BSAD 324 Exam 1
In selling a 300-acre tract to Organic Farm, Peyton tells the buyer that the land "will be worth twice as much by next year." This statement is not likely to support rescission of the contract because it is
an opinion
Intoxicated, Efron enters a contract for the sale of his business, Freight Dispatch, to Gretel for less than its market value. This contract is enforceable if, at the time,
Efron understood the legal consequences.
Intoxicated, Hans enters a contract for the sale of ten acres of timberland to Ira for less than its market value. Later, Hans seeks to cancel the deal. In determining whether Hans can avoid his duties under the contract, a court is most likely to look at
Hans's intoxicated mental state and other factors.
Generally, there are few formal requirements to a contract. However, in the state of Louisiana this type of contract must be in writing
sale of immovable property
Jenny promises to pay Kay $500 because "she does not have as much money as other people." Jenny's promise is
not enforceable because Kay has not given consideration in return.
D'Sean promises to pay his personal assistant Edie $50,000 in consideration of the services she provided over the years. D'Sean never makes the payment. D'Sean's promise is
not enforceable because the consideration is in the past.
Ada agrees in writing to pay Bob to damage Ada's car, which is fully insured. Bob damages the car, but Ada's insurer refuses to pay for the damage. In Ada and Bob's suit against each other for breach of contract, the court is most likely to
none of the choices.
An ad for the New Plays Festival asks playwrights to submit their work and "we might produce it for the world." Oded submits a play with a note that states, "I accept." Between the Festival and Oded, there is
none of the choices.
Adequacy of consideration refers to
"how much" consideration is given.
Food Court Inc. leases space to Gourmet Café. Gourmet abandons the premises when the amount of the rent due on the lease is $5,000. Food finds a new tenant, Hasty Bowls, which agrees to pay $3,500 for the space over the remainder of Gourmet's term. Food's measure of damages is
$1,500, plus any additional expenses to find the new tenant.
Cow's Milk LLC needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,000 from Dairy Supplies Inc. Cow's Milk tells Dairy Supplies that it must receive the part by Tuesday or it will lose $10,000. Dairy Supplies ships the part late. Cow's Milk can recover
$10,000.
Hera contracts to work exclusively for Island Tours LLC during July for $5,000. On June 30, Island cancels the contract. Hera finds a similar job for the month of July but earns only $3,000. Hera files a suit against Island. As compensatory damages, Hera can recover
$2,000.
Car Lot's salesperson Dirk offers to sell Espy, who is twenty years old, a car. Dirk intentionally misrepresents the vehicle's use and repairs. In reliance, Espy buys the car. To prove fraud, Espy does _not_ have to show that
Espy is under twenty-one.
Key promises to pay Liv, his niece, $5,000 if she obtains her degree at Metro College, where she is in her third year. Liv graduates. Key must pay because
Liv obtained a degree at Metro.
A contract between Max and Nye provides for an "assignment of all rights." Max "assigns the contract" to Olin. Because a court will normally construe this wording as implying both an assignment of rights and a delegation of duties, if Olin fails to perform
Max is liable.
Jim offers to buy Mark's used textbook for $60.00. Jim is the
Offeror
Jana tells Levi she will give him an Xbox if Levi promises to do Jana's chores for a month. Levi promises to do the chores but has not yet begun to do them. Jana and Levi have formed
a bilateral contract.
Ghee agrees to buy Hole's Donut Shop on the express condition that the shop's suppliers extend the same credit terms to Ghee that the suppliers currently extend to Hole. This approval is
a condition precedent.
Architect LLC enters into a contract with Barn & Silo Inc. to provide designs for a certain number of farm buildings. Architect provides fewer than half of the designs by the time specified in the contract because the firm is busy with other projects. Architect's performance is most likely
a material breach.
Drain Equipment Inc. contracts to sell its assets to Earth Aquatic Corporation. Before either party has performed, rescission of this contract requires
a mutual agreement to rescind.
Gliders LLC and Hang Time Inc. are parties to a contract. They subsequently agree that In the Wind Inc. should take Gliders' place and assume all of its rights and duties under the contract. This is
a novation.
Nevin negotiates a deal for the sale of twenty-five acres of farmland to Otis. Nevin promises to hold the offer open in return for a small payment but does not state an exact period of time. With respect to this offer
a reasonable period of time is implied.
Data Inc. offers to provide certain services to Enterprise LLC, but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Enterprise accepts the written offer. Enterprise's best argument in _favor_ of enforcement of the contract is
a unilateral mistake does not afford relief from a contract.
Stewart has been eyeing Ben's new watch, as he finds it to be very "clean" looking. He makes an offer to Ben to purchase the watch for $18.00. Ben accepts the offer. In order for this to be a valid contract, it requires
a valid offer and a valid acceptance
Fix-It-Quik, Inc., offers Gina a job as a plumber. No time for acceptance is specified in the offer. The offer will terminate
after a reasonable period
Les, a minor, enters into a contract to buy a dirt bike from Motocross LLC. Les can ordinarily disaffirm the contract
all of the choices.
Fez makes and sells camping gear. Fez and Gobi enter into a contract for a delivery of the gear to Gobi's Outfitters retail locations for an invoiced price. Fez transfers the right to payment under the contract to Haulers Distribution Inc. This transfer is
an assignment.
Stephen tells Ben during a phone call that he will buy an old lawn mower from him for $75. Ben agrees. These parties have
an enforceable contract
Cloud Storage Inc. promises to pay its employees a year-end bonus "if profits continue to be high and management agrees at the time." This is
an illusory promise.
Lon says to Misty, "I would like to sell you my sofa." This statement is
an invitation to negotiate, not an offer.
A valid contract requires
an offer and an acceptance
Dino hires Eve to perform at Dino's Club, but Eve later breaches the agreement to accept a higher-paying job at Five Star Arena. Dino files a suit against Eve, asking the court to order her to perform at his club. The court will most likely
award damages to Dino.
East Bay Café orders seafood from Fresh Catch Company. Fresh places the goods at East's disposal. Fresh's performance under the contract is
complete.
Margaret tells Roy she will give him a new ipad if Roy promises to cut her grass for a month. Roy promises to do the chores but has not yet begun to do them. Margaret and Roy have formed a(n)
bilateral contract
A misunderstanding concerning a basic assumption on which a contract is made will support the rescission of the deal if the mistake is
bilateral.
Bottling Company enters into a contract with Chug's Brewery to provide certain bottling and delivery services. Before Bottling starts to work, the market price rises for the fuel for glass ovens. Bottling tells Chug's that due to the added cost it will not perform their deal. Bottling's contractual obligation to Chug's is
breached.
Quest enters into a contract to buy a thoroughbred from Rancho Mesa. Quest can disaffirm the contract
by words or conduct.
Bern, a minor, signs a contract to buy a Caterwauler jet boat from Dahl, an adult. Dahl
cannot avoid the contract.
Fritz offers to buy a guitar owned by Holle for twice what she paid for it. She accepts and hands the guitar to Fritz. Holle's delivery of the guitar is
consideration.
Anton tells Brooke, who has no knowledge of Shakespearean comedy, that he will tutor her in the subject for $50. As an offer, this is
effective.
Dwelling Inc. enters into a contract with Estate Management to manage and maintain Dwelling's apartment complex. Their contract contains a clause that limits Estate's liability except in cases of gross negligence or willful misconduct. With respect to this clause, a court would most likely
enforce it.
Beau borrows $15,000 from Credit Center to buy a car. The lender assigns the right to receive the loan payments to Debt Collections Inc. If Beau does not pay the debt, the assignee can
enforce the payment in court.
Jan is obligated under a contract to pay Katie $500. Katie assigns the right to receive the funds to Loren. If Jan does not pay the debt, the obligee can
enforce the payment in court.
Glen offers to sell Helen his iPad for $200. Under the mirror image rule, Helen's response will be considered an acceptance if the terms of the acceptance
exactly mirror those of the offer
Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when Megan and Nonny
exchange the horse for the money.
Dairy Farm enters into a contract with EZ Ice Cream Inc. to supply milk. Later, Dairy decides that it is no longer advantageous to fulfill the contract and subsequently fails to perform as promised. EZ files a suit against Dairy. A breach occurred when Dairy
failed to perform as promised.
What is not an element of a contract:
formality
Alvin induces Beth to enter into a contract for the purchase of a Chef's Burger restaurant. Alvin knowingly misrepresents a number of material features about the restaurant and the business. When Beth discovers the truth, she can rescind the contract on the basis of
fraudulent misrepresentation.
Denis sells a motorcycle to Elton without disclosing that the odometer, which reads 10,000 miles, was disconnected 100,000 miles ago. Denis is most likely liable for
fraudulent misrepresentation.
Beck and Call enter into a contract under which Beck agrees to cater Call's wedding. The contract expressly prohibits any transfer of rights without the obligee's consent. Call may transfer the right to receive Beck's services to Dion
if Beck consents.
Beta contracts to design and deliver marketing materials to Cesar. Beta cannot delegate this duty to Devon
if performance depends on Beta's personal skill.
Vicky asks Walt, a cobbler, to repair a pair of boots. There is no discussion of a price, and Vicky and Walt do not sign any documents. After the repair, Walt hands Vicky a bill. With respect to Vicky?s obligation to pay the bill is
implied contract
Kim promises to pay Leo $500 to install a sump pump in Kim's warehouse. Leo completes the installation. The act of installing the pump
is the consideration that creates Kim's obligation to pay Leo.
Field Construction, Inc., contracts with M Ranch to build a new barn on M's property for which M agrees to pay. The elements of this, and any other, contract include
legality
Nicholls State University contracts with a construction company to build its new greenhouse. The elements of this, and any other contract include:
legality
Kris buys Liz's house for $300,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kris's consideration
legally sufficient.
Rory questions whether there is consideration for his contract with Silver Spurs Club to exchange his performance of country music on certain dates for Silver's payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be
legally sufficient.
For a contact to be considered valid and enforceable, the parties to a deal must
manifest their voluntary consent to the same bargain.
Bram, a salesperson for Cruisin' Motors, promises Dot a certain car will give her a "smooth ride." Bram offers a test drive, which Dot declines. She buys the car but soon realizes its suspension is in poor condition. Dot can rescind the contract on the ground of
none of the choices.
Fagin and Gretel agree to hijack a truck carrying a load of almonds. If Fagin later refuses to go through with the crime, Gretel can
none of the choices.
Owen, the owner of Parts Company, pays Quint to obtain a competitor's design patent. Quint keeps the money but does not deliver. Owen can
none of the choices.
Stan, a salesperson for Trucks & Autos, promises Uri a certain car will give him a "smooth ride." Stan offers a test drive, which Uri declines. He buys the car but soon realizes its suspension is in poor condition. Uri can rescind the contract on the ground of
none of the choices.
Maya tries to start her new car with no success. She yells that she will sell the car to anyone for $10. Nero, a passerby who owns Nero's Motors, hands Maya $10. This is
not a valid acceptance because Maya does not seriously intend to sell.
Idina admires Jules's collection of guitars. Jules says, "I plan to sell the collection when I get tired of it." Jules's statement is
not an offer because Jules expressed only an intent to enter into a future contract.
Rena asks Sully, "Do you want to pay me to repair your forklift?" This is
not an offer, because the terms are not definite.
Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can
not collect it because she had a preexisting duty to capture Oscar.
Jen promises to pay Kam $500 because "she does not have as much money as other people." Jen's promise is
not enforceable because Kam has not given consideration in return.
EcoEnergy LLC files a suit against Fiber Optics Inc., claiming that the consideration for their contract is inadequate—that the plaintiff will not realize sufficient financial benefit from the deal to make it worthwhile. Most likely, the court will
not question the adequacy of consideration.
Stephen offers Theresa $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely
not question the adequacy of the consideration.
Dana believes that a new phone to be sold by Ear Fruit Inc. will become the most popular phone in the global market. Dana enters into a contract to buy 500 shares of Ear Fruit stock, anticipating an increase in its value. The phone does not become popular, and the price of the stock does not rise. Dana can recover
nothing.
National Grocers, Inc., enters into a contract with Overland Shipping Company for the delivery of a shipment of fresh produce. If ambiguities appear in the contract, they will be construed against the
part who drafted the contract
Movers LLC promises to deliver a certain couch to Nora, who promises to pay for the service. If Movers does not perform, it may be required to
pay money damages.
The requirements of a contract do not include
practicality
Builders Inc. agrees to construct an office building for Commerce Center Corporation. The project proceeds according to plan, but before it is done, the buyer tells Builders to quit. In a suit for breach, Builders may recover
profits plus the costs incurred up to the time of the breach.
If performance under a contract will vary materially on a delegation of its duties to a third party from that expected by the obligee, the delegation is
prohibited.
Bianca, a minor, enters into a contract to buy two all-season passes from Chalet Ski Park. The contract will be made enforceable if Bianca
ratifies it.
For a court to determine if a contract has been breached and to give an appropriate remedy, the offer must include terms that are at least
reasonably definite
Erma enters into a contract to buy a tract of lakefront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely
specific performance.
Guy orally agrees to buy a unique collection of sports memorabilia for $10,000 from Hec and sends $2,500 as an initial payment. When Guy pays the rest of the price, Hec refuses to ship the collection. In a suit for breach, Guy should seek
specific performance.
Ben buys a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is
still liable on the agreement.
Rafi offers to sell his sailboat, _Sea Siren_, to Tara for $50,000. Referring to the prices for similar vessels, Tara says, "I'll pay no more than $40,000." Rafi's offer is
terminated.
Kelly offers to sell a certain used forklift to Lumber Outlet, but Kelly dies before Lumber Outlet accepts. Most likely, Kelly's death
terminates the offer.
Concrete Company agrees to lay a foundation for Diamond Properties, but fails to finish the job. Diamond hires Earth Projects Inc. to complete the work. In a suit for breach, Diamond may recover from Concrete
the costs needed to complete construction.
For a price, Rose agrees to unload the catch from fishing boats that dock at Seafood Shipping. Rose delegates this duty to Tina, who then owes performance of the duty to the warehouse. Tina is
the delegatee.
Faiz enters into a contract to buy 350 acres from Grain Farm to cultivate hops and open a brewery. Faiz fails to make the purchase. Grain Farm's remedy is most likely
the difference between the contract and market prices of the land.
A novation requires
the existence of a previous, valid obligation.
Business Center signs an agreement with Credit Lending Inc. to borrow $40,000 at 20 percent interest. Later, the state legislature passes a law lowering the maximum permissible rate of interest to 15 percent. The borrower's best argument for avoiding payment to the lender is that
the law has rendered performance of the contract illegal.
For a price, Recycle LLC agrees to empty the dumpster behind Sushi Café. Recycle delegates this duty to Trash Inc. Sushi is
the obligee.
For a price, Ray agrees to unload trucks that make deliveries to Shoppers Warehouse. Ray delegates this duty to Tim, who then owes performance of the duty to the warehouse. Ray is
the obligor.
Ewa is induced by her guardian Filo to sign a contract to invest funds in Gold Inc. through Filo's investment firm. Unknown to Ewa, Filo realizes a commission from the investment. Most likely, Ewa can rescind the contract on the basis of
undue influence
Eugene, an accountant, convinces his client Faye to enter into a contract to invest her savings in Gathering, a non-existent social media site. There is clear and convincing evidence that Faye did not act out of her free will. This is
undue influence.
A contract to do something that is prohibited by statute is
unenforceable.
Chet, a minor, signs a contract with Denise, an adult. The contract is voidable at the option of
Chet only.
Orin signs a covenant not to compete with his employer, Product Distribution, Inc. The covenant will be enforced if it
is reasonable with respect to geographic area and duration.
An ad on the NewsNow Web site asks viewers to "send us your story and we might share it with the world." Ollie submits a manuscript, adding, "I accept your offer." Between NewsNow and Ollie, there is
no contract.
Emma, a minor, buys a water bottle, a set of weights, and a treadmill from Fitness Warehouse. Later, Emma disaffirms the deal. If the goods are still in her possession or control, she can keep
none of the goods.
Dix agrees to sell Eli, for $1,500, a remote parcel of land. They believe the land to be worthless, but beneath it is shale rock containing oil. A court would
not rescind the contract.
Ross promises to pay Sara, his niece, $5,000 if she obtains her degree at Tech University, where she is in her third year. Sara graduates. Ross is
required to pay because Sara obtained a degree at Tech.
Mark fails to reveal a material fact in a business deal with Nancy. This constitutes fraud if
the fact concerns a serious defect known to Mark but not to Nancy.
Moe asserts that a deal he entered into with Nina to sponsor and host a motivational conference for independent sales representatives is an unenforceable contract. Defenses to the enforcement of a contract include
the lack of a party's voluntary consent
