CBAD 344 - Unit 2

If an individual shopping for groceries opens a bottle of water from their cart and drinks it before they have paid for their items:

a quasi-contract has been created.

Which mistake is likely to be voidable?

Bilateral mistake

Under the Uniform Commercial Code (UCC), which term in a written contract for the sale of goods is essential?

quantity of items being purchased

What type of contract is created by an agreement that is oral when it is required by the Statute of Frauds to be in writing?

voidable

Which of the following words, if added to an offer, will cause the offer to fail for definiteness? (Select two)

1. Might, as in "I might want to sell you my boat for $1000" 2. In the future, as in "I will sell you my boat sometime in the future for $1000"

How may an offer be terminated? Choose 3 answers.

1. The offeree may make a counteroffer. 2. A reasonable amount of time has passed. 3. An offeror may terminate an offer by revocation.

Which act or statement is a valid offer?

A detailed advertisement

Which statement is true about the ability of minors to enter into contracts?

A minor may enter into any contract an adult can, except for contracts that are expressly prohibited for minors.

Which of the following is an equitable remedy for breach of contract?

an order for specific performance

What type of contract exists when at least one party has the option of canceling it?

voidable

Huseyin and Ashish are negotiating the details of a new garage that Ashish plans to build on Huseyin's property. They agree on the building specs, the delivery date, and a price of $25,000. Ashish draws up the contract and sends it to Huseyin to sign. Huseyin reviews the contract and notices the price is listed as $2,500 instead of $25,000. Elated at the unbelievably low price, Huseyin quickly signs the contract and sends it back to Ashish, who signs it as well. If Ashish later tries to rescind the contract due to the mistaken price:

Ashish will be successful, because it is a mathematical mistake that Huseyin was aware of.

Why is a court unlikely to grant a remedy for specific performance when a contract for personal services is breached?

Because it is tantamount to court ordered involuntary servitude.

Quon decides to sell his antique roadster, so he places an ad on Craigslist. He lists the roadster as a 1957 Mercedes Benz 300SL Roadster, describes it as in good working condition, and states that no reasonable price will be refused. Fern responds to the ad and offers to pay $25,000 to Quon for the car, which Quon agrees to. In this scenario, who is the offeror?

Fern is the offeror.

Which is NOT an exception to the parol evidence rule?

Jayden wants to present evidence that Jignesh verbally promised he would include the trailer with the boat he sold to Jayden.

What is the difference between legal remedies and equitable remedies for breach of contract?

Legal remedies are monetary while equitable remedies are non-monetary.

What are the differences between legal and equitable remedies? Choose 2 answer choices.

One is monetary. One requires actions instead of damages.

What must a plaintiff show to be awarded a quasi-contract in a lawsuit?

The defendant was unjustly enriched.

Which of the following creates a bilateral contract?

a sale of goods with payment at delivery

Reformation of a contract is considered:

an equitable remedy.

Owen offers to sell his motorcycle to Julian for $5,000. After he makes the offer, Owen has second thoughts. Owen can revoke the offer to sell his motorcycle to Julian:

as long as Julian has not yet accepted the offer.

What is the principle that is applied to determine how much compensation a party receives in a quasi-contract settlement?

quantum meruit

Which of these types of contracts must be in writing under the requirements of the Statute of Frauds? Choose 3 answers.

collateral promises to pay the debt of another person promises made in consideration of marriage contracts for the sales of land

Forcing a party to agree to the terms of a contract through the use of threats or blackmail is called:

duress.

Don and Kim have entered into a contract for the purchase of a car. Don has paid money for the car, but Kim has not yet delivered it. This is an:

executory contract.

In an auction, the bidder is:

the offeror.

If Ramona changes her will at age 88 to leave the bulk of her fortune to her home health care nurse instead of her children, what factor will the courts consider in judging whether or not her will is valid?

undue influence

Restitution is an appropriate remedy when: (Select three)

when the parties never had a contract. a contract has been rescinded. a contract has been breached.

In general, certain terms must be included in contracts to satisfy the requirement of definiteness. What are the exceptions to this rule? Choose 2 answer choices.

-Courts can complete a contract to supply some missing items. -Sales contracts under the UCC

In general, which of these contract terms is NOT required to meet the requirement of definiteness?

Acceptance

What is the result of a contract in which both parties are wrong about a material fact of the contract?

The contract is voidable.

What is the test for whether a contract is governed by the Statute of Frauds because of the one-year rule?

The contract must be objectively impossible to perform within one year.

In what situation is a minor most likely to be able to terminate a contract?

When a minor orders books for school

When party A and B form a contract and both parties fully perform, the contract is considered:

executed

What remedies are available in the case of a unilateral mistake in making a contract? Choose 2 answers.

reformation rescission

Rescission of a contract will:

return the parties to the position they were in before the contract was formed.

What elements are required for courts to apply the doctrine of promissory estoppel? Choose 3 answers.

-Enforcement of the promise is necessary to avoid injustice to the promisee. -There was a detrimental result from reliance on the promise -The promise must be definite and relied upon.

What function does a severability clause serve? Choose 2 answers.

-It specifies what will happen with a potentially unenforceable part of a contract. -It preserves the rest of the contract if one part is unenforceable.

Samuel has mental competency issues. Samuel entered into a contract with Beth, but now Samuel is petitioning the court to terminate the contract. What options does the court have in ruling in the case? Choose 2 answer choices.

-The contract is voidable if Samuel was incompetent at the time the contract was formed. -The contract is void if Samuel has been previously determined to be mentally incompetent.

How may a revocable offer effectively be revoked? Choose 2 answers.

1. The offeror may withdraw the offer with a clear expression. 2. The offeror may take an action that contradicts the offer and make that known to the offeree.

Which of the following statements is an offer?

I will sell you my house for $400,000.

Selma wants to buy Matilda's house. Selma has been admiring the house for a long time and has asked Matilda repeatedly to sell the house to her, but Matilda has always refused. Finally, Selma tells Matilda that if Matilda does not sell Selma the house, Selma will kill Matilda's daughter. Afraid for her daughter's life, Matilda signs the contract to sell the house to Selma. If Matilda later tries to rescind the contract:

Matilda may rescind the contract on the grounds that she signed the contract under duress.

Which situation would be considered sufficient consideration for a contract to exist?

Pam agrees to pay Derek $500 if he does not sit next to her in class anymore.

What happens when a party with the right to avoid a contract chooses to not avoid it?

The contract is ratified.

Carol and Al enter into a contract for the sale of a painting. Carol pays Al the asking price and Al delivers to Carol the painting. This contract is an:

executed contract.

Maryanne offers to sell her 2015 Mustang convertible to April for $15,000, and April agrees to those terms. April brings the $15,000 to Maryanne, and Maryanne promises to deliver the Mustang to April the next day after she has it detailed. At this point, Maryanne and April have:

an executory contract.

What is the primary purpose of the Statute of Frauds?

requiring written evidence of agreements concerning important transactions

Quon and Bert have signed a contract for Bert to mow Quon's grass every week in June, July, and August for a price of $40 per week. They have agreed to all the necessary terms, but Bert has not yet mowed because it is still May. What type of contract do they have?

executory

Mia contracted with Greencare Lawn Service for a pest treatment on Mia's lawn for $1,000. Pat lives next door to Mia. Greencare mistakenly treats Pat's lawn instead of Mia's. Pat watched them perform the treatment while looking through the window of his living room, but did not go outside and stop them. When Greencare seeks payment from Pat, Greencare can probably receive:

from Pat an amount less than the contract amount that will reimburse Greencare for expenses incurred, in order to avoid unjust enrichment.

When an agreement fails to qualify as an enforceable contract, but one of the parties breaches the agreement, the non-breaching party:

may sue for unjust enrichment.

The weekly Kroger advertisement states that five-pound chubs of ground chuck are available for eighty-nine cents per pound. Arlene sees the advertisement; she realizes that ground chuck has not been priced this low in quite some time, so she hurries to the store to purchase some. Arlene loads seven chubs of ground chuck in her shopping cart. When she goes to the checkout to pay, however, the cashier informs Arlene that the price in the advertisement is a typo and that the correct price is $1.89 per pound. Arlene insists that the store must honor the price listed in the advertisement, because it is an offer that she has just accepted. The cashier calls the store manager for a decision. The store manager will likely explain to Arlene:

-that the advertisement is a valid offer because its terms are definite. x-that the advertisement is a valid offer, and the store must honor the price in the advertisement. -that advertisements are not offers, but merely a request for offers. x-that the advertisement is a valid offer because it is in writing.

Jones Construction Company is building a series of new subdivisions in Newtown over the next two years. Jones enters into a verbal agreement with Harley Concrete Inc. to construct all the driveways and sidewalks in the subdivisions that Jones will be building. Jones and Harley agree on a price of $130 per cubic yard and that Jones will pay Harley at the end of each project. Harley completes the first project, which is four sidewalks and sixteen driveways, and bills Jones for the project. Jones decides that the price is too high and refuses to pay, claiming that they have no obligation to pay because the parties did not have a valid contract. If Harley sues Jones for payment the court would probably:

apply quasi contract theory and award the fair market value of the work that Harley completed.

A contract for an illegal purpose is:

void

What are the possible remedies for a contract formed under duress? Choose 3 answer choices.

-Make the contract voidable. -Rescind the contract. -Allow duress as a defense for breach of contract.

Which of the following is a valid offer?

Eric offers to buy Arun's house for $775,000 with no contingencies because Eric's lease ends in two months. Arun wants to think about it and six days later has not yet responded.

A quantum meruit remedy is equivalent to:

the reasonable value of the agreement.

What is the term for a contract agreement in which an offeror promises to pay after the occurrence of a specified act, and the offeree is not required to respond in words?

unilateral contract

Isabel is 17 years old and wants to stop paying for the use of the local gym, but wishes to continue teaching classes. Her contract with the company includes terms regarding her employment and use of the facility. What must she do to properly disaffirm the contract? Choose 2 answer choices.

-Isabel must let gym staff know she is terminating the contract. -Isabel must disaffirm both the gym membership obligations and the employment terms in the contract.

What factors make an agreement enforceable under the principle of quasi-contract? Choose 2 answers.

-One party is being enriched at the expense of the other. -The enriched party knows about the benefit and keeps it.

What factors are used to judge if consideration is adequate to ensure a fair bargain? Choose 2 answers.

-Promises exchanged may not be a preexisting duty. -Promises must be made with voluntary consent.

What elements are required for an offer to be effective under the common law? Choose 3 answers.

1. The terms of the offer must be reasonably definite so that all parties understand them. 2. The offer must be communicated to the offeree. 3. The offeror must intend to be bound by the offer.

For which of the following contracts would a court be likely to grant a remedy of specific performance? (Select 2 answers)

A contract for the sale of land A contract for the sale of a Picasso painting

Otto orally agrees to install three wells for Green Space Energy over the next eighteen months. When the three wells are completed, Green Space Energy will pay Otto $10,000. After the first well is completed, Green Space Energy tells Otto that it does not want any more wells. Green Space Energy refuses to pay Otto for the first well, claiming that the contract was not in writing and, therefore, not enforceable. If Otto sues Green Space Energy to enforce the contract:

Green Space Energy will have to pay Otto a reasonable price for the one well that was installed.

Shania offers to sell her lakefront property to Tonya for $150,000, and Tonya agrees to buy it. Tonya and Shania both sign the real estate contract, but, before they close the deal, Shania learns that a new resort is being opened on the lake. The opening of the resort will drive property prices up in the area, so Shania believes she can sell her property to someone else and get a better price on the deal. Shania tells Tonya that she has decided not to sell the property to Tonya. If Tonya sues to enforce the contract, a court will likely:

require Shania to go through with the sale.

If two parties have an on-going oral agreement that that one will ship and the other will accept 50 pounds of produce each week unless the buyer informs the seller one week before not to ship the next order, then the buyer's failure to speak up and tell the shipper not to send the produce:

qualifies as acceptance of that week's delivery offer.

Alvin's Department Store agrees over the telephone to purchase $1,000 worth of blankets from Blanket Emporium. Blanket Emporium sends an invoice for the blankets before shipping them, and Alvin's Department Store refuses to go forward with the deal, saying their deal is not a valid contract. The oral agreement between Blanket Emporium and Alvin's Department Store for the purchase of $1,000 worth of blankets:

violates the statute of frauds, and is, therefore, unenforceable.

Bryan owns Snow Country, a business that leases out snow cone stands. Kaylee agrees to lease one of the snow cone stands for $500 per month. Kaylee and Bryan sign a written contract that states the monthly lease amount is $5,000. When Kaylee refuses to pay the $5000 for the first month's rent, Bryan sues for breach of contract. If Kaylee tries to introduce evidence in court that shows that the amount stated in the written contract is incorrect:

Kaylee will be allowed to introduce the evidence under the parol evidence rule.

Brindley has an old shed on her property that needs to be removed. She posts the following ad on Facebook: "Shed needs to be gone. You take down and haul away. (Much of the wood is reusable.) $100 to the first person to show up and haul this away." This is an example of a(n):

unilateral contract.

In a unilateral contract:

substantially undertaking performance prevents the offeror from revoking the offer.

Zayn boards the Big Rock Metro to ride downtown to his job. Zayn gives his money to the driver and takes his seat. Neither the driver nor Zayn says anything. Zayn and the bus driver:

have an implied contract.

Harold offers to sell Emma his farmland in Bryson County. After discussing the sale at length in front of their friends Nicole and Jackson, Harold and Emma orally agree on a price of $120,000 for the land. The next day, Emma goes to the bank and withdraws $120,000 to pay Harold for the land. When Emma presents the $120,000 to Harold, Harold tells Emma he was just joking and does not wish to sell the land. Emma tries to enforce the deal, and Harold continues to refuse by saying that the deal was not in writing, and, therefore, it is unenforceable. The contract between Harold and Emma for the sale of the land:

is not enforceable because it violates the statute of frauds.

Milo is the owner of a sporting goods store that has only been open for three months. The holiday season is coming up, and Milo realizes that he will need extra help. Milo asks his friend Jess to help him out at the store. Milo and Jess agree that Jess will work during the months of November and December. However, because Milo is unsure how much help he will need and how much he will be able to pay, they agree to decide each week on the hours that Jess will work for the following week, and to decide the hourly rate after Jess has worked two weeks before she receives her first paycheck. Just before November 1, Jess takes a job at another store. If Milo tries to sue Jess for breach of contract, the court will probably decide:

x-that the parties had a contract, but the damages could not be ascertained because the hourly rate and number of hours had not been determined. -that the parties had no contract because the terms of the offer were not definite. -that the parties had a contract, and Jess breached the contract. -that the parties had no contract because the terms were not in writing.

What is the result if parties agree to a contract orally, but it is a contract that must be in writing under the statute of frauds? Choose 2 answer choices.

-The contract is voidable. -The parties can complete the contract.

When might a contract made by a mentally incompetent person be enforceable?

The incompetent person was lucid at the time the contract was made.

What must a plaintiff prove to show duress in the formation of a contract? Choose 2 answer choices.

-The plaintiff was incapable of voluntarily agreeing to the contract. -The defendant committed a wrongful or illegal act.

In what situations would a court be likely to award a quasi-contract? Choose 2 answer choices.

1. When the unjust enrichment is a relatively insignificant amount of money 2. If the defendant was unjustly enriched and played a part in deceiving the plaintiff

Courts may reform a contract:

to reflect the parties' true intentions.

Which of these contracts would be enforceable, despite the existence of a mistake? Choose 2 answer choices.

- Christopher agrees to sell his washer and dryer to Ella in "as is" condition. Ella thinks the set is in excellent condition and is willing to take a chance on buying it. Neither works after a few weeks of use. -Christopher agrees to sell his washer and dryer to Ella. Ella thinks the dryer uses gas instead of electricity, but she is incorrect.

What types of contracts violate public policy? Choose 3 answers.

-conducting trade with a country that is an enemy to the United States -a candidate for public office paying his competitor to retire -employment contracts that forbid membership in a union

What are the elements of consideration? Choose 2 answer choices.

-something of value from each party -an exchange to which the parties agree

When are covenants not to compete in employment contracts considered to be against public policy? Choose 2 answers.

-when the geographical restriction is too broad -when the specified time of restraint is excessive

Evan offers to sell his 2016 John Deere Tractor to Jorge for $30,000. Jorge accepts and promises to meet Evan on Saturday to make the exchange. On Thursday, a fire on Evan's farm totally destroys the tractor. Jorge is upset, because the price of the tractor was really good, and he knows he cannot get another one for that price. If Jorge sues Evan for breach of contract, the likely result will be that:

Evan's performance under the contract will be excused due to impossibility of performance.

Danny hires Evelyn to install a swimming pool at Danny's home for $40,000, to be completed by June 1. Evelyn completes the job on time. When Danny inspects the pool, he discovers that Evelyn used a vinyl lining, and the contract called for a fiberglass lining. Danny refuses to pay Evelyn, stating that Evelyn breached the contract because the contract was not completed according to the specifications stated in the contract. If Evelyn sues Danny for the contract price:

Evelyn will probably receive the contract price less the cost to replace the pool liner with a fiberglass liner.

Must all terms of a deal be included in an offer?

No, but the terms required will depend on the type of contract.

What is an exception to the statute of frauds?

Promissory Estoppel

Fred and Wilma enter into a contract for horse riding lessons. Fred accidentally types the price for lessons to be $4.00 each instead of $44.00 each. Wilma wishes to enforce the contract at $4.00 per lesson. Which remedy would be most effective?

Reformation

Ruby, a seventeen-year-old, purchases a car from Smitz Used Auto Sales and agrees to pay for it over a period of twenty-four months. Ruby makes the payments for four months but then decides the car payment is too much for her limited budget. Ruby tells Smitz that she wants to stop making payments and that she wants out of the contract completely. The contract between Ruby and Smitz can be canceled by:

Ruby, because she is a minor, but Ruby must return the car.

A contract for a purpose that causes the parties to violate a law is:

illegal and void

Sal has ordered 100 pounds of shrimp for his restaurant from Sam every Friday for 5 years and has always paid that week's market price. One Friday, Sal decides to take a vacation but doesn't tell Sam. Sam claims they have a contract, even though it was never written down. What kind of contract do they have?

implied-in-fact

When ambiguity in a contract's language exists, a court will: (Select all that apply)

interpret the terms against the drafting party

Lupita enters into a contract with Faith to purchase a used car. At the time they sign the contract, Lupita appears to be very intoxicated. Faith notices this but signs the contract anyway. If Lupita later decides she wants to get out of the contract:

x-Lupita cannot get out of the contract even though she had been drinking excessively. x-Lupita can raise the issue of undue influence, because Faith took advantage of Lupita while she was drinking. -Lupita cannot get out of the contract if both parties signed it. -Lupita can raise the defense of lack of contractual capacity due to intoxication.

What evidence outside of the written contract is a party allowed to present? Choose 2 answer choices.

-Evidence showing a change to the contract after it is signed -Evidence to prove agreement on an essential element of the contract

What factors may overturn a minor's right to disaffirm a contract? Choose 3 answers.

-The contract is for necessaries. -The minor misrepresented the minor's age while engaging in business as an adult. -The minor ratifies the contract after reaching the age of majority.

What conditions must be met for an offer to be legally accepted? Choose 2 answers.

1. It may only be accepted by the intended offeree or the offeree's agent. 2. Acceptance must be unequivocal with no requests for changes in the offer.

What factors must be present to prove fraudulent misrepresentation in a contract? Choose 3 answers.

A misrepresentation of a material fact has occurred. There has been an intent to deceive. The innocent party has justifiably relied on the misrepresentation.

In which of the following scenarios is a court likely to order reformation of a contract? Select 3 answers.

Clerical error in the contract Fraud by one of the parties Mutual mistake by the parties

Randy hired Lamar to drive his car in a race. Manu, a friend of Lamar, promised to pay Lamar $3,000 if he won the race. Lamar won the race, but Manu refused to pay the $3,000. Manu contended that no legally binding contract had been formed because he had received no consideration from Lamar for his promise to pay the $3,000. Lamar sued Manu for breach of contract, arguing that winning the race was the consideration given in exchange for Manu's promise to pay the $3,000. What rule of law supports Manu's claim?

Identifying the Facts and Issues Of the elements of a contract: mutual assent, consideration, capacity, and legality, the consideration element is at issue here. Lamar would win the race and Manu would pay $3,000 was the consideration exchanged in the contract. Assessment question Lamar already does have a duty to win the race because Randy hired Lamar to drive his car in the race. Assessment question Lamar cannot support a second contract by doing something he was already obligated to do on the first contract because contract law does not allow it. Assessment question In the preexisting duty rule, a person already bound by a contract to perform a certain duty cannot have that duty act as consideration for a second contract. In this case, Lamar cannot recover from Manu. Assessment question What If the Facts Were Different? If Lamar hadn't entered into the first contract with Randy, he could recover because his duty to try and win the race would be sufficient consideration to support the bargain.

Which type of lack of capacity is easiest to prove?

Minor

What type of acceptance requires an affirmative action for the offeree to accept that offer?

Unilateral contracts

Manuel contracts to sell a painting that was painted by his deceased grandmother, then has a change of heart and decides to hang it in his own bedroom. He notifies Nadine, the person who had planned to buy it. Can Nadine have the contract enforced?

Yes, it can be enforced under the equitable remedy of specific performance.

Nadia needs help running her bakery. Nadia contacts her friend Zoey, who has baking experience but lives in another state, and offers Zoey a job. Nadia orally promises Zoey that she will employ Zoey for at least two years. Zoey quits her job in the other state, moves her family, and begins to work for Nadia. After three months, Nadia terminates Zoey's employment. Zoey sues Nadia, claiming they had a contract for two years. If Nadia defends the lawsuit by claiming the contract could not be enforced because it violates the statute of frauds, the court will likely hold in favor of:

Zoey, under the theory of promissory estoppel.

Marie and Molly enter into a written contract to sell Marie's home to Molly. At the time the contract is executed, Marie tells Molly that for the last six months she has been sharing the home with a family of extraterrestrial beings. Marie states that she has asked the extraterrestrials to move out, but they won't; therefore, she is selling the family home to get rid of them and is willing to sell the home to Molly for well below market price. After the sale of the home is complete, Marie's children challenge the sales contract on the grounds that Marie did not have the mental capacity necessary to enter into a contract, even though Marie has not been declared incompetent by the courts. The contract between Marie and Molly can be rescinded:

if Marie's children can prove that Marie lacked the mental capacity to comprehend the nature, purpose, and consequences of the contract.

Specific performance is a remedy which is always available in:

real estate contracts.

Contests, lotteries, and competitions with prizes are common examples of:

unilateral contracts

Jordynne was the manager of Pets-R-Us, a pet store in Southern Valley Mall. Pets-R-Us had a one-year lease, and rent payments were $2,000.00 per month. Five months into the lease, Jordynne found a better site for the pet store. She notified Southern's manager, vacated the mall, and moved her store to its new location. After two months, Southern was able to re-lease the premises to another retail store, but at a reduced rent of $1,800.00 per month. If Southern successfully sues Pets-R-Us, Southern will likely receive:

-$4,000.00 in damages. x-$14,000.00 in damages. -$5,000.00 in damages. x-nothing, because Southern was successful in obtaining a new tenant for the property.

Gabe Guevarra & Company (Guevarra) contracted with the State of South Dakota (State) to surface a new public highway. The contract had a liquidated damages clause, which established compensation to be paid to the State if the completion of the contract was delayed. The contract stated that an on-time completion was "an essential element" of the contract, citing as rationales the cost of administering a delayed contract and the detriment and inconvenience of the public. Guevarra performed $530,724.14 worth of work, but completed the highway surfacing sixty-seven days late. The specific damages or expenses incurred as a result of this delay were considered to be "unknown." Calculating the per diem liquidated damages in the contract ($210) by the number of days delay (67) resulted in the State withholding $14,070 from the amount due to Guevarra. Guevarra sued the State to recover the withheld amount.

Identifying the Facts and Issues Often, the purpose of contract law is to place the parties in a position they would have occupied had the contract been fully performed . A liquidated damages provision in a contract specifies that a certain dollar amount is to be paid in the event of a future default or breach of contract. Assessment question Liquidated damages provisions are frequently used in construction contracts. A liquidated damages provision is not the same as a penalty clause. Unlike a liquidated damages provision, a penalty clause is designed to penalize the breaching party. Assessment question Liquidated damages provisions usually are enforceable in contracts. Penalty clauses usually are unenforceable in contracts. In order to determine whether a contract provision is a liquidated damages provision or penalty clause, a court will first ask: when the contract was entered into , was it apparent that damages would be difficult to estimate in the event of a breach? Assessment question In order to determine whether a contract provision is a liquidated damages provision or penalty clause, a court will also ask whether the amount set as damages was a reasonable estimate and not excessive . The amount of liquidated damages claimed by the State pursuant to its contract with Guevarra was a small portion of the entire contract. As a result, a court would likely find that the contract clause permitting the State to reduce the amount it paid Guevarra because of Guevarra's late performance would be an enforceable liquidated damages clause. Guevarra likely would not be able to recover the $14,070 damages sought from the State. What If the Facts Were Different? Assume that the contract stated that Guevarra would be paid 10% less by the State each day Guevarra was late. Guevarra, being sixty-seven days late, would be paid nothing for his completed work as a result. The amount set as damages would be an unreasonable estimate and considered to be excessive . This provision in the contract would likely be treated as a penalty clause . Therefore, the court would likely find the penalty clause in the contract to be unenforceable .

L.D.T. International Sales Corp. (L.D.T.), an American firm, contracted to sell 100,000 pounds of "US Fresh Frozen Chicken, Grade A, Government Inspected" to Freight Importing Co. (Freight), a Swiss company. When L.D.T. asked Freight what kind of chickens were wanted, Freight said "any kind of chickens." L.D.T. also asked whether the term "chicken" included the German word "Huhn", which includes both older stewing and younger broiling and frying chickens. In response, Freight answered yes. When the shipment of chicken arrived, Freight complained that the chicken delivered were substantially older stewing chicken or "fowl." According to Freight, the term "chicken" in the contract meant younger and more expensive chickens suitable for broiling or frying. L.D.T. replied that "chicken" meant any bird of that species and both older and younger chickens met the contract's specifications. When L.D.T. did not agree to deliver entirely young chicken suitable for broiling and frying, Freight sued L.D.T. for breach of contract.

This case primarily involves an express contract . When a contract's writing is clear and unequivocal, the court will enforce the contract according to its obvious terms. Interpreting a contract's terms from the written document alone is sometimes referred to as the plain meaning rule . If a contract term is ambiguous, a court may consider extrinsic evidence to interpret the contract. Assessment question In this case, the meaning of the word "chicken" is ambiguous . Therefore, a court can use extrinsic evidence to interpret the contract between Freight and L.D.T. The extrinsic evidence shows that the term "chicken" was given a broader interpretation by the parties. Therefore, the extrinsic evidence of the contract favors the interpretation of L.D.T. . Assessment question In this case, seller L.D.T. could satisfy the terms of the contract by delivering both older stewing and younger broiling chickens to Freight. Assessment question A court in this case likely would find that L.D.T. did not breach the contract when it delivered both older stewing and younger broiling chickens to Freight. As a result, L.D.T. would likely win the case. Assessment question What If the Facts Were Different? What if the written contract between Freight and L.D.T. stated that L.D.T. was obligated to deliver "chicken broilers and chicken fryers" instead of simply "chicken"? In this case, seller L.D.T. could not satisfy the terms of the contract by delivering both older stewing and younger broiling and frying chickens to Freight. A court would not need to use extrinsic evidence in order to interpret the term "chicken" in the contract between Freight and L.D.T. because the meaning of the word "chicken" in this contract would be obvious . As a result, Freight would then win the case.

Lilly hired Harris Lawn Service to cut her grass one summer, and paid through automatic charges to her credit card. After taking three months off for winter weather, Harris staff cut Lilly's grass for four weeks in a row before charging the fees on Lilly's credit card. Lilly protested the charges, stating she did not hire the company to cut grass for the second summer. Harris sues Lilly. What law applies? Choose 2 answer choices.

1. Lilly's silence is acceptance because the offeree accepted the benefit offered. 2. Lilly's silence is acceptance because of the parties' past dealings.

Kapoor owned property in North Carolina and listed the property for sale on August 4th. That same day, Nolan made an offer to purchase the property. The offer included the following language: "OFFER CLOSING DATE: Time is of the essence, therefore this offer must be accepted on or before 5:00 p.m. August 5th." Kapoor received the offer, signed it, but also made several changes to the terms. These included an increase in the initial deposit, an increase in the down payment due, and a decrease in the term of the loan from the seller from 25 to 20 years. On the evening of August 4th, Nolan received the modified document but neither accepted nor rejected its terms. Instead, Nolan said "he was going to wait awhile before he decided what to do with it." The following morning on August 5th, Kapoor approached Segal, another prospective buyer, and signed an offer to purchase with terms very similar to those presented to Nolan the previous evening. At 2:00pm on August 5th, Nolan was informed that "[y]ou snooze, you lose; the property has been sold." Later that afternoon, Nolan initialed the offer containing Kapoor's modified terms and presented it to Kapoor's representative. When Kapoor refused to sell the property to Nolan, Nolan filed a lawsuit against Kapoor.

An offer can terminate automatically when the period of time specified in the offer has passed. In this case, Nolan made an offer that automatically terminated at 5:00pm on August 5th. Before the offer automatically terminated, Kapoor replied to Nolan with changes in the terms of the offer. This constitutes a counteroffer of the original offer. Assessment question A counteroffer is a rejection of the original offer and does not have to be accepted. If an original offeror does accept the terms of the counteroffer, a valid contract is created. Nolan received the terms of the counteroffer, but did not accept the terms of the counteroffer. When Nolan was informed that "[y]ou snooze, you lose; the property has been sold," Kapoor had revoked her counteroffer. Assessment question When Segal was presented with the terms of the counteroffer made earlier to Nolan, Segal did accept the terms. Segal's acceptance of the terms offered by Kapoor causes a valid contract to be created. Assessment question Nolan's subsequent acceptance of Kapoor's counteroffer does not create a valid contract. Therefore, Nolan is likely to lose his lawsuit against Kapoor and Segal is likely the legitimate new owner of the property. Assessment question What If the Facts Were Different? What if, after receiving the counteroffer from Kapoor, Nolan signed the counteroffer, agreed to all of its terms, and returned it to Kapoor. In this case, Nolan would have accepted the counteroffer of Kapoor. Kapoor and Nolan would have entered into a valid contract as a result. If Segal accepted Kapoor's offer after Kapoor and Nolan agreed upon contract terms, Segal and Kapoor would not have a valid contract because the contract between Kapoor and Nolan to sell the property had already been formed.

Gavin and Allison are having drinks after work. After several rounds, the topic of Gavin's sports car comes up. Gavin is extremely proud of his sports car and brags about it all the time. To impress Allison, Gavin offers to sell Allison his expensive sports car for $5,000. Allison jumps at the deal, because she knows the car is worth much more than $5,000. They even write the "deal" down on a napkin, and both Gavin and Allison sign the napkin. The next morning, when Allison brings $5,000 to purchase the sports car, Gavin explodes. Gavin tells Allison that he was just kidding and that he would never sell his expensive sports car for such a low price. When Allison tries to enforce the deal:

Gavin can either rescind the contract based on incapacity or ratify the contract.

When Santino Simms and Luna Batista divorced, they agreed to split their assets equally without specifically mentioning any stock accounts. They owned an account with Bernie L. Milford Investment Securities estimated to be worth $5.4 million. Simms kept the account and paid Batista more than $6.5 million, including $2.7 million to offset the amount that they believed was in the account. Two years after the divorce agreement was signed, Simms learned that the account actually never existed due to its manager's fraud.

Identifying the Facts and Issues This contract has all of the four required elements of a contract: agreement, capacity, consideration, and legality. When the parties learned that the Milford account was worthless, Santino would want to get out of this contract because Santino kept the worthless account and paid Luna cash for one-half of the supposed value. Assessment question If a court does not enforce the contract between Santino and Luna, it is because of a lack of voluntary consent . If the parties had a voluntary consent problem, it was a bilateral mistake . Assessment question The divorce settlement agreement did not explicitly mention the Milford account and did not explicitly mention the equal split of stock shares in the Milford account. Therefore, the finding that the Milford account was nonexistent two years after the divorce agreement does not amount to a material mistake of fact. Assessment question A court would not likely rescind this agreement due to a bilateral mistake. Luna would not have to return the money she received under the agreement. Assessment question What If the Facts Were Different? Assume that, after the divorce agreement was reached, Santino Simms found that his Milford account had substantially increased in value. In this case, Luna could not rescind the agreement to obtain the increased value. Given these revised facts, there would not be a mutual mistake between Santino Simms and Luna Batista.

LaVon contracts with Nathan for Nathan to sing at her comedy club every Friday night in July. The first Friday, the crowd loved Nathan. The second Friday, they booed him. The next week, Nathan got a better offer, so he hired his twin brother Ethan to fill in for him at LaVon's club. Can LaVon compel Nathan to perform?

Yes, she can compel him under the equitable remedy of specific performance.