BLAW - Homework 3

Central Maine Power Co. (CMPC) made a promotional offer in which it promised to pay a substantial sum to any homeowner or builder who constructed new housing with electric heat. To qualify for the offer, Motel Services, Inc. (MSI) decided to install electrical heat in a housing project it was constructing in Waterville, Maine. MSI built the units and requested payment for the full amount of the promotional offer. Is CMPC obligated to pay? Why or why not? a. Yes, CMPC is obligated to pay because this was a unilateral contract, and MSI performed. b. No, CMPC is not obligated to pay because this was a bilateral contract, and MSI did not promise to perform. c. Yes, CMPC is obligated to pay because this was a bilateral contract, and MSI performed. d. No, CMPC is not obligated to pay because MSI did not make a serious offer.

*a. Yes, CMPC is obligated to pay because this was a unilateral contract, and MSI performed.* - Unilateral because CMPC made a promise and MSI accepted by constructing the home with electric heat.

Xuechen graduated from culinary school at the top of her class, and signed an employment contract to work as a chef for one of Chicago's best restaurants for a period of three years. Additionally, Xuechen signed a non-competition agreement that stated she agreed not work as a chef for any other restaurant in the Chicago city area for a period of five years. Shortly after she began working, Xuechen left her employer to work as a manager at another Chicago restaurant. Has Xuechen breached either of the contracts she signed? a. Yes, the employment contract has been breached, but the non-competition agreement has not been breached. b. Yes, both contracts have been breached. c. No, contracts have not been breached. d. No, the employment contract has not been breached, but the non-competition agreement has been breached.

*a. Yes, the employment contract has been breached, but the non-competition agreement has not been breached.* - Began working for another restaurant as a manager (not a chef).

Interactive Data Corp. hired Foley as an assistant product manager, and over the next six years, Interactive steadily promoted him. Interactive officers repeatedly told Foley that he would have his job as long as his performance was adequate. They also distributed an employee handbook that specified termination guidelines that included a mandatory seven-step pre-termination procedure. Foley learned that his supervisor was under investigation by the FBI, and he told Interactive officers. Shortly thereafter, Interactive fired Foley. He sued, claiming that Interactive could fire him only for good cause after the seven-step procedure. Who wins? a. Interactive wins because the seven steps were only an implied, not express, condition to its employment contract with Foley. b. Interactive loses because it had an implied employment contract with Foley that incorporated the seven steps. c. Foley loses because he and Interactive had a unilateral, express employment contract that incorporated the seven steps. d. Foley wins because he and Interactive had a bilateral, express employment contract that incorporated the seven steps.

*b. Interactive loses because it had an implied employment contract with Foley that incorporated the seven steps.*

Chef Jacquie is scheduled to teach a cooking class to three students. The class tuition is $1,100 per student. In the class, each student cooks a French meal under Jacquie's expert supervision and receives a cookbook (worth $30) and a cooking pan (worth $150). Tory, one of the students, tells Jacquie the day before the class that she will be unable to attend and requests a refund. Jacquie denies the refund and Tory sues. Tory claims that the UCC should govern the contract, and Jacquie argues that it should be covered by the common law. Who is right? a. Tory, because the cost of the class was more than $500. b. Jacquie, because the class is primarily a service. c. Tory, because everyone in the class receives a cookbook, pan, and food. d. Jacquie, because the agreement was a bilateral contract.

*b. Jacquie, because the class is primarily a service.* Explanation: The UCC only applies if it is solely the sale of a good. Since it was a service it is covered by the common law.

Mrs. Martin tells some neighborhood kids that she will pay $100 if any of them mows her lawn. Jake goes to a hardware store, purchases a lawnmower for $60, and then mows Mrs. Martin's lawn. Jake has entered into which types of contract? a. Jake has made a bilateral contract with Mrs. Martin and a unilateral contract with the hardware store. b. Jake has made a bilateral contract with Mrs. Martin and a bilateral contract with the hardware store. c. Jake has made a unilateral contract with Mrs. Martin and a bilateral contract with the hardware store. d. Jake has made a unilateral contract with Mrs. Martin and a unilateral contract with the hardware store.

*c. Jake has made a unilateral contract with Mrs. Martin and a bilateral contract with the hardware store.* - *unilateral contract*: one party makes a promise that the other can accept by doing something. - *bilateral contract*: a promise made in exchange for another promise.

Olivia agrees that she will bring Desiree a cherry pie every Monday for one month in exchange for $15 per week. Olivia delivers a pie to Desiree for four weeks, and Desiree pays her each time. Olivia continues to deliver Desiree pies every Monday, and Desiree continues to pay for another five weeks. On the tenth week, Olivia brings a pie and Desiree refuses to pay. Olivia sues for payment. What will result? a. Desiree will win. Olivia assumed the risk of not getting paid when she continued to bring pies beyond than the month-long contract. b. Desiree will win because the contract was not express. c. Olivia will win. The court will rule that they had an implied contract. d. Desiree will win because the contract was voidable by either party.

*c. Olivia will win. The court will rule that they had an implied contract.* - It was an intended agreement

While George travels for two months, Mary agrees to housesit and care for George's three horses at her stables. The parties agree that Mary will pick up the horses on the first day of George's trip, and George will pay Mary when he returns. George returns home from his travels and finds that Mary never picked up the horses. George sues. What will result? a. The court will apply the UCC, and Mary will lose. b. The court will apply common law, and Mary will win. c. The court will apply common law, and Mary will lose. d. The court will apply the UCC, and Mary will win.

*c. The court will apply common law, and Mary will lose.* - Common law protects service to be provided, whereas UCC covers a product/good.

For the past seven years, Sommerset Storage, Inc. has hired Mountbatten Tax Associates to prepare its annual tax return. This year the parties agree to their usual $1,000 fee, but Mountbatten finds a loophole in the tax code and gets Sommerset a refund four times the usual amount. Mountbatten then requests that Sommerset pay $4,000 to reflect the increased tax refund. There is nothing in their contract about increased fees, but Mountbatten argues it would be unjust for Sommerset not to pay extra. Sommerset refuses, and Mountbatten sues. What will result? a. The court will find that there is an implied contract, and Mountbatten will win. b. The court will rely on promissory estoppel, and Mountbatten will win. c. The court will uphold the original contract, and Mountbatten will lose. d. The court will apply a quasi-contract, and Mountbatten will win.

*c. The court will uphold the original contract, and Mountbatten will lose.*

While negotiating with Stewart to purchase his house, Yasmine asks him about the condition of the roof. "Excellent," he replies. "It is only 2 years old, and should last 25 more." In fact, Stewart knows that the roof is 26 years old and has had a series of leaks. The parties sign a sales contract for $600,000. A week before Yasmine is to pay for the house and take possession, she discovers the leaks and learns that a new roof will cost $35,000. What kind of contract exists between Yasmine and Stewart? a. Valid b. Voidable by Stewart c. Voidable by Yasmine d. Unenforceable

*c. Voidable by Yasmine* Explanation: Stewart's fraud makes the contract voidable by Yasmine (not by Stewart).

Simon, aged 10, is invited to a classmate's birthday party at an exclusive ski resort on March 15th. The day will include 4 hours of snowboarding, lunch and birthday cake. Simon's mother checks a box on the invitation that says "YES, we will attend" and returns it to the classmate's address. Unfortunately, they later don't attend the party when Simon comes down with the flu. On March 17th, Simon's mother receives an invoice in the mail from Simon's classmate for $35 that says, "Party No-Show Fee." Can Simon's classmate collect the fee? a. Yes, because Simon's mother checked the "YES" box on the invitation, creating a contract obligation. b. Yes, because the classmate has a case for quasi-contract. c. No, because Simon was ill and that is a reasonable excuse to not attend. d. No, because there was no intent to form a contract by Simon's mother.

*d. No, because there was no intent to form a contract by Simon's mother.* - Acceptance to a party is not a contractual agreement.

Riley, age 16, and Samuel, age 36, enter into a contract in which Riley will sell Samuel his car for $11,000. The next day, Samuel decides he no longer wants the car and tries to get out of the contract. Samuel argues that because Riley is a minor, the contract is void. If Riley wants to enforce the contract, will he be able to? a. No, the contract is voidable, and either party can cancel it. b. No, the contract is void because Riley is a minor. c. Yes, Riley can take the $11,000, and he has no legal obligation to give Samuel the car. d. Yes, the contract is voidable, and only Riley can cancel it.

*d. Yes, the contract is voidable, and only Riley can cancel it.* Explanation: Riley is the only one who can void the contract. Samuel is not permitted to cancel the contract.

The Hoffmans owned and operated a successful small bakery. Lukowitz, an agent of Red Owl Stores, told them that for $18,000 Red Owl would build a store and fully stock it for them to operate. The Hoffmans sold their bakery and purchased a lot on which Red Owl was to build the store. Lukowitz then told the Hoffmans that the price had gone up to $26,000. The Hoffmans borrowed the extra money from relatives, but then Lukowitz informed them that the cost would be $34,000. Negotiations broke off and the Hoffmans sued. The court determined that there was no contract. Can the Hoffmans recover any money? a. Yes. They can most likely recover damages based on judicial restraint. b. No. Based on the facts, there is no contract. c. Yes. They can most likely recover damages based on quasi-contract. d. Yes. They can most likely recover damages based on promissory estoppel.

*d. Yes. They can most likely recover damages based on promissory estoppel.* Explanation: Courts can apply promissory estoppel to enforce promises if: (1) the defendant made a promise knowing that the plaintiff would rely on it; (2) the plaintiff did rely on the promise; and (3) the only way to avoid injustice is to enforce the promise. Lukowitz, acting as an agent of Red Owl Stores, promised that Red Owl would build and stock a store for the Hoffmans for $18,000 - a promise that the Hoffmans would likely rely on in making business arrangements. In fact, the Hoffmans did rely on the promise when they sold their previous bakery and store, if Lukowitz's promise is not enforced, the Hoffmans will be left without a store or livelihood.