b-law test 2

Which of the following represents a unilateral offer?

"I will pay you $50 if you mow my lawn."

Quantum meruit

"as much as he deserves"- the damages awarded in a quasi-contract case

What phrase explains how a requirements contract can be valid?

"in good faith"

Which of the following statements, if made by a seller who knows the statement to be untruthful, would not be misrepresentation of material fact resulting in a cause of action for fraud?

"there is no better car in the world"

Bob, a house builder, contracts with Ollie to build a house on Ollie's lot. The total price of the construction is $100,000, $20,000 of which will be Bob's profit. After Bob has put $10,000 worth of materials into the house, Ollie wrongfully refuses to let him finish the house. If Bob sues for damages, he will be able to collect:

$30,000

The courts will find an implied contract when:

conduct of the parties indicates they intended an agreement.

__ is the inducement, price, or promise that causes a person to enter into contract & forms the basis for the parties' exchange

consideration

a _ is a legally enforceable agreement

contract

3 exceptions to consideration

1) illusory promises 2) preexisting duties 3) past consideration

void agreement

A contract that neither party can enforce, because the bargain is illegal or one of the parties had no legal authority to make it

injunction

A court order that requires someone to refrain from doing something

Which of the following events would probably excuse performance of a contract based on commercial impracticability?

An unforeseeable trade embargo causes prices to triple.

Ethel's Exercise World plans to order three weight machines from Pete's Push, Pedal and Pull, Inc. for a total of $15,000. Pete's demands that Ethel's friend, Moneybags, a wealthy independent businesswoman (not connected with Ethel's business in any way) promise to pay Pete's for the three machines if Ethel's Exercise World does not. Which of the promises in this problem must be in writing to be enforceable?

Both Moneybag's promise and Ethel's Exercise World's promise.

Bernie owes an undisputed amount to Wilde's Heating & Air Conditioning. Which of the following is true?

If Wilde's agrees to accept less than the full amount as full payment, the agreement is not binding.

Status quo rule

If a minor cannot return the consideration, the adult or store is only required to return its profit margin to the minor

mitigation of damages

Keep damages as low as he reasonably can Injured party must try to prevent unnecessary loss

Barb has been a children's day care provider for several years in the small town of Sallton. She has decided to give it all up and move to the big city for excitement and adventure. She sells her business to Ken, agreeing not to open a competing business within five miles of Sallton for a period of nine months. After five months of the big city life, Barb is broke and moves back to Sallton. She opens a small day care business. Ken sues on the noncompete clause. What is the most likely result?

Ken wins. The agreement is enforceable.

Dodger bought an insurance contract from Liberty Farm Co. The policy contained a clause stating that all claims for losses had to be reported within 45 days after the date of the loss or the claim would be barred. Time is stated to be of the essence. Dodger sustained a covered farm loss, but did not report it to Liberty Farm until 50 days later. Liberty Farm denied coverage for the claim. If Dodger sues, who wins?

Liberty Farm wins; there was failure of a condition subsequent.

Marty, a 16-year-old, contracted with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. He agreed to make monthly payments until the purchase price plus interest were paid in full. It is three years later and Marty has not disaffirmed the contract and has made regular payments on the cycle since turning 18. Which of the following is correct?

Marty has ratified the contract and is now bound by its terms.

Collector Carl displays his beer can collection at the local swap meet. Mary sees the collection and is interested in buying it. Carl says he will sell the collection for $1,500. Mary says she really likes the collection but is only willing to pay $1,000. Which of the following is correct?

Mary's counteroffer terminates Carl's offer of $1,500.

who has the highest usury rates in the nation?

Nevada

Linda agrees to buy Missy's Greyhound race dog for $2,000. Linda is to deliver the money and take possession of the dog the next morning. That night, running his best race ever, the dog runs away from Missy, never to be seen again.

None of these; the contract duties are discharged: 1) Linda must give $2000 for the dog, but only if the dog was insured. 2) Linda must give $2000 for the dog, but only if Missy can find a replacement dog within a reasonable time. 3) Linda must give $2000 for the dog.

unenforceable agreement

Occurs when the parties intend to form a valid bargain, but a court declares that some rule of law prevents enforcing it

specific performance

Orders the parties to perform the contract, only in cases involving the sale of land or some other asset that is considered "unique"

Patty is a poor college student struggling to work and keep up with her studies. Fred, her uncle, promises to pay Patty support of $200 per month for the next six months. Although Fred didn't ask her to, she quits her current job in order to devote full time to her studies for the next six months. Fred makes one payment and then stops with no explanation. If Patty sues, what is the likely result?

Patty may win under the doctrine of promissory estoppel.

restitution

Restoring an injured party to its original position

requirement contract

obligates that the buyer to buy everything they require in their business from a seller

Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job?

The costs of mailing resumes to prospective employers.

E-mation, Inc hires Marvin to steal trade secrets from one of its competitors for $10,000. Marvin demands half of the money up front. E-mation pays Marvin $5000 but Marvin decides not to pursue theft of the trade secrets. E-mation sues Marvin for the return of the $5000. What will the court do with this contract?

The court will not do anything to help E-mation get its money back.

Promissory Estoppel

The defendant made a promise that the plaintiff relied on.

Quasi-Contracts

The defendant received a benefit from the plaintiff

restitution interest

The injured party may be unable to show an expectation interest or reliance. The objective is to restore to the injured party the benefit she has provided

Shelly offers to sell Jane goods both parties know are stolen. Jane accepts the offer, and agrees to pay for the goods. Later, Jane refuses to accept or pay for the goods. If Shelly sues Jane for breach of contract, what is the probable result?

The law would not enforce Jane's promise, as it does not have a lawful purpose.

Dick offers to sell Jane his 1955 Thunderbird convertible. Before Jane can accept the offer, lightning strikes the car and it is totally destroyed. Which of the following is true?

The offer is terminated by law.

Floyd offers to sell his 1967 Ford Mustang convertible to Tim. Before they conclude their negotiations, Floyd dies. Which of the following is true?

The offer terminates automatically upon Floyd's death.

Which of the following is NOT a true statement about fraud?

The plaintiff must show that although the defendant acted in good faith, the statement was material because the defendant expected the plaintiff to rely on it and enter into the contract.

David and George have a contract wherein George agrees to buy sporting goods and equipment. Since the goods are not to be delivered for several months, they left the price open. Under the UCC, which of the following will be true?

The price will be the reasonable price based on fair market value of the goods at the time of delivery.

incidental damages

The relatively minor costs that the injured party suffers when responding to the breech

Robert, a minor, buys a stereo from Jane for $200. State law allows a minor to disaffirm contracts within a reasonable time after turning 18. Robert disaffirms the contract the day after turning 18 and returns the stereo.

This contract was a voidable contract, Robert can disaffirm.

output contract

obligates that the seller to sell everything it can make to the buyer

Jackie hires Charles to lay new carpet in her bedroom. Charles does such a bad job, that the only way to fix the carpet is to start over and relay the carpet. Which of the following best describes this situation?

This is a material breach. Jackie owes nothing to Charles.

Jeff was a subcontractor, bidding on a contract for ACE Corp., the general contractor. When adding up the total of materials and labor, Jeff's secretary mistakenly moved the decimal point one place, ending up with a bid of $3500 rather than $35,000. ACE Corp. accepted Jeff's bid, mostly because all the other bids were over $30,000. When Jeff learned of the mistake, he tells ACE Corp. that he cannot do the job for $3500. If ACE Corp. sues to enforce this contract, what is the most likely result?

This is a unilateral mistake, but one where ACE Corp. knew that a mistake had been made. Jeff should be able to rescind the contract.

___ facilitates easy formation and enforcement of contracts in a fast-paced world ?

Uniform Commercial Code (UCC)

Vivian goes to an auction and sees a rare antique lamp that is an identical match to one she already has. At the proper time she bids on the lamp and is the highest bidder. Even though she is the highest bidder, the auctioneer refuses to accept her bid and withdraws the lamp from the auction. Can the auctioneer do that?

Unless otherwise stated, the auctioneer had the right to withdraw the item before the fall of the hammer.

On January 16, Deb offers to sell her waterbed to Colleen for $600. Colleen accepts and agrees to pay Deb $600 on January 27. Which of the following is correct?

Until January 16, the contract was executory.

expectation interest

What the injured party reasonably thought she would get from the contract

Jennifer has offered to sell her laptop computer for $750 to Jack. She tells Jack that the computer is only six months old but, in fact, it is three years old, and Jennifer wants to unload the lemon. Jack agrees to buy the computer based on Jennifer's representations. This contract is:

a voidable contract, one that Jack can void.

One of the factors leading courts away from a laissez-faire approach to contract law was:

a change in relative bargaining power between parties to contracts.

Mary contracted to buy 100 table lamps. Under the terms of the agreement, Mary is to pay for the lamps upon delivery. This is an example of:

a concurrent condition

If Crosby and Dash are in disagreement as to the exact amount of money that Crosby owes Dash, then they may choose to form a new agreement at a set amount. If they both perform the new agreement, their conduct would be an example of:

accord & satisfaction

Bailey Co. and Spryt Bros. enter into a contract for the manufacture and sale of 400 lawn chairs. If both parties agree that a modification is necessary:

an agreement to rescind the contract will terminate the contractual rights of Bailey Co. and Spryt Bros. if neither of them had completed their obligations.

Jerry offers to shovel the snow from Ben's driveway for $35. Ben replies "OK." This is an example of:

an express, bilateral contract

"I'll sell you my car if I decide to sell it" is an example of:

an illusory promise

Deborah purchased a boat from Sun 'N Surf Marine. She later learned that the salesman had made misrepresentations to induce her to make the purchase. Under UCC Section 2-721, Deborah can rescind the contract:

and sue for damages whether the misrepresentation was fraudulent or innocent.

Which of the following would suffice for a signature on a writing under the statute of frauds?

any of these: (judges define signatures very broadly) A stamped signature. b. A handwritten signature. c. A name keyed at the bottom of an e-mail.

consideration

anything that someone might want to bargain for. it distinguishes contracts from gifts.

The remedy of reformation:

can be used to correct mistakes in the original contract

Sea Rovers, Inc. contracted to sell 1,000 pounds of shrimp to the Seafood Shack with delivery on June 1. On May 1 Sea Rovers advised the Seafood Shack that it would not be able to deliver the shrimp. The Seafood Shack:

can sue Sea Rovers immediately for breach of contract.

Mercury Motors inadvertently mixes up a work order on Peter's car. Peter brought the car in to have the tires rotated. Mercury tuned up the motor by mistake, conferring a benefit on Peter. If Mercury Motors insists that Peter pay for the price of the tune-up, Mercury Motors:

cannot recover its expectation interest because there was no enforceable agreement.

when do consent issues arise?

cases of fraud, mistake, duress, & undue influence

peppercorn rule

courts don't care about the adequacy of the consideration, just the sufficiency (courts don't analyze economic terms). for it to be adequate, it must provide some benefit to the promisor or some detriment to the promisee

Public policy means the law that comes from the:

courts that decide what would have a negative impact on society.

Which of the following is least likely to be regarded as a necessary? Rent, Food, Medical Expenses, Educational expenses

educational expenses

T/F: A gambling contract is legal unless it is specifically prohibited by state statute.

false

When a party to a contract makes a unilateral mistake, the contract:

generally cannot be rescinded by the mistaken party unless the contract is unconscionable or it is proven that the nonmistaken party knew of the error.

___ is what prevents outputs & requirement contracts from being illusory

good faith

An express contract:

has both parties setting forth their intentions.

Jennifer substantially performs her service contract with Gretchen. Due to Jennifer's failure to render complete performance, Gretchen:

is required to pay the full contract price, minus the value of Jennifer's defective performance.

An exculpatory clause is generally unenforceable when:

it involves public transportation

A contract most likely will be declared unconscionable if:

it is oppressive and the weaker party did not fully understand the consequences of the agreement.

The most accurate statement regarding economic duress is:

it may be grounds for rescission.

a court:

may refuse to enforce an express condition intended by the parties if the court determines it is unfair and harmful to the general public.

An insurance contract is not considered to be a legalized form of gambling because:

one must have an insurable interest in the person being insured.

unilateral contract

one party makes a promise that the other party can accept only by actually doing something

If a condition does not occur:

one party will probably be discharged without performance being required.

valid contract

one that satisfies all of the law's requirements

The basic distinction between a bilateral contract and a unilateral contract is that:

only one promise is involved in a unilateral contract.

In a promissory estoppel case, a court will generally award:

only reliance damages

forbearance

opposite of an act --> not doing something

Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days. The parties negotiated and meant to say in the written agreement, delivery in 50 days. If the two cannot settle this dispute, and Archie still wants to deliver the champagne, then Archie should sue for the remedy of:

reformation

a counteroffer is a __ ?

rejection

When courts consider economic duress, they consider all the following factors EXCEPT:

relevant size of the contract

If Morales and Rolfes Supply negotiate for the purchase and sale of a supply of fuel for a three-year period for Morales' business:

the contract may indicate a method for determining the price, without stating a definite price.

Solomon breaches his contract with Neal to purchase the 500 pairs of socks he had promised to buy. Neal is able to sell the 500 pairs to Renny for a much lower amount. Neal then sues Solomon for damages. Neal will be able to recover:

the difference between Solomon's contract price and the amount paid by Renny.

Oxtron, Inc. substantially performed its obligations under a service contract. Oxtron is entitled to receive:

the full contract price minus the value of the defects.

Claude agrees to lease his house to Irvin for nine months, the lease to begin six months from the signing of the contract. Under the statute of frauds:

the lease is required to be in writing because of the one-year rule.

If an offer specifies no time limit in which to accept:

the offeree has a reasonable period during which to accept.

Regency Construction placed an order for two hundred 2 x 4s from Lumber Jack. If the place of delivery and time for shipping the goods are not specified, the UCC provides:

the place of delivery is Lumber Jack's and the time for delivering the lumber is a reasonable time based on normal trade practice.

A seller's form clearly states no warranty is included. The buyer's form states that the seller warrants the goods for one year. In this case:

the warranty term is a "different term," and the majority of states hold that a contract can be formed but the contradictory terms cancel each other out.

The intent of the offeror to extend an offer to the offeree is generally determined by reference to:

the words and conduct of the offeror.

T/F: Software clickwrap and shrinkwrap agreements limiting the manufacturer's maximum responsibility to a refund of the purchase price even if the software destroys your hard drive have generally been found to be binding against consumers.

true

T/F: Some of the elements of a contract are agreement, consideration, legality, and capacity.

true

2 basic elements of consideration

value & bargained for exchange

if a person has been adjudicated incompetent, then all of his future agreements are __?

void ("adjudicated incompetent" means that a judge has made a formal finding that a person is mentally incompetent and has assigned the person a guardian by court order)

Which of the following promises ordinarily must be in writing to be enforceable?

1) Promises made as a part of a prenuptial agreement. 2) The agreement to sell a car for $1500. 3) The promise by an executor of an estate to pay a debt of the decedent.

In which case is the offer still valid at the time the acceptance is made?

1) Hal offered to sell a book to Sid. Hal died, and Sid sent an acceptance two days later. 2) By-Waste Co. telephones XXX Co. offering to dispose of XXX Co.'s chemical waste by a particular method. XXX says it has another way to dispose of the waste. Then XXX finds out the method it planned to use violates environmental protection statutes, so it sends a letter of acceptance to By-Waste. 3) Ray offers to sell his AT&T stock for a particular price by May 1. On May 2, Kathy agrees to buy the stock. 4) In a face-to-face transaction, Pat offers to sell Mike his stereo and Mike accepts.

2 questions determine whether a statement is an offer:

1) Do the offeror's words & actions indicate an intention to make a bargain? 2) Are the terms of the offer reasonably definite?

Which of the following offers are considered to be irrevocable for a given period?

1) Firm offers. 2) Option contracts. 3) A writing signed by a merchant offering to hold open an offer for the sale of goods for a stated period.

Under the UCC, which of the following contracts may be enforceable, even without a written memorandum?

1) The seller is specially manufacturing the goods for the buyer. 2) The seller admits in court that there was a contract. 3) The seller has delivered the goods.

To be valid, a noncompete clause must be:

1) ancillary to a legitimate bargain. 2) reasonable in time, geographical area, and scope of activity when ancillary to the sale of a business. 3) necessary to protect trade secrets, confidential information, or customer lists developed over an extended time when ancillary to an employment contract.

a court will generally enforce a liquidated damages clause if:

1) at the time of creating the contract, it was very difficult to estimate actual damages 2) the liquidated amount is reasonable

2 things that typically happen with true impossibility

1) commercial impracticability 2) frustration of purpose

Generally, a seller has no duty to disclose facts. However, there is a duty to disclose information or facts if the disclosure is necessary to:

1) correct a previous assertion. 2) correct a basic mistaken assumption on which the other party is relying. 3) report a latent defect that the buyer would not be expected to discover.

3 extremes of true impossibility

1) death of subject matter is irreplaceable 2) death of promisor 3) illegal

4 principle contract interests a court may seek to protect are:

1) expectation interest 2) reliance interest 3) restitution interest 4) equitable interest

statements that usually do not amount to offers

1) invitations to bargain 2) price quotes 3) letters of intent 4) advertisements 5) auctions

Angie, a minor, wants to avoid a contract she made with Cumberland Cycles. She may disaffirm the contract by:

1) notifying Cumberland orally that she will not honor the agreement. 2) filing a lawsuit to have a court formally cancel the contract. 3) just refusing to perform her obligations under the contract.

7 characteristics that make a contract enforceable

1) offer 2) acceptance 3) consideration 4) legality 5) capacity 6) consent 7) writing

The UCC deals with unconscionability in a contract by providing that a court may:

1) refuse to enforce the contract. 2) enforce the remainder of the contract without the unconscionable clause. 3) limit the application of any unconscionable clause as to avoid any unconscionable result.

4 ways that a contract can be terminated

1) revocation 2) making contracts temporarily irrevocable 3) rejection 4) expiration

Courts may award damages called "quantum meruit":

1) which means "as much as he deserved." 2) which is money the court believes the plaintiff morally ought to have. 3) even though there was no valid contract entitling the plaintiff to it.

If a court orders rescission and restitution of a contract under which Nala sold a baseball card to Shirley in exchange for $450:

1)Shirley must return the baseball card. 2) Nala must return the $450.

Which of the following types of property would be goods under the Uniform Commercial Code?

A computer.

Acme Co. offers to buy 1000 widgets from Widget World Co. The written offer provides for 1000 at $10 per widget, to be delivered May 1. The offer has no other provisions. Widget World sends a written acceptance. However, the acceptance also states that if any claim arises under this contract, Widget World must be notified within 10 days. Acme does not object to this provision. Both parties are merchants. Which of the following best describes this situation?

A contract exists. If the additional terms are construed to be material, they are not part of the contract. If the additional terms are not material, they are part of the contract.

What is not required to establish promissory estoppel?

A promise made by the plaintiff in response to the defendant's promise.

Alpha and Xenon companies are both major international conglomerates. They are negotiating a contract whereby Alpha will install a computer system for Xenon. One clause in the contract states that Alpha will not be liable for damages caused by the negligent installation of the computer system, except that Alpha warrants the system and will fix any problem for a period of two years following installation. Alpha completes the installation of the computer system. Xenon loads extensive amounts of information on the system, but all of it is destroyed because Alpha negligently installed the memory chips. Alpha fixes the memory, but Xenon incurred significant expenses in recreating the lost information. Xenon sues for these expenses. Alpha defends with the noted clause in the contract.

Alpha wins; this exculpatory clause is enforceable.

voidable contract

An agreement that may be terminated by one of the parties

Which of the following exculpatory clauses will most likely be enforceable?

An exculpatory clause that relieves a riding stable of negligence.

Dana hires Paris to paint a portrait of her poodle, "Mack." The painting is to be done to Dana's personal satisfaction. Upon completion of the painting, which of the following will be true?

Dana may refuse to accept the painting if she really does not like it.

Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land. Since neither of them had any paper with them, Derek wrote the following on a napkin: "Abyan agrees to purchase from Derek a 5-acre parcel located at the local address of 123 105th Street, St. Joseph, Minnesota, U.S.A. for the price of $4,500 per acre. Transfer of title, payment, and possession to take place on May 1, 2011." Abyan signed the napkin. On May 1, 2011, Derek was ready to close the deal and transfer title but Abyan refused to pay the purchase price. If Derek sues Abyan for the price of the land, the most likely result will be:

Derek will win because the writing is sufficient under the statute of frauds.

Jamie is building a house on her lot. She invites Earnie of Earnie's Excavation to bid on the excavation job. Earnie observes that the lot next to Jamie's is also under excavation and the soil in that lot is normal and not excessively rocky. Based on the assumption that the soil in Jamie's lot will be similar, he and Jamie agree that the excavation will cost $3,000. When Earnie starts digging, he learns there is solid rock under Jamie's lot. Earnie says it will cost an extra $2,500 for the excavation work. Jamie agrees just to get the job done but later refuses to pay a dime more than $3,000. If Earnie sues, the most likely result would be:

Earnie wins, as the modification was due to unforeseen difficulties.

Travel Lines offered to sell 10 round-trip tickets to Elaine. Travel Lines stated that the acceptance must be in writing by USPS next-day service. Which of the following acceptances will create a contract between Travel Lines and Elaine?

Elaine sends a letter by USPS next-day service to Travel Lines stating that she will buy the tickets.

reliance interest

Even if the injured party has not shown any expectation interest, he can still recover damages if he proves that he spent money in reliance on that agreement and that, in fairness, he should receive compensation

Ron, a minor, goes to the hospital for treatment of the flu. On the new-patient form Ron signs, he agrees to pay for any care or treatment he receives. When billed for the treatment:

Ron must pay for the value of the benefit he received, because medical care is a necessary.

Frank's Furniture Company promised in a written agreement to purchase as much walnut wood "as it desires" from Forestry Products, Inc. If Frank's purchased walnut wood from another source and Forestry Products sued, what is the likely result?

Frank's is not obligated to purchase anything from Forest Products under this contract. Therefore, the contract is illusory and fails for lack of consideration. Forestry Products could not win a suit to enforce an agreement.

The Grand Performance Hall is in the process of remodeling and is scheduled to open for business after being closed for 50 years. As part of the remodeling, it is installing a new sound system. The sound system is to be installed by Sound Systems, Inc. on or before April 10. Opening night of the hall is May 1. The contract states that "time is of the essence" because of the opening- night deadline. Sound Systems has some financial difficulties and doesn't deliver the system until April 20. Grand Hall refuses to accept it, and Sound Systems sues. What result?

Grand Hall wins; the contract date was strictly enforceable.

Jack mails an offer to Joan that states, "I offer to sell you my car for $2000. If I don't hear from you in 10 days, I will assume you are willing to buy the car for the stated price." Jack hears nothing by the deadline and assumes he has a deal. What is the result?

Joan is not bound. Generally an offeree must say or do something to accept an offer.

Walter enters a dentist office and points to a damaged tooth. The dentist, Matt, treats the tooth. If Walter refused to pay and Matt sued:

Matt would win; this is an implied contract.

Alfred orally promised to pay Robert a salary of $30,000 per year for five years and his moving expenses up to $10,000 if Robert would quit his job and come to work for him at his manufacturing plant. Robert agreed to do so, but requested a written contract. Alfred assured him that the company attorney would prepare such a contract as soon as possible, but Alfred needed Robert to start at once. Accordingly, Robert sold his house, moved his family, and commenced to work for Alfred. He was fired without cause two months later. No written contract was ever executed. Can Robert enforce Alfred's oral promise?

Maybe. Robert should go to court under the theory of promissory estoppel. Alfred made an oral promise that Robert relied upon, and the way to avoid injustice is to enforce the promise.

remedy

Method a court uses to compensate the injured party (used to right a wrong party)

When Myrtle comes home from work one evening, she finds that her yard has been mowed and trimmed. Later, a man comes to collect for the yard work done. Myrtle refuses to pay for the work since she has never seen the man before and did not hire him to do her yard work. Which of the following answers is most accurate?

Myrtle would not have to pay him

Which of the following is an example of an exculpatory clause?

Seller is not responsible for property damage regardless of the cause of the injury.

In order to satisfy the statute of frauds, a writing must:

be signed by the defendant and contain the name of each party, the subject matter of the agreement, and the essential terms and promises.

Mid-American Oil had a contract with NSB Company to supply 1,000 gallons of oil by September 1. The contract contained a provision which required all modifications to be written and signed by the company presidents. In early August, an executive of Mid-American talked with the purchasing agent of NSB who orally agreed to two shipments of oil; one in September and the second one in December. By September 30, when only 500 gallons had been delivered, NSB sued. The likely outcome of this lawsuit is:

NSB wins because the modification has to be in writing.

Wendell, new to the area, selects a doctor from the telephone book and visits that doctor to have a splinter extracted. Unbeknownst to Wendell, the doctor has never passed the state licensing exams. Later, when Wendell discovers the truth, he refuses to pay his bill. If the doctor sues for recovery of the fee, will the court support the doctor's claim?

No, the court is likely to take the position that it is not in the public's best interests to enforce contracts with unlicensed doctors.

Martin, Human Resources Director for Spring Co., sent Lynn the following signed letter: "This letter confirms our offer to you. We will pay for your moving expenses, up to $1,500. Your starting date will be February 1, and you will become eligible for health care benefits as of May 1. You will receive a starting salary of $36,500 annually, with reviews and eligibility for increases at six months, 12 months, and annually thereafter. Vacation will be for two weeks a year after one year." Spring fired Lynn eight months after she started to work, and Lynn sued arguing the letter constituted a memorandum of an oral contract for employment for five years. Is the letter sufficient to satisfy the statute of frauds?

No, to satisfy the statute of frauds, the memorandum must contain all essential terms of the contract.

Vicki entered into a written contract to buy a car from Valley Motors. During the negotiations, the sales representative said that the car had a two-year full warranty. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." The written contract did not include a warranty. Two months after Vicki took delivery of the car, she discovered that the transmission needed to be replaced. Vicki claimed that it was covered by the full warranty. Will Vicki be able to present evidence as to the sales representative's statements concerning the warranty?

No. The parol evidence rule will most likely exclude any evidence of the discussion of the warranty.

Police Officer Paul apprehends a wanted criminal and then demands the $10,000 reward offered by Crime Stoppers. Which of the following statements is true?

Police Officer Paul is not entitled to the reward because he was under a pre-existing duty to make the arrest.

consequential damages

Reimburse for harm that results from particular circumstances of the plaintiff . Only available if they are a foreseeable consequence of the breech

bilateral contract

both parties make a promise

Seth told the salesperson at Outdoor Times that he wanted the sleeping bag that was advertised in the Sunday paper; one that would keep him comfortable if the temperature drops to 10 degrees Fahrenheit. The salesperson told Seth they were sold out of that bag, but there were two other styles that would meet his needs and were the same price. Seth insisted he wanted the advertised bag and threatened to sue for breach of contract. Which is true?

Seth will not prevail, as the advertisement was simply an invitation to negotiate.

Which of the following is most likely to constitute fraud?

Silence as to a toxic waste problem on real property that the buyer would not reasonably find.

Mark works as a bartender at The Little Nipper, a local bar. Under state law, bartenders are required to be licensed. The licensing requires filling out an application and submitting a $50 application fee. The application does not require any special education or experience, just the $50 fee. Craig enters Mark's bar, orders a round of drinks for the house, then notices that Mark's license is not on display behind the bar. Craig learns that Mark is not licensed and refuses to pay for the round of drinks. The Little Nipper sues. What result?

Since this is a revenue-raising statute, The Little Nipper wins.

Sonny, a college student, places a telephone order for a new computer from Computers, Inc. The price of the computer is $1500. The clerk who takes the order sends Sonny a copy of the invoice. The next week, Sonny calls back and tries to cancel his order.

Sonny can cancel the order; the invoice is unenforceable against him, as he did not sign the invoice.

Scott is trying to introduce oral evidence in court to alter the terms of a written contract he had with Bonnie. Bonnie has raised the parol evidence rule as an objection to Scott's testimony. In which of the following circumstances will Scott not be able to introduce the oral evidence?

The contract has an integration clause in it and Scott's point of contention is covered in detail in the contract, although not to his favor.

The Plaza Hotel contracts with EZ Lawn to have EZ mow the grass on the Plaza grounds for the next 10 years. However, there is a clause in the contract that states if the hotel chooses, the contract may be terminated provided Plaza pays EZ $2,000 on termination. Which of the following is correct?

The contract is enforceable because the option to cancel clause is supported by consideration.

Brahma entered into an oral agreement to sell 50 jet skis to Summer Sports. Brahma delivered 20 of the skis on May 1. On June 1, Summer Sports notified Brahma that it will not honor the agreement. Which statement is correct?

The contract is enforceable for 20 jet skis.

Larry has the largest pizza business in the city. He learns that Henry is thinking of opening a competing pizza and pasta delivery business. Larry gives Henry $25,000 to not open his proposed business in the same city. Which statement is correct?

The contract is illegal and void.

E-mation entered into a contract with a consumer, Ezra, a recent immigrant to the United States, who spoke very little English, and had no formal education. The contract provided for Ezra to pay $2500 for a computer system. The system was worth $400. If E-mation sued Ezra for enforcement the contract, what is the most likely result?

The contract is unenforceable because it is unconscionable.

Mike owns a house in a poor area of a large city. Mike is on disability and his total monthly income is $700. A sales representative visits his home, selling a water purification system. Mike signs a contract that calls for monthly payments of $500 for the next 10 years. The water system is worth no more than $1000. Mike thought he was signing a permission slip allowing the salesman to conduct a free water test to determine the toxins in the water. How would a court most likely describe this contract?

The contract is unenforceable because it is unconscionable.

Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. Marty agrees to make monthly payments until the purchase price plus interest are paid in full. Which of the following is correct?

The contract is voidable by Marty.

Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fee will be a percentage of the recovery Lenny obtains for Cindy in her pending divorce. State law makes such a contingency fee arrangement illegal in divorce actions. What will be the probable outcome if Lenny attempts to enforce the agreement?

The contract will be void as violating a statute. Lenny will not be able to recover anything.

Abby dies, and her good friend, Clay is appointed to administer Abby's estate. Abby's house was in poor condition, so Clay orally hired a contractor to make repairs. Clay also orally promised that if the estate could not pay the repair bill, he would pay it even though he does not live in the house and has no entitlement under Abby's estate. The estate does not pay the repair bill. Who can the contractor collect from, if anyone?

The contractor can collect from the estate only.

Ralph is a professional football player. He signs a valid contract with the Jets. Later, the Giants offer him more money, so he signs a contract with them. If the Jets sue Ralph, the most likely result would be?

The court will enjoin Ralph from playing with any team other than the Jets.

disaffirm

To give notice of refusal to be bound by an agreement

Which of the following types of contracts cannot be either contradicted or supplemented by evidence of prior agreements or expressions?

Totally integrated contracts.

The main difference between the UCC requirement for a writing for a contract for the sale of goods and the common law is that the:

UCC does not require all the terms of the agreement to be in writing.

Wally owns 200 acres of land. Wally offers to sell the land to Robert for $1,500 per acre. Robert replies that he does not need 200 acres of land but would like to buy 40 acres at $1,500 per acre. Wally agrees to sell but does not identify which 40 acres. Later, Wally refuses to sell any land to Robert. What is the result?

Wally wins; this agreement is too indefinite since it does not identify which 40 acres are to be sold.

Walter worked nights as a clerk in a fast-food store. On his last work shift, Walter's boss told him, "I'm really grateful for the year that you have worked here. I am going to give you a bonus of $1,000 in your last paycheck." When Walter got his last paycheck, there was no bonus. If Walter sues, the likely result will be:

Walter will lose, as he gave no consideration.

equitable interest

When $ wouldn't put you back in the right position

In January, Alex promised to pay Y-K Inc. $5,000 if it would refrain from filing suit against him on a breach of contract action. Y-K agreed and accepted a $5,000 check from Alex. Which of the following statements is correct?

Y-K's promise to refrain from suing Alex was supported by legal consideration and is enforceable.

Zero, Inc. agreed to build Millie a storage building for $8,000. After beginning the project, Zero realized that it could not complete the job and make a profit. Zero demanded $9,500 to complete the building. Millie agreed to pay the $9,500. When the project was complete, Millie tendered $8,000 to Zero for the job. If Zero sues Millie for the remaining $1,500:

Zero will lose because there was no legal consideration to support the additional $1,500.

An unliquidated debt can be described as:

a debt in which the existence or amount is in dispute.

An example of the type of relationship required to find undue influence would be:

a doctor-patient relationship

A contract between a company in the U.S. and one in China, contained a clause that stated: "If an event happens which is extraordinary and out of the control of the parties such as a strike, act of God, fire, accident, or transportation difficulties, then the affected party shall be relieved of its obligations under the contract." This type of clause is:

a force majeure clause.

Pamela is planning to sell her home decorating store to her daughter. Pamela has:

a greater duty to reveal problems in the business because her daughter assumes she will be honest.

For the purposes of the statute of frauds, an interest in land includes:

a house, a real estate mortgage, & an easement

interest

a legal right in something

A contract clause which specifies the amount of damages to be paid in the event of a breach is called:

a liquidated damages clause.

example of liquidated debt

a loan

A force majeure clause:

a provision included in a contract which allows cancellation of the contract in the case of an extraordinary, unexpected event, such as an act of God, fire, labor dispute, or accident.

force majeure claus

a provision included in a contract which allows cancellation of the contract in the case of an extraordinary, unexpected event, such as an act of God, fire, labor dispute, or accident.

liquidated damages clause

a provision stating in advance how much a party must pay if the contract breaches

Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef Noble has breached the contract by failing to pay for the potatoes. The potatoes are beginning to rot. If Farmer Elvin sells the potatoes to a local diner to make potato soup and salad, then this action would be considered:

a reasonable mitigation of damages.

if parties do not settle on a price, the Code establishes that the goods be sold for __?

a reasonable price

The Tavern's secret recipe for its pizza sauce would be considered:

a trade secret, and an employment noncompete clause would be enforceable to protect it.

When Mohammed was hired by Pomico, Inc., he signed the following agreement, "Upon termination of my employment with Pomico, I agree not to work for a competing company within 30 miles of Pomico's headquarters for one year." This agreement, important to protecting secret information developed in the employer's business, is:

an enforceable agreement not to compete.

Marco agrees to sell Clowns R Us some balloons. The contract states that Clowns may buy as many balloons as it wishes. This agreement is:

an illusory contract

duress

an improper threat made to force another party to enter into a contract, and the victim had no reasonable alternative, the contract is voidable.

In breach of the partnership agreement, Trimble, a partner in the partnership of Morris, Newt, and Oppie, Ltd. quits the partnership and goes to work for a competitor. The former partners may ask the court for:

an injunction to prevent Trimble from working in competition with the former partners.

Vicki entered into a written contract to buy a car from Valley Motors. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." This is:

an integration clause.

Specific performance may be available for the breach of a contract to sell:

an original painting

nominal damages

are a token sum, such as $1, given to the plaintiff who demonstrates that the defendant breached the contract but cannot prove serious injury

In bailment cases, exculpatory clauses:

are somewhat more likely to be enforced than in other types of cases.

If a court awards nominal damages it will generally:

award a very small amount of money

Amy Hudson has been trying to purchase Glen Cappel's antique desk for some time, but Glen has been reluctant to sell. One evening Glen said to Amy, "Okay, I'll sell the desk for $550." Amy replied, "Thank you, Glen. I accept." The agreement was not reduced to writing, but Glen and Amy did shake hands. Two days later, Amy sent Glen a letter outlining the terms of the agreement, and stating that she would deliver $550 cash according to the agreement within ten days. The letter was signed, "Best regards, Amy." Later, Amy had second thoughts, and refused to go through with the purchase. Nothing had been exchanged at this point. Glen:

can enforce the contract against Amy because the statute of frauds is satisfied under this situation.

Ron operates a garbage pickup business. He contracts to pick up garbage from an apartment complex for the next 52 weeks at a price of $150 per week. Unexpectedly, the landfill center where Ron takes the garbage to dispose of it, files for bankruptcy. As a result, Ron must travel an additional 100 miles to the nearest landfill center, turning Ron's expected profit into a loss of $40 per week. Ron's best argument in support of his petition to be discharged from the contract is:

commercial impracticability

All Seasons, Inc. ordered $5,000 worth of Christmas decorations from Santa, Inc. The shipment of decorations was to arrive no later than October 1, but did not arrive until December 1. All Seasons was able to purchase some of the unfulfilled order through other suppliers, but had to pay 15% more than the price under contract with Santa, Inc. As a result of the delay, All Seasons' sales were down 25%. All Seasons can recover:

compensatory damages and consequential damages.

Sam, the seller, enters into a contract agreement to buy Betty Lou's house on the condition that he is able to secure financing at or below 6% per year. This is a:

condition precedent

Melody is a recent graduate of State Law School. She lands an impressive employment contract with the firm of Dewey, Cheathem, and Howe, Attorneys at Law, on the stated provision that she pass the upcoming bar exam. This provision in the employment agreement is a(n):

condition subsequent

The Uniform Electronic Transmission Act (UETA):

declares that a contract or signature may not be denied enforceability just because it is in electronic form.

Peter, a minor, purchased a car from ACME Motors. Using a fake ID, he misrepresented his age to be 18. The contract is fully executed. Which of the following is correct?

depending on the law of the jurisdiction in which the contract was formed: 1) Peter cannot disaffirm the contract because of his misrepresentation. 2) Peter can disaffirm the contract, because a minor must be saved from his own poor judgment, including his lie.

Virginia borrowed money from G & L Lending at 35% interest per year. The state maximum interest rate is 20% per year. Virginia defaulted on the loan. What amount can G& L collect from Virginia?

depends on the state law

The distinction between a condition precedent and a condition subsequent:

determines who has the burden of proof.

Which of the following relationships will ordinarily not create an insurable interest?

doctor & patient

Mark's home had burned to the ground. When he met with his insurance adjuster, she accused him of burning down the house, and said she would have him criminally prosecuted if he didn't settle the claim for much less than the house was worth. Mark agreed to the settlement. If he changed his mind, he can probably rescind the settlement on the basis of:

duress

Bob signed an agreement with Joe under which Bob agreed to purchase all the hay that Joe grew during the coming growing season. This contract will be:

enforceable as long as both parties act in good faith and Bob doesn't suddenly demand more hay than what was reasonably estimated.

Tuan is president and sole shareholder of Entertainment, Inc. Entertainment, Inc. wishes to borrow money, but to do so, the bank requires Tuan to orally agree to personally pay the debt of the corporation if Entertainment, Inc. cannot. Tuan's guarantee to repay is:

enforceable because of the leading object rule.

Robin and Bellman, both merchants, orally agree to a contract for the sale of $5000 of accessories. Bellman, the buyer, sends to Robin, the seller, a written confirmation of the sale, which is sufficient against Bellman under the statute of frauds and which Bellman signs. Robin does not sign. Robin fails to perform the contract and does not ship out the goods. Bellman sues. This contract is:

enforceable even without Robin's signature because both parties are merchants.

A promise by Derkin Restaurants to buy all of the produce it needs this next year at an established price from Elfredo's Produce would be an:

enforceable requirements contract

An agreement to pay a lesser amount to settle an unliquidated debt is:

enforceable, as there is consideration.

Willis and Leslie orally agree to the sale of a parcel of land for $50,000: one-half payable now as a down payment; one-half payable in 30 days at the time of closing when the title will be transferred. The buyer, Willis, is to have possession immediately. Willis pays Leslie $25,000, takes possession of the land, and starts building a house. At the time of closing, Willis has made a substantial beginning on the house. However, Leslie refuses to transfer the title, claiming the oral contract is not enforceable. This contract is:

enforceable, because Willis has partially performed the oral contract and made improvements on the land.

commercial impracticability

event occurred that neither party anticipated and now fulfilling contract would cause an unfairness to one party

Mike made the following offer to Mick: "I will pay you $500 if you agree to paint my house." Mick replied that he would. At this point, the contract is an:

executory, bilateral, express contract

T/F: A letter of intent summarizes progress made during business negotiations, but more importantly, it creates a binding contract.

false

T/F: A party to a contract has a duty to investigate the other party's factual statements.

false

T/F: A valid contract can legally be voided by either party.

false

T/F: Abdulla hired Granite Construction to build an addition onto his home. Granite Construction dug the foundation but then abandoned the project. Granite Construction is entitled to receive the full contract price minus the value of the defects.

false

T/F: Alice signs a contract with Bob to buy Bob's house for $150,000, with the clause, "if I am able to obtain a mortgage loan for $125,000, at no more than 7% interest, payable over 15 years." Assume that Alice tries but is unable to obtain the described loan, and therefore refuses to proceed with the purchase. Alice is in breach of the contract.

false

T/F: All oral contracts are quasi-contracts until they are completely executed.

false

T/F: An illusory promise is valid consideration.

false

T/F: Any contract involving a sale of goods of $100 or more must be in writing.

false

T/F: April put an advertisement in the newspaper advertising the sale of her computer for $500. Simultaneously, six people responded to the ad by mail with formal written acceptances. April is bound on all six contracts to sell her computer for $500.

false

T/F: Assume that Jessie and Lester have formed a contract whereby Jessie agrees to deliver 10,000 dozen "Grade A Large Eggs" to be shipped in recycled paper cartons. A shortage of paper makes paper cartons much more expensive, so Jessie uses styrofoam cartons and ships the eggs. Lester is entitled to cancel the contract based on this deviation of terms in the contract.

false

T/F: Barbara, a skilled welder, was hired at Mainco Enterprises for a welding position. She was asked to sign noncompete clauses limiting future employment if she left Mainco. A court would be very likely to enforce the noncompete clause unless the time or geographic restriction is unreasonable.

false

T/F: Billy owes a liquidated debt of $3000 to Rayna, his personal weight trainer. Billy sends Rayna a check for $300 on which he has marked, "Payment in Full." If Rayna cashes the check she will not be able to successfully sue Billy for the remainder of the debt.

false

T/F: Candy, Inc. signed an agreement with Sweet Plantation. Under the contract, Candy, Inc. agreed to purchase all the sugar cane Sweet Plantation grew during the coming season. This contract will be unenforceable due to its vagueness.

false

T/F: Concurrent conditions arise when there is both a condition precedent and a condition subsequent.

false

T/F: Contracts generally do not require bargaining that leads to an exchange between the parties.

false

T/F: Contracts in which one party agrees to buy all his requirements of certain goods from the other party are generally unenforceable because there is no definite amount.

false

T/F: Courts enforce all promises in the interests of simple morality.

false

T/F: Courts normally require consideration to be approximately equal on both sides of the bargain.

false

T/F: Cynthia and Brian were friends. Brian was a dare devil. Because of his antics, Cynthia thought that Brian wasn't long for this life. Cynthia purchased a life insurance policy on Brian's life. Subsequently, Brian was killed in a car accident. Since Cynthia and Brian were friends, Cynthia had an insurable interest in his life and will be entitled to the insurance proceeds.

false

T/F: Denton agreed to build a cedar deck for the Thrashers for $7,000. After he began the work, the Thrashers asked him to add cedar flower boxes at one side. Denton replied he would, but it would cost an additional $600. The Thrashers would not be obligated to pay the additional sum because the original agreement already obligated Denton to complete the deck for $7,000.

false

T/F: Dr. Gonzalez ordered specialized surgical equipment from Physician's Supply Co., but his order was not delivered by the agreed date. Gonzalez is under no obligation to minimize damages since the contract was breached by Physician's Supply, not Gonzalez.

false

T/F: Either party may demand rescission of a fully executed oral contract if it was required to have been in writing under the statute of frauds.

false

T/F: Expectation interest can best be described as money spent in reliance upon the agreement.

false

T/F: Fraudulent, but not innocent, misrepresentation permits the injured party to rescind a contract.

false

T/F: Generally, neither a "time is of the essence" clause nor a "force majeure" clause will be recognized by the courts because these types of clauses are seen as a violation of public policy.

false

T/F: Hannah orally agrees to sell her house to Brett for $175,000. If she delivers the deed to Brett with the expectation of payment in two weeks and he fails to pay, most courts will not enforce the contract since it was not in writing.

false

T/F: If a court finds as a matter of law that a clause of a contract was unconscionable at the time the contract was made, the court must refuse to enforce the contract.

false

T/F: If a salesperson says, "This is a great car and it's really fun to drive," but the car turns out to be a lemon, the salesperson has committed fraud.

false

T/F: If both parties believe they have a binding contract, this belief settles any later questions about the validity and enforceability of the agreement.

false

T/F: In negotiating the purchase of a vehicle, the sales representative told Karla, "I guarantee that you will be personally satisfied with this car." The guarantee was written on the contract when Karla purchased the car. If a controversy arises over Karla's satisfaction, the court will apply a subjective standard, which means Karla's judgment must be reasonable.

false

T/F: Injunctions are frequently used by courts to force employees to complete their contractual obligations with their employers.

false

when people sue based on an ad, they typically __?

lose

T/F: Irving is shopping at the local Computers R Us store and agrees to buy a computer for his home "on the condition of personal satisfaction." If Irving takes the computer back to the store stating that he doesn't like the computer, then the seller must accept the return of the computer and terminate the contract.

false

T/F: John was a licensed physician in Michigan. When he retired to Florida, he started providing medical services to the people in his condo, relying on his Michigan license. Isaac, John's next-door neighbor, owed John $2000 for medical services. John will be able to enforce the contract he made with Isaac.

false

T/F: Liquidated damages are awarded to parties who have experienced an injury to their legal rights but have no actual loss.

false

T/F: Liquidated damages are enforceable even if the amount is considered to be a penalty on the breaching party.

false

T/F: Lucy and Rick sign a contract in which Lucy agrees to deliver 10 boxes of chocolates in exchange for Rick's promise to pay $5 per box. Lucy delivers the candy. Rick pays for the goods. This contract is fully executory.

false

T/F: Marvin contracts with House Painters R Us to paint the interior of his house lemon yellow throughout. The total contract price is $7,000. House Painters R Us's anticipated profit on the job is $4500. If Marvin breaches the contract before House Painters R Us has begun work on the job and has not incurred any expenses, then its damages will be $7000.

false

T/F: Morality plays no part of gambling contract legality.

false

T/F: Most contracts are discharged by mutual agreement of the parties.

false

T/F: Nella offers to sell her crop of strawberries, which have just been picked, to Morgan's Market. Since she does not specify a time limit for acceptance, Morgan's can accept the offer the following week, as long as Nella has not revoked it.

false

T/F: Nominal damages are awarded in contract cases in which a damage amount was named in the contract.

false

T/F: On Monday, Mick puts an offer in the mail to Sheri to sell his guitar for $50. Monday night when jamming with his buddies, he decides he will really miss his old guitar and has second thoughts about selling it. Tuesday morning he puts a revocation in the mail informing Sheri he has changed his mind and the guitar is no longer for sale. The revocation is effective on Tuesday morning.

false

T/F: Paid surrogacy contracts are viewed by the legislative majority in all states as immoral and illegal.

false

T/F: Patrick owned an acre of land which was being divided into building lots. Nancy was interested in purchasing the corner lot. In a signed writing, Patrick stated "I will sell Nancy Grimes a lot on Route 70 for $5,500 cash, payable on April 30, 2012." This writing is sufficient under the statute of frauds to make the contract enforceable.

false

T/F: Pushy Pat, a persuasive salesman, talked Nice Nancy into purchasing something she didn't really need or want. Nice Nancy may rescind the contract because of undue influence.

false

T/F: Ramon purchased 5,000 pounds of coffee from Quick Jump Coffee. The coffee was to be delivered on September 1. Since the contract included a date for performance, time is of the essence and the delivery date is strictly enforceable.

false

T/F: Ramona, age 42, orally agreed to work for Brahma, Inc. for the rest of her life for $50,000 per year. This agreement would not be enforceable since it violates the one-year rule of the statute of frauds.

false

T/F: Rudolph overhears Macy's plans to go skydiving over spring break. Not really knowing Macy, but figuring it's worth a chance, Rudolph rushes out and buys an insurance policy for $100,000 on Macy's life. Macy does in fact meet her demise jumping out of the airplane. Rudolph can collect the $100,000.

false

T/F: Section 2-306 of the UCC expressly disallows output contracts in the sale of goods.

false

T/F: Strawly Corp. runs an "adult bookstore" in Metro City, leasing the building from MegaCorp. Then, Metro City passes an ordinance prohibiting the sales of the types of merchandise found in "adult bookstores." Strawly is still bound to the contract.

false

T/F: Sweet Plantation, Inc. made a written contract with Candy, Inc. whereby Sweet Plantation agreed to supply all of Candy's sugar requirements for the next year at $.25 per pound. A dispute arose as to how much sugar Sweet is to supply. The parol evidence rule will bar Sweet's introduction of evidence concerning the intent of the requirements of Candy.

false

T/F: Tess, a tenant, moves from her apartment in breach of the lease agreement. The landlord, Lenny, may not attempt to rent the apartment until the date of the lease expiration, and so has no recourse to minimize damages.

false

T/F: The UCC requires consideration for agreements modifying contracts for the sale of goods.

false

T/F: The age of majority to contract in all states is 21.

false

T/F: The statement, "You will have a job with Snelling & Snelling as long as you complete your degree in business administration this May" does not create a condition because it does not include the phrase "provided that."

false

T/F: To raise revenues, the City of St. Cloud required restaurants to purchase a special permit if they wanted to serve food in an open-air patio. (This is in addition to he sanitation inspection license.) While at Hola Taco, a restaurant in St. Cloud, a customer notices that Hola Taco's permit expired. This mean the customer is not legally required to pay for her food.

false

T/F: Upon the recommendation of a friend, Hope hires Joey to rewire her kitchen and he completes the work within the time agreed. Then Hope finds out that Joey is not a licensed electrician, and she refuses to pay him for the work. A court will enforce the agreement because otherwise Hope would be unjustly enriched.

false

T/F: Valerie promises Teresa that she will pay Teresa $75 if Teresa will clean Valerie's house by noon on Saturday. If Teresa cleans the house by noon on Saturday and Valerie pays the $75, then this is an implied, bilateral, executory contract.

false

T/F: Vick Valve Company makes valves for plumbing fixtures. At the beginning of the year, it sends out a price list addressing each one, "To our valued customers." Honest Hank Hardware orders a variety of valves at the prices quoted on the price list. Vick Valve must honor the prices on the list and sell the valves to Honest Hank.

false

T/F: When Olga asks Sven if he wishes to sell his Harley motorcycle, he replies that he would not sell it "for less than $2,000." Olga replies, "I accept," and hands him $2,000. A contract exists.

false

T/F: When Randy accepted a job with Buren Construction, Randy signed the following agreement, "Upon termination of my employment with Buren Construction, I agree never to work for another employer as an electrician." If Randy resigns from Buren Construction, this agreement would be upheld under the theory of freedom of contract.

false

T/F: Whittle sent an order over the Internet for a $1,200 garage door. His name keyed onto the order will only be effective as a signature sufficient to create a "writing" "signed by the party against whom enforcement is sought" if he follows up with a signature on paper.

false

M & E contracted to sell 500 music stands to Coda, Inc. M & E shipped the stands in accordance with the agreement. Coda paid for the stands as promised. The contract between M & E and Coda is discharged by:

full performance

As set forth in the Restatement Second of Contracts, which of the following duties are imposed on the parties in the performance and enforcement of a contract?

good faith; fair dealing

Judith is a CPA with an excellent reputation and client base. She sells her tax preparation business to Shawn, and the sales contract includes a noncompete clause restricting Judith from opening a similar business for two years within a 10-mile radius of her former office. If she opens a tax preparation office five miles away after one year, a court would probably:

grant an injunction barring her from operating the new office.

why do we have UCC?

if people are in 2 different states, which state law do we use?

Costs to store a vehicle for a short period of time after an auto dealer fails to complete the contract to purchase the vehicle would be:

incidental damages

A condition:

is an event that must occur before a party becomes obligated under a contract.

In January 2008, Professor Noe entered into a contract with State University. She agreed to teach full time during the 2008-2009 academic year. Professor Noe died on May 31, 2008. Her estate:

is discharged from any further obligations under the contract.

substantial performance

is performance that is less than perfect, yet it complies with the essential purpose of the contract.

___ makes the law more flexible but more predictable.

judicial activism

___ makes the law less flexible but more predictable.

judicial restraint

usually letters of intent do not create any ___ ?

legal obligations (they merely state what the parties are considering)

usury

lending out $ at high interest rates

Statutes of limitations:

limit the time in which an injured party may sue.

in cases of __, if the creditor agrees to take less than the full amount as full payment, her agreement is not binding.

liquidated debt (but if the debtor offers a different performance and creditor agrees, the agreement is binding)

Larson entered Forrester's Auto Mart to purchase a used car. Larson found a vehicle with a sales price of $11,000. After Forrester answered all of Larson's questions, Forrester and Larson agreed to a sale. As Larson was leaving to get the money to pay for the car, Forrester told Larson that Robert Redford formerly owned the car. Larson later learned that Robert Redford had never owned the car. If Larson seeks to rescind the deal based on Forrester's statement, Larson will:

lose because he will not be able to prove reliance on the misrepresentation.

Ryan, a minor, contracted to sell his auto to Ed, a 28-year-old. Ryan later refused to complete the sale. If Ed sues to enforce the contract, Ed will:

lose, because the contract is voidable by Ryan.

When an offer is for a bilateral contract, the offeree generally must accept by __?

making a promise.

what does the UCC code govern?

many aspects of commerce, including the sale and leasing of goods, negotiable instruments, bank deposits, letters of credit, investment securities, secured transactions, etc.

Under the UCC, if a seller of goods breaches the contract, the buyer:

may "cover" and then receive the difference between the original contract price and the "cover" price.

Mulligan Domestics Co. breached a contract by refusing to accept its order for 60 bolts of fabric from Wellington Mills, although the fabric met the contract specifications. Wellington:

may choose not to resell the fabric and settle for the difference between the contract price and the market value.

Under the Uniform Commercial Code, an agreement modifying a contract:

may not require consideration

Hensley and Boyer have been negotiating for several months over issues related to the purchase and sale of some real estate. They draft a letter of intent which:

may or may not be an offer, depending on the exact language and whether the document indicates that the parties have reached an agreement.

what does "goods" mean in the UCC?

means anything "movable," except for money, securities, & certain legal rights

legal benefit means something of __?

measurable value

bilateral contracts have to have a _ ..?

meeting of the minds

Noncompetition agreements are:

more common today than they were in the past, although policy issues they raised in the 1700s have never gone away.

a __ occurs when both contracting parties share the same mistake. If the contract is based on a fundamental factual error by both parties, the contract is voidable by either one

mutual mistake

exceptions for minors

necessaries & misrepresentation of age

A ___ is something essential to a minor's life and welfare (food, clothing, medical care)

necessary

Mentally infirmed Sasha contracts to purchase a piano for $2,500 in 60 monthly installment payments. Six months later she tries to void the contract on grounds of mental impairment. A court will:

normally void the contract but will require Sasha to return the piano.

Eintz Corp. hired Jose to bribe a foreign government official into awarding a $3 million contract to Eintz. Eintz gave Jose $10,000 in cash to make the bribe payment and $2000 for Jose's efforts. Instead of paying the bribe, Jose pocketed all of the money. If Eintz sues Jose, Eintz will:

not be able to recover the $12,000.

If Becky promises not to drink alcohol until she becomes a legal adult in exchange for Ben's promise of $1,000, the agreement is:

not enforceable because Becky does not have a legal right to drink alcohol.

John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky Derby. Prince Charming came in last, much to John's frustration and embarrassment. John exclaims in a loud voice, "I'm selling that horse to the first person who hands me $100 bucks!" John has:

not made an offer because under the circumstances a reasonable person would not conclude that John had intent to make an offer.

Harry agreed to pay $100 to rent a rooftop spot in downtown Seattle to watch the New Year's Eve festivities. The festivities were unexpectedly canceled because of concern over a terrorist attack. Harry is:

not obligated to pay under the frustration of purpose doctrine.

If Rudy offers Oscar $200 for his laptop valued at $600 and Oscar agrees, a court will probably:

not set aside the agreement based on the adequacy of the consideration.

Renita, a merchant, has received a signed, written confirmation from Merchants, Inc. referring to goods she had not ordered. Renita should:

object to the confirmation in writing within 10 days.

bargaining begins with an __ ?

offer

Jaime offered to buy Kevin's bike. Jamie is the:

offeror

An agreement in which a buyer agrees to buy all the goods produced by a manufacturer is known as:

output contract

mentally impaired persons get treated the same as minors, except that they have to __?

pay restitution

When the offer is for a unilateral contract, the offeree must accept by __?

performing

As English judges were developing the common law of contracts in the twelfth and thirteenth centuries:

promises were found not binding unless written and sealed.

in ____ cases, the defendant made a promise that the plaintiff relied on.

promissory estoppel

If Jane persuades Linda to buy her horse by telling Linda that the horse runs "like the wind," then Jane's statement is:

puffery

in ___ cases, the defendant received a benefit from the plaintiff

quasi-contract

Contracts that do not arise from mutual agreement but are created by courts to avoid unjust enrichment are:

quasi-contracts

Under a contract for the sale of land, the statute of frauds:

requires the defendant to sign the agreement.

When a business is concerned about selling to minors because of their right to disaffirm contracts, the business might protect itself by:

requiring an adult co-signer

Al contracted to sell his house to Bev. Subsequently, they both changed their minds and agreed to cancel the contract. The contract between Al and Bev is discharged by:

rescission

Larry purchased a Leisure Lawnmower because the company salesperson intentionally misled him by assuring him that the mower was self-propelled, had a mulching feature, and had a five-year unlimited manufacturer's warranty. When Fred finds out that his new Leisure Lawnmower is not self-propelled, does not mulch, and has a 90-day warranty, he may successfully sue for:

restitution and possibly punitive damages.

the common law governs contracts for:

services, real estate, employment

frustration of purpose

some event occurred that neither party anticipated and not the contract has no value for one party

Compensatory damages are typically assessed against the breaching party:

to put the non-breaching party in the position it would have been in if the contract hadn't been breached.

T/F: A court may, at times, discharge a party who has not performed.

true

T/F: A party injured by fraud generally has the choice of suing for damages or rescinding the contract.

true

Upon graduating from college, Kathy announced her plans to enter law school the following fall and to marry Rick in December. Kathy's father was afraid that marriage during her first year in law school might cause her to fall behind in her studies or cause her to drop out of school. He called Kathy and promised her $10,000 if she postponed her wedding until after completion of her first year of law school. Kathy agreed and postponed the wedding for a year. Kathy successfully completed her first year of law school, but soon thereafter, Kathy's father died. The administrator of her father's estate claimed she was not entitled to the $10,000 because there was no consideration for her father's promise. If Kathy sues the estate, she will probably be:

successful, as there was consideration.

satisfaction

the actual payment of that compromised sum

accord

the agreement to settle for less than the creditor claims

Mary owes $3,800 on her credit card. She sends the credit card company a check for $800 with the notation "payment in full" on the check. If the credit card issuer cashes the check:

the check may be subject to a UCC exception to the general rules for accord and satisfaction cases involving checks.

John enters into a contract to paint Chad's house. When Chad decides on a color, John will buy the paint and paint the house for the price of $2,500. This contract is governed by:

the common law of contracts governs because the predominant factor of the contract is for the sale of services and not goods.

liquidated debt

there is no dispute about the amount owed

Peter Dementas helped Jack Tallas with numerous personal and business chores towards the end of his life. Two months before his death, Tallas dictated a memorandum to Dementas, in Greek, stating: PETER K. DEMENTAS is my best friend I have in this country, ... he treats me like a father and I think of him as my own son. ...For all the services Peter has given me all these years, I owe to him the amount of $50,000 (Fifty Thousand Dollars). I will shortly change my will to include him as my heir. Tallas signed the memorandum, but he did not in fact alter his will to include Dementas. This was a real case. The Utah appeals court would rule:

there was no consideration to support Tallas's promise.

rescind

to cancel a contract

T/F: A wholesaler of coffee notifies a retailer that it cannot fulfill its contractual obligation to deliver 1,000 pounds of coffee at the agreed upon price of $2.00 per pound next month because of recent price increases in coffee. The retailer may treat the wholesaler as having breached the contract and sue for damages even though the wholesaler's performance is not due until next month.

true

T/F: According to the UCC, one or more open terms will not cause a sales contract to fail for indefiniteness as long as the parties intended to make a contract and there is a reasonably certain basis for the court to determine the open terms.

true

T/F: After her 18th birthday Lora may, by words or action, ratify a contract she made during the previous year.

true

T/F: Agreeing not to open a competing business could be consideration.

true

T/F: Alex promises to pay $100 to anyone who finds his lost watch. Kate finds and returns the watch to Alex after hearing of the reward money. Alex and Kate have an enforceable unilateral contract.

true

T/F: Alice offers to sell her car to Barry for $500, and Barry accepts. Alice's car has a market value of $1,000 but this fact is unknown to Alice. The contract is enforceable.

true

T/F: All states allow the remedy of rescinding a contract for the sale of goods while still allowing the remedy of suing for damages.

true

T/F: Amanda, a recent university graduate, needed a car to get to her new job. To help Amanda secure a loan for the car, Ted, a friend, agreed to pay the loan should Amanda default. Ted's promise to pay the loan is a collateral promise. His promise must be in writing to be enforceable.

true

T/F: An agreement may violate public policy even if the agreement does not require a party to commit a crime, tort, or violate a statute.

true

T/F: Banner enters into a contract with Sylvia to buy her house for $150,000. Sylvia decides later not to sell because she is so emotionally attached to the house. Banner insists that he is entitled to the house. Banner can successfully sue for specific performance.

true

T/F: Boris sky dives out of a plane and gets hung up in a tree, hopelessly suspended and swinging precariously in his parachute from the branches of the tree. Natasha sees that he is in trouble and comes to his rescue. Once Boris is safely on the ground, he gratefully promises to give Natasha half of his life savings. When he changes his mind, Natasha will probably be unsuccessful in enforcing his promise.

true

T/F: Bry, Inc. and Gangl Co. entered into an oral agreement for the sale of 3,000 sweaters. Both parties performed as required under the contract. Bry delivered the sweaters and Gangl accepted and paid for them. Since the contract is fully executed, it makes no difference that it was oral.

true

T/F: Carswell, a contractor, enters into a contract with Helen, a homeowner, to remodel her bathroom. The contract provides a specific completion date. The contract provides that if Carswell does not have the job finished by the date, Helen may deduct $200 per day from the contract price until the job is finished. This is an example of liquidated damages.

true

T/F: Consideration can be a promise or an act.

true

T/F: Contract rescission can sometimes be based upon a unilateral mistake.

true

T/F: Contracts for the sale of fabric, automobiles, computers, furniture, and paper clips would all be governed by Article 2 of the Uniform Commercial Code.

true

T/F: Damages must be estimated with reasonable certainty.

true

T/F: Ernest operates an ice cream stand during the months of May, June, July, and August. Ernest's ice cream machine is broken and needs a new part to run. He contracts to have the part shipped to him by special carrier. Ernest emphasizes that the part needs to be delivered by April 25 and the carrier agrees, knowing that Ernest intends to open his stand May 1. If the shipper fails to deliver the part on April 25, Ernest will be able to recover consequential damages caused by the delay.

true

T/F: Frank suffers from a mental impairment due to a brain injury from a airplane accident. He contracts with Glena to purchase her dining room furniture. A month later, he tries to void the contract. If he is unable to return the furniture, a court will not rescind the agreement unless Frank can show that Glena acted in bad faith.

true

T/F: Hilda owes Lex $3,000, which is an undisputed amount. If she offers him her car in full settlement of the debt and he accepts, the agreement is binding and he can no longer claim she owes him anything on the original debt.

true

T/F: If a contract is made with a person required by law to hold a license, and the purpose of the license is protection of the public, the contract made by an unlicensed person will generally be unenforceable.

true

T/F: If a minor can cancel a contract, it can be done at any time during minority or within a reasonable time after reaching majority.

true

T/F: If the offer does not specify a type of acceptance, the offeree may accept in any reasonable manner and medium.

true

T/F: In many states it is illegal to lend money to help someone gamble.

true

T/F: In seeking to determine whether there is a meeting of the minds, the courts look to how a reasonable person would objectively view the language or actions of the parties.

true

T/F: L & M loaned Joan $400 so that she could buy her textbooks for the current semester. L & M's terms for repayment of the loan (including interest) are, $200 in two months, $200 in four months, and another $100 at the end of the fifth month. The legal maximum rate of interest on this type of loan is six percent per annum. L & M's loan is usurious.

true

T/F: Mary goes into Honest Harry's Electronics and purchases a TV. Mary agrees to pay for the TV in 30 days on the store's "30 days same as cash" plan. This is an executory contract.

true

T/F: Monumental, Inc. contracts with Champion Builders to erect a three-story office building on a parcel of land it has purchased. Before construction begins, the local zoning board changes the zoning of the parcel and those adjoining it to residential use only. Monumental's contract with Champion is discharged.

true

T/F: Most courts hold that a seller of goods is not entitled to consequential damages.

true

T/F: Nunnsky's Retail sent out newspaper inserts advertising wool suits for $50. In fact, the store had only two, out-of-style suits for sale at this price. Their other wool suits started at $175. This constitutes bad faith in its advertising, so consumers may have protection through state statutes.

true

T/F: One purpose of contract law is to make business matters more predictable.

true

T/F: Parol evidence refers to anything (other than the written contract itself) that was said, done, or written before or as the parties signed the contract.

true

T/F: Pastor Tom was employed by the First Church for 40 years. On Pastor Tom's retirement there was no adequate pension plan. Two months after the retirement, a wealthy parishioner, in consideration for Pastor Tom's 40 years of faithful service and for being such a "sweet" man, promised to pay him $500 per month for the rest of his life. This promise probably is not enforceable.

true

T/F: Raul agrees to paint Mike's house for $1,000. Before finishing, Raul states it is too hot to finish, and Mike offers to pay $1,200 if Raul finishes. Mike's statement that he will pay $1,200 is unenforceable.

true

T/F: Raymond agrees to transfer an easement right to Sandra for $1,000. This contract is within the statute of frauds and therefore needs to be in writing to be enforceable.

true

T/F: Rest Well Hotel orally ordered 1,000 blankets monogrammed with its initials, RWH, from TriColor Textiles. TriColor had just finished monogramming the blankets when Rest Well called and canceled the order. TriColor will be able to enforce the agreement even though there was no writing.

true

T/F: Revocation is the withdrawal of an offer by the offeror.

true

T/F: Robert offers to buy a car from Jane for $400. Jane must accept this offer in order to form an enforceable contract.

true

T/F: Roger parked his car at a garage that has a large sign at the entrance saying, "This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.

true

T/F: Roger, a minor, buys a stereo from Tuneland, Inc. Roger uses the stereo for a few months, returns it to Tuneland, and demands his money back. In a majority of states, Roger may return the stereo and he does not have to pay for the use of the stereo or the damages.

true

T/F: Specific performance is available when the subject matter of the contract is unique.

true

T/F: Spencer, age 18 and of sound mind, has the legal capacity to contract.

true

T/F: The UCC recognizes commercial impracticability as a ground for discharge of a contract.

true

T/F: The Uniform Commercial Code provides that, under certain circumstances, a merchant may be liable on a written contract, even though that merchant has NOT signed it.

true

T/F: The legal right to sue for a breach of contract is subject to a statute of limitations.

true

T/F: The original statute of frauds is the English law that began the practice of requiring written evidence of certain kinds of contracts, but now the British government has repealed the writing requirement for most contracts.

true

T/F: To be valid, an agreement not to compete must be ancillary to a legitimate bargain.

true

T/F: Travis had too many beers at the baseball game. Ed realized Travis was so intoxicated he wouldn't know what he was doing, so he got Travis to sign a promise to sell his motorcycle to Ed for $50. When Travis gets sober, he may void the contract.

true

T/F: Under a contract, Danielle is required to paint a room with paint chosen by the homeowners, the Flynns. After Danielle paints the room according to the contract requirements, her duties under the contract are discharged.

true

T/F: Under the UCC, the buyer is entitled to consequential damages if the seller could have reasonably foreseen them.

true

T/F: Under the statute of frauds, the writing must: be signed by the defendant; and must state with reasonable certainty the name of each party, the subject matter of the agreement, and all of the essential terms and promises.

true

T/F: When promissory estoppel is used by the courts, it is because there is NOT an enforceable contract present.

true

T/F: You have placed an antique sofa up for auction and the auctioneer has not made any special announcements about the sale. You can withdraw the sofa at any time before the auctioneer closes the sale by announcement or by the fall of the hammer.

true

Reformation is:

uncommon

An agreement in which parties intend to form a valid bargain, but a court declares that some rule of law prevents enforcing it.is:

unenforceable

When a contract falls within the statute of frauds but is not reduced to a writing, the contract is:

unenforceable

is a "lost dog" flyer a bilateral or unilateral contract?

unilateral

A __ occurs when one party enters a contract under a mistaken assumption; the other is not mistaken

unilateral mistake

Larry goes to his barber who has cut his hair for the past several years. The barber proceeds to cut his hair as they talk about the most recent snow storm to hit the area. This is an example of a:

unilateral, implied contract

Vince has begun forgetting things and is becoming very difficult to get along with. He is 85, has been ill, and is very fond of his housekeeper Annie. He gives a deed to Annie for all of his real property. At Vince's death, his children, who got only his photograph albums according to the will, ask that the deed be set aside and the land be put back in the estate for purposes of division among all the children. The probable result will be:

unless the children can prove that Vince was unable to understand what he was doing, or that Annie used her position to improperly influence Vince, Annie can keep the property.

accord & satisfaction

valid consideration to support the creditor's agreements to drop all claims

A party suffering a mental impairment usually creates only a __?

voidable contract

because a minor lacks legal capacity, she can normally only create a __?

voidable contract

On January 8, Quastrar, Inc. sent Hylavian Company a letter offering to sell $10,000 in restaurant supplies. On January 18, Hylavian mailed a letter to Quastrar accepting the offer. Quastrar received the acceptance letter on January 20. On January 17, Quastrar sent a letter revoking the offer. Hylavian received this letter on January 21. A contract between Quastrar and Hylavian:

was formed on January 18.

The first step a court takes in choosing a remedy is to determine:

what interest it is trying to protect

executory contract

when a contract has been made, but one or more parties has not yet fulfilled its obligations

how do all contracts begin?

when a person or company proposes a deal

Generally, reasonable liquidated damage clauses will be enforced:

when actual damages are difficult to determine

when does a voidable contract occur?

when an agreement is signed under duress or a party commits fraud

how does someone breach a contract?

when he fails to perform a duty without a valid excuse

voidable

when one party has the option either to enforce or terminate the agreement (problems with capacity & consent)

when is an offer revoked?

when the offeror "takes it back" before the offeree accepts

The Johnsons decided to sell their summer cabin on Beech Lake. They sent flyers out to all who previously had expressed an interest in buying the cabin stating that they were planning on selling their cabin. The flyer described the location of the property, the size of the lot, and the price. If one of the recipients responds by sending a letter accepting, an agreement:

will not be formed because the flyer was sent out as an invitation to make an offer.

Miles purchased a lawnmower with an attached warning that said, "The manufacturer is not responsible in the case of an injury caused by the lawnmower." If Miles is injured because of a defect in the mower and sues the lawnmower manufacturer, he will most likely:

win, as this warning would be unenforceable.

legal offer? A note scribbled on a restaurant napkin that includes the details of the offer.

yes

true impossibility

you absolutely cannot perform under the contract under any circumstances