completion of the home. After the contractor completed 5% of the residence, a tornado demolished the construction but left the lot undamaged.

Does the mean that the contractor is discharged? is the contract void? Is the contractor entitled to quantum merit for the work done until the destruction?

Answer 31

The contract is not void. The contractor remains obligated to perform under the original contract without any compensation for the work done prior to the tornado.

The contractor remains bound under the original contract, and he is not entitled to compensation for the work that was destroyed. The general rule is that a contractor is responsible for destruction of the premises under construction prior to completion. Once the residence is completed, risk of loss shifts to the owner.

Question 32

Gustavo hires M to refurbish his kitchen. M made a mistake on the quotation and give him a better price first, but then ask for more money. Gustavo accepts. But then only pays the original price.

Who is right?

Answer 32

Since this is a service contract, there are no UCC rules regarding modification of the agreement, and since CL dictates that a price cannot be changed unless new consideration. The preexisting duty rule dictates that Gustavo is right.

Question 33

Statute of Frauds, and Sale of Goods. Do both parties need to be merchants?

Answer 33

No

The parties’ status as nonmerchants is irrelevant. While the Code relaxes the Statute of Frauds rule in the case of a written confirmation between merchants, that exception does not apply here. There was no writing by either party that would satisfy the Statute of Frauds; thus, even if the parties were merchants

Question 34

Statute of Frauds, and Sale of Goods. What is the minimum required amount to require writing? 500 or over 500?

Answer 34

$500 or more

A promise for the sale of goods priced at $500 or more is not enforceable under the Statute of Frauds unless evidenced by a writing signed by the party to be charged.

Question 35

Statute of frauds: writing requirements, need to be signed? by whom?

Answer 35

Under the Statute of Frauds, to be enforceable a contract for the sale of land must be evidenced by a writing signed by the party sought to be charged.

Question 36

Can you rescind a contract if there is a TPB?

Answer 36

If his rights have already vested, no you cannot rescind a contract

Question 37

Effects of a clause against assignments:

1. IT says “No assignment of contract”
2. IT says “No assignment of rights”
3. IT says “Assignment will be void”

Answer 37

Effects

1. IT says “No assignment of contract”:
   
   • Will be constructed as only barring delegation of the assignor’s duties
2. IT says “No assignment of rights”:
   
   • Will not make the assignment void, but it will give the obligor the right to sue for damages
3. IT says “Assignment will be void”:
   
   • Assignment is barred, and it has no effect/

In all cases, if the assignee has notice of the nonassingment clause, an assignment will be ineffective.

Question 38

What is Replevin?

Answer 38

Replevin is a buyer’s right to replevy (recover) undelivered, identified goods from a seller under certain circumstances. Replevin will lie only in cases with identified goods.

Question 39

What are Laches?

Answer 39

Laches is an equitable defense involving an unreasonable lapse of time in asserting a right that prejudices the defendant. It can be raised to defend an action for specific performance; the breaching party would argue that the other party delayed too long in bringing the specific performance action, and the delay caused prejudice against the breaching party.

Question 40

What is an injunctive relief in contract law?

Answer 40

Is a court-ordered act or prohibition against an act or condition which has been requested, and sometimes granted, in a petition to the court for an injunction.

In contract law is typical because its the only measure available to enjoin a breaching party from providing services for a competitor throughout the duration of the contract if the services contracted for are rare or unique.

Question 41

What is the unclean hands defense?

Answer 41

The unclean hands defense arises when the party seeking specific performance is guilty of some wrongdoing in the transaction being sued upon. Note that the wrongdoing must be related to the transaction being sued upon; it is not sufficient that the plaintiff has defrauded other persons in similar transactions.

Question 42

When a catalog or an ad sent to a client can be considered as an offer?

Answer 42

Catalogs or ads are normally to broad to be offered.

However, price quotations and catalogs of prices could be considered when answering inquiries by clients.

COurts would also see if the catalog or ad included specific information like the terms of payment or delivery

Question 43

When is a mistake a reason to rescind a contract

Question 44

What is the measure of damages regarding nonconforming goods when the shipment is accepted by the buyer?

Value or cost?

Answer 44

Value, not cost.

If the buyer accepts goods that breach one of the seller’s warranties, the basic measure of damages is the difference between the value of the goods as delivered and the value they would have had if they had been according to the contract, which is best stated by choice

Question 45

The owner of an old car parked it in front of his house with a “for sale” sign in the windshield. In response to an inquiry from his neighbor, the car owner said that he would take $400 for the car. The neighbor responded, “You’ve got a deal.” Because it was a Sunday, and the banks were closed, the neighbor told the car owner that he would come to his house with the $400 the next day at about 6 p.m. The car owner said that was fine. At 9:15 the next morning, the car owner called his neighbor and told him that when they had talked the previous day, he forgot that he had just put two new tires on that car and that he would need an extra $50 to cover their cost. The neighbor agreed to bring $450 in cash to the car owner’s house at about six o’clock.

Is the neighbor legally bound to pay the car owner the additional $50?

Answer 45

The neighbor must pay the car owner the additional $50 because the parties have an enforceable contract. A contract for the sale of goods (the car) was formed when the neighbor said, “You’ve got a deal.” The parties then orally agreed to a modification of the contract when the car owner called his neighbor the next morning. Under the Statute of Frauds provision in the UCC, which applies to all contracts for the sale of goods, a promise requires a writing signed by the party to be charged to be enforceable if it is for the sale of goods of $500 or more. Here, the contract as modified is under $500, so it is enforceable even though it is not in writing.

A no new consideration defense is incorrect because under UCC section 2-209, no consideration is needed for a good faith modification of a contract for the sale of goods. UCC rules on modifications and the Statute of Frauds apply to all contracts for the sale of goods, not just those between merchants.

Question 46

A retailer entered into an oral contract with an office supply wholesaler to buy 100 file boxes for an upcoming back to school sale at the retailer‘s store. The wholesaler agreed to deliver the file boxes in two weeks at a cost of $4 per file box. A week later, the retailer phoned the wholesaler and asked if she could increase her order to 200 file boxes. The wholesaler agreed. The wholesaler delivered the 200 file boxes as promised, but the retailer accepted only 150 upon discovering that she lacked storage space for all 200.

May the wholesaler recover damages with respect to the 50 file boxes that were not accepted?

Answer 46

No, because the contract as modified was for $800.

The wholesaler may not recover damages. Under the UCC Statute of Frauds, a contract for the sale of goods for $500 or more is unenforceable unless evidenced by a writing signed by the party sought to be held liable. The original contract was for $400 and, thus, was not within the Statute. Whether a modification must be in writing to be enforceable depends on whether the entire contract price as modified is within the Statute. Here, the retailer and the wholesaler modified their original contract to 200 file boxes, bringing the total price to $800. Thus, the modification was unenforceable under the Statute of Frauds, and the wholesaler cannot collect damages with respect to the 50 unaccepted file boxes.

Question 47

A jeweler sent a fax to a gold dealer offering to sell the dealer 100 ounces of gold at $900 per ounce. The dealer immediately responded via fax, “What are your terms of shipment?” The jeweler faxed back, “F.O.B. my store.” The dealer faxed back, “I accept.”

Who must pay the freight charge from the shop to the dealer? the dealer or the jewer?

Answer 47

The Dealer, the seller of the goods

The gold dealer must pay the freight because that is what the offer stated, and he accepted the offer. The term “F.O.B.” is a delivery term under the UCC, which governs the contract here because it is a contract for the sale of goods. That term means “free on board,” and it obligates the seller to get the goods to the location indicated after the term. [UCC §2-319(1)] Here, the term indicates that the goods are “F.O.B. [jeweler’s] shop,” so the jeweler is not obligated to pay for costs of shipment beyond his shop.

Question 48

Company gives benefit to employee to choose a charity to recieve a bonus. The employee can change the charity at any time before retiring.

He chooses church 1. Company sends a letter informing them about the decision of Employee.

church 1 in reliance builds a new office.

Employee changes his mind at the last second, and now chooses Church 2 to recieve the gift

Can the Church 1 enforce the gift?

Answer 48

Yes, under a theory of promissory estoppel:

The company should expect the promise to induce action or forbearance and such action or forbearance was in fact induced.

An answer mentioning vesting would not be correct, because the vesting did not happen by the terms created by the contract since the assignment of the church was still open to a last-minute change by the Employee. Only if the church would have given them a manifestation of consent to the promise or brought a lawsuit the rights would have vested in favor of the Church

Question 49

Baker orders “200 batches apples of any kind” for 600$ upon delivery. Apple grower delegates his duties to a third party Mac grower. M hires a truck company that loses the shipment.

Who’s liable?

Answer 49

Baker would be able to recover the cost of cover to get new apples.

Normally when the goods are identifiable, and they are lost by a third party without the fault of the parties, then the contract could be avoided (since the Baker hasn’t paid)

Since the goods are generic and not identifiable then the loss is on the seller. If a carrier is used then the risk of the seller extinguishes upon delivery to the specific place. Since the apple were lost before, the risk is on the seller.

Specific performance is only available when the goods are unique

Question 50

What problem has this disclaimer?

“The store expressly warrants that this set shall be free of manufacturing defects for 30 days. If a set is defective, the store’s liability shall be limited to the cost of repair or replacement of defective parts. The store “HEREBY DISCLAIMS ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF FITNESS FOR PARTICULAR PURPOSE AND THE WARRANTY OF MERCHANTABILITY.””

Answer 50

In every sale of goods, unless expressly disclaimed, there arises a warranty that the goods will be merchantable, which means that they will be fit for the ordinary purposes for which such goods are used.

A television that explodes after five weeks of use likely breaches this warranty. The warranty will not be disclaimed because, to be effective, a disclaimer must be part of the offer and acceptance process or must be agreed to by the buyer as a modification. Here, the “disclaimer” was in the box, and the consumer did nothing to accept the disclaimer.