Contracts & Sales

HYPO 6N Shirley MacLaine is fired in violation of her contract. She makes $900/week. Her former employer provides that Shirley could have gotten a comparable job paying $800/week. What are Shirley's damages?

$100/week

HYPO 6H I contract to sell my 2010 Toyota Prius to Sofia Vergara for $1,000. Sofia breaches the contract. A week later, I sell the car to Eva Longoria for $800. What are my damages? (2) What if I sell the car to Eva for $1,000?

$200 (2) nothing

HYPO 6G B contracts to buy an antique painting for $4,000. B later discovers it's not antique. B keeps it anyway. The painting is worth $2,000. Had it been antique, it would be worth $5,000. What are B's damages?

$3,000

HYPO 6D. He pays another painter $13,000 to paint the I agree to paint Gates's house for $10,000. I breach. house. How much can Gates recover from me? (2) Same facts, except that Gates refuses to pay me after I have started painting his house, Thave already spent $5,000. I expected to clear $1,500 in profit. What are my damages? (3) If my profits were uncertain, what would my reliance damages be? (4) What would restitution damages be?

$3,000 (2) $6,500 (3) $5,000 (reliance damages) (4) $______ reasonable value conferred on Bill Gates by painting house

HYPO 6E B contracts to buy carpeting for $2,500. S does, not deliver. The market price for similar carpeting is $2,700. What are B's damages if B pays $2,800 for the same carpeting?

$300

HYPO 4H A contract for a machine provides that "all parts are guaranteed for two years" [express warranty]. What if it also provides that "all warranties are disclaimed"? (2) A contract provides for the sale of a machine is" or "with all faults." [= magic words] The contract says nothing else about quality. Are there any implied warranties under this contract? (3) A contract says that there are "NO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS" instead using a "magic" phrase. Are there any implied warranties?

(1) No, cannot do (2) No, implied warranties, used magic language under UCC (3) No, as long as disclaimer was conspicuous

Jeff Bezos offers to sell his house to Bill Gates for $500,000. Gates responds, "I will only pay $490,000." Bezos refuses. Can Gates later accept Bezos's $500k offer? (2) What if Gates had responded, "Will you take $490,000?"

(1) No, counteroffer is a rejection (2) Yes, Gates can accept, because this is mere bargaining. A mere inquiry will not operate as a rejection/counteroffer.

Meg Ryan offers me $10,000 to paint her house. Her offer states that it can be accepted only by painting the house. I start painting the house. Can Meg still revoke? (2) What if I had ordered paint, but not yet started painting the house? Could Meg still revoke?

(1) Start of performance of unilateral contract means offeror cannot revoke. (2) Yes because performance hasn't started, it's mere preparation to perform. [most they will throw at you, all short of paintbrush at wall = mere preparation; but could be reasonably foreseeable detrimental reliance and that could make revocable] offer only ---- by = unilateral *starting to perform a unilateral contract

HYPO 4F Which of the following are express warranties? (1) "This ring is solid 24 carat gold" (2) "This computer is guaranteed for 2 years" (3) Seller uses a sample or model [TRICK Q!-don't say it's "implied"] (4) All parts of my widgets are "top notch" or "best quality"

(1) Yes (2) Yes (3) Yes -- not implied (4) No - puffing/opinion

HYPO 2TB orders a Beyoncé CD from S. S ships a Lady Gaga CD instead. Has S accepted B's offer? (2) What if S includes a note saying, "I'm out of Beyoncé, but am sending Gaga as an accommodation"?

(1) Yes, acceptance and breach (2) Accommodation = counteroffer/rejection

B makes a written offer to buy 100 widgets from S. The offer does not mention any warranties. S's written acceptance disclaims all warranties. Is there a contract? (2) Does the contract include S's disclaimer? (3) What if S had not disclaimed all warranties, but had merely added "Monday delivery"? (4) What if B had responded that Monday deliver was not convenient?

(1) Yes, there is an additional term, but s made a seasonable acceptance. (2) No, because disclaimer is a material change (would cause unfair surprise or hardship for the offeror). (3) between merchants that would become part of the deal (4) buyer can keep out additional terms with response

Unconscionability is (1) part of ____ law generally (2) empowers a ____ to refuse to enforce all or part of an agreement. The two basic ______, (3) unfair _____ and ______ terms, are (4) tested as of the ____ the agreement was made (5) by the court.

(1) contracts; (2) court; tests; (3) surprise; oppressive; (4) date

Liquidated damages are upheld if: (1) were ______ to estimate at the time of the contract, and (2) are a reasonable ______ of probable damages, but (3) cannot operate as a ______.

(1) difficult (2) forecast (2) penalty

The sale of goods is governed by the UCC. The UCC does not employ the common law mirror-image rule for offer and acceptance. Instead, under UCC 2-207, as between merchants, additional terms proffered by a party become part of the contract, unless: (1) the offer expressly ______ acceptance to the terms of the offer; (2) the offeror __________ within a reasonable time; or (3) the additional terms would ___________ ______ the contract. Here, the additional term limiting liability to a mere $100 on a $10,000 order is a material alteration of the contract. As such, the term does not become part of the contract. The contract at hand is made up of the offer to buy $10,000 worth of widgets and the acceptance to provide those widgets by August 30.

(1) limits (2) objects (3) materially alter

HYPO 4I. You buy an oven for your home from Al's Kitchen Appliances. The contract provides: "All parts are guaranteed for two year" [=express warranty] and "Al's liability is limited to replacement parts" [="limitation of remedy"; not a "disclaimer"]. A year later, a defect in the oven causes a fire that destroys your kitchen. Can you get damages from Al's? (2) What if you were also injured in the fire?

(1) probably not because you can limit as long as not unconscionable (at time contract made) (2) prima facie unconscionable to limit remedies with injury, she can recover

The father of a high school senior who had poor grades his junior year offered to pay his son $1,000 if he quit playing video games for the rest of the school year. The son agreed to quit that very day. However, shortly thereafter the son began to have doubts as to whether his father would really pay him the $1,000 if he kept his end of the bargain. The son told his mother about the conversation and she told him, "Go ahead and quit—if your father won't pay, I'll see that you get the money he promised you from my own account." The son quit playing video games for the rest of the school year, and he made the honor roll that year. Unfortunately, his parents did not live to see him complete this feat—they were killed in a skydiving accident two weeks before the end of the school year and one month before his 18th birthday. At the appropriate time, the son submitted a claim for $1,000 to the executor of his father's estate and was refused payment because the estate was insolvent after paying numerous secured creditors. The son then filed a claim against his mother's estate for the $1,000 based on the promise his mother made to pay that amount if his father refused to pay it. What is the best argument for the probate court's rejecting this claim against the mother's estate? (A) The contract between the mother and the son was illusory. (B) The son has not been damaged by any breach because the only effect—that he quit playing video games—was salutary. (C) The contract between the mother and the son was oral. (D) The son did not turn 18 years of age until two weeks after he completed performance and, thus, the contract was void because it lacked mutuality of obligation.

(C) The estate's best defense is that the contract was oral. Generally, contracts need not be in writing to be enforceable; however, under the Statute of Frauds, certain contracts must be evidenced by a writing signed by the party to be charged to be enforceable. Contracts in which one party promises to pay the debt of another, such as this contract, must be in writing - Surety/Guaranty. The mother promised to pay her son the amount owed to him by his father if the father did not pay him. Thus, there was a suretyship promise that had to be in writing under the Statute of Frauds, and this one was not. Therefore, (C) is correct. (A) is incorrect because the promise was not illusory. A promise is illusory when there is not consideration on both sides of the contract. Here, the son will receive $1,000 if he performs (i.e., refrains from playing video games for a specified time period), and the mother will receive the son's detriment of not doing something that he has a right to do, which is valid consideration (the benefit to the promisor need not have economic value). The son's performance is valid consideration even though he has already promised his father that he would give up video games (i.e., it is not a preexisting duty), because the son was not bound by his promise to his father. The father's offer was for a unilateral contract (i.e., one seeking perfor- mance rather than a promise to perform), and so could be accepted only by performance. The son had not yet performed when his mother made her promise to pay him if his father did not, so the son had not yet accepted his father's offer and was not bound by his promise to quit playing video games. Therefore, he was not under a preexisting duty, and his mother's promise servedas additional consideration for the son's performance. Note also that a surety such as the mother will be bound by her promise to pay another's debt as long as she makes her promise before the creditor (the son) performs or promises to perform; the surety need not receive any separate consideration. (B) is incorrect because the son's giving up what he had a legal right to do—even if it is detrimental—is sufficient consideration to support a contract, so the mother is bound to pay even though the contract was beneficial to the son. (D) is incorrect because a contract between an infant (i.e., a person under the age of 18) and an adult is binding on the adult, even though it is voidable by the infant. Courts abide by the legal fiction of mutuality of consideration in cases involving infant-adult contracts for reasons of public policy, so such contracts may be made and acted on.

A landscaper entered into a written contract with a developer to landscape a 30-house subdivision at a price of $4,000 for each house. The contract provided for payment of the $120,000 only on completion of the landscaping for allthe houses. After completing 20 houses, the landscaper demanded payment of $80,000. The developer refused. The landscaper then walked off the job without doing any landscaping on the other 10 houses. The developer refuses to pay the landscaper. If the landscaper sues the developer, what damages should the court award the landscaper? (A) Nothing, because payment was expressly conditioned on completing the landscaping of all the houses. (B) Nothing, because the landscaper's breach is material. (C) $80,000, less the developer's damages resulting from the breach. (D) The amount of the landscaper's anticipated profit on the 20 houses completed.

(C) The landscaper may recover $80,000 less the developer's damages resulting from the breach. A contract is divisible if it is possible to apportion the parties' performances into corresponding pairs. Here the landscaper's and developer's performances can be apportioned into corresponding pairs: for each house landscaped by the landscaper, there is a corresponding payment of $4,000 owed by the developer. The contract itself states the price as $4,000 per house, rather than $120,000 for the entire job. If a party performs some of the units of a divisible contract, he is entitled to the agreed-on price for those units even if he fails to perform the other units. However, the right to the contract price for the units performed is offset by the damages arising from the breach of the remaining units. (A) is incorrect because the provision for payment upon comple- tion of all houses is construed by most courts as merely stating a time for payment rather than imposing a condition. This language does not establish that the parties intended the contract to be indivisible. (B) is incorrect because materiality of the breach does not affect the landscaper's ability to recover under a divisible contract or in restitution. In any case, (A) and (B) are both incorrect because the developer would be unjustly enriched if he were allowed to keep the landscaping without paying for it. Thus, even if a court were to find that the contract was not divisible, the landscaper could recover in restitution either the reasonable value of the serviceshe performed (the detriment suffered) or the increase in value of the properties (the benefit conferred). Under either measure, his recovery would again be offset by the developer's damages incurred in completing the job. (D) misstates the proper measure of damages.

Calandrillo buys a 2010 Toyota Prius for $8,000 from his next door neighbor. The price includes a free lesson on making it up hills. Article 2 or not?

Rule is to apply all common law or all UCC Article 2 depending on what part of contract is more important. The more important part is the car, so UCC Article 2 would apply.

Quasi-contractual relief is appropriate if a failed contract resulted in unjust enrichment of one of the parties. A party must allege that: (i) it conferred a ________ on the other party by providing something at the other party's request, (ii) party had a reasonable __________ of being adequately compensated under the agreed-upon terms, and (iii) the other party would be unjustly ____________ by the services provided if not required to compensate the complaining party.

(i) benefit (ii) expectation (iii) enriched

For a liquidated damages clause to be enforceable: (i) damages for breach must have been ________ to ascertain or establish at the time the contract was formed, and (ii) the amount agreed upon must have been a _____________ forecast of compensatory damages in case of breach.

(i) difficult (ii) reasonable

In determining whether a breach is minor or material a Florida court will examine six criteria: (i) SB (ii) AC (iii) CP (iv) HBP (v) NWB (vi) LCP

(i) extent to which the non-breaching party received the substantial benefit it could have anticipated from full performance (ii) the extent to which the non-breaching party can be adequately compensated in damages (iii) the extent to which the the breaching party has completed performance or made preparation to complete performance (iv) the hardship upon the breaching party if the contract is terminated (v) the negligent or willful behavior of the breaching party (vi) the likelihood that the breaching party will complete performance.

The rights of the third-party beneficiary do not vest until: M D L

(i) it manifests assent in a manner invited or requested by the parties; (ii) it learns of the contract and detrimentally relies on it; or (iii) it brings a lawsuit to enforce its rights.

SOF requires one or more writings that: (i) RIS (ii) IDM (iii) ET

(i) reasonably identify subject matter (ii) indicate contract made (iii) essential terms

Non-repudiating party has four options in response to an anticipatory breach: TRS SPWS ORD IRUP

(i) treat the anticipatory breach as a total repudiation and sue immediately (ii) suspend performance and wait to sue until performance date (iii) treat repudiation as an offer to rescind and treat the contract as discharged (iv) ignore the repudiation and urge the party to perform

A contract is divisible if: (i) performance of each party is divided into _____ or more parts, (ii) the number of parts required of each party is the ________, (iii) performance of each part by one party is the agreed-upon ______________ of a corresponding obligation of the other party.

(i) two (ii) same (iii) equivalent

Ambiguity/misunderstanding

*raffles v whistle house innocent party terms if the other party knows about it

Methods of Termination 1) Lapse of ________ 2) Death 3) _____________ 4) Rejection

1) Lapse of Time 2) Death 3) Revocation 4) Rejection

Termination of Offer-4 Ways:

1) Lapse of Time After a reasonable time, if no time is specified. 2) Revocation Look for indirect revocation (offeror conduct + offeree awareness). 3) Rejection An inappropriate response (a counteroffer or conditional acceptance). 4) Death before Acceptance Terminates a revocable offer.

FLORIDA NOTE Disabilities are removed to allow: 1. Minors ____+ years of age to borrow money for their own _______. 2. Eligible _____ to participate in benefits of the ____, Farm & Business Loans Act 3. Minor to ______ for medical services of her _____ or her pregnancy Minor may be ____ from raising legal ______ as a defense if he induced the other ______ to enter into the contract by _______ representing he had reached the age of majority.

1. 16, education 2. minors; Home 3. contract; child estopped; incapacity; party; fraudulently

Risk of Loss in a Sale of Goods governed by hierarchy: 1. Agreement _______ risk. The agreement of the parties _______. [won't happen on the bar] 2. Breaching _______ bears risk. 3. Delivery by _____ carrier (e.g., UPS, Amtrak)*** Risk of loss ______ to buyer when seller completes "_______ obligations." 4. Non-carrier cases (e.g. buyer picks up or the seller _______). Risk of loss _____ on whether the _____ is a merchant.

1. allocates; controls 2. party 3. common; shifts; delivery 4. delivers; depends; seller

Exceptions to the Parol Evidence Rules [=evidence gets in]: 1. Correct a _____ error. 2. Establish a defense against ________. 3. Interpret a _____ or ambiguous term. 4. Add to a partially ______ writing

1. clerical 2. formation 3. vague 4. integrated

FLORIDA NOTE: Florida Additions to SOF 1. Healthcare _______________ 2. Debt __________ by Statute of Limitations 3. Newspaper ____________ 4. Home _____________ sales 5. Home improvement ____________ 6. Credit ____________

1. guarantees 2. barred 3. subscriptions 4. solicitation 5. contracts 6. agreements

Sale of goods under Article ____, modifications need no ______.

2; consideration

Sale of Goods for $______ or more (article 2) subject to SOF.

500

Which of the following promises is commonly considered to be illusory? A) A promise with an unqualified right to cancel or withdraw at any time B) A promise conditioned on the promisor's satisfaction C) A promise to purchase all that one requires D) A promise to sell all that one decides to make

A

Which of the following is a true statement regarding discharge of contractual duties by rescission? A) An agreement to rescind is itself a binding contract supported by consideration B) Once an offeree of a unilateral contract has fully performed, the contract cannot be rescinded under any circumstances C) A third-party beneficiary contract may be discharged by mutual rescission despite the vesting of the beneficiary's rights if the beneficiary is a donee beneficiary D) A mutual rescission agreement must be in writing if the contract so provides

A "An agreement to rescind is itself a binding contract supported by consideration" is a true statement. The consideration is the giving up by each party of her right to counterperformance from the other. A third-party beneficiary contract may not be discharged by mutual rescission if the third-party beneficiary's rights have vested, regardless of whether he is a creditor or donee beneficiary. Once an offeree of a unilateral contract has fully performed, the contract can be rescinded, but only if the rescission promise is supported by: (i) An offer of new consideration by the nonperforming party; (ii) Elements of promissory estoppel; or (iii) Manifestation of an intent by the offeree to make a gift of the obligation owed to her. A mutual rescission agreement may be oral, even if the contract to be rescinded expressly states that it can be rescinded only by a writing.

A microbrewery and a farming operation entered into a written contract for the sale of barley. The microbrewery agreed to buy from the farm "all the barley that the microbrewery requires" in its manufacture of beer, for a period of five years, at a mutually agreed-upon price. Under the contract, the microbrewery would place its orders on the first of each month and the barley would be delivered within five business days. For the first two years of the contract, the microbrewery placed its orders on the first of each month for either four or five barrels of barley. At the beginning of the third year of the contract, an article about the microbrewery appeared in a national newspaper, causing its popularity to soar. The following month, the microbrewery placed an order for 20 barrels of barley. The farm could not meet the increased demand and refused to deliver the 20 barrels. The microbrewery sued the farm for breach of contract. Will the microbrewery be successful in its suit? (A) No, because its order for 20 barrels of bar- ley was unreasonably disproportionate to its previous orders over a two-year period. (B) No, because the quantity term in a contract for a sale of goods must be certain. (C) Yes, because its order for 20 barrels of barley reflected its actual requirement for that month. (D) Yes, because its change in demand was unforeseeable when the parties entered into the contract.

A (A) The farm will prevail. Under U.C.C. section 2-306(1), quantities subject to requirements contracts may not be unreasonably disproportionate to any stated estimate or, in the absence of any stated estimate, to any normal or otherwise comparable prior requirements. Here, the January orderwas four to five times larger than the previous orders over a two-year period and, therefore, the size of this order is unreasonably disproportionate to comparable prior requirements. Thus, (A) is correct. (B) is incorrect because a requirements contract is a special case. Even though no specific quantity is mentioned in an offer for a requirements contract, it is sufficiently definite because the quantity term is capable of being made certain by reference to objective, extrinsic facts (i.e., the buyer's actual requirements). (C) is incorrect because, although the buyer's requirements are measured by actual requirements as may occur in good faith, under U.C.C. section 2-306(1), they may not be unreasonably disproportionate to any stated estimate or to any normal or otherwise comparable prior requirements. (D) is incorrect because the rule regarding unreasonably dispro- portionate orders must be followed even when the change in demand was unforeseeable when the parties entered into the contract.

An intended beneficiary must be: A) Identifiable at the time performance is due B) Present at the time the performance is due C) Notified at the time the contract is made D) Named at the time the contract is made

A An intended third-party beneficiary has certain rights under the contract. The best test for determining whether someone is an intended beneficiary is to pose the following question: "To whom is performance to be given according to the language of the contract?" In other words, was the purpose of the promisee, according to the language of the contract, to get the benefit for herself primarily or to confer a right on another directly? If the purpose was to confer a right on another directly, there is a third-party beneficiary situation. The third-party beneficiary must be identifiable at the time performance is due. Although it is true that a court will more likely find that a contract is primarily for the benefit of a third party if that third party is expressly designated in the contract, this is not always the case. It is not necessary that the third-party beneficiary be named, or even identifiable, at the time the contract is made; she need only be identifiable at the time performance is due. There is no requirement that an intended beneficiary be notified at the time the contract is made or be present at the time the performance is due.

On April 15, a wholesaler of tulip bulbs telephoned a local nursery and offered to sell to the nursery 80 gross of tulip bulbs for $8,000, not including delivery charges. The nursery accepted immediately. On April 17, the nursery sent the wholesaler an email confirming the deal for the sale of 80 gross of tulip bulbs for $8,000, and stating that it anticipated a waiver of the delivery charges because of the size of the order. On May 3, the wholesaler telephoned the nursery and stated that, due to a poor growing season for tulips, it would not be able to supply any tulip bulbs to the nursery. If the nursery brings suit against the wholesaler and the wholesaler asserts the Statute of Frauds as a defense, will the nursery prevail? A) Yes, because its April 17 email contained the quantity term. B) Yes, because its April 17 email contained the price term. C) No, because the nursery's April 17 email varied the terms of the wholesaler's offer. D) No, because the wholesaler is the party to be charged and has signed nothing.

A Because the quantity was stated in the April 17 email, the Statute of Frauds is satisfied and the nursery may prevail. This contract is for the purchase and sale of goods; thus, the UCC applies. The Statute of Frauds requires that a contract for the sale of goods for $500 or more be evidenced by a writing signed by the party to be charged. This writing must contain the essential elements of the agreement. The quantity term is the key to the sufficiency of a memorandum, and here the writing includes the quantity term. Thus, the writing complied with the Statute of Frauds. (B) is wrong because all other terms (including price) may be proved by parol evidence. The UCC requires only that the memorandum contain (i) quantity, (ii) the signature of the party to be charged, and (iii) a writing sufficient to indicate that a contract was formed. [UCC §2-201] (C) is wrong because it does not bear on the Statute of Frauds issue, but rather on the issue of the additional terms, which will not prevent a contract from being formed between merchants. (D) is wrong because UCC section 2-201(2) provides that, in a deal between merchants, a writing confirming the deal sent by one party will bind both parties, unless the other party objects in writing within 10 days. Here, the wholesaler did not object within 10 days, and so the nursery's email confirmed the deal. Thus, the wholesaler can be charged even though the wholesaler has not signed the memorandum.

In a contract for a sale of goods priced at $500 or more, if the goods are _________ or __________, the contract will be enforced even if there is no writing. A) Received and accepted; paid for B) Shipped; received and accepted C) Shipped; paid for D) To be specially manufactured; unique

A If goods are either received and accepted or paid for, the contract is enforceable without a writing. However, the contract is not enforceable beyond the quantity of goods accepted or paid for. Thus, if only some of the goods called for in the oral contract are accepted or paid for, the contract is only partially enforceable. A contract for specially manufactured goods, i.e., goods that are to be specially manufactured for the buyer and are not suitable for sale to others by the seller in the ordinary course of his business, can sometimes be enforceable without a writing, but only under circumstances where the seller has reasonably indicated that the goods are for the buyer and made a substantial beginning in their manufacture or committed for their purchase before notice of a repudiation was received. There is no exception to the Statute of Frauds for unique goods. There is no exception to the Statute of Frauds for contracts in which the goods have been shipped. There is an exception once the goods have been received and accepted or paid for.

A landowner and a purchaser orally agreed that the landowner would convey 20 acres of his 160-acre farm to the purchaser. At the time of their agreement, the landowner wrote on the back of an envelope, "I hereby promise to convey the northern 20 acres of my farm to [the purchaser] for $10,000." One month later, the purchaser tendered $10,000 to the landowner, but the landowner refused to convey the 20 acres. If the purchaser sues the landowner to convey the land and the landowner prevails, what will be the most likely reason? A) The writing was not signed by the landowner. B) The writing was not signed by the purchaser. C) The writing did not describe the property with specificity. D) The writing was on the back of an envelope.

A If the landowner prevails, it will be because the writing was not signed by the landowner. Under the Statute of Frauds, to be enforceable a contract for the sale of land must be evidenced by a writing signed by the party sought to be charged. Here, the landowner is the party that the purchaser is seeking to charge, so his signature is required on the writing. (B) is wrong because the purchaser's signature is not required to bind the landowner. (C) is wrong because the contract need only reasonably describe the subject matter; great specificity, such as a legal description, is not required. Nothing in the facts suggests that "the northern 20 acres of my farm" is not an adequate description, which makes (C) a less certain reason than (A) why the landowner would prevail. (D) is wrong because it does not matter on what substance the writing is made.

Certain agreements, by statute, must be evidenced by a writing signed by the parties sought to be bound. This is commonly known as: A) The Statute of Frauds B) The Confirmatory Memo Rule C) The Perfect Tender Rule D) The Parol Evidence Rule

A In most instances, an oral contract is valid. However, certain agreements must be evidenced by a writing signed by the parties sought to be bound as set forth in the Statute of Frauds. These agreements include things such as suretyship promises, promises creating an interest in land, promises that cannot be performed within one year, and contracts for the sale of goods priced at $500 or more. The Confirmatory Memo Rule is a special UCC rule used for confirming oral agreements. In contracts between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under the Statute of Frauds to bind the sender, it will also bind the recipient if: (i) he has reason to know of the confirmation's contents; and (ii) he does not object to it in writing within 10 days of receipt. Under the Perfect Tender Rule, if goods or their delivery fail to conform to the contract in any way, the buyer may reject all, accept all, or accept any commercial units and reject the rest. The Parol Evidence Rule is a rule used in interpreting and enforcing a written contract. Under that rule, when the parties to a contract enter into an agreement in writing, with the intent that the agreement embodies the final expression of their bargain, any other expressions, written or oral, made prior to the writing, as well as any other oral expressions made contemporaneous with the writing, are inadmissible to vary the terms of the writing.

An interior decorator asked a woodworker she met at a crafts fair to build a curly maple armoire. They entered into a written contract, with a contract price of $6,500 to be paid upon the decorator's receipt of the armoire. When the work was completed, the woodworker shipped the armoire to the decorator. After inspecting it, the decorator felt that it was not of the same high level of workmanship as she was expecting, given the other furniture that the woodworker had showcased at the fair, and a good faith dispute arose between the parties as to the workmanship. The decorator sent the woodworker a check for $4,000 marked "payment in full." The woodworker indorsed and cashed the check, then sued the decorator to recover the $2,500 balance. What would most courts likely hold? A) The woodworker's cashing of the check constituted an accord and satisfaction, discharging the decorator's duty to pay the balance. B) The woodworker can recover the $2,500 balance from the decorator. C) The woodworker is estopped to sue for the balance because he cashed the check knowing that it was being tendered in full settlement. D) The woodworker's endorsing a check so marked constituted a written release, thereby discharging the contract.

A Most courts would hold that there is a good faith dispute, and the check thus proposed an accord; the woodworker's act of cashing it is a satisfaction. A contract may be discharged by an accord and satisfaction. An accord is an agreement in which one party to an existing contract agrees to accept, in lieu of the performance that he is supposed to receive from the other party, some other, different performance. Satisfaction is the performance of the accord agreement. An accord and satisfaction generally may be accomplished by tender and acceptance of a check marked "payment in full" where there is a bona fide dispute as to the amount owed. Here, there is a good faith dispute between the parties as to the workmanship on the armoire. Therefore, the decorator's tender of the check marked "payment in full" and the woodworker's cashing of the check constituted an accord and satisfaction, discharging her duty to pay the balance. (B) is incorrect because the debt is unliquidated. Generally, payment of a smaller sum than due will not be sufficient consideration for a promise by the creditor to discharge the debt. However, the majority view is that payment of the smaller amount will suffice for an accord and satisfaction where there is a bona fide dispute as to the claim. As discussed above, because the parties had a good faith dispute about the workmanship on the armoire, the decorator's tender of the check and the woodworker's cashing of the check constituted an accord and satisfaction, which discharged the decorator's duty to pay the balance. (C) is incorrect because a promissory estoppel situation does not exist in that there was no change of position by the decorator based on any act or statement by the woodworker. Whenever a party to a contract indicates that she is waiving a condition before it is to happen or some performance before it is to be rendered, and the person addressed detrimentally relies upon the waiver, the courts will hold this to be a binding (estoppel) waiver. Here, there is no indication that the designer detrimentally changed position as a result of the woodworker's cashing of the check. Therefore, his act of cashing the check could not be considered an estoppel waiver. (D) is incorrect because the woodworker's indorsement is not sufficient to meet the writing requirement for a release. A release that will serve to discharge contractual duties is usually required to be in writing and supported by new consideration or promissory estoppel elements. While the good faith dispute between the woodworker and the decorator would meet the consideration requirement for a release, the indorsement does not show the kind of circumspection and deliberateness that the writing requirement was intended to ensure. Therefore, the better answer is that the acceptance of the check by the woodworker was a satisfaction, as discussed above, rather than a release.

Under Article 2, when an offeree proposes additional or different terms during acceptance, what will the court apply to determine whether the additional or different terms become part of the contract? A) The battle of the forms provision B) The mailbox rule C) Gap fillers D) The mirror image rule

A The battle of the forms provision of Article 2 lists specific rules for determining what terms are included in a contract when the terms of acceptance do not match the terms of the offer. Article 2 has abandoned the mirror image rule, which requires an absolute and unequivocal acceptance of each and every term of the offer. Gap fillers are used when certain terms are not included in the contract; it does not apply to additional or different terms in the acceptance. The mailbox rule is applied to determine the timing of acceptance of a contract.

A corporation whose subsidiaries include a major hotel chain planned to build a new hotel and advertised for bids to build the hotel within the next six months. Four bids were received, for $17 million, $17.2 million, $17.4 million, and $15 million. The corporation's chief financial officer reviewed the bids, then emphatically told the corporation's chief executive officer ("CEO") that there was "no way" the low bidder could make a profit on the $15 million bid. The CEO made no response. In fact, the builder had stayed up for 72 hours without sleep preparing the bid for the hotel project and had neglected to include the plumbing expenses in the bid. Typically, the cost of plumbing, including the shop's profit, would have been about $2 million. Shortly after the $15 million contract was signed by the CEO and the builder, the builder discovered his mistake and telephoned the CEO to tell her that he had forgotten to include the cost of plumbing, adding that he would normally charge $2 million for plumbing. The CEO agreed to pay the additional $2 million, but this arrangement was never reduced to writing. After the builder completed the project on time, the CEO sent him a check for only $15 million. Can the builder compel the CEO to tender the additional $2 million? A) Yes, because the CEO was on notice of the builder's mistake. B) Yes, because the builder relied to his detriment on the CEO's promise. C) No, because the builder had a preexisting legal duty to complete the project for $15 million. D) No, because evidence of the agreement to pay the additional $2 million is barred by the parol evidence rule.

A The builder will be able to compel the CEO to pay the additional $2 million because the CEO was on notice of the mistake. The builder has the defense of unilateral mistake. Although the general rule is that a contract will not be avoided by a unilateral mistake, there is an exception where the nonmistaken party either knew or should have known of the mistake. Here the facts clearly indicate that the CEO knew that the builder's bid could not be correct, yet relied on it anyway. Thus, the builder had grounds to avoid the contract. Rather than completely avoid the contract here, the parties agreed to reform it, but they failed to record the reformation in writing. Nevertheless, the court will allow the parties to show the reformed terms because of the mistake. (B) is incorrect because the fact that the builder relied to his detriment on the CEO's promise would not allow him to collect the additional $2 million. Detrimental reliance is a factor in promissory estoppel, which is a doctrine used by the courts to avoid an unjust outcome when there is no contract. Here, there is a contract supported by consideration, so this doctrine does not apply. The builder is entitled to reformation of the bargained-for contract because the CEO was on notice of the builder's mistake. In addition, even if this were a proper case for promissory estoppel, the builder would not necessarily be entitled to the $2 million. Courts that follow the Second Restatement approach typically award reliance, not expectation, damages. (C) is incorrect because the unilateral mistake here was sufficient to discharge the builder from his duties under the contract, so there was no preexisting duty. (If the mistake had not been sufficient to discharge the builder, (C) would be correct because where one is under a preexisting legal duty to perform, performance of that same duty generally will not be sufficient consideration to support a promise to pay additional sums for the performance.) (D) is incorrect because the parol evidence rule only prevents introduction of oral statements made prior to or contemporaneously with a written contract. Here, the $2 million term, although oral, was agreed upon after the original contract was made; thus, the parol evidence rule would not be a bar.

A builder and a wealthy landowner entered into a written contract whereby the builder would build on the grounds of the landowner's estate a mausoleum, using imported granite, to hold the remains of the landowner's recently deceased wife. The cost of the mausoleum was set at $100,000. After the contract was signed but before construction began, an international incident occurred. The incident resulted in various governments enacting an embargo, which prevented the builder from obtaining the granite he planned to use to build the mausoleum. The builder could get the granite from another source, but it would cost an additional $25,000. The builder explained the situation to the landowner, who agreed to pay $125,000 to have the mausoleum built. The builder prepared a writing stating that the price for the mausoleum was now $125,000. Both the builder and the landowner signed the writing. After the work was completed, the landowner gave the builder a certified check for $100,000 and refused to pay one penny more. If the builder brings suit against the landowner to recover the additional $25,000, will the builder likely prevail? A) Yes, because the modification was fair and equitable in view of the unanticipated increase in the cost of granite. B) Yes, because the later agreement was in writing and signed by the parties. C) No, because the builder had a preexisting duty to do the work for $100,000. D) No, because the 25% increase in price that the builder was trying to force on the landowner is unconscionable.

A The builder will likely prevail. Under the modern and better view of the Restatement (Second), a promise modifying a duty under a contract not fully performed on either side is binding if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made. Here, the contract had not been performed on either side at the time of the modification, the embargo is a circumstance unanticipated by the parties when the contract was made, and the increase is fair and equitable in light of the circumstances (it reflects only the builder's increased costs). Thus, the builder should succeed in his suit for the additional $25,000. (B) is incorrect because whether there is a signed writing is immaterial when there is a failure of consideration and thus no contract to be enforced. (C) is incorrect because it states the traditional rule and does not take into account the unanticipated circumstances of the embargo. Generally, modification of a building contract requires consideration, and performance of a preexisting legal duty is not consideration. Even the slightest change in performance is generally sufficient to constitute consideration, but here there was no change in the builder's duties in exchange for the additional $25,000 payment. Thus, under the traditional view, the modification would not have been valid, and the landowner would have been liable only for the amount agreed to in the original contract. (D) is incorrect because courts rarely recognize unconscionability based on price alone—and then only if the parties were in vastly unequal bargaining positions, which does not appear to be the case here. Moreover, a 25% increase alone is very unlikely to be found unconscionable. Had there been consideration, this modification undoubtedly would have been enforceable.

An advertising agency specializing in aerial banners and skywriting signed a contract with a film production company that was premiering a new blockbuster film. The contract provided that the agency would advertise the film by flying over the city towing a giant streamer belonging to the film company heralding the film's catch phrase and title in large letters. This contract specified that the flight was to be conducted on the first Saturday in June at noon (the day of the local premier), and the film company was to pay the advertising agency $500 for the flight. On the designated Saturday, the advertising agency was unable to fly because of a defective fuel pump. The defective condition was entirely unforeseeable and did not occur through any negligence or fault of the agency. The film company did not pay the agency, and each of the parties has sued the other for damages. Which of the following best states the rights and liabilities of the parties? A) The film company is entitled to recover damages from the advertising agency on account of the agency's failure to fly. B) The advertising agency is entitled to recover from the film company the $500 contract price, as the incapacity of the airplane was not the agency's fault. C) Neither party is entitled to recover against the other, because the advertising agency's duty to fly was discharged by impossibility, and the film company's duty to pay was contingent on the agency's flight. D) Neither party is entitled to recover against the other, because the film company's offer to pay $500 for the flight was in effect an offer for an act, and because the act was not performed, there was no valid acceptance.

A The film company will be able to recover damages from the advertising agency because the agency's failure to fly constituted a breach of contract. The parties entered into a bilateral contract—the agency promised to fly with the streamer and the film company promised to pay for the flight. The agency breached the contract by failing to fly on the designated Saturday. Its duty to fly was not discharged by impossibility. A contractual duty to perform may be discharged by objective impossibility (i.e., no one could have performed), but subjective impossibility (defendant could not perform) is insufficient. Here, the defect in the plane constituted only subjective impossibility (if it amounted to impossibility at all) because the agency could have obtained another plane to pull the streamer. If the agency had been unable to fly the plane because of weather (e.g., a severe ice storm), its performance would have been objectively impossible, and the agency would have been discharged. However, under these facts, the film company is entitled to damages for the agency's breach. (B) is incorrect because the film company's duty to perform (pay $500) was subject to the condition precedent of the agency's performance (flying), and, as discussed above, the agency breached the contract by failing to fly. Therefore, the film company's duty to pay never arose. The fact that the engine problem was not the agency's fault does not change things. The agency's inability to perform, even if it were due to impossibility, would merely discharge the contract, and each party would be excused from performance; the film company would not have to pay the $500. (C) is incorrect because, as determined above, the agency's duty was not discharged because performance was still possible. (If there had been objective impossibility, (C) would have been the correct choice.) (D) is incorrect because it suggests that the contract was a unilateral one (the offer to pay could be accepted only by completion of performance). This interpretation is clearly contrary to the facts. Although the film company offered to pay $500 for the flight, the agency accepted that offer by signing the contract. A promise to pay was given in exchange for a promise to fly. Thus, there was a contract to which both parties were bound.

A small business owner decided to retire, so she offered her long-time employee a chance to buy the business for $1 million. She promised in writing to keep the offer open to him for 90 days and to give him enough time to secure financing once he accepted the offer. Over the next few days, the employee cashed out all his retirement accounts and took a second mortgage on his home to raise the funds to purchase the business. When he approached the business owner to discuss the details of the sale, she said that she changed her mind and was revoking her offer because she did not want to retire after all. Was the owner's revocation of her offer proper? A) Yes, because it was an offer that could be revoked at will. B) No, because the owner created an option contract by promising to keep the offer open for 90 days. C) No, because the employee detrimentally relied on the offer. D) No, because the offer constitutes a merchant's firm offer.

A The owner's revocation of her offer was proper because the offer could be revoked at will. Generally, offers can be revoked at will by the offeror, even if she has promised not to revoke for a certain period of time. There are limitations on the offeror's power to revoke, but none of those exceptions apply in this case. (B) is incorrect because an option contract requires that the offeree give consideration for the promise by the offeror to keep the offer open, and no consideration is indicated by the facts. (C) is also incorrect. Detrimental reliance can limit an offeror's power to revoke where the offeror could reasonably expect that the offeree would rely to his detriment on the offer, and the offeree does so rely. However, this usually is limited to those situations in which the offeror would reasonably contemplate reliance by the offeree in using the offer before it is accepted; e.g., when a general contractor uses a subcontractor's bid in making its own offer. Here, the offer itself included a promise by the owner to give the employee time to secure financing after the offer was accepted. Therefore, the owner had no reason to anticipate that the employee would take immediate steps to raise the purchase money before he even accepted the offer. (D) is incorrect because these facts are not an example of a merchant's firm offer. A merchant's firm offer does not apply to any offer by a merchant; it applies only to an offer under the UCC for the sale of goods where a signed writing gives assurances that the offer will be held open.

A man shopping for a leather jacket at a clothing store could not decide between two jackets, so the proprietor, who knew the man and his family well, let him take one of the jackets on approval. No mention was made by the proprietor of the method of payment he expected. The man wore the jacket on a visit to his grandfather, who liked it so much that when the man told him what the jacket cost and that he had taken it on approval, the grandfather said he would buy it for him if he promised to give some of his old clothes to a favorite charity for the poor at Christmastime. The man wholeheartedly agreed to donate the clothes to the charity at Christmas. Very pleased, the grandfather called the shop and told the proprietor to send the bill for the jacket to him, which he did. Before the bill was paid and before the Christmas season arrived, the grandfather fell ill and died. The grandfather's executor has refused to pay the bill, and the man has not yet given any old clothing to the charity. Will the proprietor be able to recover the price of the jacket from the estate? A) Yes, because the proprietor was the intended beneficiary of the promise between the man and his grandfather. B) Yes, because the man has no duty to give the clothing to the charity. C) No, because the grandfather's implied promise to pay the proprietor arising from the phone call is unenforceable. D) No, because a condition has not yet occurred.

A The proprietor can recover the cost of the jacket from the grandfather's estate because the proprietor is an intended third-party beneficiary and his right to enforce the contract has vested. The rights of an intended third-party beneficiary vest when the beneficiary (i) manifests assent to the promise in a manner invited or requested by the parties; (ii) brings suit to enforce the promise; or (iii) materially changes his position in justifiable reliance on the promise. Here, the proprietor qualifies as an intended beneficiary of the agreement between the man and his grandfather because the proprietor was expressly designated in the contract, he was to receive performance directly from the grandfather, and he stood in an existing contractual relationship with the man that required the man to either pay for the jacket or return it, making it likely that the young man's purpose in making the arrangement with his grandfather was to satisfy the obligation to the proprietor. The proprietor can enforce the contract because his rights vested when he sent the bill to the grandfather at the grandfather's request. Thus, the proprietor will prevail against the grandfather's estate. (B) is wrong because the man does have a duty to give the clothes to the charity; if he does not do so, he will be in breach of his contract with his grandfather, and this would give his grandfather's estate a defense to payment. However, the man's time for performance (Christmastime) has not yet occurred, and so he is not in breach. Nevertheless, this fact is not the reason the proprietor will recover; he will recover due to his status as an intended beneficiary, not because this possible defense has been negated. (C) is wrong because both the result and the rationale are incorrect. The proprietor is not relying on the grandfather's implied promise to him in the phone call; he is seeking to enforce his rights as a third-party beneficiary of the agreement between the man and his grandfather. Even if the grandfather had not called the proprietor, the proprietor could still have recovered against the grandfather's estate because of his status as a third-party beneficiary. (D) is wrong because the man's giving the clothes to the charity is not a condition that must be fulfilled before the grandfather's estate must pay. The grandfather promised to pay for the jacket if the man promised to donate the clothes; i.e., the consideration for the grandfather's promise was the man's promise, not his actually donating the clothes. As soon as the man made the promise, the grandfather's duty to pay became absolute. (If the man does not donate the clothes, he will be in breach of his contract with his grandfather, but the grandfather's performance was not conditioned on the man's donating the clothes.)

A downtown department store engaged an electrician to service all electrical appliances sold by the store for a flat fee of $5,000 per month. Under a written contract signed by both parties, the store was responsible for pickup and delivery of the appliances to be repaired and the billing for the work. By its terms, the contract would continue until either party gave 180 days' written notice of its intent to terminate. Several months ago the electrician informed the store that he was losing money on the deal and was in financial trouble. He requested in good faith that the fee for the next three months be increased by $1,000 and that this increase be paid to a local bank to help pay off a loan that the bank had made to the electrician. The store orally agreed to so modify the original contract. However, the store did not pay the bank and now the bank is suing the store for $3,000. Who will prevail? A) The store, because there was no consideration to support the promise to pay the bank. B) The store, because the bank is only an incidental beneficiary of the modified contract between the store and the electrician. C) The bank, because it is an intended creditor beneficiary of the modified contract between the store and the electrician. D) The bank, because the electrician exercised good faith in requesting the modification regarding the payment to the bank.

A The store will prevail, because there was no consideration to support its promise to pay the bank the additional $1,000 per month. This question looks like it concerns third-party beneficiaries, but it actually presents a consideration issue. Generally, there must be consideration for modification of a contract, and a promise to perform an act that a party is already obliged to do is not sufficient consideration (the "preexisting legal duty" rule). Here, the electrician is promising to do exactly what he was obliged to do under his original contract with the store; thus, there is no consideration to support the promise to increase the fee. Note that the modern view permits modification without consideration if it is fair and equitable in view of unanticipated circumstances. That is not applicable here. This exception contemplates an unanticipated circumstance arising in performance of the contract that makes performance more difficult or expensive. (B) is wrong because the bank is an intended beneficiary, not an incidental beneficiary. An intended beneficiary is one who is clearly intended to benefit from the agreement. Here, the bank was named in the agreement and performance was to be made directly to it, and so it is clearly an intended beneficiary. (C) is wrong even though it is true that the bank is an intended creditor beneficiary. Despite this status, the bank will not recover because there was no consideration to support the modification of the contract. The status of creditor beneficiary does not give the bank any more rights than the electrician would have had to enforce the agreement, and the electrician could not enforce the agreement for the additional money because there was no consideration. (D) is wrong because it is based on the rule of UCC section 2-209, which states that an agreement subject to the UCC does not need consideration to be binding. However, the UCC governs only in cases of the sale of goods, and this question presents a contract for services. Thus, the UCC does not apply and the common law rule requiring consideration controls.

The owner of a house put the property up for sale. A surgeon entered into negotiations with the owner to purchase the house, and the parties agreed upon a sale price of $200,000 and a closing date. The owner told the surgeon that she would drop a contract in the mail and have her attorney draw up a deed. The owner signed a land sale contract, which included the property's address but did not contain a metes and bounds legal description. She mailed the contract to the surgeon that afternoon, although it was mailed too late for the last mail pickup of the day. The owner's attorney promptly drew up a deed and dropped it in the mail to his client. The surgeon received the contract the next day. After she mailed the contract, the owner received an offer of $250,000 for her property from her next-door neighbor, who wanted to expand beyond his own property line. The owner called her attorney and told him to inform the surgeon that the deal was off. The attorney e-mailed the surgeon, stating that his client had found another purchaser for the property, and that all matters regarding the surgeon's offer for the property were rescinded. The surgeon signed the contract anyway and returned it to the homeowner by registered mail. If the surgeon brings an action to compel the owner to convey the property to him for $200,000, is he likely to prevail? A) Yes, because the owner signed the land sale contract. B) Yes, because the contract was effective when the owner placed the document in the mail. C) No, because the surgeon did not mail the signed contract until after he received the revocation by e-mail. D) No, because the land sale contract does not contain the complete legal description of the property.

A The surgeon is entitled to specific performance because the owner signed the land sale contract. A contract was formed here when the parties orally agreed to the sale of the property. However, the contract was unenforceable at that time because, under the Statute of Frauds, a contract for the sale of land is unenforceable unless a memorandum containing the contract's essential terms is signed by the party to be charged. Here, the party to be charged is the owner, and she signed the land sale contract, a writing sufficient to satisfy the Statute of Frauds (a memorandum for the sale of land is sufficient if it contains the price, a description of the property - which need not be a "legal" description - and a designation of the parties). Thus, the contract was enforceable. Specific performance is allowed when the legal remedy (damages) would be inadequate, such as with contracts to purchase land, which is unique. Therefore, the surgeon is entitled to specific performance (assuming the property has not already been sold to a bona fide purchaser); under the facts the neighbor had made an offer but nothing indicates that the owner accepted the offer yet. (B) is incorrect because the contract was effective when the parties orally agreed to it. The contract became enforceable when the owner signed it, not when she placed it in the mail. (C) is incorrect because this is not a mailbox rule issue. The contract was already formed before the attorney attempted to revoke the offer. Thus, his attempt at revocation was ineffective. It did not matter when the surgeon mailed the contract. (D) is incorrect because, to satisfy the Statute of Frauds, a description need not be a complete legal description, but need merely be sufficient to reasonably identify the subject of the contract. It is sufficient that the property was identified by its address.

A purchasing agent of a steel company invited bids from several coal companies for 10 lotsof metallurgical coal. The coal company with the winning bid offered $750,000, which was substantially under the market price for metal- lurgical coal. The agent immediately made a written agreement with the coal company to carry out the purchase, but several weeks before the coal was to be delivered, the coal company notified the agent that it had made an arithmet- ical error in pricing the coal and that the price should have been $1 million. The coal company requested a price increase to $825,000, which the agent approved in writing. If the agent had no reason to believe that the coal company had made an error in its initial calculations, is the modification by which the steel company agreed to pay $825,000 enforceable? (A) Yes, because the request for the modification was made in good faith. (B) Yes, only if the coal company can estab- lish that enforcement of the contract at the $750,000 price would be unconscionable. (C) No, because the coal company was under a preexisting duty to sell at $750,000. (D) No, unless the arithmetical error is tanta- mount to changed circumstances.

A (A) The modification is enforceable because it was made in good faith. Article 2 of the U.C.C. applies because coal is a movable good. Under section 2-209 of the U.C.C., consideration is not required for an enforceable modification; however, any modification will be subject to the general Code require- ment of good faith and fair dealing, which requires honesty in fact and conformity with reasonable commercial standards. It appears that the coal company was being honest in informing the agent of the clerical error and that both parties made the modification freely. There is no indication that the modified price is commercially unreasonable, despite the required assumption that the disparity was not sufficient to indicate any mistake to the agent. (B) is incorrect because it is not true that the law will only support modifications of otherwise unconscionable contracts. (C) is incorrect because U.C.C. Article 2 abolishes the preexisting duty rule and the requirement of additional consideration to support a modification. (D) is incorrect because Article 2 does not require changed circum- stances in order to support a valid modification. All that is required is good faith.

A communication will not be considered to be definite and certain enough to be an offer if it is for the sale of goods and: A) is missing a quantity term B) is missing the price term C) states the quantity to be purchased and sold as "all that the buyer requires" D) states the quantity to be purchased and sold as "all that the seller produces"

A A communication will not be considered to be definite and certain enough to be an offer if it is for the sale of goods and is missing a quantity term. The quantity term is the only term that is absolutely required to make a communication an offer when the sale of goods is involved. Most other terms can be implied or supplied later in the contract. A communication may be considered definite enough to be an offer for the sale of goods despite a missing price term. If the price term is not included, a reasonable price can be implied. The buyer's requirements and the seller's output are valid quantity terms sufficient to make a communication an offer for the sale of goods. Although these terms do not state a specific quantity, the quantity is capable of being made certain by reference to objective, extrinsic facts (i.e., the buyer's actual requirements and the seller's actual output).

To be enforceable, all of the following agreements must be in writing EXCEPT: A) A contract for photography at a wedding six months from now. B) A subscription to the Wall Street Journal. C) A contract for replacement of a residential roof. Incorrect D) A dentist's promise that a tooth implant will be successful.

A A contract with a wedding photographer need not be in writing. Contracts for services that cannot be performed within one year must be in writing to be enforceable. A contract for the services of a photographer for a single event six months from now does not fall within the Statute of Frauds. Under the Florida Statute of Frauds, other types of contracts that must be in writing and signed by the party to be charged include: (i) promises by an executor or administrator to pay estate debts; (ii) promises to pay the debt of another; (iii) promises made in consideration of marriage; (iv) interests in land; (v) leases for a period longer than one year; (vi) guaranteed results by health care providers; (vii) newspaper subscriptions; and (viii) home improvement contracts. Thus, a Wall Street Journal subscription, a contract for a new roof, and a dentist's promise that a tooth implant will succeed are examples of contracts that must be in writing signed by the party to be charged.

What is an implied-in-fact contract?

A contract created by conduct. Ex: customer in barber shop, sits in chair, barber gives haircut, barber expects to be paid.

What is an express contract?

A contract created by the parties' words (oral or written).

What is a contract?

A legally enforceable agreement.

If you go through contract analysis and come up with unfair result -- what analysis should you look to?

A quasi-contract with restitution remedies.

Activity A wholesale seller of televisions emailed a message ..... If the wholesaler then tenders the 200 television, how may the store owner legally respond?

A. No, buyer can't reject if conforming delivery B. Yes! contract formed for sale of 200 televisions C. No, only if true if not material change, both parties merchant and no objection within reasonable time. D. No, only if imperfect tender by seller.

What is a "constructive" condition? A) A contractual provision providing that a party does not have a duty to perform unless some event occurs or fails to occur B) A condition that is implied by a court even though it is not explicitly stated in the contract C) A condition commonly found in construction contracts stating that the condition of complete performance may be excused if the party has rendered substantial performance D) A contractual provision providing that the contract is not effective unless some event occurs or fails to occur

B A constructive condition is a condition that is implied by a court even though it is not explicitly stated in the contract. Common examples of constructive conditions are the conditions of cooperation and notice. Constructive conditions are also known as implied conditions. In contrast, an express condition precedent is an explicit contractual provision providing that a party does not have a duty to perform unless some event occurs or fails to occur. When an entire contract is not effective unless some event occurs or fails to occur, the contract is subject to an express condition precedent, not a constructive condition. The concept of substantial performance was developed in construction cases to avoid the harsh results that could occur when complete performance is required. Under the doctrine of substantial performance, the condition of complete performance may be excused if the party has rendered substantial performance.

Which of the following statements regarding revocation and acceptance of contract offers is correct? A) A revocation generally is effective when received, and an acceptance generally is effective when received. B) A revocation generally is effective when received, and an acceptance generally is effective when dispatched. C) A revocation generally is effective when dispatched, and an acceptance generally is effective when dispatched. D) A revocation generally is effective when dispatched, and an acceptance generally is effective when received.

B A revocation generally is effective when received and an acceptance generally is effective when dispatched (i.e., the mailbox rule). Under the mailbox rule, if the offeree dispatches an acceptance before he receives a revocation sent by the offeror, a contract is formed.

Unless properly disclaimed, this warranty is included in every contract for the sale of goods: A) Warranty against infringement B) Warranty of title C) Implied warranty of merchantability D) Implied warranty of fitness for a particular purpose

B A warranty of title is included in every contract for the sale of goods. Any seller of goods warrants that the title transferred is good, that the transfer is rightful, and that there are no liens or encumbrances against the title of which the buyer is unaware at the time of contracting. The warranty against infringement, which warrants that goods are delivered free of any patent, trademark, copyright, or similar claims, arises automatically only in contracts by merchant sellers. The implied warranty of merchantability, which generally warrants that the goods are fit for the ordinary purpose for which such goods are used, also is implied only in contracts by merchant sellers. The implied warranty of fitness for a particular purpose arises only when: the seller has reason to know the particular purpose for which the goods are to be used and that the buyer is relying on the seller's skill and judgment to select suitable goods, and the buyer in fact so relies.

At common law, a written communication revoking an offer is considered "received" by an offeree at the moment: A) The offeree reviews the contents of the revocation B) It comes into the offeree's physical possession C) The offeror dispatches the communication, provided that the mail is properly addressed and stamped D) The offeror relinquishes possession of the communication

B A written revocation of an offer is effective when it is received by the offeree. At common law, a written communication is considered to have been "received" as soon as it comes into the physical possession of the person addressed (or of someone authorized by him to receive it) or when it is deposited in some place authorized as the place for this or similar communications to be deposited. The offeree need not review the contents of the revocation for it to be effective. The rule for revocation is different from the rule for acceptance, which generally creates a contract at the moment of dispatch, provided that the mail is properly addressed and stamped.

HYPO 4J. Starbucks Seattle contracts to ship coffee to Central Perk in New York City. Rats answer the call of nature inside the coffee containers while they are in transit. The contract is silent on who bears the risk and neither party is to blame for the rats. Who has the Risk of Loss if Starbucks shipped the coffee after the contract deadline?

Starbucks, breaching party bears risk.

The owner of an exclusive clothing salon entered into a written agreement with a customer to sell the customer a certain full-length fake fur coat for $12,000, with delivery by December 7. On December 6, the customer went to the salon at 5:30 p.m., and the salon owner told her that her coat was ready and she could take it home with her. The customer inspected the coat and discovered that a button was missing. She told the salon owner that she would not accept the coat without the missing button. He informed her that the tailor had gone home for the day at 5 p.m. and would not be back at the salon until 8:30 a.m. on December 8, because Congress had enacted a law declaring December 7 to be Pearl Harbor Day, a new federal holiday, and the tailor had the day off. The salon owner assured the customer that the coat could be ready with the button sewn on by 9:15 a.m. on December 8. Which of the following best states the customer's position? A) The customer may reject the coat, because the salon owner failed to provide perfect tender. B) The customer may reject the coat, but she must give the salon owner an opportunity to cure. C) The customer must accept the coat, because its value is not substantially impaired by the missing button. D) The customer must accept the coat, because the defect can be easily cured.

B Although the customer is entitled to reject the coat for even a minor defect such as one button being missing, she is required to give the seller an opportunity to cure this defect. Because this is a contract for the sale of goods, the Uniform Commercial Code applies. Pursuant to the UCC, if goods or any tender fail in any respect to conform to the contract, the buyer may reject the goods. This rule of perfect tender allows rejection for any defect, and does not require material breach. However, the perfect tender rule is softened by the rules allowing the seller to cure the defect by giving reasonable notice of an intention to cure and making a new tender of conforming goods within the time originally provided for performance. Also, where the buyer rejects a tender that the seller reasonably believed would be acceptable with or without money allowance, the seller, upon reasonable notification to the buyer, has a further reasonable time beyond the original contract time within which to make a conforming tender. Here, one button missing on a $12,000 coat is a very minor defect. However, pursuant to the perfect tender rule, the customer has the right to reject the coat even for this defect. In turn, the salon owner is entitled to cure the defect by notifying the customer of his intention to do so and by making a conforming tender. The salon owner has told the customer that the tailor will sew on the button, which will result in the coat's conforming to the contract. Although the tailor, due to the holiday, will not be able to sew on the button by the agreed-upon date of delivery, being able to do so early in the morning of the day after falls within a further reasonable time beyond the original contract time within which to make a conforming tender. In any event, at this point the customer must give the salon owner an opportunity to cure. (A) is incorrect because it fails to add that the salon owner must be allowed an opportunity to cure, as discussed above. (C) and (D) are incorrect because with the failure of perfect tender, the customer is not required to accept the coat. This right of rejection is not affected by the minor nature of the defect, as (C) suggests. Similarly, the buyer's right of rejection is not impaired by the fact that the defect is easily curable, as (D) states.

An advertisement, catalog, or circular letter, listing the price at which a seller is willing to sell a product, would typically be construed as: A) An offer for a bilateral contract B) An invitation for an offer C) A merchant's firm offer D) An offer for a unilateral contract

B An advertisement, catalog, or circular letter, listing the price at which a seller is willing to sell a product, would typically be construed as an example of an invitation for an offer, rather than an offer. Since there is no clearly identified offeree, there is no offer of any type, whether for a bilateral contract, consisting of the exchange of mutual promises, a unilateral contract, where the offeror requests performance rather than a promise, or any type of merchant's firm offer.

A small processor of specialized steel agreed in writing with a small manufacturer of children's toys that it would supply, and the manufacturer would buy, all of the manufacturer's specialized steel requirements over a period of years at a set price per ton of steel. Their contract did not include a nonassignment clause. Recently, the toy manufacturer decided to abandon its line of steel toys, so it made an assignment of its rights and delegation of its duties under the contract to a toymaker many times larger. The large toymaker notified the steel processor of the assignment and relayed to the processor its good faith belief that its requirements will approximate those of the assignor. Must the steel processor supply the requirements of the large toymaker? A) Yes, because there was no nonassignment clause in the contract. B) Yes, because the large toymaker acted in good faith to assure the steel processor that its requirements will approximate those of the small manufacturer into whose shoes it stepped. C) No, because requirements contracts are not assignable under the UCC D) No, because the steel processor did not give prior approval of the assignment.

B Because the large toymaker acts in good faith in setting its requirements to approximately those of the small manufacturer into whose shoes it stepped, the contract may be assigned. The contract in this question is a "requirements" contract: The steel processor must sell the small manufacturer of children's toys all the specialized steel it requires for its toys. Generally, the right to receive goods under a requirements contract is not assignable because the obligor's duties could change significantly. In fact, here, a significant change would seem possible because the large toymaker is a larger company than the small manufacturer and its needs could be greater. However, the UCC allows the assignment of requirements contracts if the assignee acts in good faith not to alter the terms of the contract. [UCC §2-306] (The UCC applies here because goods are involved.) Thus, assuming the large toymaker's requirements remain about the same as the small manufacturer's requirements, the steel processor would be required to honor its contract, now assigned to the large toymaker. (A) is wrong because requirements contracts may be nonassignable, even without a nonassignment clause. Thus, the clause would be irrelevant. The only thing that could allow assignment of a requirements contract is a good faith limitation, as addressed in choice (B). (C) is wrong because the UCC does allow requirements contracts to be assigned, as long as the good faith limitation is satisfied. (D) is similarly incorrect. The UCC would allow assignment without approval by the obligor if there is a good faith limitation on the requirements.

How can one avoid the preexisting legal duty rule? A) By full performance of the duty B) By modifying the original consideration slightly C) By making a brand-new identical promise D) By beginning performance

B Courts are anxious to avoid the preexisting duty rule, which states that the promise to perform, or the performance of, an existing legal duty is not consideration. Thus modifying the original consideration, even slightly, is generally enough to avoid the rule. Making a brand-new identical promise is not sufficient because there is no consideration for the new promise. There must be new consideration or the consideration that is different in some way, such as by accelerating performance, to avoid the preexisting duty rule. Beginning performance does not avoid the preexisting legal duty rule. Even full performance of a preexisting legal duty is not sufficient consideration. There must be some new or different obligation.

If an accord agreement is breached: A) by the debtor, the creditor may sue on both the original contract and for breach of the accord agreement B) by the debtor, the creditor may sue either on the original contract or for breach of the accord agreement C) by the creditor by refusing to accept the performance agreed to in the accord, the debtor is entitled to punitive damages D) by the creditor by suing on the original contract, the debtor may immediately sue for damages for breach of the accord agreement

B If an accord agreement is breached by the debtor, the creditor may sue either on the original contract or for breach of the accord agreement, but not on both. If the accord agreement is breached by the creditor by suing on the original contract, the debtor may either: raise the accord agreement as an equitable defense and ask that the contract action be dismissed or wait until the creditor is successful in the action (i.e., until the debtor is damaged) and then bring an action at law for damages for breach of the accord contract. The debtor may not immediately sue for damages. If the accord agreement is breached by the creditor refusing to accept the performance agreed upon in the accord, the debtor may bring an action for breach of the accord agreement, but is not entitled to punitive damages. Punitive damages generally are not awarded in contract cases.

In a single delivery contract, when a buyer rejects goods due to defects, the seller may cure within the time originally provided for performance in the contract: A) if the seller reasonably believed the goods would be acceptable with or without money allowance. B) by giving reasonable notice to the buyer and making a new tender of conforming goods, which the buyer must then accept. C) if the nonconforming goods did not substantially impair the value of the entire contract. D) by giving reasonable notice to the buyer and making a new tender of conforming goods, which the buyer then has the option to accept or reject.

B In a single delivery contract, if the buyer has rejected goods because of defects, the seller may, within the time originally provided for performance, cure by giving reasonable notice of her intention to do so and making a new tender of conforming goods, which the buyer must then accept. If the new tender of conforming goods is made within the time originally provided for performance, the buyer does not have the option to accept or reject the goods. The buyer must accept the conforming goods. Whether the seller reasonably believed the goods would be acceptable with or without money allowance is the standard used in determining whether the seller should be granted time to cure beyond the original time provided for performance. It has no bearing on the seller's right to cure within the original time provided. Whether the nonconforming goods substantially impair the value of the entire contract is the standard for canceling an installment contract. It does not apply to a seller's right to cure.

Which of the following statements is correct regarding damages for a breach of a contract for the sale of goods? A) Either a nonbreaching buyer or a nonbreaching seller may recover consequential damages, but only a buyer may recover incidental damages B) Either a nonbreaching buyer or a nonbreaching seller may recover incidental damages, but only a buyer may recover consequential damages C) Either a nonbreaching buyer or a nonbreaching seller may recover consequential damages, but only a seller may recover incidental damages D) Either a nonbreaching buyer or a nonbreaching seller may recover incidental damages, but only a seller may recover consequential damages

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

An insurer offered a plan to cover an insured's catastrophic illnesses for the remainder of the insured's life in exchange for a large one-time payment at the inception of coverage. Because the program was experimental, the insurer would accept only a fixed number of applications during the enrollment period. A recent retiree in good health was one of the applicants accepted, and he enrolled in the program. He paid the one-time premium of $30,000 a few days before coverage began. The day after his coverage started, he was struck by a bus and killed. The executor of the retiree's estate reviewed the policy and immediately notified the bank to stop payment on it. The insurer then filed suit against the retiree's estate. Will the court compel the estate to pay the premium to the insurer? A) Yes, because the insurer necessarily declined to take another applicant during the enrollment period because of the retiree's promise to buy the policy. B) Yes, because the risk of the timing of the retiree's death was assumed by both parties and built into the cost of the contract. C) No, because the purpose of the contract between the retiree and the insurer had been frustrated. D) No, because it is unconscionable for the insurer to have charged the retiree so much for so little value received.

B In entering into the contract, the possibility that the retiree would die shortly after paying the premium and therefore receive virtually nothing in return should have been apparent to both parties. Actually, both parties took risks in this regard, as the retiree could have incurred medical expenses for a catastrophic illness during his lifetime that would have required the insurer to make payments far exceeding the one-time $30,000 premium. The retiree and the insurer were equally aware of these various possibilities, yet they freely entered into an agreement with this knowledge and on terms that were apparently acceptable to each of them. Despite the apparent unfairness of the result, a court generally will not interfere with the parties' right to make their own deal. Thus, the insurer is entitled to the premium. (D) is incorrect because the price paid by the retiree was freely arrived at by the parties. There is no indication of any inequality in bargaining power or any other factors indicative of hardship or oppression exerted against the retiree by the insurer. The retiree was free to enter into an agreement that turned out to be a bad one for him. Therefore, there are no factors pointing to the existence of unconscionability. (A) is incorrect because the insurer is entitled to the payment of the premium regardless of whether it declined to take another applicant. As detailed above, the possibility of the retiree's death occurring in the time frame that it did was part of the risk voluntarily undertaken by the parties, and, as such, will not afford a basis for preventing the insurer from recovering the premium payment. The payment of $30,000 in return for the insurer's promise of catastrophic insurance coverage was part of a bargained-for exchange. Regarding (C), discharge by frustration of contractual purpose requires that, at the time of entering into the contract, the parties did not reasonably foresee the occurrence of the act or event leading to the frustration. Here, the parties should have foreseen the possibility that the retiree would die shortly after the policy took effect. Consequently, this is not a proper case for the application of frustration of purpose.

A state bans the use of disposable diapers to reduce the volume of nonbiodegradable material in its landfills. The ban was a boon for diaper services within the state, but many parents of young children were displeased with the use of conventional diapers. With support from retail establishments that lost business from the disposable diaper ban, a grass roots coalition formed to fight the ban funded a study showing that the trucks and cleaning supplies used by diaper services within the state harmed the environment more than disposable diapers. The coalition and retailers then filed suit seeking to have the ban on disposable diapers declared unconstitutional. If the court strikes down the statute, on which of the following constitutional provisions would its decision most likely be based? A) The Equal Protection Clause of the Fourteenth Amendment. B) The Due Process Clause. C) The Impairment of Contracts Clause. D) The Privileges or Immunities Clause of the Fourteenth Amendment.

B Of the choices presented, the only likely basis to strike down the statute is under the Due Process Clause as a violation of substantive due process. Substantive due process tests the reasonableness of a statute; it prohibits arbitrary governmental action. Under substantive due process, when government action limits a fundamental right, the government must prove that the action is necessary to promote a compelling interest. If a fundamental right is not involved, the challenging party must prove that the act is not rationally related to any legitimate government interest. The retail sale of diapers is not a fundamental right, and so a challenger must prove that there is no rational basis for the statute. Almost any law can be justified under the rational basis standard. The law need not be the best law for accomplishing the government's goal. Thus, even if it is true that the disposable diaper ban causes more pollution than it prevents, because the ban is rationally related to reducing the volume of trash in landfills, the challenge is unlikely to succeed. Nevertheless, none of the other choices states a viable ground for invalidating the statute, and so (B) is the best choice. (A) is wrong because equal protection applies where a statute or governmental action treats similar people in a dissimilar manner (i.e., classifies people), and here there is no classification—under the statute no one can sell disposable diapers for use within the state. Thus, an equal protection argument is not applicable. (C) is wrong because the Impairment of Contracts Clause prohibits only the substantial impairment of existing contracts (and there are exceptions even where there is substantial impairment), and nothing in the facts indicates that forbidding the retail sale of disposable diapers would substantially impair any existing contract. (D) is wrong because the privileges and immunities covered by the Fourteenth Amendment are those attributes peculiar to United States citizenship (e.g., the right to petition Congress for redress or the right to vote for federal officers). The statute here does not affect such rights.

Which of the following is not traditionally an element of the doctrine of promissory estoppel? A) The reasonable expectation that the promise will induce action or forbearance B) Valuable consideration on both sides of the bargain C) Detrimental reliance D) An action or forbearance that is in fact induced by a promise

B Promissory estoppel is considered a substitute for consideration. Thus, consideration is not necessary if the facts indicate that the promisor should be estopped from not performing. A promise is enforceable if necessary to prevent injustice if: (i) the promisor should reasonably expect to induce action or forbearance; and (ii) such action or forbearance is in fact induced. Detrimental reliance is simply another way of describing the action or forbearance of the promisee (i.e., he relied on the promise to his detriment).

Under Article 2, when an offeree proposes additional or different terms as part of an otherwise valid acceptance, the acceptance __________. A) Fails under the mirror image rule B) Is effective, unless the acceptance is expressly made conditional on assent to the additional or different terms C) Is deemed a rejection and counteroffer D) Fails under the battle of the forms

B The Article 2 battle of the forms provision provides that the proposal of additional or different terms by the offeree in a definite and timely acceptance is effective as an acceptance, unless the acceptance is expressly made conditional on assent to the additional or different terms. Whether the additional or different terms become part of the contract depends on whether or not both parties are merchants. Article 2 has abandoned the mirror image rule, which insists on an absolute and unequivocal acceptance of each and every term of the offer. Under that rule, any different or additional terms in the acceptance make the response a rejection and counteroffer.

What does Article 2 of the UCC apply to?

Sale of goods

The UCC gives a seller the right to cure a defective shipment within a reasonable time beyond the original time for performance in the contract if: A) The buyer would suffer no damages by allowing the seller to cure B) Prior dealings with the buyer led the seller to reasonably believe that the defective shipment would be acceptable C) The buyer agrees to extend the terms of the contract to allow for late delivery without additional consideration D) The seller notifies the buyer of his desire to cure before the time for performance in the original contract

B The UCC provides that in cases where a buyer rejects a tender of nonconforming goods that the seller reasonably believed would be acceptable "with or without money allowance," the seller, upon a reasonable notification to the buyer, has a further reasonable time beyond the original contract time within which to make a conforming tender. A seller will probably be found to have had reasonable cause to believe that the tender would be acceptable if the seller can show that trade practices or prior dealings with the buyer led the seller to believe that the goods would be acceptable, or the seller could not have known of the defect despite proper business conduct. Although notification of the desire to cure is required before the seller can cure the defective delivery, it is not enough that the seller notifies the buyer of his desire to cure before the time for performance in the original contract. To extend the right to cure beyond the original time of performance, the seller must show that he mistakenly, but reasonably, believed that the nonconforming goods would be acceptable to the buyer. The seller's right to cure under the UCC is not determined by whether the buyer would suffer damages by allowing the seller to cure; and the buyer need not agree to extend the terms of the contract to allow for late delivery without additional consideration for the seller to exercise the right to cure under the UCC.

A buyer agreed to buy a limited edition guitar from a seller for $12,000 and a contract memorializing the agreement was signed by both parties. The next day, after the seller received an offer of $20,000 for the guitar, he called the buyer and said that he could not sell the guitar to him for $12,000. The buyer did not respond. On the delivery date, the buyer fails to tender $12,000 and the seller does not deliver the guitar. A) The seller can recover from the buyer for breach of contract. B) The buyer can recover from the seller for breach of contract. C) Neither the seller nor buyer can recover until one of the parties tenders performance. D) The contract is terminated.

B The buyer can recover because the seller's phone call was an anticipatory repudiation. Anticipatory repudiation occurs where a promisor, prior to the performance time, unequivocally indicates that he cannot or will not timely perform, allowing the nonrepudiator the option of suspending performance and waiting to sue until the performance date, or to sue immediately. The seller's phone call was an unequivocal statement that he would not sell the guitar for $12,000. This repudiation excused the buyer's duty to tender $12,000 on the delivery date. (A) is incorrect because the seller's anticipatory breach excused the buyer's performance. (C) is incorrect because the seller's repudiation the day after the contract was signed gave rise to an immediate cause of action. (D) is wrong because the contract was not terminated; rather, it was anticipatorily breached by the seller.

On April 1, a graduate student who owned an antique dictionary agreed to sell it to a buyer for $1,500. The written contract between the seller and the buyer provided that the dictionary would not be delivered to the buyer until April 20. Late on April 15, a fire swept through the seller's apartment building, through no fault of the seller, and the dictionary was destroyed. Fortunately for the seller, he had insurance that covered all of his damages, including compensation for the destroyed dictionary. On April 20, the seller told the buyer of the fire, but still demanded payment, claiming that the buyer was the equitable owner of the dictionary when it was destroyed, and told her that she could have obtained insurance on the dictionary had she wanted to, because she had an insurable interest in the dictionary as soon as the contract was made. The buyer refused to pay. The seller brings an action against the buyer for the $1,500. Who will prevail? A) The buyer, because the seller was fully compensated for his dictionary and making the buyer pay would therefore result in unjust enrichment. B) The buyer, because destruction of the dictionary avoids the contract and discharges her duty to pay. C) The seller, because when he contracted with the buyer, the risk of loss passed to her. D) The seller, because of the doctrine of equitable conversion.

B The buyer will prevail because complete destruction of the dictionary results in avoidance of the contract and discharge of her duty to pay, since the seller still had the risk of loss. Because the contract here is for the sale of goods, it is governed by the Uniform Commercial Code ("UCC"). Under the UCC, if a contract requires for its performance particular goods identified when the contract is made, and, before risk of loss passes to the buyer, the goods are destroyed without the fault of either party, the contract is avoided. [UCC §2-613] All of the elements of section 2-613 are present here. The contract required the seller's particular dictionary, which was identified at the time the contract was made. The risk of loss had not yet passed to the buyer because, in a sale by a nonmerchant such as the seller, risk of loss does not pass to the buyer until tender [UCC §2-509], and the seller never tendered the dictionary here (there was no actual tender and delivery was not due until April 20). Finally, the goods were destroyed by a fire and without the fault of either party. Thus, the contract is avoided. (The same conclusion would result under the common law doctrine of impossibility—all executory duties are discharged when the subsequent destruction of the subject matter of a contract renders performance impossible.) (A) is wrong because the UCC contains no such rule. The only UCC remedy that depends on an injured party's insurance involves the risk of loss after the buyer's revocation of acceptance or wrongful repudiation under section 2-510. Here, the buyer does not have to pay because the destruction of the dictionary discharged her duty to do so. (C) is wrong because, as explained above, the risk of loss had not yet passed to the buyer. (D) is wrong because the UCC does not follow the doctrine of equitable conversion; rather, the Code contains very specific risk of loss rules, as detailed above.

A farmer contracts with a mechanic to repaint his antique tractor for display in the upcoming county fair. Which of the following would discharge the contract by impossibility? A) The unexpected death of the mechanic B) The destruction of the tractor by a tornado C) The cancellation of the county fair due to a drought D) The unexpected death of the farmer

B The destruction of the tractor by a tornado would discharge the mechanic's performance due to impossibility. If a contract's subject matter is destroyed without the fault of either party, contractual duties are discharged. If the tractor was destroyed by an act of nature, it is impossible for the mechanic to repaint it. Neither the death of the farmer nor the death of the mechanic would discharge the contract by impossibility. Death or physical incapacity of a person necessary to effectuate the contract serves to discharge it, but this applies in personal service contracts where the services involved are "unique." If the services are the kind that could be delegated, the contract is not discharged by the death of the person who was to perform them. Painting a tractor probably does not qualify as a unique or artistic service that could not be delegated, so the death of the mechanic would not discharge his duties under the contract. The farmer's duty to pay for the painting could easily be performed by his estate after his death, so his death also will not result in a discharge of the contract by impossibility. The cancellation of the county fair would not make fulfillment of the contract impossible. The mechanic's duty is to paint the tractor, which he can do even if the fair is cancelled, and the farmer's duty is to pay the mechanic for his painting, which again he can do even if the fair is cancelle

The owner of an old car parked it in front of his house with a "for sale" sign in the windshield. In response to an inquiry from his neighbor, the car owner said that he would take $400 for the car. The neighbor responded, "You've got a deal." Because it was a Sunday, and the banks were closed, the neighbor told the car owner that he would come to his house with the $400 the next day at about 6 p.m. The car owner said that was fine. At 9:15 the next morning, the car owner called his neighbor and told him that when they had talked the previous day, he forgot that he had just put two new tires on that car and that he would need an extra $50 to cover their cost. The neighbor agreed to bring $450 in cash to the car owner's house at about six o'clock. Is the neighbor legally bound to pay the car owner the additional $50? A) Yes, because the original contract was not in writing. B) Yes, because the contract, as modified, does not need to be in writing. C) No, because no additional consideration was given for the oral modification. D) No, because neither the neighbor nor the car owner is a merchant.

B The neighbor must pay the car owner the additional $50 because the parties have an enforceable contract. A contract for the sale of goods (the car) was formed when the neighbor said, "You've got a deal." The parties then orally agreed to a modification of the contract when the car owner called his neighbor the next morning. Under the Statute of Frauds provision in the UCC, which applies to all contracts for the sale of goods, a promise requires a writing signed by the party to be charged to be enforceable if it is for the sale of goods of $500 or more. Here, the contract as modified is under $500, so it is enforceable even though it is not in writing. (A) is incorrect because the fact that the original contract was not in writing is irrelevant to the issue of whether the modified contract is enforceable. If the modification had caused the contract to reach or exceed $500, the car owner could not have collected the additional $50 from his neighbor. (C) is incorrect because under UCC section 2-209, no consideration is needed for a good faith modification of a contract for the sale of goods. (D) is incorrect because the UCC rules on modifications and the Statute of Frauds apply to all contracts for the sale of goods, not just those between merchants.

Generally speaking, the promise to perform an existing legal duty is __________. A) Past consideration B) Not consideration C) Sufficient consideration D) Valuable consideration

B Traditionally the promise to perform, or the performance of, an existing legal duty is not consideration. A promise to perform an existing legal duty is not valuable consideration, unless an exception to the preexisting legal duty rule applies, e.g., new or different consideration is promised, or a minor's ratification of a voidable contract upon reaching the age of majority. Past consideration, which is also not sufficient consideration, is based on something already given or performed, not a promise to perform based on a preexisting legal duty.

Which of the following is required for a merchant's firm offer under Article 2? A) Consideration paid by the offeree to keep the offer open B) A written assurance signed by the offeror C) Both the offeree and offeror are merchants D) A specific time frame that the offer will remain open

B Under Article 2, a merchant's firm offer arises when a merchant offers to buy or sell goods in a signed writing and the writing gives assurances that the offer will be held open. If no specific time frame is stated in the offer, a merchant's firm offer will remain open for a reasonable time (but in no event may such period exceed three months). For a merchant's firm offer, it is not necessary that both parties be merchants; only the offeror must be a merchant. A merchant's firm offer is enforceable even if no consideration has been paid by the offeree to keep the offer open. QUESTION ID: K0032

When two merchants enter into an oral contract for the sale of goods and one party sends to the other party a signed, written confirmation of the agreement, it: A) Binds both sender and the recipient, provided the recipient signs the confirmation within 10 days of receipt B) Binds both the sender and recipient, provided the recipient had reason to know of its contents and did not object in writing within 10 days of receipt C) Binds only the sender because it is signed only by the sender D) Binds both the sender and the recipient, provided the recipient actually read the document and did not object in writing within 10 days of receipt

B Under the confirmatory memo rule, in contracts between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under law to bind the sender, it will also bind the recipient if he has reason to know of the confirmation's contents and does not object to it in writing within 10 days of receipt. The recipient need not actually read the document; it is binding if the recipient had reason to know of its contents. Even though the memo is generally signed only by the sender, the recipient is bound; the recipient's signature is not necessary.

Under the Article 2 battle of the forms provision, whether additional or different terms proposed by the offeree during acceptance ultimately become part of a contract depends on whether or not __________. A)The offeree is a merchant B) Both parties are merchants C) The offeror is a merchant D) One of the parties is a merchant

B Whether the additional or different terms become part of the contract depends on whether or not both parties are merchants. If any party to the contract is not a merchant, the additional or different terms are considered to be mere proposals to modify the contract. They do not become part of the contract unless the offeror expressly agrees. If both parties are merchants, additional terms in the acceptance become part of the contract unless they materially alter the terms of the offer, the offer expressly limits acceptance to the terms of the offer, or the offeror has already objected to the terms (or objects within a reasonable time after notice of them is received). Between merchants, some courts treat different terms in an acceptance the same as additional terms; other courts apply the knockout rule (i.e., conflicting terms are knocked out and replaced by gap-filling terms under the UCC).

A parks and recreation association placed an order for 100 12-inch softballs with a softball manufacturer. The order stated that the association would pay the current market price for the softballs and requested prompt shipment. The manufacturer promptly shipped 100 16-inch softballs to the association because the manufac- turer's shipping director negligently misread the size listed on the shipping instructions. Which of the following best describes the association's rights and duties upon arrival of the 16-inch softballs? (A) A contract was formed by the manufacturer's prompt shipment of the 16-inch softballs and the association must accept the softballs and offset its damages against the purchase price. (B) A contract was formed by the manufac- turer's prompt shipment of the 16-inch softballs, but the association is not required to accept the softballs and may sue the manufacturer for its damages. (C) The manufacturer's prompt shipment was a counteroffer and the association can accept the softballs or reship them to the manufac- turer because it has a duty to mitigate damages. (D) The manufacturer's prompt shipment was a counteroffer, and the association can refuse to accept the softballs, but has no cause of action for damages.

B (B) The association may reject the softballs and sue for damages. Softballs obviously are movable goods; therefore, Article 2 of the U.C.C. applies. According to section 2-206(1)(b), an order for "prompt shipment" may be accepted by shipment of either conforming or nonconforming goods, and a contract is created upon such shipment. This alters the traditional rule that a shipment of nonconforming goods was a counteroffer which the buyer accepted upon taking delivery. The association may reject the nonconforming shipment [U.C.C. §2-601] and sue for damages. It may also, if it wishes, accept the shipment [U.C.C. §2-601], notify the seller of the breach [U.C.C. §2-607(3)], pay the contract price [U.C.C. §2-607(1)], and seek damages even after accepting the nonconforming goods [U.C.C. §2-7l4]. (A) is incorrect because, while a contract was indeed formed by shipment under U.C.C. section 2-206(1)(b), the association is not required to accept shipment, but may reject it. [U.C.C. §2-601] (C) is incorrect because the shipment constitutes an acceptance, not a counteroffer, as described above. Additionally, even where a buyer right- fully rejects a nonconforming tender, the buyer is under no obligation to reship prior to receipt of reasonable instructions from the seller. [U.C.C. §2-603] (D) is incorrect because, as discussed above, the shipment constitutes an acceptance, not a counteroffer.

A shoe retailer ordered by telephone 12 pairs of dress shoes from a shoe manufacturer at its list price of $500 per dozen; delivery in 20 days. The manufacturer orally accepted the offer, and immediately faxed to the retailer this signed memo: "Confirming our agreement today for your purchase of a dozen pairs of dress shoes for $500, the shipment will be delivered in 20 days." Although the retailer received and read the manufacturer's message, he rejected the conforming shipment when it timely arrived. On learning of the rejection, does the manufacturer have a cause of action against the retailer for breach of contract? (A) Yes, because the shoes were identified to the contract and tendered to the retailer. (B) Yes, because the manufacturer's faxed memo to the retailer was sufficient to make the agreement enforceable. (C) No, because the agreed price was $500 and the retailer never signed a writing evidencing a contract with the manufac- turer. (D) No, because the retailer neither paid for nor accepted any of the goods tendered.

B (B) The manufacturer has a cause of action for breach of contract. Because the contract was for goods priced at $500, the Statute of Frauds must be satisfied under U.C.C. section 2-201. Because both the retailer and the manufacturer are merchants, a memorandum of the terms of the sale sent by the manufacturer to the retailer satisfies the Statute of Frauds unless the retailer objects within 10 days, which she did not do. (A) is incorrect because identifying the goods to the contract and tendering the goods does not satisfy the Statute of Frauds. (C) is incorrect because, while the price makes the Statute of Frauds applicable, it is satisfied by the memorandum written by the manufacturer to the retailer, which was never rejected. (D) is incorrect because neither payment for nor acceptance of goods is necessary to make a contract enforceable, which it is here because the Statute of Frauds was satisfied by the memorandum sent by the manufacturer to the retailer.

A shopkeeper loaned a long-time employee $1,500 from his personal bank account because a family illness was causing the employee unexpected financial difficulties. Because the employee had proved himself to be trustworthy, there was no writing evidencing the loan and no payback date established; it was understood that the employee would repay the loan when he was able to do so. Sometime later, the shopkeeper's nephew asked him if he could help fund a business that he was starting up. Because most of the shopkeeper's assets were currently tied up, he asked his employee if he would be in a position to repay the $1,500 loan. The employee promised to repay the loan on the following Monday, so the shopkeeper told the employee to pay the $1,500 directly to his nephew. Immedi- ately thereafter, the shopkeeper informed the nephew to expect $1,500 from the employee on the following Monday. When Monday came, the employee decided he would rather tender the money to the shopkeeper than to someone he did not know, and the shopkeeper accepted the money. If the nephew never receives any money from the shopkeeper, will he succeed in an action against the employee for the $1,500? (A) Yes, because the shopkeeper effectively as- signed his right to collect the $1,500 to the nephew. (B) No, because the shopkeeper's acceptance of the $1,500 from the employee revoked the shopkeeper's gift to the nephew. (C) No, because the assignment was unsupported by consideration and therefore never effective. (D) No, because the employee's tender of the $1,500 to the shopkeeper and the shopkeep- er's acceptance of it constituted a novation.

B (B) The shopkeeper validly assigned his right to receive the money to his nephew. However, this assignment was revocable, and it was revoked when the shopkeeper accepted the money from the employee. A creditor's right to receive money due from a debtor is a right that can be assigned, regardless of whether the debt is evidenced by a writing. By telling the employee to pay the money to the nephew, the shopkeeper manifested an intent to transfer his rights completely and immediately to the nephew. Neither a writing nor consideration was required for this assignment to be valid. However, these factors do not affect revocability. This assignment was not given for value. Such a gratuitous assignment is generally revocable. An exception to this rule arises when the assignor is estopped from revoking because he should reasonably foresee that the assignee will change his position in reliance on the assignment and such detrimental reliance occurs.Here, there is no indication that the nephew in fact changed his position detrimentally in reliance on the assignment. Consequently, the general rule of revocability of a gratuitous assignment applies. One way in which a gratuitous revocable assignment may be terminated is by the assignor taking performance directly from the obligor. By accepting the money from the employee, the shopkeeper (the assignor) took direct performance from the obligor, thereby revoking the assign- ment. As a result, the nephew has no right to the money. (A) is incorrect because it fails to account for the fact that, although the shopkeeper effectively assigned his right, he later revoked this assignment. (C) is incorrect because, as discussed in (B) above, a gratuitous assignment (i.e., an assignment not supported by consideration) is effective, although revocable except under certain circumstances not applicable here. (D) is incorrect because the facts do not indicate that there has been a novation. There is a novation when a new contract substitutes a new party to receive benefits and assume duties that had originally belonged to one of the original parties underthe terms of the old contract. Here, the original agreement was between the employee and the shopkeeper. The employee's payment of the money to the shopkeeper and the shopkeeper's acceptance thereof did not substitute any new parties or extinguish contractual duties as between the original contracting parties. Thus, there was no novation.

A golf pro entered into an employment contract with a country club to be its golf pro. The agreement specified that the golf pro would run the pro shop and provide private instruction to members from April through September of each year for the next five years, at a monthly salary of $5,000, plus instructional fees. During those months, the club's other instructor was playing on the professional tour and was unavailable. On March 15, the club's manager received an e-mail from the golf pro, stating: "Made the final cut in Sarasota Winter Open. May not be ableto get to club by April 1. Could be delayed until 5th if playoff necessary." The club's manager asked his attorney whether he should bring an immediate action against the golf pro for breach of contract. Which of the following is the most accurate advice for the manager? (A) Do not file suit; a repudiation must be in a signed writing to be of legal effect. (B) Do not file suit; the golf pro has not repudiated the contract. (C) File suit, but only if the club has changed its position to its detriment in reliance on the e-mail. (D) File suit, because the golf pro has repudiated the contract.

B (B) This is a favorite MBE question. The best advice is not to file suit because the golf pro's e-mail does not constitute an anticipatory repudiation. Language may constitute an expression of doubt as to one's ability to perform under the contract without being an outright refusal. This will not be an anticipatory repudiation, but a prospective inability to perform. If there is an anticipatory repudiation, then the nonbreaching party can (i) sue for damages, (ii) contract with a third party, or (iii) do nothing. If the fact pattern language amounts to a prospective inability to perform, the innocent party may suspend performance until he receives adequate assurances that performance will be forthcoming. Here, the golf pro's e-mail does not constitute an anticipatory repudiation because he merely states that he "may not" get to the club by April 1. Thus, (B) is correct, and (D) is incorrect. (A) is an incorrect statement of law because a repudiation can be by any means: oral, written, or by actions. An e-mail message clearly stating an intent not to perform would be sufficient. (C) is also incorrect because the golf pro's actions constitute a prospective inability to perform, which allows the club to suspend performance to the golf pro and demand assurances; it does not result in an immediate breach.

On November 5, an electronics store owner realized that his stock of 15 copies of the most popular video game of the holiday shopping season would not last until the first of the next month. Seeing an advertisement from the manufacturer of the game in a trade journal listing its price at $3,000 per hundred, with delivery one week from order, the store owner e-mailed to the manufacturer an order for 100 copies of the game at $3,000 per hundred. There were no further communications between the store owner and the manufacturer. By November 25, the store owner realized that the manufacturer was not going to deliver any of the video games. He thus was forced to obtain additional stock by purchasing from a middleman at a cost of $4,000 per hundred. The store owner brings an action for breach of contract against the manufacturer. Who will prevail? A The manufacturer, because the communications between the parties were not definite or certain enough to form a contract. B The manufacturer, because it never accepted the offer contained in the store owner's e-mail. C The store owner, because his e-mail was an acceptance of the manufacturer's offer. D The store owner, because he changed his position in reliance on the manufacturer's promise to deliver the video games within one week.

B The manufacturer will prevail because it never accepted the offer. For a communication to be an offer, it must contain a promise, undertaking, or commitment to enter into a contract, rather than a mere invitation to begin negotiations. The broader the communicating media, e.g., publications, the more likely it is that the courts will view the communication as merely the solicitation of an offer. An advertisement in a trade journal generally is construed as an invitation to submit offers, not an offer itself. It is an announcement of the price at which the seller is willing to receive offers. Thus, the store owner's e-mail was an offer that was never accepted by the manufacturer. (A) is wrong because the communications were definite and certain enough to form a contract. Under the UCC, only the quantity term must be definite and certain (or capable of being made so). Here, the quantity term, 100, was clear; the problem is that the offer containing it was not accepted. (C) is wrong because, as discussed above, the ad is not an offer. (D) is wrong because the ad in the trade journal was not a promise; hence, the store owner cannot rely on promissory estoppel or detrimental reliance to recover.

A breeder of quarter horses entered into an agreement with a rancher to sell and deliver two quarter horses, one to the rancher and the other to the rancher's fiancée as a gift. Although the fair market value of each horse was $3,000, the horse breeder agreed to sell both horses together for a total price of $5,000. Under the agreement that the rancher wrote out and both parties signed, the horse breeder agreed to deliver one horse to the rancher on August 1, at which time the rancher agreed to pay the horse breeder $5,000. The horse breeder further agreed to deliver the other horse to the rancher's fiancée on August 12. On August 1, the horse breeder delivered the first horse to the rancher and, at the same time, the rancher gave the horse breeder a certified check for $5,000. On August 12, the horse breeder brought the second horse to the residence of the rancher's fiancée and told her that the horse was a gift from the rancher. The rancher's fiancée told the horse breeder that she loathed quarter horses and she refused to take the horse. The horse breeder brought this horse back to his farm and sent an e-mail to the rancher, informing him that his fiancée refused delivery and that he (the horse breeder) could not keep the horse. Two weeks later, after not hearing from the rancher, the horse breeder sold the horse to an interested party for $3,000. If the rancher sues the horse breeder, how much should the rancher recover? A $3,000, the value of the second horse. B $2,000, the difference between the value of the horse delivered to the rancher and what the horse breeder received from the rancher. C Nothing, because the rancher was not financially harmed. D Nothing, because the horse breeder performed his part of the contract.

B The rancher should recover $2,000 because that is the amount by which the horse breeder would be unjustly enriched. In a proper tender of delivery under UCC section 2-503, the seller must put and hold conforming goods at the buyer's disposition for a time sufficient for the buyer to take possession. The seller must give the buyer notice reasonably necessary to enable him to take possession of the goods. Proper tender of delivery entitles the seller to acceptance of the goods and to payment according to the contract. [UCC §2-507] Having made a proper tender of delivery at the place designated by the rancher and having notified the rancher of his fiancée's nonacceptance, the horse breeder has discharged his duty under the contract. When a party's duty of performance is discharged, the other party is entitled to restitution of any benefits that he has transferred to the discharged party in an attempt to perform on his side. With the horse breeder's contractual duty to deliver the second horse to the rancher's fiancée discharged, the horse breeder would be unjustly enriched, to the detriment of the rancher, if he were permitted to keep the entire $5,000 paid to him by the rancher. The rancher conferred a benefit upon him by paying him $5,000 in exchange for two horses, one of which was to be delivered to the rancher, the other to the rancher's fiancée. Because delivery to the fiancée cannot be accomplished, the rancher finds himself in a position of having paid $5,000 for one horse, the fair market value of which is $3,000. Thus, if the horse breeder is permitted to retain the sum of $5,000, he will be unjustly enriched by $2,000. Therefore, the rancher should recover restitution of $2,000. (A) is incorrect because $3,000 represents more than the amount by which the horse breeder has been unjustly enriched. Although the value of the second horse is $3,000, keep in mind that the horse breeder's duty to deliver the horse to the rancher's fiancée has been discharged (and the horse breeder still has title to the horse under the UCC rule that title passes on delivery). The rancher received a discount of $1,000 off the total fair market value of the two horses because he was buying both of them. Once the horse breeder's duty under the contract is discharged, the rancher cannot recover the benefit of that bargain under the contract; he can only recover the benefit conferred upon the horse breeder, the retention of which would unjustly enrich the horse breeder. Because the horse breeder has received $5,000 from the rancher for one horse worth $3,000, the amount of unjust enrichment is $2,000. (C) is incorrect because, if the rancher recovers nothing, he will have incurred financial harm by paying $5,000 for one horse worth $3,000. (D) is incorrect because the fact that the horse breeder tendered performance but was unable to complete delivery of the second horse to the rancher's fiancée, solely due to her refusal to accept the horse, does not justify the horse breeder's keeping the entire $5,000 paid by the rancher, because the horse breeder would be unjustly enriched.

On February 1, a national department store chain entered into a written agreement with a canoe manufacturer providing that the manufacturer would sell the department store any quantity of 16-foot aluminum canoes that the department store desired at a price of $250 per canoe, deliveries to be made 30 days after any order. The agreement was signed by authorized agents of both parties. On March 1, the department store sent the manufacturer an order for 500 canoes to be delivered in 30 days. The manufacturer immediately e-mailed the department store a confirmation of the order. Ten days later, the department store sent the manufacturer an order for an additional 500 canoes, to be delivered in 30 days. Five days after receiving the department store's second order, the manufacturer e-mailed the department store and explained that a large sporting goods chain was willing to purchase all of the manufacturer's output of 16-foot canoes at $275 per canoe and that the manufacturer would be unable to fill any of the department store's orders. The department store found another canoe manufacturer willing to provide it with 16-foot aluminum canoes for $280 per canoe and on April 15 filed an action against the manufacturer seeking damages for the manufacturer's failure to deliver the 1,000 canoes ordered. How should the court rule? A The department store is not entitled to any damages because no contract was formed by the parties' communications. B The department store is entitled to cover damages of $30 per canoe only for 500 canoes but is not entitled to any damages for breach of the duty of good faith. C The department store is entitled to cover damages of $30 per canoe for 1,000 canoes but is not entitled to any damages for breach of the duty of good faith. D The department store is entitled to punitive damages equal to the lesser of 10% of the total sale price or $500 in addition to any cover damages that are due because the manufacturer breached the duty of good faith.

B This question is best answered by eliminating the incorrect choices first. (A) is incorrect. A contract was formed here for 500 canoes. The original "agreement" between the parties was nothing more than an invitation seeking offers. It did not create a contract between the department store and the manufacturer because it was illusory—an agreement to buy only what is desired is not consideration. The "agreement" probably does not even qualify as an offer. An offer must express a commitment to conclude a bargain on the offered terms. Absent some quantity limitation, a court would probably find the "agreement" here too vague to constitute an offer; otherwise, the manufacturer could be committing itself to sell more canoes than it can supply. Thus, the department store's first order will be construed as an offer, and the manufacturer's confirmation will be construed as an acceptance of the offer, thus creating a contract. (C) is incorrect because there was no acceptance of the department store's second offer. If the original agreement did not create a contract, the second order must be construed as an offer. The manufacturer did nothing to accept the department store's second offer. The manufacturer's failure to reject the offer until five days after it was made does not constitute an acceptance. Therefore, no contract was formed for the additional 500 canoes. (D) is incorrect because although it is true that the Uniform Commercial Code ("UCC") imposes a duty of good faith on all parties, and failure to deliver under a contract simply because a better price can be obtained might violate this duty, the UCC does not provide for punitive damages for breach of this duty. When a seller fails to deliver goods, one remedy available to the buyer is cover damages—the difference between the contract price and the price of substitute goods. Because the manufacturer had agreed to sell the department store 500 canoes and failed to deliver, the department store reasonably bought replacement goods for $30 more per unit and is entitled to recover the additional $30 per unit.

HYPO 4S In July, B buys a sleeping bag from S. The contract provides that the sleeping bag is insulated for temperatures as low as 10 degrees. B uses the sleeping bag for various warm weather camping adventures throughout the summer. When B goes camping in October, she learns that the sleeping bag is not insulated for temperatures as low as 10 degrees. Can B reject the goods? (2) Can B revoke her acceptance of the goods?

B cannot reject the goods (2) B can revoke acceptance of the goods -- substantial impairment of value of goods and excusable ignorance for her delay.

The fact that goods are specially made creates an exception to the _______________, but it does not excuse the obligation to tender _________________ goods in the correct quantity at or before the time specified for delivery. The perfect tender rule is incorporated into every contract for the sale of goods except where the contract specifies different terms or where there is an explicit installment contract.

Statute of Frauds conforming

Elements of economic duress ______ guy - makes an improper threat Vulnerable ______ - no reasonable alternative

Bad Guy

HYPO 4Q One day, Krispy Kreme delivers only 99 donuts at 9:01 am. What are BARBRI's rights?

Barbri cannot reject because no substantial impairment

One type of agreement covered by the SOF_________ is a promise to answer for the debt or default of another where the promise is collateral rather than primary. However, where the main purpose or leading object of the promisor is to secure an advantage or pecuniary benefit for __________, the contract is not within the SOF even if the effect is still to pay the debt of another.

Statute of Frauds himself

HYPO 5Q. Britney contracts to have her driveway paved and to pay $10,000 if she is satisfied with the work. What if everyone likes the work except for Britney? (2) What if Britney contracts with an artist to paint her portrait instead?

Britney has to pay - reasonable person (2) subjective standard, all that matters is if Britney is happy

HYPO 4M. Seller contracts to deliver 50 purple tee shirts to Buyer. Seller delivers 49 purple and 1 gold t-shirt instead. What are buyer's rights?

Buyer has right to reject everything

On September 1, an art collector offered to sell one of his expensive paintings to a buyer. The buyer, who was a friend of the collector, wanted a few days to make up her mind, so the collector and the buyer decided that the collector would keep his offer to her open until September 8 in exchange for a payment of $5. Later that week an art investor tendered to the collector double what he was asking for the painting. On the morning of September 8, the buyer telephoned the collector to tell him that she wanted the painting but his phone was out of order, so she wrote out a check for the agreed- on amount and dropped it into a mailbox before leaving town. On September 9 the collector, not having heard from the buyer, sold the painting to the investor. Who is entitled to the painting? (A) The buyer, because she had a valid option contract with the collector and effectively accepted the collector's offer to sell the painting. (B) The investor, because $5 is inadequate consideration for an option contract involving an expensive purchase such as this one. (C) The investor, because the collector sold the painting to the investor on September 9 before receiving the buyer's check. (D) The collector, because a sale of goods priced at $500 or more must be in writing to be enforceable.

C (C) The investor owns the painting. While it is true that the buyer had a valid option contract withthe collector, she did not effectively accept the collector's offer to sell the painting when she dropped the check into the mailbox on September 8. The majority view is that acceptance of an option is effective only when received by the offeror, so the usual "mailbox rule" does not apply to make the acceptance effective on dispatch. This means that the buyer did not effectively accept the option within the stated period, i.e., by September 8. When, as here, the time the offer will remain open is specified in the option, if it is not accepted within that time, the offer terminates due to lapse of time. (A) is incorrect because, as discussed above, the buyer does not own the painting because acceptance of an option is effective only when received by the offeror, and here the collector would not have received the buyer's acceptance until it was too late. (B) is incorrect because the consideration exchanged by the offeree (the buyer) for the offeror's (the collector's) promise not to revoke need not be "adequate"—generally, consideration of any value is sufficient to support an option. (D) is incorrect because the collector sold the painting to the investor. While this choice accurately sets forth the Statute of Frauds rule for the sale of goods, the outcome of the dispute here does not turn on this issue. Perhaps if the collector had changed his mind about selling the painting to the investor, he could assert that the Statute of Frauds required the agree- ment to be in writing to be enforceable. However, the facts do not present that situation, nor do they indicate whether the sale was oral or in writing.

Which of the following statements is correct? A) Both an ordinary option contract and a merchant's firm offer require that the offeree give consideration B) A merchant's firm offer requires that the offeree give consideration, whereas an ordinary option contract does not C) An ordinary option contract requires that the offeree give consideration, whereas a merchant's firm offer does not D) Neither an ordinary option contract nor a merchant's firm offer requires that the offeree give consideration

C An ordinary option contract is a distinct contract in which the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer. In contrast, under Article 2's merchant's firm offer provision, there are circumstances in which a promise to keep an offer open is enforceable even if no consideration has been paid to keep the offer open: A merchant's firm offer arises when a merchant offers to buy or sell goods in a signed writing and the writing gives assurances that the offer will be held open.

To be enforceable, certain agreements must be in writing and signed by the party to be bound. Which of the following statements concerning the Florida Statute of Frauds is TRUE? A) Both a gym membership and a newspaper subscription must be in writing. B) Neither a promise in consideration of marriage nor a 6-month lease need be in writing. C) Both a credit agreement and a contract for the sale of goods in excess of $500 must be in writing. D) Neither an agreement to pay the debt of another nor home solicitation sales need be in writing.

C Both a credit agreement and a contract for the sale of goods in excess of $500 both must be in writing. The Florida Statute of Frauds also requires newspaper subscriptions, promises in consideration of marriage, agreements to pay the debt of another, and home solicitation sales, among several other categories of contracts, to be in writing in order to be enforceable. The Statute of Frauds does not require a writing for gym memberships or short-term leases under one year.

Which of the following best describes the elements required for an effective assignment? A) An adequate description of the right being assigned, consideration, and present words of assignment B) A writing containing an adequate description of the right being assigned and present words of assignment C) An adequate description of the right being assigned and present words of assignment D) Consideration and a writing containing an adequate description of the right being assigned and present words of assignment

C For an assignment to be effective, there must be an adequate description of the right being assigned. In addition, there is a requirement that the assignment is expressed in present words of assignment. This means that the assignor must manifest an intent to transfer his rights under the contract completely and immediately to the assignee. Whether such intent is present will be determined by looking to the terms of the transfer itself; i.e., the test is objective, not subjective. It is not necessary to use the word "assign"; any generally accepted words of transfer will suffice (e.g., "convey," "sell," "transfer," etc.). A writing is usually not required to have an effective assignment; an oral assignment is generally effective. Situations where an assignment must be in writing include wage assignments; assignments of an interest in land; assignments of choses in action worth more than $5,000; and assignments intended as security interests under Article 9 of the U.C.C. Consideration is not required; a gratuitous assignment is effective.

When should the nonbreaching party treat an otherwise minor breach as a material breach? A) When the breach is part of a divisible contract B) When the breach causes the nonbreaching party damages C) When the breach is coupled with an anticipatory repudiation D) When the breach relates to the timing of performance

C If a minor breach is coupled with an anticipatory repudiation, the nonbreaching party may treat it as a material breach. Thus, the nonbreaching party may sue immediately for total damages and is permanently discharged from any duty of further performance. The courts hold that the nonbreaching party must not continue on with the contract, because to do so would be a failure to mitigate damages. There is no reason that a minor breach that is part of a divisible contract should be treated as a material breach. In fact, in a divisible contract, recovery is available for substantial performance of a divisible part even if there has been a material breach of the entire contract. Even a minor breach can cause the nonbreaching party damages. The effect of a minor breach is to provide a remedy for the immaterial breach to the aggrieved party. The aggrieved party is not relieved of her duty of performance under the contract by a minor breach, unlike in the case of a material breach. Unless the nature of the contract is such as to make performance on the exact day agreed upon of vital importance, or the contract by its terms provides that time is of the essence, a failure by a promisor to perform at the stated time will not be material. Thus, a minor breach that relates to the timing of performance generally should not be treated as a material breach

A young man proposed to his girlfriend, but she was reluctant because of his meager income and lack of job potential. The young man told his father about her reluctance. The father told the girlfriend that if she married his son, he would support them for six months and send his son to a six-month computer technology training school. This was sufficient to dispel her reservations and the two were married very soon after. When they returned from their honeymoon, the father refused to go through with his offer. Although the girlfriend is happy in her marriage, she sued the father for damages. If the father prevails, what is the likely reason? A) The father's promise was not supported by valid consideration. B)The contract is against public policy. C) The contract was oral. D) The girlfriend is happy and therefore has incurred no detriment.

C If the father prevails, it will be because his promise to the young woman was not in writing. The Statute of Frauds requires that a contract in consideration of marriage must be evidenced by a writing to be enforceable. This includes any promise that induces someone to marry by offering something of value. Hence, the father's offer of support and education expenses is unenforceable. (A) is wrong because a promise to marry is a sufficient detriment to constitute valid consideration. (B) is wrong because there is no public policy against encouraging marriage. (D) is wrong because a person's pleasure or displeasure from performing a contractual duty is irrelevant as to whether performance constitutes consideration. The young woman agreed to do something that she was under no legal obligation to do in exchange for the father's promise of financial support; hence, consideration exists.

Which of the following normally would not be an exception to the preexisting legal duty rule? A) A minor's ratification of a contract upon reaching the age of majority. B) A compromise based on an honest dispute as to duty. C) Payment of a smaller sum to settle an existing debt. D) An acceleration of the performance of the duty.

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

On July 1, a cattle rancher offered to sell his ranch to a dairy farmer for $150,000. The dairy farmer paid the cattle rancher $1,000 to hold the offer open for a period of 30 days. On July 10, the dairy farmer wrote to the cattle rancher, telling him that he could not pay more than $100,000 for the ranch, and that if he would not agree to accept that amount, he would not go through with the deal. The dairy farmer received no reply from the cattle rancher. On July 29, the dairy farmer mailed a letter to the cattle rancher telling him that he accepted his offer to sell the ranch and enclosed a check for $150,000. The cattle rancher received this letter on August 1. Has a contract been formed between the parties for the sale of the ranch? A) No, because the dairy farmer's letter of July 10 terminated the cattle rancher's offer. B) No, because the cattle rancher did not accept the dairy farmer's counteroffer of $100,000. C) No, because the cattle rancher did not receive the dairy farmer's acceptance within 30 days. D) Yes, because the dairy farmer dispatched his acceptance of the cattle rancher's offer prior to the expiration of 30 days.

C No contract was formed because the cattle rancher did not receive the dairy farmer's acceptance within 30 days. Under the mailbox rule, acceptance by mail or similar means creates a contract at the moment of dispatch. However, the mailbox rule does not apply to option contracts. An acceptance under an option contract is effective only upon receipt. [Restatement (Second) of Contracts §63] Here, an option contract existed because the dairy farmer paid the cattle rancher $1,000 to hold the offer open for 30 days. The dairy farmer mailed his acceptance within 30 days but it was not received by the cattle rancher within the 30-day period, so the acceptance was not effective. The option specified the period of time during which the offer would remain open, after which the offer terminated. Thus, (C) is correct, and (D) is wrong. (A) and (B) are wrong because an option contract is irrevocable for the time period stated. Thus, not even the dairy farmer himself could revoke the offer within the 30-day period.

Which of the following is a key distinction between an anticipatory repudiation and a prospective failure to perform? A) Repudiation must be unequivocal, whereas prospective failure to perform is determined by the subjective beliefs of the other party. B) Repudiation is final, whereas prospective failure to perform may be retracted. C) Repudiation must be unequivocal, whereas prospective failure to perform involves mere doubts. D) Repudiation may be retracted, whereas prospective failure to perform is a breach and cannot be retracted.

C Prospective inability or unwillingness to perform differs from anticipatory repudiation because repudiation must be unequivocal, whereas prospective failure to perform involves conduct or words that merely raise doubts that the party will perform. Repudiation must be unequivocal. However, a prospective failure to perform is not based on the subjective beliefs of the other party, but rather is judged on a reasonable person standard. Both repudiation and prospective failure to perform may be retracted, provided the other party has not yet changed position in reliance on the repudiation or prospective failure. The effect of a prospective failure is to allow the innocent party to suspend performance until she receives adequate assurances. She may treat this situation as a breach only if the assurances are not given. If a defaulting party regains his ability or willingness to perform, he must communicate that to the other party.

A building contractor entered into a contract with the local college to remodel a residence hall during the summer. As specified by the contract, the work had to be completed before the fall semester began at the beginning of September. Because the contractor received a great deal of other maintenance business from the college, his price of $400,000 was significantly lower than other contractors and he was not going to demand payment until the work was completed. By the end of the first week in August, the contractor had completed 75% of the project and had expended $350,000 in labor and materials. At that time, however, a labor dispute between the contractor and his employees prompted most of the workers to walk off the job. Because prospects for a quick settlement of the dispute were doubtful, the contractor informed the college that he would not be able to meet the completion deadline. A week later, the college obtained another contractor who was able to finish the project by the end of August. The college paid him $150,000, which included a substantial amount of overtime for his workers. The increase in value of the residence hall due to the remodeling was $425,000. The original contractor, who had not been paid, files suit against the college, which files a counterclaim against him. What should the contractor recover from the college? A) Nothing, because the contractor breached the contract. B) $200,000 in restitutionary damages, which is the difference between its expenditures and the amount the college paid the other contractor to complete the work. C) $250,000 in restitutionary damages, which is the contract price minus the amount the college paid the other contractor to complete the work. D) $275,000 in restitutionary damages, which is the difference between the value of the completed remodeling and the amount the college paid the other contractor to complete the work.

C The contractor should be able to recover $250,000 in restitutionary damages. Where a builder in a construction contract breaches during the construction, the nonbreaching party is entitled to the cost of completion plus compensation for any damages caused by the delay in completing the building. Most courts, however, will allow the builder to offset or recover for work performed to date to avoid the unjust enrichment of the owner. This restitutionary recovery is usually based on the benefit received by the unjustly enriched party. If substitute performance is readily obtainable, damages are measured by the unpaid contract price minus the cost of completion (up to the value of the benefit received by the defendant). Here, the contractor's duty to complete the project was not discharged by impossibility; he could have hired another contractor to take his place or yielded to his employees' demands. Hence, the contractor's failure to complete the remodeling constituted a breach of contract and resulted in the college having to expend $150,000 to have the building completed on time. However, the contractor did not receive any payments for the work that he did before breaching; the college would be unjustly enriched if it does not have to pay for any of this work. The benefit of the completed remodeling is measured by the contract price, $400,000, because a restitutionary recovery here would be based on the failed contract between the parties and substitute performance is readily obtainable. This amount is reduced by the $150,000 cost of completion that the college can recover from the contractor, leaving a net recovery of $250,000 for him. (A) is incorrect. Most modern courts would permit the contractor to recover in restitution to prevent the college's unjust enrichment from the work that he did. (B) is incorrect because recovery measured by the claimant's detriment (i.e., his reliance interest) is an appropriate alternative only where the standard "benefit" measure would achieve an unfair result; it is not applied where the party seeking restitutionary recovery was the breaching party. (D) is incorrect because courts will always limit relief to the contract price where the claimant is the breaching party. Measuring the benefit to the college in terms of the value of the improvements rather than the contract price will deny to the college the benefit of the bargain that it became entitled to when the contractor breached.

The owner of a condominium hired a cleaning and junk removal service to clean his condominium after he moved. The parties agreed in writing that the company was to completely empty out the condominium, wash the walls and floors, and clean the appliances in exchange for $1,500. Shortly after beginning performance, the company assigned to a creditor its right to all monies due under the contract (i.e., $1,500), and the creditor promptly notified the condominium owner of the assignment. The condominium owner acknowledged the assignment. The company continued working, completely emptying out the condominium, washing the walls and floors, and cleaning all of the appliances except for the oven before quitting the job. It would cost $150 to hire a substitute to clean the oven. The condominium owner refuses to pay the creditor anything because of the cleaning service's breach. If the creditor sues the condominium owner, how much, if anything, is the creditor entitled to recover? A) $1,500, the amount assigned, and the condominium owner may look to the company to recover for the minor breach. B) The reasonable value of the labor and materials expended by the company on the portion of the job it did complete. C) $1,350, on a theory of substantial performance. D) Nothing, because the condominium owner's duty to pay is subject to a constructive condition precedent, and the assignee takes subject to the defense that the condition has not been satisfied.

C The creditor will be able to recover the contract price less damages for the company's minor breach. Generally, an assignee has whatever rights his assignor would have against the obligor. Similarly, the assignee is subject to any contract-related defenses that the obligor has against the assignor. Thus, the creditor will have whatever rights the company would have against the condominium owner. Here, the company completed all of the tasks that needed to be done except for one (i.e., cleaning the oven). If the work remaining on the contract is minor, the company will be seen as substantially performing its contract, and substantial performance will discharge its duty to perform and obligate payment by the condominium owner. Because the facts state that the cost of finishing the job was relatively small (10% of the cost of the contract), it will probably be seen as a minor breach. Thus, the condominium owner cannot avoid payment of the contract price. However, despite the substantial performance, the other party to the contract may recover damages for the less than complete performance. Thus, the condominium owner will be able to offset his damages from the breach. The creditor then will be able to recover $1,350 (the contract price less the damages). (A) is incorrect because, as stated above, the obligor may offset damages directly against the assignee; he does not have to pay the full contract price and then seek damages from the assignor. (B) is incorrect because this suggests a restitutionary remedy, but, as stated above, the creditor, as assignee of the company, would be able to recover the contract price less damages because the company substantially performed. (D) is incorrect because the constructive condition precedent to the condominium owner's duty to pay (the company's performance) has been satisfied here by substantial performance.

In a shipment contract, the ________ must get the goods to a ______ carrier, make _____ arrangements, and ______ buyer.

Seller; common; delivery; notify

A jeweler was commissioned by a young man to design and create a set of rings (engagement and wedding) for his fiancée. The jeweler designed and created the rings in 18k gold, leaving room in the engagement ring for a large marquise-shaped diamond. The jeweler then entered into an oral agreement with a gemologist. The terms of the agreement were that the gemologist would provide the marquise-shaped diamond and the jeweler would pay the gemologist $20,000 when the jeweler received the payment from the young man. The gemologist found and cut a suitable stone and delivered it to the jeweler, who accepted it. The gemologist waited to be paid, and when he was not, he contacted the jeweler. The jeweler refused to pay him, arguing that their agreement was unenforceable and, anyway, the young man has not paid her. If the gemologist sues the jeweler for breach of contract, what is the gemologist's likely recovery? A) The fair market value of the stone, under a quasi-contract theory. B) The cost of materials and labor, under a quasi-contract theory. C) $20,000, the contract price. D) Nothing, because the young man did not pay the jeweler.

C The gemologist will be able to recover the full $20,000 contract price. Under the UCC, the contract is enforceable, despite the absence of a writing, to the extent of the goods accepted, which here is the entire amount contracted for. The proper remedy is the agreed-upon price of $20,000, which the gemologist will be able to prove by parol evidence. (A) is incorrect because the recovery will be under the contract. Because the promises are enforceable under the acceptance exception to the Statute of Frauds, the quasi-contract remedy need not be applied. Note that if the contract had been unenforceable, quasi-contract would be a basis for a recovery of restitutionary damages. (B) is incorrect because it also is a possible measure of restitutionary damages in a quasi-contract action, and as stated above, the gemologist will be able to recover under the contract here. (D) is incorrect because the court will construe the jeweler's agreement as a promise to pay at a particular time rather than an express condition for payment. If it were a condition, the jeweler would not have a duty to pay because she was not paid. However, courts prefer to construe language as a promise rather than a condition so as to reduce the obligee's risk of forfeiture. Where an agreement provides that a duty is to be performed once an event occurs, if the event is not within the control of the promisee, it is less likely that he will have assumed the risk of its nonoccurrence and therefore less likely to be a condition of the promisor's duty to perform. In doubtful situations, courts are more likely to hold that the provision is a promise rather than a condition because this supports the contract and preserves the reasonable expectations of the parties.

When seller is a merchant-seller, ______ bears risk of loss until buyer takes ________ of the goods.

Seller; possession

A Florida homeowner and contractor orally agree that the contractor will renovate the homeowner's kitchen for $20,000, with completion slated for three months from now. Just before beginning the job, the contractor quits for a more lucrative job. If the homeowner sues the contractor for breach, is she likely to succeed? A) Yes, because the renovation would be complete in less than one year.. B) Yes, because the contractor acted in bad faith. C) No, because home renovation contracts must be evidenced by a writing. D) No, because the price was more than $500.

C The homeowner will not succeed because home renovation contracts must be evidenced by a writing. In Florida, home improvement contracts must be evidenced by signed writing to be enforceable. (A) is incorrect because it states the majority rule for service contracts. If a contract for services is possible to complete within one year, it is not within the Statute of Frauds. (B) is incorrect because the contractor's good or bad faith is irrelevant. Also, there is no evidence that the contractor acted in bad faith; he was not bound and took another offer. (D) is incorrect because it states the rule for sales contracts. This is a contract for services.

HYPO 4K What if the coffee was shipped FOB Seattle? (2) What if it's any other city (e.g., FOB New York)

Shipment contract, so risk of loss passes to buyer once Starbucks gets it to shipper. (2) Seller would bear risk of loss until coffee got to NY

A hotelier opening a new inn in the Pacific Northwest sent letters to all known hotel and motel suppliers on June 1, alerting them to his need for such items as ice buckets, televisions, linen, and mattresses. The hotelier received a letter dated June 8 from a hotel supply company, stating that the company had 250 ice buckets left in stock and will sell them to the hotelier for $1 each. The company added that it must receive the hotelier's answer by November 1 and will hold the ice buckets for the hotelier until then. On July 1, the company sold 200 of the ice buckets to a competing hotel chain, which had recently opened a hotel on the East Coast. On July 2, the company sent the hotelier a fax stating it had only 50 ice buckets left for sale. The hotelier received the fax that day, but put it aside and never read it. On July 10, the hotelier notified the company that he was accepting the company's offer to sell 250 ice buckets. The company, upon receiving the hotelier's acceptance, shipped the remaining ice buckets. The hotelier sues the company for failing to deliver all 250 ice buckets. Will the hotelier prevail? A) No, because the hotelier is not a hotel supply merchant. B) No, because the company's offer was to remain open for more than three months. C) Yes, because the company promised in a signed writing to hold the offer open. D) Yes, because the hotelier never read the company's July 2 fax.

C The hotelier will prevail. Ice buckets are movable goods; therefore, Article 2 of the UCC applies. The June 8 letter from the supply company is a firm offer under UCC section 2-205. No consideration is required, because the company is a "merchant" (i.e., one who ordinarily deals in goods of the kind sold) of ice buckets. Where a time period for the offer is stated, the period of irrevocability is that period, except that the period cannot exceed three months. Here, the three-month period would end on September 8. The company's fax stating that it had only 50 ice buckets left to sell constitutes an invalid attempt at revocation, because it is within the three-month period of irrevocability. (A) is incorrect because section 2-205 does not require that the offeree of a firm offer be a merchant; it requires that the offeror be a merchant, and the company is (see above). (B) is incorrect because a firm offer that states a period longer than three months is still firm for the first three months. (D) is incorrect because the hotelier's knowledge, or lack thereof, of the "revocation" of the company's offer is irrelevant because it was invalid; the fact that the company made a firm offer prevents it from revoking the offer within the stated time, not to exceed three months.

A husband was on his way to meet his wife for lunch at the restaurant in the lobby of a bank building where she worked. He had just entered the building, which was owned and operated by the bank, when he heard screams and the sound of breaking glass from the restaurant area. He immediately saw that a large piece of artwork made of stained glass had fallen onto the seating area of the restaurant. In the seating area he saw several injured persons, including his wife, lying in the wreckage of the artwork. He fainted and hit his head on the marble floor, fracturing his skull. The artwork had collapsed because the pedestal that the bank had provided for the artwork was not properly constructed. If the husband sues the bank for his injury, is he likely to prevail? A) No, because he was not personally in the zone of danger of physical injury. B) No, because he did not actually see the artwork collapse onto the diners. C) Yes, because his wife was one of the persons he saw lying in the wreckage. D)Yes, because the bank had provided the pedestal for the artwork.

C The husband will recover for his injuries because his wife was among those injured by the collapse of the artwork. The duty to avoid negligent infliction of emotional distress may be breached when the defendant creates a foreseeable risk of physical injury to the plaintiff. In most jurisdictions, a bystander who sees the defendant negligently injuring another can recover for his own distress if (i) the plaintiff and the person injured by the defendant's negligence are closely related, (ii) the plaintiff was present at the scene of the injury, and (iii) the plaintiff personally observed or perceived the event. Observation is typically by sight, but may also be by hearing or other senses under certain circumstances. Here, the husband heard the screams and the sound of breaking glass when the artwork collapsed as he entered the lobby. Even though he evidently did not see the artwork collapse on the diners, he heard it crash where his wife was sitting and saw the immediate aftermath. Because his wife was one of the persons injured by the collapse of the artwork, he can recover damages for the injuries caused by his distress. (A) is incorrect because, as stated above, the majority rule allows a bystander to recover based on the factors stated above even if he is outside the zone of danger of physical injury. (B) is incorrect because, as discussed above, a plaintiff who is present at the scene of the injury may perceive the event by hearing or other senses; under the circumstances here, it was not essential that he observe the actual collapse with his eyes. (D) is incorrect because it does not matter that the bank had provided the pedestal. Even if the negligent construction of the pedestal had been done by a third party, the bank remains liable to invitees on its premises because a business has a nondelegable duty to keep its premises safe for customers.

A doll collector knew that an acquaintance from her doll collectors' club coveted one particular doll that she owned. The doll collector mailed a letter to the acquaintance on May 3 offering to sell the doll to her for $750. Her letter arrived on May 4. On May 5, the doll collector changed her mind and immediately mailed a revocation to the acquaintance. This revocation arrived on May 7. As the mail carrier handed it to her, the acquaintance simultaneously handed to the mail carrier her own letter to the doll collector, unequivocally accepting her offer. What is the result of the actions here? A) The revocation was effective upon mailing, and the acceptance would be treated as a counteroffer. B) The acceptance was effective, as long as the acquaintance had no knowledge of the contents of the doll collector's letter when she handed her letter to the mail carrier. C) The outcome would turn on the court's determination as to whether the doll collector's letter had been received by the acquaintance before she had entrusted the letter of acceptance to the mail carrier. D) Handing a letter to a mail carrier is not a proper posting of the acceptance, and hence the acquaintance's purported acceptance is not timely.

C The outcome would turn on the court's determination as to whether the doll collector's letter had been received by the acquaintance before she had entrusted the letter of acceptance to the mail carrier. At common law, an acceptance is effective upon dispatch (e.g., upon mailing a properly addressed and stamped letter) under the mailbox rule. The mailbox rule does not apply to revocations, however-revocations are effective only upon receipt. Receipt does not require knowledge of the revocation, but merely possession of it. The communication need not be read by the recipient to be effective. [See Restatement (Second) of Contracts §68] The facts here present a close question as to whether there has been a dispatch of the acceptance before the receipt of the revocation. The outcome of this question will depend on the court's determination as to what came first (the posting of the acceptance or receipt of the revocation). This will decide the existence or nonexistence of the contract. (A) is incorrect because, as indicated above, revocation is effective only upon receipt, not mailing. (B) is incorrect because whether the acceptance is effective depends on whether the revocation was received before the acceptance was dispatched, and whether the revocation was received first is not dependent on whether the acquaintance had knowledge of its contents, but rather it depends on whether she had possession of it. (D) is incorrect because the mailbox rule makes an acceptance effective upon posting, and there is no reason to hold that handing a properly addressed, stamped letter to a mail carrier is not a valid posting.

A wholesale seller of mobile phones entered into a contract with a retailer, who was in the business of selling electronics, to sell 50 of a particular model phone at a cost of $200 apiece, or a total cost of $10,000. When the phones were delivered, the retailer discovered that 20% of them were defective. The retailer promptly sent the seller an electronic check for 80% of the contract price ($8,000). Did the retailer make a proper rejection? A) Yes, because the phones were defective. B) Yes, because the retailer paid for the phones that were not defective. C) No, because the retailer accepted the phones and failed to seasonably notify the seller of any rejection due to defects. D) No, because the retailer kept all of the phones and did not return the defective phones to the seller.

C The retailer did not properly reject, because he accepted the phones and failed to give proper notice of rejection. A buyer who receives nonconforming goods generally has the right to accept all, reject all, or accept any commercial units and reject the rest. Here, 20% of the phones shipped were defective, so the retailer had a right to reject. To properly reject, the rejecting party must, within a reasonable time after delivery and before acceptance, reject the goods or notify the seller of the rejection. Here, the retailer failed to reject the goods or notify the seller of the defects. He merely transferred payment for less than the contract price. Thus, the retailer cannot rely on the defect in claiming a breach, and his rejection was improper; i.e., he has accepted the goods. (A) and (B) are wrong because, although the retailer does not have to accept defective goods or pay for them, he must give the seller notice of the specific defect or he cannot rely on that defect in rejecting. (D) is not as good a choice as (C) because the retailer could have rejected the goods without returning them. As discussed above, the retailer was required to reject or notify the seller of the defects.

A vague term in a contract can be cured by: A) the presumption that the parties' intent was to include a reasonable term B) gap fillers C) part performance D) quantum meruit

C Where part performance supplies the needed clarification of the terms, it can be used to cure vagueness. Gap fillers and the presumption that the parties' intent was to include a reasonable term go to supplying missing, rather than vague, terms. When the parties have included a term that makes the contract too vague to be enforced, the court will not apply a gap-filling term or a presumption to cure the problem. Quantum meruit is another term for quasi-contractual recovery to remedy unjust enrichment. Although it does not cure a vague term, it is available as a remedy for a party who performs despite a vague term that causes a contract to fail.

A dealer in oriental rugs acquired an antique rug measuring 24 feet by 36 feet. A banker inspected the rug and orally agreed to buy it for the asking price of $65,000, provided he was successful in purchasing the house he was trying to buy, because it had a living room large enough to accommodate the rug. The sale agreement was later reduced to writing, but the provision concerning the purchase of the house was not included in the written agreement. If the banker is unsuccessful in acquiring the house he wants because the owner decided not to sell, and the dealer sues the banker for the purchase price, what is the most likely result? (A) The dealer will prevail because the original oral agreement need not be in writing to be enforceable. (B) The dealer will prevail because of the parol evidence rule. (C) The banker will prevail because he was unable to acquire the house he wanted. (D) The banker will prevail because the dealer is not entitled to specific performance.

C (C) The banker will prevail because he could not acquire the house. In general, the parol evidence rule bars oral evidence contradicting a written agreement which was intended to be a final and exclusive embodiment of the parties' agreement. However, one exception to this general rule provides that parol evidence is admissible to show a condition precedent to the existence of a contract. Here, the contract between the banker and the dealer for the sale and purchase of the rug was only to be effective if the banker acquired the house he wanted. This condition precedent may be shown by the banker despite the fact that it was not reduced to writing. (A) is incorrect. This contract must be in writing because it is for the sale of goods of more than $500 in value. However, there is a written agreement here and the question is whether the written agreement precludes proof of the oral agreement. Under the parol evidence rule, a written agreement can prevent proof of an oral agreement even if the agreement does not have to be in writing. (B) is incorrect because a condition precedent to a written agreement's enforceability may be shown by parol evidence. (D) is incorrect because specific performance is not the issue here; whether the contract is enforceable at all is the issue. If this contract is enforceable, specific performance may be available because the rug might be considered unique.

A debtor owed $50,000 to a creditor. One week before the statute of limitations was to expire, the debtor's mother sent the creditor a letter stating that she was sure that her son was about to pay the debt, and that if her son did not pay, she would. Relying on the mother's letter, the creditor allowed the statute of limitations to expire without bringing an action to recover the money. The debtor refused to pay the creditor. If the creditor brings suit against the mother for the $50,000, will he prevail? (A) No, because the statute of limitations has run against the son's debt. (B) No, because the mother received no bargained-for exchange to support her promise. (C) Yes, because the creditor reasonably and foreseeably relied on the mother's promise. (D) Yes, because of the main purpose exception to the statute of limitations.

C (C) The creditor will prevail. The mother made a gratuitous promise to the creditor; she received no consideration for it (she did not ask for anything in return for her promise). The creditor's reliance in allowing the statute of limitations to lapse was not exchanged for the promise. However, even without consideration, under section 90 of the Restatement (Second) of Contracts, the creditor could enforce the mother's promise because he reasonably and foreseeably relied on the promise in declining to sue the debtor within the limitations period. (A) is incorrect because, although the statute of limitations has run on the debtor's debt, the creditor is not suing the debtor on his promise, but rather the mother on hers. (B) is incorrect because, while it is true that the mother received no consideration for her promise, the promise is enforceable under promissory estoppel principles. (D) is incorrect because there is no "main purpose" exception to the statute of limita- tions. The main purpose rule is an exception to the Statute of Frauds; however, that is not an issue here because the mother's promise was in writing.

A high-volume pleasure-boat retailer entered into a written contract to sell a customer a power boat for $120,000. The retailer could obtain from the manufacturer, for $90,500, as manyof these boats as it could sell. As the contract provided, the customer paid the retailer $40,000 in advance and promised to pay the full balance on delivery of the boat. The contract contained no provision for liquidated damages. Prior to the agreed delivery date, the customer notified the retailer that he would be financially unable to conclude the purchase; the retailer thereafter resold the boat that the customer had ordered to a third person for $120,000 cash. If the customer sues the retailer for restitution of the $40,000 advance payment, which of the following should the court decide? (A) The customer's claim should be denied, because, as the party in default, he is deemed to have lost any right to restitution of a benefit conferred on the retailer. (B) The customer's claim should be denied, because, but for his repudiation, the retailer would have made a profit on two boat sales instead of one. (C) The customer's claim should be upheld in the amount of $40,000 minus the amount of the retailer's lost profit under its contract with the customer. (D) The customer's claims should be upheldin the amount of $39,500 ($40,000 minus $500 as statutory damages under the UCC).

C (C) The customer should recover $40,000 minus the retailer's lost profit. The correct measure of damages is the lost profits of the retailer. That amount should be deducted from the deposit and the balance returned. The U.C.C. authorizes four different measures of damages when a buyer defaults after putting down a deposit. First, the Code allows the deposit to serve as liquidated damages if the contract so provides, within certain limits. However, this rule is inapplicable in this case because a liquidated damages clause was not included in the contract. Second, the Code provides in section 2-718(2) that when a deposit is given and there is no liquidated damages provision, the seller may keep 20% of the contract price or $500, whichever is less. In this case, the $500 limitation would control. However, if actual damages are more, as they are in this case, the seller may collect actual damages rather than the statutory amount. In section 2-708, the Code provides two measures of actual damages when the buyer defaults. The first is the tradi- tional expectancy measure of damages, resale price minus contract price. In a case such as this, there are no damages under this measure because the boat was resold for the contract price. The second alternative under section 2-708 applies here. When the seller is a dealer and the tradi- tional measure of damages is inadequate to put him in as good a position as he would be in if the sale went through, then the measure of damages is lost profit. Here, since the dealer could have ordered as many boats as there were buyers, he actually lost his profit on this sale. (A) is incorrect because even a defaulting party has the right to recover a portion of the deposit back in restitution if the amount of the deposit exceeds the contract damages to which the non-defaulting party is entitled. (B) is incorrect. While it is true that the retailer would have made profits on two boat sales instead of one if the customer had not defaulted, it did make the profit on the second sale, and cannot collect this from the customer. The lost profit on the first sale amounts to $29,500, less than the $40,000 advance. Therefore, the customer is entitled to $10,500, the difference between the amount of advance and the profit actually lost. (D) is incorrect because, as discussed above, actual damages allowed under U.C.C. section 2-708 exceed the $500 allowed under U.C.C. section 2-718(2), so the higher amount of damages would be awarded.

An owner of a piece of waterfront property contracted in writing with a contractor to rebuild the owner's dock in accordance with plans and specifications prepared by the owner. The agreed contract price was $50,000, $25,000 of which was payable on May 1 when the job was to commence and the balance due upon completion of the work. On March 1, the contractor notified the property owner that the contractor would lose money on the job at that price, and would not proceed with the work unless the property owner agreed to increase the price to $80,000. The property owner did not respond to the contractor, instead making a written contract with a third party to repair the dock, commencing May 1, for $60,000, which was the fair market cost of the work to be done. On May 1, both the contractor and the third party showed up at the dock to begin work, the contractor telling the property owner that he had decided to take the loss and would repair the dock for $50,000 as originally agreed. The property owner dismissed the contractor and allowed the third party to begin work on the dock. In a contract action by the contractor against the property owner, which of the following would the court decide? (A) The contractor will win because the property owner did not tell him before May 1 about the contract with the third party. (B) The contractor will win because he attempted to perform the contract as origi- nally agreed. (C) The property owner will win because the contractor in legal effect committed a total breach of contract. (D) The property owner will win because the third party's contract price was $20,000 lower than the $80,000 demanded by the contractor on March 1.

C (C) The property owner will win because the contractor breached. When the contractor notified the property owner on March 1 that he would not perform his obligations on a binding contract unless he was given more money, he committed an anticipatory breach. That breach gave the property owner the right both to terminate the contract and to engage a new contractor to complete the work. The property owner was not required to give notice to the contractor to exercise that right, which is why choice (A) is incorrect. (B) is incorrect because, when the contractor notified the property owner on March 1 that he would not perform his obligations on a binding contract unless he was given more money, he committed an anticipatory breach. That breach gave the property owner the right to terminate the contract and engage a new contractor to complete the work, without giving notice to the contractor. The contractor had no right to perform the contract once he had breached it; therefore, the fact that he showed up ready to perform the work on the day required by the contract is irrelevant. (D) is incorrect because the price at which the property owner was able to obtain a replacement contractor has no bearing on whether the property owner had the right to terminate the contractual rights of the original contractor. Indeed, after the contractor's breach, he could have chosen not to have the dock repaired at all, or if the lowest bid was from someone who would only do the work for more than $80,000, he could have accepted that bid and charged the contractor for the difference between the contract price and the cost of the cover.

A manufacturer and a buyer entered into a written contract for the manufacturer to produce and sell to the buyer 2,000 widgets at a price of $20 per widget. The contract expressly provided that the buyer shall have no liability under the contract unless 2,000 widgets are delivered to the buyer at his place of business no later than July 1. On July 1, 1,800 widgets meeting the buyer's specifications were tendered by the manufacturer. The remaining 200 widgets were tendered on July 5. The buyer refused to accept any of the widgets. In an action by the manufacturer against the buyer, which of the following would best support the manufacturer's case, assuming it can be proven? (A) The buyer had orally agreed, just prior to the time the written contract was executed, to accept and pay for partial deliveries of the widgets. (B) Widgets are a unique product produced only by the manufacturer and in a size and tolerance that varies with the needs of each purchaser. (C) Delivery of the 200 widgets on July 1 was delayed by a storm which disrupted the shipper's activities, and was not the manufacturer's fault. (D) A drop in the buyer's credit rating from good to fair had caused the manufacturer not to produce and tender the full 2,000 widgets on or before July 1.

C (C) The storm delay would best support the manufacturer's case. The storm may have made delivery on time impossible, which may excuse performance under either the doctrine of impracticability of performance or the doctrine of impossibility of performance. These defenses can be used not only to excuse performance totally, but also to excuse the delay in performance. (A) is incorrect because an oral agreement made prior to a written agreement on the same subject will notbe admissible to alter the written agreement under the parol evidence rule. Therefore, the oral agreement does not modify the terms of the written contract and this contention will not help the manufacturer's case. (B) is incorrect. The fact that goods are specially made creates an exception to the Statute of Frauds, but it does not excuse the obligation to tender conforming goods in the correct quantity at or before the time specified for delivery. The perfect tender rule is incorporated into every contract for the sale of goods except where the contract specifies different terms or where there is an explicit installment contract. (D) is incorrect. If the buyer became insolvent, the manufacturer could, under the U.C.C., require that the buyer pay cash upon delivery or give assur- ances of payment. Here, however, the manufacturer has not requested that payments be made in cash or that the buyer give assurances. Moreover, the buyer only suffered a decrease in his credit rating; he is not insolvent. Therefore, the manufacturer would have had no basis for making either request. The manufacturer is not excused from performance by the buyer's decreased credit rating.

A catering company entered into a written contract with a dish supplier to purchase 5,000 plastic dishes at $.10 per dish. The contract called for the supplier to deliver the 5,000 dishes to the caterer on or before October 1. On October 1, the supplier delivered only 3,000 dishes to the caterer. The supplier informed the caterer that it was experiencing manufacturing delays and would deliver the other 2,000 dishes by October 31 at the latest. The caterer accepted delivery of the 3,000 dishes, but because it had a number of catering jobs lined up for early October, the caterer was forced to purchase 2,000 dishes from another supplier at a price of $.12 per dish. The supplier demanded that the caterer pay $300 for the 3,000 dishes delivered, but the caterer refused to pay anything. If the supplier sues the caterer for breach of contract, what will the supplier recover? (A) $300, the price under the contract for the 3,000 dishes that were delivered, withno deduction for the caterer's extra cost, because the caterer waived its right to cover when it accepted the supplier's tender with- out expressly reserving its rights. (B) The reasonable value of the 3,000 dishes that were delivered less $40, which is the extra cost incurred by the caterer to obtain the balance of the dishes. (C) $260, the price under the contract for the 3,000 dishes that were delivered less $40, which is the extra cost incurred by the caterer to obtain the balance of the dishes. (D) Nothing, because the supplier is in material breach of the contract until it tenders delivery of the last 2,000 dishes.

C (C) The supplier will recover $260. Dishes are movable goods, and so Article 2 of the U.C.C. applies. Under Article 2, when goods fail in any respect to conform to the contract, the buyer may accept the goods [U.C.C. §2-601] and pay the contract price for the goods accepted [U.C.C. §2-607]. However, the buyer has a right to offset its damages. When a seller fails to deliver goods as promised, the buyer may "cover" under U.C.C. section 2-712 by making a reasonable purchaseof substitute goods, and then may recover as damages the difference between the contract price and the "cover" price. Here, the difference between the contract price and the cover price is $40 (2,000 plates × $.02). (A) is incorrect because the U.C.C. permits a buyer to accept a noncon- forming or partial delivery without waiving the right to sue for damages; thus, there is no need for an express reservation of rights at the time the goods are accepted. (B) is incorrect because the correct measure of damages is not based on the reasonable value of the goods accepted, but rather on the contract price. [See U.C.C. §2-607(1)] (D) is incorrect because the U.C.C. requires that the buyer pay for any goods accepted. [U.C.C. §2-607] The common law rule, which discharges the buyer's obligation to pay if there has been a material breach, is displaced by U.C.C. section 2-607.

A buyer and seller entered into a written contract on March 31 for the sale of a beach house. Under the terms of the agreement, the buyer would purchase the house for $275,000, with 10% due at closing on May 1 and a 15-year mortgage. At the time the contract was entered into, the parties agreed orally that the written agreement would not become binding unless the buyer notified the homeowner, in writing, by the end of the day on April 15, that she had secured the proper financing. With the summer season approaching, the seller did not wish to risk any delay in selling the house if the buyer was not in a position to buy it. On the morning of April 15, the buyer's financing was approved. On April 16, the buyer telephoned the seller and told him that her financing had been approved. The buyer also told the seller that she was not able to get written confirmation to him by April 15 because of the postal workers' slowdown and because her fax machine just broke down. The seller assured the buyer that this was not a problem. However, before closing, the seller had a change of heart and decided not to sell the beach house after all. The buyer files an action for breach. Which of the following would be the basis for the buyer's best argument? A Statute of Frauds. B Parol evidence rule. C Waiver of condition. D Excuse of condition by hindrance.

C The buyer's best argument is that the seller's assurances that there was no problem with the buyer's failure to provide written notification by April 15 amounts to a waiver of the condition. The buyer's written notification by April 15 that he had obtained the proper financing was a condition precedent to the seller's absolute duty to perform under the contract. It is clear that the buyer did not provide the required notification by April 15; thus, the condition was not fulfilled. However, one having the benefit of a condition may indicate by words or conduct that he will not insist upon it. When a condition is broken, the beneficiary of the condition has an election: (i) he may terminate his liability; or (ii) he may continue under the contract. If a choice is made to continue under the contract, the person is deemed to have waived the condition. The seller was fully aware that the buyer had not satisfied the condition, yet, when speaking with the buyer on April 16, he stated unequivocally that it was not a problem. This is a definite indication that the seller elected to continue under the contract. Having so elected, the seller is deemed to have waived the condition. Therefore, the seller's duty of performance under the contract became absolute. Regarding (A), the only way the Statute of Frauds could bolster the buyer's position would be if the original oral agreement setting forth the condition were required by the Statute to be in writing. If that were the case, the buyer could argue that the condition is unenforceable because it is not in writing. However, the oral agreement is not of a type that falls within the purview of the Statute of Frauds. Therefore, the Statute of Frauds will provide no help to the buyer. Similarly, regarding (B), the parol evidence rule could help the buyer only if it could be used to preclude admissibility of the original oral agreement. Under the parol evidence rule, where the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain, any expression made prior to the writing and any oral expression contemporaneous with the writing is inadmissible to vary the terms of the writing. However, where it is asserted that there was an oral agreement that the written contract would not become effective until the occurrence of a condition, evidence of the oral agreement may be offered and received. Because the original oral agreement between the seller and buyer established a condition precedent to the effectiveness of the written agreement, the buyer will be unable to raise the parol evidence rule as a bar to the admissibility of evidence relating to the oral agreement. (D) is unsupported by the facts. If a party with a duty of performance that is subject to a condition prevents the condition from occurring, he no longer has the benefit of the condition. This is referred to as excuse of condition by hindrance. The seller did nothing to prevent the occurrence of the condition regarding written notification by April 15. Consequently, it cannot be said that the condition is excused by hindrance.

ACTIVITY On January 1, Batman assigns the right to payment from Gotham City to Robin as a gift. On February 2, Batman promises to assign the same right to Ben Affleck, his latest alter ego. On March 3, Batman sells the same right to the Joker, shortly before he was hanged, for $100 On April 4, Batman sells the same right to Bill Gates for $1,000. As of April 4, whom should Gotham City pay? (a) Robin, the first gratuitous assignee (b) Affleck, the last gratuitous (c) Joker (d) Gates

C. Joker *a later assignee for consideration prevails if he does not know of the earlier assignments and is the first to get payment from or a judgment against the obligor.

ACTIVITY Bill Gates receives a letter from Pearl Jam inviting him to replace Eddie Vedder in a new version of the group. On August 8, Gates mails a letter to the band accepting their offer. On August 9, he changes his mind and calls the group to politely decline. On August 10, Pearl Jam receives Gates's letter of acceptance. If Pearl Jam brings an action against Gates for breach, how should the court rule? A. For Gates, because a letter is too indefinite to be an offer. B. For Gates, because Pearl Jam received his rejection via phone call before they received the acceptance letter. C. For Pearl Jam, because Gates's letter accepting the offer was effective when mailed. D. For Pearl Jam, because Gates's rejection was oral.

C. correct answer

HYPO 5A Seller contracts to sell 50 purple tee shirts to Buyer. Seller delivers 49 purple tee shirts and one gold tee shirt. What can Buyer do?

Can refuse all; buyer can still get damages

HYPO 7K Batman assigns the right to payment from Gotham City to Robin as a gift. Batman later assigns the same right to charity. To whom should Gotham City make payment?

Charity

What are the two kinds of contract law?

Common law of contracts Article 2 of the Uniform Commercial Code (UCC)

HYPO 5B I hire Martha Stewart to decorate my house. She finishes, except for one bathroom. What are my rights? (2) What if Martha quits after decorating only one room? (3) What if the contract required me to pay Martha $25,000 for each room she decorated?

Still has to perform (2) excuses C from having to perform, payment only restitution (3) still have to pay the $25k for whatever rooms she decorates (divisible contract means breach based upon unit by unit)

HYPO 2V On July 1, Elon Musk offers to sell his original Tesla Roadster to Mark Zuckerberg for $1 million. On July 2, Zuckerberg mails an acceptance. On July 3, he receives a letter revoking the offer Result? (2) What if the acceptance got lost in the mail?

Contract formed on July 2 (2) doesn't matter

__________ will read in a ____________ price for sale of _______ but not in _________ law.

Court; reasonable; goods; common

On June 1, a homeowner sent a letter to a painter that stated, "I will pay you $8,000 for painting the exterior of my home, provided you commence painting by July 1 and finish by July 10." On June 5, the homeowner received the following letter from the painter, "I am available to paint your house, but I cannot do the work for less than $10,000." On June 10, the homeowner received the following letter from the painter, "I have changed my mind. I will do the work for $8,000. I will start on July 1 and finish painting before July 10 unless I hear from you differ- ently." The homeowner never responded to the painter's letter. On June 30, the homeowner left the country for a one-month vacation in Europe. Unbeknownst to the homeowner, the painter commenced painting the house on July 1. At this point, does the homeowner have a contractual obligation to pay the painter $8,000 on completion of the painting? (A) Yes, provided the painter completes the painting by July 10. (B) Yes, because the painter accepted the contract before the homeowner materi- ally changed his position in reliance on the painter's rejection. (C) No, because the different terms in the offer and the acceptance are knocked out, and the court will supply the missing price term. (D) No, because the homeowner left the country without ever accepting the painter's offer to do the work as originally requested.

D (D) The homeowner is not obligated to pay the painter. The painter's June 5 communication was a rejection of the offer for employment by the homeowner on June 1. The painter's June 10 commu- nication, therefore, created a new offer that would require some further manifestation of accep- tance by the owner in order to form a contract. Note that the language "unless I hear from you differently" has no effect on the outcome. Thus, (A) and (B) are wrong. (C) is wrong because it states a battle of the forms provision under the UCC, which does not apply because this is not a contract for the sale of goods. Under the common law mirror image rule, the acceptance must contain the same terms as the offer. Any variance results in a rejection and counteroffer. The painter may have a cause of action against the homeowner under an unjust enrichment theory. However, the question asks if the homeowner has a contractual obligation to pay, to which the answer is clearly no.

Which one of the following elements is needed for a discharge of a contract due to frustration? A) An unanticipated or extraordinary act or event has made the contractual duties impossible or impracticable to perform B) A subsequently enacted law or other governmental act has made the subject of matter of the contract illegal C) An act of nature has destroyed the contract's subject matter or the designated means for performing the contract D) An unforeseen act or event has completely or almost completely destroyed the purpose of the contract

D An element of frustration is that an unforeseen act or event has completely or almost completely destroyed the purpose of the contract. Frustration will exist if the purpose of the contract has become valueless by virtue of some supervening event not the fault of the party seeking discharge. If the purpose has been frustrated, a number of courts will discharge contractual duties even though performance of these duties is still possible. The elements necessary to establish frustration are: (i) some supervening act or event leading to the frustration; (ii) at the time of entering into the contract, the parties did not reasonably foresee the act or event occurring;(iii) the purpose of the contract has been completely or almost completely destroyed by this act or event; and (iv) the purpose of the contract was realized by both parties at the time of making the contract. A contract can be discharged by impossibility or impracticability when an unanticipated or extraordinary act or event has made the contractual duties impossible or impracticable to perform. Contractual duties can also be discharged by a subsequent act of nature that destroys the contract's subject matter or the designated means for performing the contract. But neither of these is considered discharge by frustration. A discharge by illegality occurs when the subject matter of the contract has become illegal due to a subsequently enacted law or other governmental act. This is often referred to as "supervening illegality."

An offer for a bilateral contract can be accepted by: A) Full performance only B) Beginning performance only C) A promise to perform only D) A promise to perform or the beginning of performance

D An offer for a bilateral contract may be accepted either by a promise to perform or by the beginning of performance. Note: Unless an offer specifically provides that it may be accepted only through performance, it will be construed as an offer to enter into a bilateral contract. In contrast, a unilateral contract can be accepted only by full performance . Note that the beginning of performance may create an option so that the offer is irrevocable. However, the offeree is not obligated to complete performance merely because he has begun performance, as only complete performance constitutes an acceptance of the offer.

On July 1, a cattle breeder, who was planning to retire soon, sent a note to his neighbor offering to sell his prize bull for $15,000. On July 10, the neighbor, who was also a cattle breeder, wrote the following note to the retiring breeder: "I have decided to take the bull. I will give you a cashier's check on delivery on Saturday, July 28." The retiring breeder did not respond. The retiring breeder did not want to deliver the bull on July 28 and did not think that the delivery day was agreed to. Instead, he delivered the bull on Monday, July 30. The neighbor refused the delivery and stated that he had found another bull he likes better. The retiring breeder sues the neighbor for breach of contract. Is the retiring breeder likely to prevail? A) Yes, because his breach, if any, was minor. B) Yes, because the parties had not agreed on July 28 as the delivery date. C) No, because there was no contract. D) No, because he did not deliver the bull on July 28.

D D The retiring breeder will not prevail because he did not deliver the bull on July 28. This is a contract for a sale of goods and thus is governed by the UCC. Under the UCC, an acceptance with additional terms does not constitute a rejection and counteroffer, but rather is an effective acceptance unless made expressly conditional on the assent to the additional terms. Here, the neighbor accepted the offer and added the additional term of a delivery date. Thus, there was a contract. Whether additional terms become part of the agreement depends on whether both parties are merchants. If both parties to the contract are merchants, additional terms in the acceptance will be included in the contract unless they materially alter the terms of the offer, the offer expressly limited the acceptance to its terms, or they are objected to within a reasonable time. Here, both parties are breeders in the cattle business and, thus, are merchants. The change in the delivery date does not materially change the offer (i.e., it does not change a party's risk or remedies), the offer did not limit the acceptance to its terms, and the retiring breeder did not object. Therefore, the July 28 delivery date became part of the contract. By delivering the bull on July 30th, the retiring breeder breached the contract. (A) is incorrect because this is a contract for the sale of goods, which requires perfect tender. Whether the breach was material or minor has no effect. (B) is incorrect because under the UCC, the July 28 term became part of the contract when the breeder failed to object to it. (C) is incorrect because, under the UCC, an acceptance is effective even if it includes additional terms. Thus, the neighbor's letter on July 10 was sufficient to create a contract.

The owner of a one-acre parcel of land with a small house on it rented the property to a professor of a nearby college at a monthly rental of $500. Several years later, after the professor got tenure, the parties orally agreed that the professor would purchase the property from the owner for the sum of $60,000, payable at the rate of $500 a month for 10 years. They agreed that the owner would give the professor a deed to the property after five years had passed and $30,000 had been paid toward the purchase price, and that the professor would execute a note secured by a mortgage for the balance. The professor continued in possession of the property and made all monthly payments in a timely fashion. When he had paid $30,000, he tendered a proper note and mortgage to the property owner and demanded that she deliver the deed as agreed. The owner refused because valuable minerals had been discovered on adjacent parcels in recent months, causing the value of this parcel of land to increase to 10 times its former value. The professor brought suit against the property owner for specific performance. If the court rules in favor of the property owner, what is the likely reason? A) The transaction had not proceeded far enough to amount to an estoppel against enforcement of the Statute of Frauds. B) The purchase price, given the present value of the land, made the contract unconscionable, providing the property owner with a valid defense to enforcement. C) Oral agreements are generally revocable unless expressly made irrevocable. D) The professor's payments are as consistent with there being a landlord-tenant relationship between them as with there being an oral contract.

D If the property owner wins, it will be because the payments by the professor may be based on a valid landlord-tenant relationship. A promise creating an interest in land must be in writing to be enforceable. This includes not only agreements for the sale of real property or an interest therein, but also leases for more than one year. However, under the part performance doctrine, conduct that unequivocally indicates that the parties have contracted for the sale of land will take the contract out of the Statute of Frauds. Here, the parties had originally created a landlord-tenant relationship, and the lease would be enforceable even without a writing as a month-to-month tenancy. The continuation of the monthly payments can as readily be explained by a continuation of the lease relationship as by an oral agreement for an installment land sale contract. Thus, because the conduct does not unequivocally indicate a contract for the sale of land, the Statute of Frauds requirements will not be excepted. (A) is wrong because while part performance may create an estoppel, the professor will have a hard time proving it because the parties' conduct is consistent with a lease relationship as well. (B) is wrong because unconscionability is measured at the time the contract is formed, and there is nothing in the facts to indicate that the price was not fair at that time. Moreover, the property owner was not in a weaker bargaining position vis-??-vis the professor that would have forced her to accept an unfair price for the property; the parties were of roughly equal bargaining position and, as discussed above, the price was not unfair when the deal was struck. (C) is wrong because it states an incorrect position of the law; other than Statute of Frauds requirements, oral agreements are no more revocable than written agreements.

In a shipment contract, when goods are destroyed en route from the seller to the buyer, the risk of loss is borne by: A) The buyer because the risk of loss passed to the buyer at the time of the contract under the doctrine of equitable conversion B) The seller because the risk of loss does not pass to the buyer until the shipment is tendered to the buyer C) The seller because it was the seller's responsibility to contract with the carrier D) The buyer because the risk of loss passed to the buyer when the goods were delivered to the carrier

D In a shipment contract, the risk of loss passes to the buyer when the goods are delivered to the carrier. Any loss incurred en route is borne by the buyer. Equitable conversion is a doctrine that applies only to the sale of land, not goods. The risk of loss does not pass to the buyer until the goods are tendered to the buyer under a destination contract. This is a shipment contract, which means the risk of loss passes to the buyer when the goods are delivered to the carrier. While it is the seller's responsibility to contract with the carrier, that does not affect the risk of loss rules.

A large wholesale dealer in produce had never done business with a certain greengrocer who operated a small chain of markets in the Midwest. They entered into a written agreement whereby the wholesale dealer agreed to supply to the greengrocer the "fuzzy" variety of peaches at $35 per 50-pound lot. The agreement contained a provision stating that the greengrocer will buy "as many 50-pound lots of fuzzy peaches as the greengrocer chooses to order." Assuming that the greengrocer has not yet placed any orders for peaches with the wholesale dealer, is this agreement between the parties enforceable? A) Yes, because it is a valid requirements contract and, as such, is enforceable under the Uniform Commercial Code. B) Yes, because the Uniform Commercial Code will imply reasonable terms. C) No, because the total quantity of the contract is not specified. D) No, because there is no consideration on the greengrocer's part.

D The agreement is not enforceable because the greengrocer's promise is illusory. For a contract to be enforceable, consideration must exist on both sides, i.e., each party's promise must create a binding obligation. If one party has become bound but the other has not, the agreement lacks mutuality because one of the promises is illusory. Here, the wholesale dealer has promised to supply the greengrocer with fuzzy peaches at a fixed price. The greengrocer, however, has not promised to order any peaches from the wholesale dealer. Even if the greengrocer decides to sell fuzzy peaches, it has not bound itself to order them from this particular wholesale dealer. The illusory nature of the greengrocer's promise makes the agreement unenforceable on consideration grounds. (A) is incorrect because in a valid requirements contract, both parties' promises create binding obligations: The promisor binds itself to buy from the supplier all that it requires, and the supplier binds itself to sell to the promisor that same amount. Consideration exists because the promisor is suffering a legal detriment; it has parted with the legal right to buy the goods it may need from another source. Under the UCC, which governs in this case because a contract for the sale of goods is involved, a good faith term is implied: The buyer's requirements means such actual requirements as may occur in good faith. Thus, if the provision had stated instead that the greengrocer will buy "as many 50-pound lots of fuzzy peaches as the greengrocer shall require," it would be a valid requirements contract under the UCC because it requires the greengrocer to buy fuzzy peaches only from the wholesale dealer and to act in good faith in setting its requirements. (B) is incorrect even though the UCC will imply reasonable terms under certain circumstances. Such terms as price and time for performance need not be spelled out in the contract; the terms will be supplied by a "reasonableness" standard if that is otherwise consistent with the parties' intent. However, supplying reasonable terms will not change the express terms of the contract. The provision that the greengrocer will buy as many peaches as it chooses to order is not sufficiently obligatory to be saved by the court supplying reasonable terms. (C) is incorrect because if the agreement were otherwise a valid requirements contract, the absence of a total quantity term would not matter. As a general rule in sale of goods contracts, the quantity being offered must be certain or capable of being made certain. The UCC provides that an agreement to buy all of one's requirements is sufficiently certain because requirements usually can be objectively determined. Furthermore, the quantity ultimately required in good faith must not be unreasonably disproportionate to any stated estimate or any normal requirements (in the absence of a stated estimate). Hence, if the greengrocer had contracted to buy all of its requirements from the wholesale dealer, the absence of a term specifying total quantity would not have made the agreement unenforceable.

A town in a rural state facing financial difficulties passed a variety of "sin taxes," including one aimed at electronic game arcades frequented by local juveniles. The tax is a one cent per game tax imposed on the manufacturers of the games based on the estimated number of plays over a machine's lifetime. There are no electronic game manufacturers in the state. Which of the following constitutional provisions would support the best argument againstenforcement of the tax? A) The Equal Protection Clause. B) Substantive due process. C) The Privileges and Immunities Clause of Article IV. D) The Commerce Clause.

D The best argument against enforcement of the tax is that it violates the Commerce Clause. If Congress has not adopted laws regarding a subject, local governments are free to tax or regulate local aspects of the subject area as long as the tax or regulation does not discriminate against interstate commerce or unduly burden it. Here, the tax does not discriminate against interstate commerce, since it does not single out interstate commerce for taxation in order to benefit the local economy. However, it could be argued that the tax unduly burdens interstate commerce. A local tax will be held to unduly burden interstate commerce if the locality's need for the revenue does not outweigh the burden on interstate commerce. The Supreme Court will consider whether there is a substantial nexus between the activity or property taxed and the taxing state, whether the tax is fairly apportioned, and whether there is a fair relationship between the tax and the benefit the taxed party receives from the state. Here, there is little nexus between the manufacturer and the town. The facts indicate that out-of-state manufacturers' machines are used in the town, but do not indicate whether the manufacturers conduct any selling activity in the town. Similarly, nothing indicates that there is a relationship between the tax and any benefit that the manufacturers derive from the town. Thus, the tax would probably be unconstitutional under the Commerce Clause. (A) is not as good an argument as (D) because the Equal Protection Clause prohibits the states from treating similarly situated persons differently without sufficient justification. Where a classification does not involve a suspect or quasi-suspect class or a fundamental right, the classification will be upheld as long as it is rationally related to a legitimate government interest. While the tax here singles out arcade game manufacturers for special tax treatment, no suspect or quasi-suspect class is involved, nor is a fundamental right affected. Thus, the tax will be valid under the Equal Protection Clause because it is rationally related to the legitimate government interest of raising revenue. (B) is not a good argument because substantive due process requires that laws not be arbitrary. When laws do not involve a fundamental right, they will be held valid under the Due Process Clause as long as they are rationally related to a legitimate government interest. As established above, no fundamental right is involved and the tax is rationally related to a legitimate government interest. Thus, under the Due Process Clause the tax may be enforced. (C) is not a good argument because the Privileges and Immunities Clause of Article IV prohibits states from discriminating against out-of-state residents when a fundamental right is involved, and the tax here does not differentiate between residents and nonresidents.

On February 1, the owner of a bowling alley read in a magazine an ad from a major manufacturer of bowling balls offering sets of 40 balls in various weights and drilled in various sizes for $10 per ball. The owner immediately filled out the order form included in the ad for the 40 balls and deposited it, properly stamped and addressed, into the mail. On February 2, the bowling alley owner received in the mail a letter from the manufacturer, sent out as part of its advertising campaign, stating in relevant part that it will sell the bowling alley owner 40 bowling balls at $10 per ball. A day later, on February 3, the manufacturer received the bowling alley owner's order. On February 4, the balls were shipped. On what day did an enforceable contract arise? A) February 1, the day the bowling alley owner deposited his order in the mail. B) February 2, the day the bowling alley owner received the letter from the manufacturer. C) February 3, the day the manufacturer received the bowling alley owner's letter. D) February 4, the day the balls were shipped.

D The contract arose when the balls were shipped. The general rule is that an offer can be accepted by performance or a promise to perform unless the offer clearly limits the method of acceptance. Here, the offer would be the bowling alley owner's order, because a magazine ad is usually held to be merely solicitation to accept offers rather than an offer. Thus, the manufacturer accepted and the contract was formed when it shipped the balls. (A) is wrong because the bowling alley owner's order was an offer to buy, and no contract could be formed until that offer was accepted. (B) is wrong because this is a case of crossing offers; even though both offers contain the same terms, they do not form a contract. (C) is wrong because no contract will be formed until there has been an acceptance, and, as stated, the bowling alley owner's letter was merely an offer.

A homeowner and a contractor duly executed a contract providing that the contractor was to construct a residence on a specified lot. No date was included in the contract for completion of the home. After the contractor completed 5% of the residence, a tornado demolished the construction but left the lot undamaged. Which of the following states the probable legal consequences of the tornado damage? A) The contract is void because the subject matter of the contract was destroyed through no fault of the parties. B) The contractor's duty of performance is discharged because of impossibility. C) The contractor remains obligated to construct the residence, but he is entitled to a quantum meruit recovery for the work done prior to the tornado. D) The contractor remains obligated to perform under the original contract without any compensation for the work done prior to the tornado.

D The contractor remains bound under the original contract, and he is not entitled to compensation for the work that was destroyed. The general rule is that a contractor is responsible for destruction of the premises under construction prior to completion. Once the residence is completed, risk of loss shifts to the owner. (A) is wrong because the subject matter was not destroyed. Note that even if the subject matter were destroyed, it would not void the contract; it would merely discharge the contractor's duties under the contract. (B) is wrong because performance is not impossible; the contractor can rebuild the residence.

A craftsperson entered into a written agreement with an electrician to install electrical wiring in her standalone garage so that she could convert the garage into a workshop. The contract contained a clause requiring all electrical work to be completed within two days and provided that the craftsperson would pay the electrician $700 for his work. After the first day, approximately half of the job was completed. That evening, a piece of a defunct satellite reentered the Earth's atmosphere and a large chunk of it crashed directly into the craftsperson's garage, catching the garage on fire and destroying it. Which of the following best describes the obligations of the electrician and the craftsperson after the crash? A) Neither the electrician nor the craftsperson is discharged from their obligations under the contract. B) Neither the electrician nor the craftsperson has any further obligations. C) The craftsperson is obliged to pay the electrician the full contract price of $700. D) The electrician is discharged from his obligation but is entitled to recover from the craftsperson the fair value of the work he performed prior to the destruction of the garage.

D The destruction of the garage discharges the electrician's duties due to impossibility, but the electrician has a right to recover for the reasonable value of the work he performed. Contractual duties are discharged where it has become impossible to perform them. The occurrence of an unanticipated or extraordinary event may make contractual duties impossible to perform. If the nonoccurrence of the event was a basic assumption of the parties in making the contract, and neither party has assumed the risk of the event's occurrence, duties under the contract may be discharged. If there is impossibility, each party is excused from duties that are yet to be performed. If either party has partially performed prior to the existence of facts resulting in impossibility, that party has a right to recover in quasi-contract for the reasonable value of his performance. While that value is usually based on the benefit received by the defendant (unjust enrichment), it also may be measured by the detriment suffered by the plaintiff (the reasonable value of the work performed). Here, the garage that the electrician was wiring burned down after a chunk of a satellite crashed into it. That event was of such an unexpected nature that its nonoccurrence was a basic assumption of the parties, and neither party was likely to have assumed the risk of its occurrence. Thus, it has become objectively impossible for the electrician (or anyone else) to complete the job. This impossibility will discharge both the craftsperson and the electrician from performing any contractual duties still to be fulfilled. Therefore, the electrician need not finish the wiring work, and the craftsperson is not obligated to pay the entire amount of $700. However, the electrician can recover under quasi-contract. (A) is incorrect because both parties are discharged. (B) is incorrect because it fails to account for the fact that the craftsperson will have to pay the electrician for the value of the work already performed. (C) is incorrect because, as discussed above, the craftsperson is obligated to pay for the value of the electrician's services to date, not the full contract price.

On September 15, a highlighter manufacturer faxed a large office supply company offering to sell the supply company 50,000 highlighters for $25,000. The supply company faxed back the following communication: "We accept your offer. Please box 125 highlighters per case in post-consumer cardboard shipping boxes." Assuming the existence of a valid contract, what would its terms include? A) Only those terms set forth in the manufacturer's fax of September 15, because the manufacturer did not assent to any enlargement of the shipping terms. B) All terms set forth in the manufacturer's offer plus consistent additional terms proposed in the office supply company's acceptance. C) All terms set forth in the manufacturer's offer plus those in the office supply company's attempted acceptance that did not amount to a material alteration of the manufacturer's offer. D) All terms set forth in the manufacturer's offer plus all those in the office supply company's purported acceptance that did not amount to a material alteration of the manufacturer's offer and to which the manufacturer did not object within a reasonable time.

D The language in choice (D) properly states the UCC position regarding the terms of the contract. Under the UCC, if both parties to a contract are merchants, additional terms in an acceptance will be included in the contract unless (i) they materially alter the original contract; (ii) the offer expressly limits acceptance to the terms of the offer; or (iii) the offeror has already objected to the particular terms, or objects within a reasonable time after notice of them is received. [UCC §2-207(2)] The manufacturer and office supply company are both merchants because they regularly deal in goods. [UCC §2-104(1)] Therefore, under Article 2 the contract will include the terms of the manufacturer's offer plus those in the office supply company's purported acceptance that did not amount to a material alteration of the offer or to which the manufacturer did not object within a reasonable time. Note that the manufacturer's offer did not expressly limit acceptance of its terms. (A) is incorrect because this was a contract between two merchants. Contract formation under the UCC for contracts between merchants is governed by the rule stated above. If one of the parties were not a merchant, (A) would be correct-if one of the parties to a contract for sale of goods is not a merchant and the acceptance includes additional or different terms, such terms are considered to be mere proposals that do not become part of the contract unless the offeror accepts. [UCC §2-207(2)] However, because this is a contract between merchants, the office supply company's terms regarding shipping will be included unless they materially alter the offer, as discussed above. (B) is incorrect because it does not fully state the Code's "battle of the forms" provision. The choice fails to mention the manufacturer's power to object within a reasonable time. (C) is incorrect because, like (B), it does not note the manufacturer's power to object within a reasonable time.

Which of the following would not be considered valuable consideration that supports a contract? A) A benefit with no economic value. B) Peace of mind for the promisor. C) The gratification of influencing the mind of another. D) Fulfillment of a condition to receive a gift.

D The mere fulfillment of a condition to receive a gift is not adequate consideration. The fulfillment of the condition must be of some benefit to the promisor to constitute proper consideration. The benefit to the promisor need not have economic value. Peace of mind or the gratification of influencing the mind of another may be sufficient to establish bargained-for consideration.

The owner of a stationary bicycle wrote a letter to her friend offering to sell her stationary bicycle to him for $150. The friend received the letter on January 18. On January 19, he mailed a letter back saying that he was not interested in purchasing the bike because he had just purchased a gym membership. However, the friend changed his mind the next day and mailed a letter to the owner accepting her offer to sell the bicycle and enclosing a certified check for $150. The owner received the friend's rejection letter on January 21 but put it aside without reading it. The next day, she received the friend's acceptance letter, which she opened and read immediately. Do the parties have a contract? A) Yes, because under the mailbox rule an acceptance is effective on dispatch, while a rejection is effective on receipt. B) Yes, because the friend paid for the bicycle when he accepted the offer to buy it. C) No, because the acceptance was dispatched after the rejection. D) No, because the mailbox rule does not apply-whichever is received first controls.

D The parties do not have a contract, because the mailbox rule does not apply when the offeree sends a rejection, followed by an acceptance. In such a case, whichever is received first controls. Under the mailbox rule, acceptance by mail or similar means creates a contract at the moment of posting, with a couple of exceptions not relevant here. Rejection, on the other hand, is effective when received. So, if the mailbox rule had applied, there would have been a contract, because the friend's acceptance was mailed before his rejection letter was received. But because the mailbox rule does not apply here, and the matter is decided based on which letter was received first, there is no contract, because the friend's rejection letter was received by the bicycle owner a day before his acceptance letter was received by her. (A) is incorrect because, as discussed above, the mailbox rule does not apply when a rejection is sent before an acceptance; rather, whichever is received first controls. The fact that the bicycle owner did not read the rejection does not matter; it still was received by her before the acceptance. [See Restatement (Second) Contracts §68] (B) is incorrect because whether the friend paid for the bicycle is irrelevant. He sent the certified check (and his acceptance) after he sent his rejection, and the rejection was received first. (C) is incorrect because when a rejection by mail is followed by an acceptance by mail, the rule is that whichever is received first controls, not whichever is dispatched first. Thus, although it is true that there is no contract between the parties, it is because the friend's rejection letter was received by the bicycle owner first, rather than because it was mailed first.

The rights of a third-party beneficiary vest when he: A) Signs the contract; makes an enforceable promise in the contract; or provides consideration for the promise in the contract B) Is named in the contract; is identifiable by the terms of the contract; or is identifiable at the time of performance C) Receives notice of the existence of the contract; is a creditor of the promisee; or is an intended, not incidental, beneficiary D) Manifests assent to the promise; brings suit to enforce the promise; or materially changes position in justifiable reliance on the promise

D The promisor and promisee are generally free to modify the contract, and need not consult the third-party beneficiary unless his rights have vested. Once the third-party beneficiary's rights have vested, the promisor and promisee cannot vary his rights without his consent. A third-party beneficiary's rights vest when the beneficiary: manifests assent to the promise in a manner invited or requested by the parties; brings suit to enforce the promise; or materially changes position in justifiable reliance on the promise. In determining the promisee's intentions in a third-party beneficiary situation, courts will often look at whether the third party is expressly designated in the contract. If so, it is more likely that it is primarily for his benefit. But it is not necessary that the third-party beneficiary be named, or even identifiable, at the time the contract is made; he need only be identifiable at the time performance is due. Even if a third party is named or is otherwise identifiable, the promisor and promisee are free to modify the contract if the third party's rights have not yet vested as discussed above. A party that signs the contract, makes an enforceable promise in the contract, or provides consideration for the promise in the contract would most likely be considered a party to the contract, not a third-party beneficiary to the contact. In any event, these are not the factors that cause a third-party beneficiary's rights to vest. While it is true that only intended, not incidental, beneficiaries have rights under the contract, these rights must be vested to be enforceable. It is not enough that the third party has received notice of the existence of the contract. If his rights have not yet vested, as described above, the original parties are free to take actions, such as rescission or modification, which may affect the third-party beneficiary. These vesting rules apply to both creditor and donee beneficiaries.

On August 1, the owner of a hardware store noticed that he was running low on half-inch carriage bolts and their corresponding nuts. He called a screw manufacturer and ordered 1,000 half-inch carriage bolts and nuts to be delivered by August 15. The screw manufacturer e-mailed the store owner a confirmation of the order that same day. On August 15, the 1,000 bolts were delivered, but the nuts were missing. The store owner called the manufacturer and was told that they had been temporarily out of nuts when they had filled his order, and had reduced the amount he owed to reflect this, as they had done in the past with him in similar circumstances. The store owner protested and the manufacturer offered to send the nuts by overnight carrier so that he would get them the next day. May the store owner cancel the contract? A) Yes, because he was entitled to a perfect tender. B) Yes, because the time for performance has passed. C) No, because the one-day delay is not material. D) No, because the manufacturer has a reasonable amount of time within which to cure.

D The store owner may not cancel the contract, because the manufacturer has a reasonable amount of time within which to cure. The general rule in contracts for the sale of goods under the UCC is that the buyer is entitled to a perfect tender, which means that the goods and their delivery must conform exactly to the contract. A few exceptions to this rule exist, including where the seller has reason to think that nonconforming goods will be acceptable to the buyer, which reason can arise from the parties' past dealings. In such a case, upon notification of its intention to cure, the seller must be given a reasonable time within which to cure, which may extend beyond the original time for performance. Here, the manufacturer had reason to think the bolt-only delivery would be acceptable based on the parties' past dealings. Thus, the manufacturer had a reasonable time to cure, and its offer to send the store owner the nuts by overnight carrier is a reasonable offer to cure, negating the store owner's right to cancel the contract. Thus, (A) and (B) are wrong. (C) is wrong because, but for the above exception, the perfect tender rule would apply and the day's delay would be fatal.

In an installment contract situation, the contract can be canceled by the buyer if: A) Any shipment is deficient in quantity B) There is a nonconformity in a shipment that substantially impairs the value of the installment and cannot be cured C) Any shipment fails to conform to the contract in any way D) There is a nonconformity in a shipment that substantially impairs the value of the contract and cannot be cured

D To cancel the entire installment contract due to breach, the buyer must show that the nonconformity substantially impairs the value of the entire contract and cannot be cured. If the nonconformity substantially impairs the value of only the installment and cannot be cured, only the single installment may be rejected. Unlike most contracts for the sale of goods, under which a shipment may be rejected in it fails to conform to the contract in any way, installment contracts have special rules limiting the right to reject to substantial impairment of the value of the installment. The right to cancel the entire contract is even further limited to substantial impairment of the value of the entire contract. A shipment that is deficient in quantity is not grounds for canceling an installment contract. This situation is the least likely to even give rise to a right to reject an installment because it is easily cured by a shipment of the missing quantity

A landowner advertised in the newspaper that he wished to sell 40 acres of land at $10,000 per acre. A rancher who was looking to expand his holdings was interested, so he came out to inspect the property. After the inspection, the rancher agreed to purchase the land for $400,000. A contract for the sale of the 40 acres was prepared and signed by the landowner and the rancher. The contract failed to state the purchase price. Later, the rancher had a change of heart and refused to complete the purchase. In the landowner's lawsuit for breach of contract, for which party would the court likely hold? A) The landowner, because the parol evidence rule will not bar testimony that the rancher agreed to pay $400,000. B) The landowner, because the Statute of Frauds can be satisfied by combining the original advertisement and the written contract. C) The rancher, because the parol evidence rule will bar all evidence that he agreed to pay $400,000 for the land. D) The rancher, because the Statute of Frauds would require the contract to contain the price in order to be enforced.

D Under the Statute of Frauds, contracts for the sale of land must be in writing. The writing must contain all essential terms, and the price is considered an essential term. (A) is wrong because although the parol evidence rule might not bar the testimony, the Statute of Frauds will prevent recovery. (B) is wrong; the advertisement was not signed by the rancher, the party charged with breaking the contract. Thus, it is not a memorandum. Furthermore, the ad could not be considered part of the contract because there is nothing in the question indicating that it was attached to or referred to in the contract, or that it was assented to by the parties as part of the contract. In fact, an ad is a mere offer to deal; the actual price term may be very different by the time parties to a contract reach an agreement. (C) is wrong; the parol evidence rule would not bar the testimony, and in any event, that is not the reason the rancher will win.

Which of the following acts alone would be sufficient to allow enforcement of an oral contract for the sale of real property? A) Possession of the property by the purchaser B) Payment of the full purchase price by the purchaser C) Valuable improvements to the property by the purchaser D) Conveyance of the property from the seller to the purchaser

D Upon the seller's conveyance of the property to the purchaser, the seller can enforce the buyer's oral promise to pay. Under the doctrine of part performance, conduct that unequivocally indicates that the parties have contracted for the sale of the land will take the contract out of the Statute of Frauds. However, most jurisdictions require at least two of the following: payment (in whole or in part), possession, and/or valuable improvements.

A large producer of bread wrote to a distributor of flour, asking, "How much will you charge to supply my needs for flour for the next year?" The distributor replied in writing that it could supply the producer with all the flour it would need next year at a specified price per pound. The producer wrote back, "Your offer to supply me with flour is hereby accepted, provided that you agree to a 10% discount if payment is made within 10 days from date of billing." What should the producer's reply concerning a 10% discount be characterized as? (A) An acceptance with a proposal for an additional term. (B) An acceptance with a term that, absent an objection, is part of the contract. (C) A proposed modification of the contract. (D) A rejection of the distributor's offer.

D (D) The producer's reply is a conditional acceptance, which is a rejection of the offer. This question deals with the "battle of the forms" provision of the UCC. Under section 2-207 of the UCC, an acceptance containing additional or different terms is effective as between merchants unless the offeree expressly makes his acceptance conditional on assent by the offeror to the additional terms. When an acceptance is made expressly conditional on the acceptance of new terms, it isa rejection of the offer. The conditional acceptance is essentially a new offer, and the original offeror may form a contract by expressly assenting to the new terms. Here, both parties are merchants, but the producer made his acceptance conditional on the distributor's assent to the 10% discount. Thus, his communication is a rejection of the distributor's offer. (A) is incorrect because this is not an acceptance. The rule stated in (A) is the one used for a nonmerchant when an acceptance contains an additional term. (B) would have been correct had the acceptance not been conditional. Because the parties are merchants, an acceptance with an additional term would result in the term becoming part of the contract unless (i) it materially altered the original terms of the offer; (ii) the offer had expressly limited acceptance to the terms of the offer; or (iii) the offeror objected to the terms within a reasonable time after notice of it. (C) is incorrect because at this point there is no contract to be modified; there is no acceptance of the offer.

A gourmet food company entered into a long- term contract with an airline, under which the food company would supply the airline with 5 million gourmet dinners over a five-year period at a special rate of $2 per unit. The food company insisted as a term of the contract that the airline agree to purchase from a microwave supplier, and to install in each of its planes, a microwave oven specifically designed to heat frozen dinners, in part because the food company owned consid- erable stock in the microwave supplier. The contract between the food company and the airline had a clause that authorized "oral modifications by the contracting parties." One month after the contract was signed but before any dinners were delivered, the airline informed the food company that it would have difficulty complying with the provision requiring purchase of the supplier's microwaves because the supplier's products had increased dramati- cally in price. Subsequent negotiations between the food company and the airline led to an oral agreement to increase the price per dinner to $2.08 per unit and eliminate the supplier's microwave requirement. If the supplier sues the airline for enforcement of the contract, what will be the most likely result? (A) Judgment for the supplier, because under the UCC the oral modification is not valid and the supplier's rights vested when it brought suit. (B) Judgment for the supplier, because it was a third-party beneficiary to the original contract and it did not agree to the modifi- cation. (C) Judgment for the airline, because the contract was between the airline and the food company, and by its terms an oral modification was permissible. (D) Judgment for the airline, because the supplier's rights had not vested when the modification took place.

D (D) This is a favorite MBE question. The airline will prevail because the supplier's rights had not vested at the time of the modification. The rights of the third-party beneficiary do not vest until: (i) it manifests assent in a manner invited or requested by the parties; (ii) it learns of the contract and detrimentally relies on it; or (iii) it brings a lawsuit to enforce its rights. Until a third party's rights have vested, a modification of the contract can take place without the consent of the third party. The proper analysis is that the supplier's rights have not vested. Even if the supplier was aware of the contract, and even if the supplier was pleased with it, the supplier had not assented to the contract in any manner, had not detrimentally relied, and had not brought suit on the contract before it was modified. Therefore, the supplier's rights had not vested, and the contracting parties were free to modify the contract. Moreover, notwithstanding the oral modification clause, while the oral modification will be enforceable between the food company and the airline only if an exception to the Statute of Frauds applies (e.g., the parties admit the modification or perform the contract as modified), it is doubtful that a court would allow the supplier to use the Statute to prevent the parties from admitting their modification. Thus, the modification is valid, and (A) is wrong. (B) is wrong because the supplier's rights had not vested. (C) is a true statement, but (D) is a better answer, because it states the specific reason that the supplier's rights had not vested.

An antique lover spotted a beautiful Early American bedroom ensemble at her favorite antique store. The ensemble included a bed, a mirror, and two dressers. Over a period of several weeks, the shop owner and the antique lover negotiated over a price, but they were unable to come to an agreement. On April 3, the shop owner and the antique lover signed a statement whereby the shop owner offered to sell to the antique lover an Early American bedroom ensemble, recorded as items 20465, 20466, 20467, and 20468 in the shop's registry, if the parties agree upon a price on or before April 12. On April 6, the shop owner sent a letter to the antique lover, telling her that she could have the bedroom ensemble for $22,000. Also on April 6, the antique lover sent a letter to the shop owner telling him that she was willing to pay him $22,000 for the bedroom ensemble. Both parties received their letters on April 7. Without assuming any additional facts, which of the following statements is most correct as of April 8? A The shop owner and the antique lover had a valid contract from the moment the letters of April 6 were mailed. B A contract exists between the shop owner and the antique lover, because the shop owner, a merchant, sent the antique lover an offer in writing. C A contract exists between the shop owner and the antique lover, because the crossing offers were identical and received before April 12. D No contract exists between the shop owner and the antique lover, because of a lack of mutual assent.

D Although the crossing offers as to price were identical, there is no requisite mutual assent absent an acceptance. If offers stating precisely the same terms cross in the mail, they do not give rise to a contract despite the apparent meeting of the minds. An offer cannot be accepted if there is no knowledge of it. Here, the shop owner and the antique lover each sent offers setting the price of the ensemble at $22,000. Despite the fact that these offers were identical, there is no mutual assent without at least one of the parties manifesting acceptance of the terms of the offer, and communicating that acceptance to the other. We are told that this has not yet happened even though the shop owner and the antique lover both have received the letters. Consequently, although there is an apparent meeting of the minds as to price, there has not been a sufficient objective manifestation of this agreement as to denote a mutual assent. (C) fails to account for the principle discussed above, that identical crossing offers do not give rise to a contract. Despite their receipt of identical offers before April 12, there is no agreement between the parties. (A) is incorrect because it misstates the mailbox rule. Acceptance by mail or similar means creates a contract at the moment of posting, properly addressed and stamped, unless the offer stipulates that acceptance is not effective until received, or unless an option contract is involved. This rule does not operate to create a contract from the moment an offer is mailed (or in this case, two identical offers are mailed). Thus, (A) is incorrect. Regarding (B), the fact that a merchant sends an offer in writing is significant because it will limit the offeror's power to revoke if it gives assurances that it will be held open for a stated time. Here, the written offer by the shop owner is irrevocable at least until April 12, but the issue in the question is whether it has been accepted rather than whether it has been revoked.

A homeowner and a local builder entered into a written contract that called for the builder to build a second story onto the top of the homeowner's one-story residence. When scheduling conflicts arose, the builder asked the homeowner if they could substitute his buddy, an out-of-town builder who had comparable experience and skills, to perform the local builder's part of the contract. All of the parties agreed to the substitution. Unfortunately, the out-of-town builder made a major blunder that will be quite expensive to correct. Is the local builder liable to the homeowner for the cost of correcting the defect? A Yes, because the substitution in and of itself does not relieve the local builder of liability on the underlying contract. B Yes, because the local builder did not give any consideration on which to base a release. C No, because the local builder transferred his duties to the out-of-town builder. D No, because the local builder was discharged through a novation.

D The agreement among all of the parties to substitute the out-of-town builder for the local builder operates as a novation which immediately discharged the local builder from any duties he had under the original contract. A novation arises when the parties enter into an agreement to substitute a third party for one of the parties in a contract, releasing the party who was substituted. All parties must agree to the substitution. Here, the facts say that all of the parties agreed that the out-of-town builder would substitute for the local builder. Thus, there was a novation and the local builder was released immediately and is not liable for the out-of-town builder's blunder. (A) states incorrectly that the substitution does not relieve the local builder of liability. If the parties had not all agreed to substitute the out-of-town builder for the local builder, or the facts said that there was merely an assignment of rights and delegation of duties, (A) would reflect the correct result. However, where the parties agree to substitute a new party for an old party, there is a novation that does release the old party. (B) is incorrect because there was consideration to support the release—the local builder implicitly agreed to give up his rights under the original contract, the homeowner implicitly agreed to give up his right to look to the local builder for performance, and the out-of-town builder agreed to perform. (C) is not as good an answer as (D). The mere fact that a contractual duty was transferred does not release the transferor from a duty under the contract. It is only the agreement among the parties to substitute the new party for the old that released the local builder here.

ACTIVITY Tesla dealer. A Tesla dealer contracts to sell a Model X out of its Tegular inventory to Mark Zuckerberg for $100,000. The dealer would have made á $10,000 profit. Zucker- berg breaches. A week later, the dealer sells the same car to Jay Inslee for $100,000. The market price of the car is $95,000. What are the dealer's damages? m lcue0 (A) Contract price of $100,000. (B) Resale damages of $0. (C) Market damages of $5,000. (D) Lost profit of $10,000.

D.

ACTIVITY Carol's Fran's driveway for $10,000.Rising Construction Co. agreed to pave all of Farmer asphalt costs led o Carol and Farmer Fran to latèr agree in writing that the barn (saving $2,000) and still receive the full con- Carol could omit the portion of Fran's driveway behind tract price. Under the general rule, this subsequent written agree- ment is: (A) Enforceable as a novation, which superseded the g original paving contract. (B) Enforceable, because an agreement modifying a contract for the sale of goods (the asphalt) needs no consideration to be binding. (C) Enforceable, on the theory that Carol gave up her right to breach the contract in reliance on Farmer Fran's agreement to the modification. (D) Unenforceable for lack of consideration, even though it is in writing.

D. no additional consideration

HYPO 5O Krell rents a lot for Thanksgiving Day because of its great view of the upcoming Thanksgiving Day parade. The parade is cancelled unexpectedly just before Thanksgiving. Does Krell have to go through with the deal to rent the loft?

Depends, only if LL knew why Krell was renting loft from him

Emery

Employee came to employer and wanted to know if renewed employment contract. Employer says go ahead get men out, you'll be okay and alright. Emery is like okay cool got contract. President said I was just trying to get rid of him. Court was like, yeah reasonable person thought contract = contract.

Parol evidence rule (PER) keeps out _________ of a _________ or contemporaneous agreement (either oral or ___________) that contradicts a _________ writing.

Evidence; prior; written; later

Bilateral Contracts - Exchange of Mutual Promises EMP

Exchange of mutual promises

Sale by auction is complete when auctioneer so announce by FOH___________________ or in another customary manner. An auction sale is with reserve unless the goods are explicitly put up with reserve. "With reserve" means the AMWG_________________ at any time until he announces completion of the sale.

Fall of the hammer Auctioneer may withdraw the goods

Parol Evidence Rule (__________________) Bars introduction of prior or contemporaneous oral agreements that vary or modify the terms of a complete and totally integrated agreement.

Four Corners Rule

FOB

Free on board

|HYPO 7J Can Robin sue Gotham City if he is not paid for Batman's work? (2) If Batman fails to perform the services, can Robin still collect from Gotham City? (3) In May, Batman assigns his rights under the contract to Robin. Unaware of the assignment, Gotham City makes the June payment to Batman. Is Gotham City liable to Robin? | HYPO 7K Batman assigns the right to payment from Gotham City to Robin as a gift. Batman later assigns the same right to charity. To whom shouid Gotham City make payment?

HYPO 7L and is first to notify Gotham City of his rights? What if Gates is unaware of the other assignments HYPO 7M I contract to paint Bill Gates's house for $10,000. I delegate to Van Gogh, who does a great job. Gates objects to the delegation. Does Gates have to pay? you HYPO 7Nq vO hGA lo aA What if the contract between me and Gates prohibits delegation? (2) What if our contract prohibits assignment? [Watch for this on MBE!]

FLORIDA - Additional Contracts required to be in writing include: HCG DBSL NS HSS HIC CA

Health care guarantees Debt barred by SOL Newspaper subscriptions Home solicitation sales Home improvement contracts Credit agreements

HYPO 3B What if Beiber does not disaffirm the contract and continues to use the Prius after he turns 18?

Implied affirmation, so enforceable.

Real Estate Transactions must have LP

Land and price terms

LOVE FOR DOGS TREAT EVERY ROVER TERRIFICALLY

Law applies Formation - Offer, Termination, Acceptance, Consideration Defenses - lack of capacity, ambiguity, statue of frauds Terms - parol evidence rule Excuse - for nonperformance Remedies - specific performance slow to use, expectation interest and money damages, reliance, restitution, liquidated damages clause Third party problems

Lucy v Zimmer

Lucy offered to sell farm and wrote it on napkin, but told wife just a joke. Nope, he's bound.

Suretyship, the _____ Purpose Exception Takes us Outside of SOF

Main

Statute of Frauds - MYLEGS

Marriage Year (impossible perform in 1 year) Land Sale (any interest, not just sale) Executor Goods $500+ (within SOF) Surety - a promise to pay if the debtor does not pay

Statute of Frauds M Y L E G S

Marriage contracts Term of Years Land-sale contracts Executory Contracts Goods $500 or more Surety Contracts (Guaranty Contracts)

Mink Stole and Carbolic Smokeball exceptions to ads not being offers unless there is a quantity.

Mink Stole - ad in paper, Saturday morning 9 am, 3 mink coats $1 (worth $100/each). Gentlemen first in line, $1, give me my mink. Store was like no way, you're not a lady. Court was like ah, this is offer, valid contract. Carbolic Smokeball use and still get influenza get 100 pound reward. She did all the stuff, wanted her money because she got influenza. Court says yep, give her the money.

HYPO 2Y Elon Musk offers to sell the Roadster to Mark Zuckerberg for $1 million. Zuckerberg mails a rejection letter on July 8 and then mails an acceptance letter on July 9. Is Musk bound?

Musk is bound depending upon when the letter is actually received by Musk - rejection first, offer terminates; acceptance first, then contract formed.

Creation of Contract MA C D

Mutual assent (offer and acceptance) Consideration Defenses?

HYPO 5H John contracts to do yard work for Gabrielle. Later, John, Calandrillo, and Gabrielle agree that Calandrillo will do the work instead. If Calandrillo does not do the work, is John liable for breach? (2) John and Calandrillo agree that I will mow the lawn without getting Gabrielle's consent. If I don't do the work, is John liable for breach?

NO, excused by novation (2) Yes, this is a delegation, not a novation

HYPO 4A Jennifer Lopez signs a lease for the Grand Ballroom at the Beverly Hills Hotel for her wedding. J.Lo claims she could select any ballroom and has a fax from the Beverly Hills Hotel sent before the written lease supporting her claim. If J.Lo asks the court to reform [rewrite] the contract, can she get the fax into evidence?

No

HYPO 5E John contracts to do yard work for Gabrielle. Before John does the work, he and Gabrielle agree to rescind the contract. If John does not perform, can Gabrielle sue him for breach of contract?

No

HYPO 5M. A Seattle manufacturer contracts to sell desks of Washington pine to a California retailer. Washington then passes a law forbidding cutting down Washington pine trees. Must the manufacturer perform as promised?

No

HYPO 7A. Michael Phelps takes his watch to a jeweler to be repaired. The jeweler wrongfully sells the watch to Ryan Lochte. Can Phelps get his watch back from Lochte?

No

HYPO 7O Felix Hernandez has a contract with the Seattle Mariners (he's their star pitcher). There is no contract language prohibiting delegation or assignment. Can Felix delegate his pitching duties to Calandrillo? (2) Can Felix delegate to Clayton Kershaw?

No (2) No (could possibly do novation)

HYPO 7N. What if the contract between me and Gates prohibits delegation? (2) What if our contract prohibits assignment? [Watch for this on MBE!]

No (2) No (no assignments = no delegations)

HYPO 3A I agree to sell my 2010 Toyota Prius to 17-year-old Justin Bieber. Bieber later refuses to go through with the deal. Can I enforce the agreement against Bieber? (2) I believe Bieber is 18 because he told me he was 18. Does that matter? (3) If I refuse to convey the Prius, can Bieber enforce the agreement against me? [TRICK Q!]

No (2) No even if he told you older? (3) Yes because defendant had capacity to make the agreement

HYPO 7I Does Batman's assigning his right to payment substantially change Gotham City's duties? (2) Can Gotham assign its right to Batman's security services to Metropolis?

No (2) No, substantially changes

HYPO 5L Ida Hogh hires Van Gogh to paint her portrait. If Van gets hurt and cannot paint, is he liable? O her barn rather than her portrait? Mor (2) What if lda had hired Van to paint the exterior of (3) If Van paints the portrait, but Ida dies, is her estate liable for the contract price?

No (2) Van not excused (3) Yes

HYPO 6B Le'Veon Bell signs a contract with the Pittsburgh Steelers for $8M/year. Bell breaches. Can the Steelers get specific performance? (2) Same facts but now Bell breaches and goes out to play for the competing Baltimore Ravens. Can the Steelers get an injunction barring Bell from playing for Baltimore?

No (2) Yes

HYPO 4R Lonzo Ball contracted to buy new sneakers from Nike. He paid before the shoes arrived at his home. Did Lonzo impliedly accept the sneakers by paying for them in advance? (2) The sneakers arrived at Lonzo's L.A. house more than three months ago, but he's been too busy helping his dad set up basketball leagues in Europe to open up the box. Has Lonzo impliedly accepted the sneakers?

No (2) Yes -- 3 months is more than enough time to inspect

HYPO 6I. If I sell it to Eva for $100, can I recover the $900 difference from Sofia? (2) What if I decide not to sell the car at all?

No (2) don't know market price, if knew then take price (assuming $950, then $50)

HYPO 3V Tom Brady orally agrees to buy 50 regularly-inflated footballs for $100 each. Seller takes Brady's check for $2,000 for the first 20 footballs and cashes it. Seller refuses to deliver any footballs. Brady sues Seller for breach. Does Seller have an SOF defense? (2) Brady orally agrees to buy a boat for $50,000. Seller takes a $10,000 deposit from Brady. Seller does not deliver the boat. Brady sues. Does Seller have an SOF defense?

No as to the 20 footballs he paid for; Yes as to the remaining 30 (2) No, cannot apportion a boat the way you apportion footballs

HYPO 2W Elon Musk offers to sell his original Tesla Roadster to Mark Zuckerberg for $1 million. His offer states: "Your acceptance must be received by July 9." On July 9, Zuckerberg mails his acceptance. Musk receives it on July 11. Is Musk bound?

No because his offer overrides the mailbox acceptance rule.

HYPO 6M Hadley contracts with Baxendale to ship a brown mill shaft back to the manufacturer for repair. Baxendale delays in shipping the shaft. Hadley does not have another shaft. As a result, Hadley's mill is shut down for 2 extra weeks. Can Hadley recover the $20,000 in profit it lost during that 2-week period?

No because lost profits are not foreseeable at the time of formation, shipper doesn't know the details. [be chatty rule, upfront before breaching party]

Subcontractor S submits a bid to do the plumbing work on a school project for $10,000. General Contractor G relies on S's bid in computing its own bid, and wins the overall school building project. Can S still revoke its offer?

No because sub knows up front general will rely on sub's bid. General reasonably foreseeably relied on offer makes offer irrevocable at least for a reasonable time. *bid = offer

HYPO 5R Provided he Bill Gates agrees to buy my house obtains a $1,500,000 mortgage at 5% or less. He makes no effort to get a mortgagẹ. Gates claims that the express condition was hot satisfied [i.e., he didn't get a mortgage], so he is excused. Is he right? (1) Who was protected by the condition? R.G yes (2) Did he do anything to forfeit the protection? (3)Result? (Voluntarily

No, (1) B.G (2) Yes (3) doesn't get it

HYPO 2M Disney sends Bill Clinton an offer to appear in the film, "Waiting to Inhale." Bill agrees on the condition that he gets top billing. Is there a contract?

No, Bill's condition is a conditional acceptance, so operates as rejection and counteroffer.

HYPO 3L On May 1, 2020, Club Galaxy orally agreed to have Enya perform at its New Year's Eve Bash on December 31, 2021. Is their oral agreement enforceable?

No, SOL

Chris Harrison emails Hannah Brown a job offer that states, "You can accept this offer only by reporting for work on Monday." Hannah e-mails back, "I accept!" Has she accepted the offer?

No, because language of offer controls manner of acceptance.

HYPO 4L. Chryssa contracts to buy a floor model couch froms Costco. She's to pick it up at the loading dock.ele Before she does, the couch is ruined by yuppie kids jumping all over it. Does Chryssa still have to pay? (2) Chryssa contracts to buy a couch at a garage/ estate sale. Owner tells her where it is located in the back bedroom and how to pick it up. Before Chryssa picks up the couch, it's ruined by bargain hunters jumping all over it. Does Chryssa still have to pay?

No, because merchant-seller bears risk of loss until buyer takes possession of goods. (2) Yes because non-merchant seller passes risk of loss once she tenders the goods.

On January 1, I offer to sell Bill Gates my 2010 Toyota Prius for $8,000. My offer does not contain a termination date. Can Gates accept my offer on December 31?

No, because more than a reasonable time has passed. *watch out for dates separated by more than 1 month. raise this issue if acceptance more than a month.

HYPO 2DD Beyonce contracts to sing at the Coachella Music Festival for $20,000. On arrival, she demands $30,000. Coachella agrees. After Beyonce performs, Coachella refuses to pay her the extra $10,000. Is there consideration for Coachella's promise to pay Beyonce the extra $10,000? (2) What if Beyonce agrees to sign autographs for an hour in exchange for the extra $10,000? (3) What if the modification is fair in light of an unanticipated change in circumstances? (4) What if the promise to pay the extra $5,000 is made by Kanye West, not by Coachella? [TRICK Q!]

No, because she didn't agree to do more or different, already doing what she promised to do *Alaska packers, fishermen contracted to do work $50, but went on strike for $100, modification invalid (2) Yes because she is doing something new, additional (3) Yes okay because fair and equitable and it's enforceable *Rubble case, contractor excavate site for $100k, but once starts job, discovers all rubble and debris, it's okay to modify and can get more money (4) third party promising to pay more, that is not a preexisting duty rule violation, cannot use it as a defense; it is enforceable against Kanye

ACTIVITY A woman went to her local department store and told the salesperson that she wanted a coat that was extremely warm. The salesperson went into his stockroom and brought out four different styles of very warm coats. The woman tried on each of the four but did not like the way any of them looked. While walking around the store, however, the young woman saw a coat she did like and told the salesperson to bring ohe in her size. The salesperson brought her the coat, and he said that it was made of the finest cashmere and would probably last for years. The young woman tried on the coat and told the salesperson that she would take it and paid him. After wearing the coat twice, however, she decided it was not warm enough for her climate. She took the coat back to the department store and demanded her money back. The store refused. If the woman sues the department store for breach of contract, is she likely to prevail? (A) Yes, the store breached the implied warranty of fitness for particular purpose. (B) Yes, the store breached the implied warranty of merchantability. (C) Yes, the store breached an express warranty. (D) No.

No, because the buyer declined the seller's advice.

HYPO 3J Edward Scissorhands alleges that on February 1, 2020, W orally agreed to have Edward cut down all the trees on his ranch. Is this agreement within the SOF? (2) What if Edward doesn't actually finish the job until August 1, 2021?

No, because theoretically done within a year, so no SOF (2) doesn't matter

HYPO 3D B and S contract for the delivery of cotton on the ship "Peerless." B means the ship sailing in October. S means the ship sailing in December. Is there a contract?

No, because there is no meeting of the minds

HYPO 2X Elon Musk offers to sell his Tesla Roadster to Mark Zuckerberg for $1 million. Zuckerberg pays Musk $3,000 to hold the offer open until July 9 (=option K). On July 9, Zuckerberg mails an acceptance. On July 11, Musk receives it. Is Zuckerberg's acceptance effective?

No, because under option contracts, acceptance must be received, mailbox rule does not apply.

The Yankees advertise tickets in the NY Post: "Incredible offer! Ticket special for $19." Offer?

No, general advertising rule, invitation to deal. No quantity specified.

HYPO 4T I contract to sell Bill Gates my 2010 Toyota Prius. Our contract requires him to pay me by 5 p.m. Sunday. Gates gives me a personal check at 5 pm Sunday. If I refuse his check, is Gates in breach?

No, he gets more time to bring in cash.

CarMax makes a written offer on CarMax letterhead to sell a 2011 Tesla Roadster. The offer states that CarMax will not revoke for two weeks. Can CarMax still revoke its offer? (2) What if the writing provides that CarMax will not revoke the offer for six months? (3) What if CarMax promises not to revoke its offer, but does not state a time period? (4) CarMax makes a signed, written offer to sell a 2011 Tesla Roadster. Can CarMax still revoke? [TRICK Q!]

No, irrevocable offer due to merchant firm offer rule. (2) No, only 3 month limit under UCC Article 2. (3) Offer is irrevocable, the court will fix a reasonable time period, but not more than 3 months. (4) Yes because missing a promise to hold the offer open.

Is there a $500 money minimum for UCC, Article 2 to apply?

No, it applies (statute of frauds requirement, not Article 2)

HYPO 3K ABC orally agrees to employ Chris Harrison as host of the Bachelor for the rest of his life. Is a writing required? (2) What if ABC orally agreed to employ Chris Harrison for three years?

No, lifetime employment contracts are not within the SOF (2) Yes, SOF because explicitly calls for 3 years

HYPO 3E Alex Rodriguez agrees to sell Serena Williams a baseball bat for $100,000. Neither was aware the baseball bat had been destroyed two days earlier. Does Serena still have to buy the bat? (2) A-Rod agrees to sell Serena a baseball bat for $100,000. Both believe it was used by Babe Ruth. After the Agreement, they learn that it was not. Does Serena still have to buy the bat? (3) What if baseball bat was one of Babe Ruth's, but it is worth only $50,000? [TRICK Q!]

No, mutual mistake about subject matter of deal -- baseball bat no longer exists (2) No, mutual mistake heart of subject matter (3) Yes, enforceable because mutual mistake as to value does not allow recession of contract.

HYPO 3T Bill Gates alleges that Jeff Bezos orally agreed to sell him Bezos' Mercer Island mansion for $4,000,000. Gates has paid Bezos the entire $4,000,000. Does Gates' full payment satisfy the SOF?

No, need 2 of 3

HYPO 3R. Scully mails Mulder a signed note: "I accept your offer." Does the note satisfy the SOF?

No, not all material terms here (who? what?)

HYPO 6F. Same facts, except that B pays $6,000 for much better carpeting. Can B recover the $3,500 difference between cover price and contract price? (2) then what are B's damages? (3) What if B does not buy any replacement carpeting at all?

No, not good faith (2) Market damages -- market price of similar carpeting $2,700; so $200 (3) still get $200 damages

HYPO 5K Buyer contracts to buy 500 computers from Seller. After the contract is formed but before delivery, fire destroys one of Seller's warehouses. Thousands of computers are destroyed. Is Seller excused from performing?

No, not unless specifically identified.

HYPO 4E After signing the written lease, the manager promised J.Lo that the Hotel would "throw in the bridal suite for free." Does the P.E.R. prevent J.Lo from getting this promise into evidence?

No, parol evidence is only applicable to things that happened before final writing. This is an attempt to modify -- common law or UCC analysis would apply depending on type of transaction.

HYPO 2BB Snooki helps JWoww move into her new home. LATER, JWoww promises to pay Snooki $300 for helping her move. Jwoww now refuses to pay. Was there consideration for JWoww's subsequent promise to pay Snooki?

No, past consideration - can make and break that promise. *mills v wynan: promise to pay for caretaking dying son, care had already happened, don't have to pay

Angelina Jolie hires Lindsay Lohan to babysit her kids. Does Article 2 apply?

No, personal service contract, common law applies

Monday: I offer to sell my Prius to J.Lo. Tuesday: I mail her a revocation. Wednesday: J.Lo accepts my offer. Thursday: She receives my revocation. Is my revocation effective?

No, revocation effective upon receipt, not when mailed.

Bill Gates contracts to buy Greenacre. Does Article 2 apply?

No, sale of real estate, common law applies

HYPO 2R. Gates's offer states that I can accept only by painting the house [= unilateral]. I start painting the house. Have I accepted the offer so that I am bound to finish the job? (2) BUT: Once I start painting, can Gates still revoke? [Recall Brooklyn Bridge Hypo]

No, start of performance is not acceptance bound to finish. (2) No, once offeree starts to perform, offeror cannot revoke

Landlord sends Tenant a signed lease that says nothing about pets. Tenant adds, "Tenant may keep a pet," signs the lease and returns it to Landlord. Has Tenant accepted Landlord's offer?

No, the mirror image rule has not been met, tenant added a new term, so it's a rejection/counteroffer.

HYPO Grandpa promises to give his granddaughter $2,000 as a gift. In reliance, Granddaughter quits her job as a bookkeeper. Then Grandpa dies and his estate reneges. Was there consideration for Grandpa's promise to give Granddaughter the $2,000? (2) Can Granddaughter enforce Grandpa's promise on any other ground?

No, this is a gift promise made out of grandpa's heart. (2) Yes, promissory estoppel (grandpa made promise; reasonable to expert her to rely; justice requires enforcement of the promise)

HYPO 2UI leave a note on your outline at the break: "I offer to sell you my Prius for $8,000. If I don't hear from you by 9 tonight, you've accepted." You say nothing. Have you accepted my offer?

No, unfair to do that

HYPO 5N Burger King agrees to buy imitation meat for its Impossible Burger from a vendor for $2.00/pound. An outbreak of veggie flu causes the market price to double. Is the vendor excused from performing?

No.

HYPO 5J Kourtney contracted to sell her BMW to Khloe, the car was destroyed by a fire. Is Kourtney excused from performing due to impracticability? [TRICK Q!]

Not need an excuse because risk of loss already passed to Khloe.

J.Lo orally agreed to work for Columbia Pictures for 5 years for $10 million per film. After "Gigli" bombed, Columbia refused to pay her for the film. The Statute of Frauds bars J.Lo from enforcing the contract. Can she recover from Columbia? (2) How much can she recover in restitution?

Not under the contract. She can recover in restitution for value of benefit she conferred - reasonable valuable of her service. Columbia has been unjustly enriched.

First Step of Agreement Formation Process

Offer

Unilateral - acceptance by performance ORCRA, NP OPPC OAC, CF OPOP

Offeror requests completion of a request act, not a promise. Offeror promises to pay upon completion of the request act. Once the act is completed, a contract is formed. One promisor and one promise

Artiste is an intended third-party beneficiary (TPB) of the contract and has certain enforcement rights. However, because a TPB's rights are entirely dependent on the underlying contract, any valid defenses that the promisor has to the enforcement of the contract, such as impracticability, failure of a condition, or breach by the promisee, are also effective against the _________. Here, the contract had a constructive condition read into it that Kabb would not breach the contract. When Kabb breached the contract, the constructive condition precedent to Petrol's performance failed, and Petrol was excused from performing. Not only would Petrol not have to supply gasoline to Kabb, but Petrol would not have to place its advertising with Artiste.

TPB

Quasi-Contract (not a contract at all)

One party is unjustly enriched at the expense of the other party, so that the enriched party must pay restitution to the other party equal to the unjust enrichment.

HYPO 7Q Can Gates sue Van Gogh for breach of contract?

Only if Van Gogh received consideration from Calandrillo

3rd) Usage of Trade What others in the trade do in similar contracts (less important than #1 and #2). (X: __________ people in the chicken industry interpret the word "chicken" to mean chickens up to 6 pounds, including broilers or fryers.) That trade custom can ________ determine what "chicken" means in the current contract, but is the least import-ant evidence of what the term means.

Other; help

Implied Contract

Parties' conduct indicates that they assented to be bound.

Express Contract

Promises are communicated by language

Part _______ can take a party out of the SOF and allows partial recovery.

performance

Frustration of buyer's primary purpose as an excuse for non-_______

performance.

Course of _________ is the best _______ of what the parties __________.

performance; evidence; intended

EXAM TIP It does not matter if _______ actually takes more than 1 years. As long as ___ performance within a year was ______ possible, no writing is required by the SOF.

performance; full; theoretically

In a bilateral contract, starting _______ is acceptance and carries with it an _______ promise to finish the job.

performance; implied

Part ______ of real estate sale contract is an exception to SOF. Need 2 of 3: 1) some _______; 2) possession, and/or 3: improvements

performance; payment

The purpose of contract damages is to put the nonbreaching party where he would have been had the promise been ______.

performed

A party can be deemed to have accepted additional terms of a contract by __________.

performing

An offer for a unilateral contract can be accepted only by ________.

performing

common law contracts

personal service, landsale (75% fall into common law)

Contracts which cannot _______ be completed in 1 year or _____ are subject to the SOF.

possibly; less

Valid assignment must have _____ of present transfer.

present

To establish a breach of contract, a party must prove the other party is under a (1) ______ duty to perform and (2) that duty has neither been performed nor _________.

present discharged

An absence of writing or consideration may allow the assignor to revoke an assignment, but will not _________ the assignee from enforcing it against the obligor.

prevent

For a sale of goods contract to be enforceable under the UCC, it must specify the ___________.

price

2nd) Course of Dealing What parties did under ________ contracts with each other. (X: S sent stewing chickens to B in last year's contract.) That can help determine what the word "chicken" means in the __________ contract, but is less important than the current course of ____________.

prior; current; performance

Suretyship is a _______ to ______ for (i.e. guarantee) the debt of another person.

promise; answer for

FLORIDA NOTE: A ____ to pay a debt barred by the statute of _____ is enforceable if in ____ and signed by party sought to be charged.

promise; limitations; writing

Consideration can be a ______ in exchange for a ______ (the usual case), performance or even ___________.

promise; promise; forbearance

Loss in value is value as _____ minus value as delivered. This is used when buyer _______ non-conforming goods.

promised; keeps

The party who secures the promise is the _______.

promisee

Promisor is the party who ____ to perform for the 3rd party.

promises

Look for _______ mark at end of a response to an offer. Period _____ question _____.

punctuation; versus; mark

Seller's warranties of _________ in a _______ of goods is covered by UCC, Article 2.

quality; sale

Sale of goods requires a _____ and be signed by party to be charged with breach.

quantity

An offer for a bilateral can be accepted in any ___________ way.

reasonable

Breaching party suing, they are entitled to the __________ value of services provided minus the _____________ incurred by the non-breaching party.

reasonable damages

Seller does not have an option to cure unless there is _____________ grounds for thinking that her improper _____. would have been acceptable.

reasonable; tender

Consequential damages must be _______ foreseeable to the breaching party at the time the contract is formed. These are ____ available to a seller under Article 2.

reasonably; not

A revocation is effective on _________ [no Mailbox Rule].

receipt

Unpaid seller's right to ____ goods (article 2) is generally not ______.

reclaim; available

Seller can _____ goods at any time if buyer misrepresents its _____ to seller in writing within three ______ before delivery.

reclaim; solvency; months

Language may constitute an expression of doubt as to one's ability to perform under the contract without being an outright _____________. This will not be an anticipatory repudiation, but a prospective inability to perform.

refusal

Supervening governmental ______ = excuse due to impossibility

regulation

Conditional acceptance operates as a __________ and counteroffer.

rejection

Delegating party always ______ liable (compare/contrast with novation)

remains

Restitution is the ______ of last resort.

remedy

Anticipitory ____ provides an excuse unless the repudiation is _____.

repudiation; retracted

The promisor and promisee can ____ or modify the contract until the rights of the third party have ____.

rescind; vested

Damages could be contract price if seller cannot ____ the goods.

resell

If seller _____ in good faith, seller can get contract price minus resale price.

resells

Seller's perfroammce not perfect in every ___ (Perfect Tender Rule), buyer has pretty much free ____. 1. reject all 2. accept all 3. reject some and accept the rest

respect; reign

A quasi-contract provides for __________ and protects against _________ enrichment whenever contract law yields an _________ result.

restitution; unjust; unfair

Contract language controls _____ on assignments, distinguish between a clause that _____ assignment from one that completely "invalidates" _______.

restrictions; "prohibits;" assignment

Consequences of rejection or revocation is that buyer can ________ the goods at seller's expense. Buyer can get a refund and any _____ paid back. Buyer can get ____ for breach of contract.

return; money; damages

Sometimes Buyer can ________ if the non-conformity _______ impairs the value of the goods and was ____ to discover (i.e. latent defect).

revoke; substantially; difficult

Non-merchant seller _____ of loss passes sooner. Finish

risk

Sale of goods, destruction provides excuse but ____ of loss and unidentified ____.

risk; goods

When Buyer bears ________, buyer must still _____ the contract price even though _____ are destroyed.

risk; pay; goods

Failure of an Express Condition as an excuse for Non-Performance and ______.

satisfaction

Full performance of service contract _____ the SOF, but ___ performance does not.

satisfies; part

Termination is the _______ step of agreement formation process.

second

Check is okay, but ____ can refuse it.

seller

Lost profits doctrine for volume ____________.

seller

Standard remedy for non-breaching __________ under UCC = contract price - resale price.

seller

If ______ bears risk of loss, seller must provide new ______ to buyer for no ______ cost, or be _____ for breach.

seller; goods; additional; liable

Option to cure gives a ______ a second change after failing to make _____ tender may have an ______ to cure.

seller; perfect; option

Accommodation shipment rule applies only when _________ is used as a form of acceptance. Watch out for a fact pattern in which a party accepts an order by promising to ship. He then discovers he lacks the specific goods and ships noncomforming goods as an "accommodation." This is a breach, not an accommodation. There was a contract at the promise to ship. The shipment was not acceptance; thus, accommodation is not possible

shipment

Exam Tip Look for a _________ contract, where buyer bears Risk of Loss before it gets the goods! It's counterintuitive-that's why it's tested so often! A shipment contract is ____________ unless the contract clearly indicates otherwise-look for "FOB" (stands for Free on Board) followed by a city name. Risk of loss ________ to buyer at the named location. FOB followed by Seller's city = Shipment K FOB followed by any _________ city = Destination K

shipment; presumed; passes; other

Merchants' confirmatory memo: One party can use its own ______ writing to satisfy the SOF agains the other party if ____ parties are merchants writing claims ____ and has ______; and no written objection within ____ days.

signed both agreement; quantity 10

Offeree's _____ is not __________.

silence; acceptance

Conduct can be a ________ of terms.

source

Breach of contract is minor if the obligee gains the _____ benefit of the bargain despite obligor's defective performance.

substantial

Custom-made goods can be an exception to SOF when you've shown a ________ beginning to satisfy SOF- i.e. that the goods are custom-made/not-suitable for sale to others.

substantial

Installment Contracts = _______ impairment rule, not perfect ______

substantial; tender

Assignments cannot ______ change duties of obligor.

substantially

Novation is an agreement to _____ a new party for an existing one.

substitute

HYPO 5G Same facts, except they agree that only if John does the yard work for a year, then Gabrielle will discharge the debt. What are Gabrielle's right if John does not do the yard work as promised?

sue on accord or sue on pre-existing $500 debt

Under UCC Section 2-204, a contract for the sale of goods can be made in any manner ________ to show agreement, including conduct by both parties which recognizes the existence of a contract. Because the earlier signed agreement stated arrival of agreement at the same price within the next week by the parties would create a deal, and no manner of acceptance was specified, the mutual identical offers would create a contract because they show agreement on the terms of the contract.

sufficient

Discharge by Frustration: SA DNRF PD PRBP

supervening act did not reasonably foresee purpose destroyed purpose contract realized by both parties

HYPO 5C Martha contracts to decorate my house, payable on completion. After Martha starts the job. I tell her I am not going to pay [="Anticipatory Repudiation"] What are Martha's rights? (2) What if I tell Martha the next day that I've changed my mind, and will pay her as promised [="Retraction"]

suspend her efforts and sue for damages (2) contract still goes forward (can repudiate as long as Martha hasn't relied upon repudiation)

The offeree's _____ sometimes does not make it into the ________.

term; contract

Death operates to _______ an offer.

terminate

Under common law if the offeree adds _________, it is a rejection!

terms

Tender by check is sufficient unless the seller demands legal tender and gives the buyer ______ to obtain cash

time

Exam Tip modification or an accord and satisfaction depends on ____ - underlying obligations excused ___ or later?

timing; now

Land sale/_____ of an interest in real property subject to SOF

transfer

Delegation is a ____ of contract duties, not a transfer of _____.

transfer; rights

Contracts of adhesion unconscionable and ________

unenforceable.

All contracts assignable, delegable, except: UPS LTR

unique personal services contract and long-term requirement contracts.

A ______ is not required to have an effective assignment of a right to collect debt from a third party.

writing

FLORIDA - Promise to pay a debt barred by SOL enforceable if WS______________ by the party sought to be charged.

writing and signed (FLORIDA)

Parol evidence is allowable when adding to a partially integrated ______. Partial ________ is a ________ statement of the terms included, but not a ________ statement of all terms agreed to.

writing; integration; final; complete

Exceptions to SOF (where you don't need a _____) are carved out where there is _____ chance of fraud.

writing; less

A parol evidence rule problem requires a ________, so if the fact pattern tells you that the parties only ________ agreed, you have a SOF problem, not a Parol Evidence problem.

writing; orally

A ____ promise to pay a debt, collection of which is barred by _____ of limitations, is enforceable even without consideration.

written; statute

HYPO 4P Barbri contracts to buy 3,000 donuts form Krispy Kreme Donuts, with Krispy Kreme to deliver 100 donuts here by 9 a.m. each of the 30 days the bar review course meets. Installment contract?

yes

HYPO 7B. Can Chryssa recover from Eddie Vedder for breach if Vedder does not perform as promised? (2) What if Calandrillo's check to Eddie Vedder had "bounced"? (3) Chryssa invited Beyoncé to hear Eddie Vedder sing, but Eddie Vedder did not show up. Can Beyoncé recover from Eddie Vedder for breach of contract?

yes, that's the whole point of third-party beneficiary law; even though she didn't make contract she benefits from it (2) no, he would have defense of non-payment against intended beneficiary (3) no, Eddie not a party to agreement with chryssa and Beyonce -- Beyonce is a mere incidental beneficiary

ACTIVITY Carol's Fran's driveway for $10,000.Rising Construction Co. agreed to pave all of Farmer asphalt costs led o Carol and Farmer Fran to latèr agree in writing that the barn (saving $2,000) and still receive the full con- Carol could omit the portion of Fran's driveway behind tract price. Under the general rule, this subsequent written agree- ment is: (A) Enforceable as a novation, which superseded the g original paving contract. (B) Enforceable, because an agreement modifying a contract for the sale of goods (the asphalt) needs no consideration to be binding. (C) Enforceable, on the theory that Carol gave up her right to breach the contract in reliance on Farmer Fran's agreement to the modification. (D) Unenforceable for lack of consideration, even though it is in writing. EXCUSE

| HYPO 5L Ida Hogh hires Van Gogh to paint her portrait. If Van gets hurt and cannot paint, is he liable? O her barn rather than her portrait? Mor (2) What if lda had hired Van to paint the exterior of (3) If Van paints the portrait, but Ida dies, is her estate liable for the contract price? | HYPO 5M A Seattle manufacturer contracts to sell desks of Washington pine to a California retailer. Washington then passes a law forbidding cutting down Washington pine trees. Must the manufacturer perform as promised? Increase | HYPO 5N Burger King agrees to buy imitation meat for its Impossible Burger from a vendor for $2.00/pound. An outbreak of veggie flu causes the market price to double. Is the vendor excused from performing?

Which of the following types of evidence may be outside the scope of the parol evidence rule? A) Evidence of a condition precedent B) Evidence of a contemporaneous oral agreement C) Evidence of a prior oral agreement D) Evidence of a condition subsequent

The parol evidence rule prohibits admissibility of extrinsic evidence that seeks to vary, contradict, or add to an integration. Other forms of extrinsic evidence may be admitted when they will not bring about this result, i.e., they will fall outside the scope of the parol evidence rule. When a party asserts that there was an oral agreement that the written contract would not become effective until a condition occurred, all evidence of the understanding may be offered and received. This would be a condition precedent to effectiveness. The rationale is that one is not altering a written agreement by means of parol evidence if the written agreement never came into being. It should be borne in mind that parol evidence of such a condition precedent will not be admitted if it contradicts the express language of the written contract. Parol evidence is inadmissible as to conditions subsequent to the formation of the contract, i.e., an oral agreement that the party would not be obliged to perform upon the happening of an event. This latter type of condition limits or modifies a duty under an existing or formed contract. Under the parol evidence rule, when the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain (i.e., the writing is an integration), any other expressions, written or oral, made prior to the writing, as well as any oral expressions contemporaneous with the writing, are inadmissible to vary the terms of the writing.

The Statute of Frauds requires: A) one or more writings that reflect the material terms of the contract, signed by the person sought to be held liable. B) a signed writing for suretyship promises that primarily serve the pecuniary interest of the promisor. C) the handwritten signature of the party sought to be held liable on some document acknowledging the existence of the contract. D) a formal written contract signed by both parties to the agreement.

To satisfy the Statute of Frauds, there must be one or more writings signed by the person sought to be held liable on the contract that reflect the material terms of the contract. The Statute of Frauds does not require a formal written contract signed by both of the parties. For example, a letter, receipt, or a check containing the material terms (e.g., quantity for sale of goods) and signed by the party to be charged satisfies the Statute of Frauds. The needed signature need not be handwritten, but the document or documents must include the material terms of the contract, not just acknowledge the existence of the contract. Generally, the Statute of Frauds requires that suretyship promises be in writing and signed by the party to be held liable. However, there is an exception for suretyship promises that primarily serve the pecuniary interest of the promisor; they are not within the Statute of Frauds.

The common law differs from UCC Article 2 as to whether adding terms prevents acceptance of an offer. True or false

True

EXAMPLE Batman contracts to provide security for Gotham City for $200,000. Batman ("assignor") then assigns his right to the payment to Robin ("assignee"). Robin has the right to receive payment from Gotham City ("obligor"). How many steps?

Two steps.

HYPO 3W Vera Wang Design Studios sends Victoria's Bridal shop a signed letter "confirming our earlier oral agreement over the phone for the sale of 9 gowns for $2,700." Victoria's Bridal Shop does not respond. Will Vera Wang's letter satisfy the SOF against Victoria's?

Yes

HYPO 4N Same facts, except the contract provides for delivery no later than June 6. Seller delivers 49 purple and 1 gold tee shirt on May 5. Buyer rejects them. Does Seller have an option to cure?

Yes

HYPO 4O Same facts, except Seller delivers the 49 purple and 1 gold tee shirt on June 6 (the deadline). Buyer rejects them. In the past, Buyer had accepted gold tee shirts instead of purple ones. Does Seller have the option to cure even though the contract deadline has passed?

Yes

HYPO 6A Seller contracts to sell an antique painting to Buyer, then breaches. Can Buyer get the painting from Seller?

Yes

HYPO 6L. After Zuckerberg's breach, Seller has to store and insure the Tesla, and advertises it for sale in the newspaper in an attempt to find another buyer. Can Seller recover these expenses from Zuckerberg?

Yes

HYPO 7C. Can Calandrillo recover damages from Eddie Vedder if he doesn't sing for Chryssa as promised?

Yes

HYPO 7M I contract to paint Bill Gates's house for $10,000. I delegate to Van Gogh, who does a great job. Gates objects to the delegation. Does Gates have to pay?

Yes

HYPO 7P I contract to paint Gates' house for $10,000. Without consulting Gates, I delegate to Van Gogh [=delegation, not novation]. Van Gogh cuts off his ear and fails to paint Gates' house. Can Gates still sue me for breach of contract?

Yes

HYPO FLORIDA MasterCard is barred by the statute of limitations from collecting $3,000 you owe them. You write MasterCard: "I know I owe you money. I will pay you $2,000." Must you pay MasterCard $2,000?

Yes

HYPO 4G Seller is a merchant who deals in goods of the kind You buy a bicycle from Big Wheel Cycles. Is there an implied warranty of merchantability? (2) Big Wheel Cycles sells you a delivery van. Is there an implied warranty of merchantability?

Yes (2) No

HYPO 3O Bill Gates agrees to have me paint his house for $10,000. Jeff Bezos chimes in, "If Gates doesn't pay you, I will." Is Bezos' promise to pay me within the SOF? (2) I have no contract with Gates. Bezos tells me, "Paint Gates' house and I will pay you $10,000." Is Bezos' promise to pay me within the SOF?

Yes (2) No, mere promise to pay (not a surety).

HYPO 5S Gates decides to build instead. His duty to make monthly payments is conditioned on Builder's providing an architect's certificate for that month's work certifying that the work was done correctly. However, Builder fails to obtain this certificate. Nevertheless, Gates tells Builder that he will pay even without a certificate. Must Gates pay? yes (1) Who was protected by the condition? (2) Did he do anything to forfeit the protection? (3) Result?

Yes (1) B.G (2) waived it (3) he waived, so has to pay for that month.

HYPO 3Q "I agree to buy 20 dumbbells from Muscle Memory Products for $500. /signed/ Arnold Schwarzenegger." If Muscle Memory Products sues to enforce the contract, will this note satisfy the SOF against Schwarzenegger? (2) What if, instead, the note read: "I agree to sell 20 dumbbells to Schwarzenegger for $500. Isigned/ Muscle Memory Products." Can Muscle Memory use this note to satisfy the SOF against Schwarzenegger?

Yes (2) No because Schwarzenegger (defendant) didn't sign

Hypo 3M Billy Ray Cyrus alleges that Lil Nas X orally agreed to sell him the Oldtown Road Ranch for $4,000,0000. Is this within the SOF? (2) Cyrus alleges that Lil Was X orally agreed to lease him a cabin for the next 2 years on the Oldtown Road Ranch. Is that covered by SOF? (3) Cyrus alleges that Lil Nas X orally agreed to have him build a fence around Oldtown Road Ranch. SOF? (4) Lil Nas X authorizes an agent to sell the ranch. Must the agent's authorization be in writing?

Yes (2) Yes, includes lease, too (3) No, construction contract without date, not subject to SOF (4) Yes, under equal dignity rules. Have to look at underlying contract to be entered into (sale of ranch/real estate covered SOF), so because SOF, the authorization to agent to enter into deal must be authorized in writing. Equal dignity rules say oral authorization ok underlying contract, ok for authorization.

HYPO 7D. Can Calandrillo and Eddie Vedder modify or rescind their contract before Chryssa learns about it? (2) Chryssa learns of the contract and invites Beyonce to hear Eddie Vedder. Can Calandrillo and Eddie Vedder still modify or rescind their contract?

Yes (2)No, Chryssa's rights have vested.

HYPO 3F At the time of their agreement, Serena believed Babe Ruth was the original owner of the baseball bat, but A-Rod did not. Later, Serena learns she was wrong. Does she still have to buy the bat?

Yes *palpable mistake exception, aka obvious mistake

HYPO 3N Bill Gates orally agreed to buy a computer from Calandrillo for $500. Is a writing required? (2) What if price was $400?

Yes $500 or more (2) No, but remember article 2 applies

HYPO 2CC We agree that I will pay you $300 for your Billy Joel "Greatest Hits" CD. The CD is only worth $20 but I desperately want it to complete my Billy J collection. Is there consideration for my promise to pay you $300 for it?

Yes as long as bargained for exchange *mere peppercorn will suffice

HYPO 7J. Can Robin sue Gotham City if he is not paid for Batman's work? (2) If Batman fails to perform the services, can Robin still collect from Gotham City? (3) In May, Batman assigns his rights under the contract to Robin. Unaware of the assignment, Gotham City makes the June payment to Batman. Is Gotham City liable to Robin?

Yes because Batman assigned rights to collect cash to Robin, he can sue (2) No, Gotham City has defense of Batman's breach (3) No, if someone unaware assignee exists, don't have to make payment

On January 1, I offer to sell Gates my Prius for $8,000. The next day, while giving Barbri lectures, I exclaim, "I do not want to sell my Prius to Bill Gates." Can Gates still accept? (2) If I sell my Prius to Jeff Bezos on January 4, can Gates still accept my offer? [Trick Q!] (3) Bezos tells Gates he bought the Prius from me. Can Gates still accept my offer?

Yes because Gates doesn't have awareness of the revocation. (2) Yes because Calandrillo didn't provide notice of sale to Gates. (3) No because Gates is aware that offer is no longer outstanding.

HYPO 3H D has a contract to supply 1,000 radar sets to P in 2020. D refuses to perform this contract until P agrees to buy 4,000 erector sets in 2021. P has no other sources of radar sets and so agrees. D delivers the radar sets in 2020. Can P get out of the agreement to buy 4,000 erector sets in 2021?

Yes because economic duress made her reluctantly agreed.

HYPO 4B Before J.Lo signed the lease, the manager told her the Grand Ballroom was soundproof. It's not. J.Lo seeks rescission because of this misrepresentation. Can J.Lo get this evidence in?

Yes because evidence is being preferred to establish a defense.

HYPO 3U Sesame Street orally agrees to employ Big Bird for two years for $50,000. Big Bird works for two years, but Sesame Street refuses to pay. Does Big Bird need a writing to satisfy the SOF? (2) But: What if Sesame Street fires Big Bird after only three months?

Yes because full performance 2 years (2) No, part performance does not satisfy SOF; but would turn to restitution to fashion remedy for Big Bird (Fair Market Value of his work)

HYPO 3P Ariana Grande contracted in writing to buy 20 tubes of hair gel for $20 each from L'Oreal [20x$20=$400]. L'Oreal claims that they and Grande later agreed to modify the contract to make it 40 tubes [40x$20=$800]. Does the modification have to be in writing? (2) What if L'Oreal instead claimed the number of tubes was later reduced to 10 [10x$20=$200]? (3) Same facts, except the original written contract prohibited oral modification. What result?

Yes because modified contract sale of goods $500 or more (2) No writing required (3) SOF applies in both circumstances (article 2 allows parties to create own SOF)

HYPO 2S Jay Inslee offers me $10,000 to paint his house green. I paint it purple. Have I accepted?.

Yes, acceptance and breach.

HYPO 3S. Fox News signs this letter: "We agree to employ Judge Judy as an expert legal consultant for three years at a salary of $45 million per year. /signed/ Rupert Murdoch." A month later, Fox fires Judy without cause. Judy sues Fox for breach. Does the letter satisfy the SOF against Fox? (2) Same facts, except Judy quits after one month. Fox sues Judy for breach. Does the letter satisfy the SOF against Judy?

Yes, all material terms (who? what? 3 years $45million/yr; signature of party charged) (2) No because Judy didn't sign

HYPO 6K. Don Draper hires Martha Stewart to redo his office. The contract provides for damages of $100/day for each day Martha is late. Martha finishes 20 days late. Is the liquidated damages clause valid? (2) What if the contract provides for $2,000 in damages in the event that Martha is late, no matter how late she is? O (3) Will Don get any damages if the liquidated damages clause is struck down as a penalty?

Yes, as long as $100/day reasonable forecast and damages were difficult to estimate (2) No, unenforceable penalty clause - punitive and not reasonably related to actual damages (3) Yes, he is victim of breach, so give him his expectation damages, if uncertain, then reliance

HYPO 7H. The Batman-Gotham contract provides, "Rights under this contract are not assignable." Batman assigns the right to payment to Robin anyway. Can Robin collect from Gotham City? (2) Same facts, except that the contract states, "All assignments under this contract are void."

Yes, as long as Robin did not know of the language of prohibition (2) No rights are transferred

HYPO 2EE Donna Karan contracts to sell a dress to Heidi Klum for $4,000. Later, they agree to increase the price to $4,500. Is Heidi's promise to pay the extra $500 enforceable?

Yes, as long as modification made in good faith.

HYPO 6C. B Buys goods on credit on May 10. B is insolvent on May 22, when B received the goods. S demands their return on May 29. Does S have a right under Article 2 to get the goods back? (2) What if B had sold the goods to a third party on May 25?

Yes, assuming reclamation (buyer insolvent at time received; 2 10 day rule) (2) seller's reclamation rights are gone, too; seller can sue buyer for breach

HYPO 4D The lease says nothing about sleeping arrangements. J.Lo claims that before signing the lease, the manager promised to "throw in the bridal suite for free." Can J.Lo get this promise into evidence? (2) But: What if the written lease also said: "This contract is limited to the terms herein" [a "merger clause"]?

Yes, assuming this writing was only a partial integration; bring in parol evidence to add to the deal. (2) No, because merger clause = complete integration and so you cannot bring in parol evidence to add to it

Bill Gates offers me $10,000 to paint his house, but does not specify how to accept [=bilateral]. I start painting. Have I accepted Gates's offer so that I am bound to finish the job?

Yes, because bilateral open reasonable manner acceptance.

Missing price for real estate -- indefinite contract?

Yes, because common law requires price for definiteness.

HYPO 7E. The contract lets Calandrillo change who Eddie Vedder will sing for. Chryssa has relied on the contract by inviting Beyoncé to hear Eddie Vedder sing. Can Calandrillo terminate Chryssa's rights?

Yes, because contract language controls.

Tesla offers to buy all its requirements of batteries from Solar City for six years for $10,000/battery. Is that a valid offer? (2) Solar City accepts Tesla's offer. For the last three years, Tesla has ordered 100,000 batteries a year. Can Tesla require Solar City to deliver 1 million batteries this year?

Yes, because has price and Article 2 allows quantity to be exercised by buyer reasonably. (2) No because this is an unreasonable or disproportionate increase in quantity. This would work an unfair surprise on the seller.

I offer to sell you a machine. Before accepting, you have an expensive foundation custom-made to fit the machine. Can I still revoke my offer?

Yes, because he cannot reasonably foresee that he will build a custom-made machine before accepting.

HYPO 3I Piper claims that Alex promised to relinquish claims to her assets if she agreed to marry her. Is this promise within the SOF? (2) Pete Davidson alleges that Ariana Grande promised to marry him. Is this promise within the SOF?

Yes, because one party might be tempted to lie (2) No - promises to marry do not fall within SOF

I offer my Prius to Beyonce for $8,000 and promise I will keep my offer open for a week. Can I revoke? (2) I promise to keep my offer open for a week if Beyonce pays me $100. She pays the $100. Can I still revoke?

Yes, because the option is not paid, no consideration. (Dickinson v Dodds, train station, agent track down seller for offer to house for buyer until Friday, didn't keep it open, sold it. No consideration = no option contract.) (2) No, because option contract prevents offeror from revoking.

HYPO 3C I rent Bieber a place to live (a "necessary") for $20,000 a month. Does Bieber have to pay?

Yes, but only reasonable value, aka restitution

HYPO 2AA I promise to pay you $100 to not read romance novels by E.L. James for the next 2 months. You don't read her novels. Is there consideration for my promise to pay you $100? (2) But what if you would not have read her novels anyway?

Yes, consideration -- forbearance *Hammer v Sidway, nephew forbear from smoking/etc until 22; nephew agreed to forbear = consideration (2) Yes still consideration, giving up right to do something you otherwise legally could have done

HYPO 2Z Bill Gates promised to sell Jeff Bezos a puppy in exchange for his promise to pay $400. Bezos not refuses to pay. Was there consideration for Bezos' promise to buy the dog?

Yes, consideration because two promises.

HYPO 5P Ariana Grande contracts to buy a house from Taylor Swift, provided it is appraised for at least $2 million. The house is appraised for $1,999,900. Is Grande excused from buying a house? (2) Can Grande sue Swift for breach because the house did not appraise for at least $2 million?

Yes, express conditions are strictly construed (2) no

HYPO 7L What if Gates is unaware of the other assignments and is first to notify Gotham City of his rights?

Yes, he can get

HYPO 4C J.Lo signs a lease for a ballroom. J.Lo says it was lease supporting her claim. Can the court consider from the Beverly Hills Hotel sent before the written specifically for the Grand Ballroom. J.Lo has a fax the fax?

Yes, it can be used to clarify and interpret what the word ballroom means; not contradicting writing. Parol evidence can be oral or written.

Calandrillo isn't a merchant, is he subject to UCC Article 2 when selling toupee to Bezos?

Yes, it covers all sales of tangible personal property.

HYPO 5I Caldwell leases his music hall to Taylor for a concert to be held on June 1. The hall burns down on May 26. Is Caldwell excused from performing?

Yes, no music hall because it's burned down.

HYPO 3X I buy paint on credit from Home Depot to paint Bill Gates' house. Gates orally promises to pay Home Depot if I don't pay [=suretyship]. Can Home Depot enforce Gate's oral promise against him?

Yes, okay to be oral because suretyship rule takes us out of SOF because his agreement is in his interest

HYPO 2FF You owe MasterCard $3,000. The debt is due and undisputed. You and MasterCard orally agree that if you pay $2,000, MasterCard will forgive the rest of the debt. If you pay $2,000, can MasterCard recover the $1,000 balance?

Yes, they can recover *pay debt early or some dispute as to amount owed, then that can be considered consideration

Jeff Bezos buys a toupee from Calandrillo for $400. Does Article 2 apply?

Yes, toupee is a tangible piece of personal property = UCC, Article 2

HYPO 3G Ms. Williams rents to own a bunch of different items from a Washington, D.C. electronics shop - a TV for $300, a phone for $400, and a stereo for $500. After she has paid off $1,100 of the total $1,200 price tag, she misses her final installment payment, and the Seller repossesses everything in accordance with its rights under the fine print cross-collateralization clause of the contract that it made her sign in blank. Can Ms. Williams avoid the harsh consequences of this contract?

Yes, under defense of unconscionability because she had to sign something in blank.

Common law ____________ must mirror the offer ("Mirror Image Rule")

acceptance

Improper performance as ______ is simultaneous acceptance and _______.

acceptance; breach

Watch out for offeree responses that look like _________________ but are actually rejections: counteroffers, ______________ acceptances and __________ terms.

acceptance; conditional; additional

Buyer can imply _____ is when buyer keeps ______ after having an opportunity to inspect them.

acceptance; goods

Consequences of Buyer's _____ is that once buyer accepts, its _____ late for buyer to reject, but _____ can still get _______ for seller's breach.

acceptance; too; buyer; damages

Mailbox rule only applies to ______________, acceptance is effective on dispatch, not receipt.

acceptances

An ______ is not an offer unless there's a ____________.

ad; quantity

What is an ____ writing to SOF? Depends on ___ of the contract.

adequate; nature

Failure to give ____ assurance under Article 2. Party with _____ grounds for being insecure about the other party's ______ may, in writing, request adequate assurance that the ____ party will perform in accordance with _____.

adequate; reasonable; performance; contract

Implied _____ after gaining capacity. Look for a _______ retaining the benefit under contract after reaching ____.

affirmation minor; 18

An offer lapses _________ a ___________ term or after a ___________ time has passed.

after; stated; reasonable

UCC Battle of Forms: If the offeree accepts the offer and at same time makes material alteration -- the terms of the ___________ control and material alteration is out, we have contract under the terms of the original offer.

agreement

An accord is an ____ to accept a ____ performance in future satisfaction of an ____ duty. Duty is ___ by the accord, but is not excused until the accord is _____ (performed).

agreement; different; existing suspended; satisfied

Look first for an ________ formed, then see if it's ________ enforceable.

agreement; legally

Modification is an _____ to replace an existing contract with a ____ one. A modification takes effect _______ (i.e. excuses original obligations immediately)

agreement; new immediately

EXAM TIP This is how it is _____ tested on the MBE: a dealer resells the same goods for the ____ price. The bar examiners are trying to trick you into saying the dealer's damages are $______, but don't be fooled! The dealer has lost the profit it would have made on the initial ____!

always; same; 0; sale

HYPO 5D Calandrillo contracts to buy computer chips from Bill Gates. Calandrillo learns from other buyers that Gates' recent deliveries have contained lots of defective chips. What can Calandrillo do?

ask for adequate assurance (2) can treat as an anticipatory repudiation (3) no, can ask for adequate assurance, but cannot re-write deal

For multiple assignments which ____ gets to collect depends.

assignee

Specific performance not _____ in service contracts, but _____ relief may be.

available; injunctive

Don't think of good guys and ____ guys. Contract remedies are designed to ______ the injured party, not to punish the ____ party.

bad; compensate; breaching

Exam Tip: On the ______, the facts are always the same - an owner takes _____ or a car in to be repaired by a ______ who also sells that particular kind of ____. BFP wins.

bar; jewelry; merchant; good

Consideration definition

bargained-for legal detriment/benefit

An intended ______ is usually named in the contract, the person is not a party to the contract, but has rights under the contract because it was intended to benefit him.

beneficiary

The formula for expectation damages is the contract price plus any incidental or consequential damages, minus any payments already received from the buyer, and minus any costs saved as a result of the _________.

breach

Material _____ is only excuse to suspend an _____ party's performance.

breach; innocent

Sale of Goods for $500 or more when the goods are accepted or paid for by ____ exception to SOF

buyer

Seller can limit _____ remedies for breach of any _____ (express or implied) as long as the limit is not ________________. Exception is limiting buyer's ______ for personal ________ in the case of _______ goods is ________ to be unconscionable.

buyer's; warranty; unconscionable remedies; injury; consumer; presumed

Exception to unpaid seller's rights to reclaim goods is when _____ was insolvent when it received goods and seller makes ______ within 10 ____ after buyer received them.

buyer; demand; days

Lack of _____ is a defense. The three categories are ______ (under 18); intoxicated; mentally _____.

capacity; minors; incapacitated

Buyer's obligation to pay is ___ unless otherwise agreed.

cash

Only _____ contracts needs to be a writing to be ______.

certain; enforced

Under _____ law, clauses that prohibit oral modifications are not ______ so you can generally modify a contract orally under common law, even if you have ____ not to!

common; enforceable; agreed

Reliance damages are sometimes awarded when __________ damages, intended to put the nonbreaching party where he would have been if the promise had been performed, are too speculative to measure.

compensatory

Strict _______ required with express conditions.

compliance

However, one exception to this general rule provides that parol evidence is admissible to show a __________________ to the existence of a contract.

condition precedent

Modifications under common law, need new _________ because of the pre-existing duty rule.

consideration

Past consideration is not _____.

consideration

A delegate who gets ______ is liable, they create ____ party beneficiary obligation.

consideration; third

Contary language in _____ controls.

contract

UCC Battle of Forms: If offeree accepts the offer and makes a non-material change, that non-material change becomes part of the ____________ unless the offeror timely objects and then the term is out.

contract

A valid ____, taken alone, does not discharge prior contract. It merely _____ the right to enforce it in accordance with the terms of the accord contract.

contract suspendse

Language in a _____ limits obligations created by other contract _____, but does not create an ______ obligation. Look for words like "if" "as long as" "when" "provided that" "on condition that" "unless"

contract; language; independent

Increase in the ____ of seller's performance = no _____.

cost; excuse

Incidental Damages are ____ to the injured buyer or seller of transporting/______ for goods after a ______ and of arranging a substitute transaction = ______ recoverable.

costs; caring; breach; always

UCC Battle of Forms: If the offeree makes acceptance conditional upon assent to an additional term, then you have a _________________.

counter-offer

Notice of accommodation results in _________________.

counteroffer

Market damages used if buyer doesn't ____ in good faith or doesn't cover at all.

cover

According to section 2-206(1)(b), an order for "prompt shipment" may be accepted by shipment of either conforming or nonconforming goods, and a contract is ______________ upon such shipment. This alters the traditional rule that a shipment of nonconforming goods was a ________________ which the buyer accepted upon taking delivery. The association may reject the nonconforming shipment [U.C.C. §2-601] and _______ for damages. It may also, if it wishes, accept the shipment [U.C.C. §2-601], notify the seller of the breach [U.C.C. §2-607(3)], pay the contract price [U.C.C. §2-607(1)], and seek ____________ even after accepting the nonconforming goods [U.C.C. §2-7l4].

created counteroffer sue damages

The ____ creates duty to _____ exception.

custom; speak *Hobbs (eel skins case) - seller always sell eel skins and send, buyer would accept with silence and send check. 7th time, buyer not pay, but custom was silent acceptance, so this creates a duty to speak. (Oliver Wendell Holmes).

Buyer's damages if seller breaches cover _______ _______ damages

damages market

Punitive ____ are not awarded for breach of ____ because the purpose of contract damages is to ________, not punish.

damages; contract; compensate

Cover ____ cover price minus original contract ____.

damages; price

Lost profit, if seller is a lost volume _____, then damages would be the lost ____.

dealer; profit

Generally, contracts do not have to be in writing to be enforceable; however, under the Statute of Frauds, certain contracts will not be enforceable unless they are evidenced by a writing signed by the party to be charged. One such contract is to pay the _______ of another, such as the grandfather's promise here to pay the uncle's debt if he does not pay.

debt

Partial payment of a _____ that is due and undisputed does not equal ______.

debt; consideration

The department store's acceptance of the three food processors did not waive its right to collect damages for the ________ in quality.

defect

Unilateral mistake is generally not a _______.

defense

If there's a long ____ between receipt & complaint (more than ___ month), look for implied acceptance.

delay; one

In a _______ contract, Seller must get the _________ all the way to a _______ destination (usually where the _____ is located).

destination; goods; specific; Buyer

Foreseeable ______ reliance may make a promise enforceable, even without consideration.

detrimental

General Rule is that an incapacitated defendant has the right to _______ the contract (she does not have to disaffirm, but she can if wants to _____ the contract).

disaffirm; avoid

A seller can ____ implied warranties, but not _____ warranties in a sale of goods.

disclaim; express

Assignments for consideration are more ______-- first one ____.

durable; wins

Gratuitous ("Gift") assignments are ______ revoked.

easily

Death of _____ party before acceptance terminates a ______ offer.

either; revocable

If the breach was material, the nonbreaching party: (i) may treat the contract as at an ____, and (ii) will have an immediate right to all remedies for breach of the ______ contract.

end entire

In contract modification if there is a modification, can it be _______? Article ___ and _____ law differ.

enforced; 2; common

Specific performance is an ____ remedy, available only if monetary damages are _____ to compensate the injured party. Availability of specific performance depends on the ______ of the contract - 1) land vs. 2) goods v 3)services

equitable; inadequate nature

Death/Incapacity of _____ person as an excuse due to impossibility; not just ____ person; must be somehow special/essential for performance.

essential; any

Promises by Executor of an _____ to pay the estate's debts from other source of funds/out of his own pockets are within the SOF (not likely to be tested).

estate

Promissory ____ is a substitute for consideration.

estoppel

Promissory _____ is the right answer only if there is no _____.

estoppel; consideration

For later ____, the Parol Evidence Rule is ______.

events; irrelevant

Time-barred debt as an ____ to the consideration rule.

exception

Anticipatory breach occurs when there's an (i) E B C with unperformed duties on both sides and (ii) the promisor's words or conduct indicate unequivocally that she will not perform when the time comes.

executory bilateral contract

Sale of goods damages under Article 2 award _______.

expectation

An _______ warranty describes the ______, promises _______ about the goods, shows a ______ or model, but NOT an "____________."

express, goods, facts, sample, opinion

Battle of Forms, mirror image rule not applicable for Article 2; proposal of additional or different terms in a definite and timely acceptance does not constitute a rejection and counteroffer, but is effective as an acceptance unless the acceptance is __________ made ________ on assent to the additional or different terms. Whether the additional of different terms become part of the contract depends on whether or not both parties are merchants.

expressly; conditional

To modify a sale of goods contract you need good ____.

faith.

In Florida, the judge must determine, as a question fo fact whether a particular document was intended to be the _____ and complete integration or all the agreements between them.

final

The ____ assignee for consideration _____ over all subsequent assigns as well as ___ gratuitous assigns.

first; prevails; prior

1st) Course of Performance How parties performed under previous installments of this contract. (X: S and B contract for the sale of 100 "chickens" a month for 12 straight months. The first 3 shipments under this contract are broilers, not stewing ______.) This course of performance under these first 3 installments can help interpret what the word "chicken" means in month _____.

foul; 4

HYPO 6J. I agree to buy a custom-made stamp from Seller featuring the Calandrillo name and unique artwork to help market our raw honey business. I breach. What are Seller's damages?

full contract price

If terms other than quantity missing from agreement, Article 2 has GF__________ provisions to fill in the missing terms.

gap-filler

Real property/land sale specific performance is ______ available because real property is considered _______ (even if it's boring land).

generally; unique

Modifications under UCC allowed for GF modifications.

good faith

Expectation damages put an injured party in as ____ a position as full performance. "Compensate" for ____ expectation. These are general rule.

good; lost Hairy hand (scarred v hairy -no, expected perfect hand)

Seller is excused for unidentified ____ only if goods damaged or destroyed had been "identified in the ________."

goods; contract

In a sale of ________, if a _______ promises in a ________ writing to keep an _______ open, then the _________ is irrevocable.

goods; merchant; signed; offer; offer

In a sale of ______, look first for an _______ (no limits). If you do not have an ________, look for a ______ offer (subject to several limitations).

goods; option; option; firm

Specific performance is available only if _____ are unique or there are "____________________ appropriate ___________" (e.e. an inability to buy similar goods on the market)

goods; other; circumstances

A ______ assignment is effective, consideration is not required.

gratuitous

Rejection Under Installment Contract is ______ because perfect tender ____ does not apply to these. Buyer may only reject for _____ impairment.

harder; rule; substantial

The effect of a minor breach is to provide a remedy for the _____ breach to the aggrieved party; the aggrieved party is not relieved of the duty of performance under the contract.

immaterial

The parol evidence rule states that where the parties to a contract express their agreement in a writing with the intent that it embody the final expression of their bargain, any other expressions—written or oral—made prior to the writing, as well as any oral expressions contemporaneous with the writing, are ____________ to vary the terms of the writing. Parol evidence can be offered to show ___________________ modifications of a written contract, such as the oral agreement between the builder and the yoga instructor, because the rule applies only to prior or contemporaneous negotiations.

inadmissible subsequent

Certain terms can be too ____________ to be _________.

indefinite; enforced

The term "F.O.B." is a delivery term under the UCC, which governs the contract here because it is a contract for the sale of goods. That term means "free on board," and it obligates the seller to get the goods to the location _________ after the term. [UCC §2-319(1)]

indicated

Avoidable damages must be subtracted; an ____ party cannot recover damages he could have _______ ("mitigated") with reasonable effort.

injured; avoided

A mere ________ about additional terms or matters is not a counteroffer.

inquiry

For false imprisonment, the plaintiff must show (i) an act or omission on the part of the defendant that confines or restrains the plaintiff to a bounded area, (ii) _________ on the part of the defendant to confine or restrain the plaintiff, and (iii) causation.

intent

Contraction modification and ______ with SOF. The _____ must be in writing, only if the contract as modified (not the _____ contract) is within SOF

interaction; modification; original

Fixtures are considered an ________ in land.

interest

HYPO 7F. What if Batman promises to assign the right to receive the $200,000 payment to Robin?

invalid -- need present transfer

The _____ gratuitous assignee prevails over earlier gratuitous _____ because a later gift assignment ____ an earlier one.

last; assignees; revokes

Impossibility as an excuse when a ____ unforeseen event makes performance impossible. UCC, article 2 this is called _________ FLORIDA: Rationale for impracticability is that unanticipated circumstances have made performance vitally different from what was anticipated, so original K cannot be thought to govern.

later impracticability

Two people make a contract; ______ one (assignor) transfer his rights to a _____ party (assignee) The party who owes the _____ (typically to pay $$ to third party) is the _____.

later; third duty; obligor

In common _____, _____ consideration is required to ______ a contract. Performing a _______ duty is not enough.

law, new; modify; preexisting

For common _____ contracts, writing must have _____ material terms and be signed by the _____.

law; all; defendant

Consideration makes the agreement that was formed ______ enforceable.

legally

An incapacitated party is _______ for necessaries (food, shelter......), but only for their _____ value, not the _____ price.

liable; reasonable; contract

Risk of _____ in a sale of goods.

loss

Acceptance is effective when ________ ("Mailbox Rule").

mailed

An offer is a _______ of an _________ to be __________ (as judged by a ___________/objective standard).

manifestation; intention; bound; reasonable person

Vesting occurs when: (1) the TPB brings suit on the contract; (2) the TPB changes his position in justifiable reliance on the contract; (3) the TPB ___________ his assent to the contract; or (4) there is an express contract term for such vesting.

manifests

Signature Requirement MSIAS UCC: PIL

mark or symbol intention to authenticate writing as that of signer party's initial or letterhead

Contracts in consideration of _____ are subject to SOF, but not a ______ to marry.

marriage; promise

Other party's breach ___ provide an excuse depending on the nature of the contract.

may

Satisfaction is ________ by a reasonable person standard unless the contract deals with _____ or matters of ______ taste.

measured; art; personal

For an implied warranty of merchantability, the seller must be a _______ who deals in goods of the _______.

merchant; kind

In a sale of goods, if a ________ promises in a signed writing to keep an _____ open, then the offer is irrevocable.

merchant; offer

An implied warranty of __________ in sales of goods cases means the goods are _____ for their _____ purpose.

merchantability; fit; ordinary foreseeable

Counteroffer operates as a rejection, but ________ bargaining does not.

mere

FLORIDA NOTE In Florida, marriage of a ________ removes incapacity defense notwithstanding the _______ death of the spouse or _______ of the marriage.

minor; subsequent; dissolution She will lose the capacity defense.

UCC Article 2 does not have a ________ image rule. The offeree's _________ or changing a __________ does not _________ acceptance.

mirror; adding; term; prevent Just need a seasonable acceptance.

Watch out for sale of land _________ price v sale of ________.

missing; car

Stuff happens after contract = _______________analysis, not PER - i.e. is there new ____________.

modification; consideration

A later agreement excusing original obligations including recession, _____, accord/satisfaction, ______.

modification; novation

UCC Battle of Forms: A material alteration is any change to the offer that affects M L R

money, liability or remedy for breach of contract.

State of Frauds is the ___ commonly tested topic

most

What are goods?

moveable, tangible personal property ex: cars, watches, laptops

Rescission is a _____ agreement to cancel the contract.

mutual

Another defense is _____ mistake about a material fact.

mutual *sherwood v walker: sale of cow Rose 2nd both thought barren cow, but she was pregnant and buyer was excited. court said no contract and seller could rescind

Defense of lack of mutual assent may be based upon M L M F

mutual mistake latent ambiguities misrepresentation or fraud

Exception to incapacity defense is that an incapacitated party is liable for ______.

necessaries (i.e. food, shelter, clothing or medical care)

Enforceable contract, requires offer acceptance consideration __________

no defenses

HYPO 7G. Must Robin give Batman consideration to make the assignment valid?

no, consideration not required

Consideration is _____ required to make a valid assignment

not

If seller does ____ resell in good faith or does not resell at all, contract prices minus market price.

not

If the term is customary in the industry, it's _____ material.

not

Death does _____ automatically terminate a ______, nor an irrevocable ______.

not; contract; offer

An irrevocable offer does _____ have mailbox ______.

not; protection

If a defendant admits under ____ that she had a deal, then she will lose her SOF defense. The judicial admission exceptions satisfies SOF.

oath

An _______ can be revoked any time before acceptance.

offer

Exceptions to Mailbox Acceptance Rule is when _______ states otherwise.

offer

An offer can be revoked if: 1. option 2. firm _______ 3. foreseeable ________ before ____________ v after __________ 4. ______ to perform a __________ contract

offer release; acceptance; acceptance starting; unilateral

Look for 3 magic words - "_____________________"; or a _________ offer. Otherwise, assume it's bilateral.

offer....only by; reward

Language of the ______ controls the manner of ___________.

offer; acceptance

An _____ terminates when the ________ rejects it (an ____________ response).

offer; offeree; inappropriate

Mailbox rule protects _______ against revocation once she has _______ the acceptance.

offeree; mailed

An offer terminates with the _______ revokes the offer.

offeror

Indirect revocation is when the __________ engages in _______ that indicates she's ______ her mind and the _________ is aware of the conduct.

offeror; conduct; changed; offeree *offeree not have awareness - it's not effective

Direct revocation is when the ___________ indicates directly to the offer that he has changed his mind about _______ the deal.

offeror; entering

Leases of _____ year or less are an exception to SOF.

one *legislative exception to protect tenants

HYPO 5F John borrows $500 from Gabrielle and promises to repay her with interest. Later, Gabrielle agrees to discharge the debt now if John promises to do her yard work for a year. John makes the promise. What are Gabrielle's rights if John does not do the yard work as promised?

only sue on modified contract

Offer is _______ as to the method of acceptance for a bilateral contract.

open

Reliance damages are based upon the nonbreaching party's costs, including _______ costs, and are designed to put the nonbreaching party in the position he would have been in if the contract had not been formed.

opportunity

Noncompliance with SOF renders the contract unenforceable at the OPC_____________ (i.e. the party charged may raise the lack of a sufficient writing as an affirmative defense). If the Statute is not raised as a defense, it is waived.

option of the party to be charged

An _________ is a promise to ________ the offer open that is ________ for.

option; keep; paid

Mailbox Rule does not apply to _________ for acceptance.

options

Most ___ contracts are enforceable.

oral

Parol evidence can be _______ or written.

oral

If goods are specially made for a buyer and not suitable for sale to others in _____ course of business, contract is enforceable if seller has under circumstances that reasonably indicate that the goods are for the buyer, made substantial beginnings in their manufacture or commitments for their purchase before notice of _____ is received -- be enforceable without a writing under the UCC.

ordinary repudiation

An ____ who entrusts goods to a ____ who deals in goods of the kind (i.e. a dealer) has no rights against a ____ fide purchaser (BFP)

owner; merchant; bona

As to later events, the ______ evidence rules is ___________.

parol; irrelevant

If you see a _________ or complete integration in answer, it's probably ______.

partial; wrong

An implied warranty of fitness for a ______ purpose means the _______ are ______ for buyer's particular ________. Seller knows ______ has a special _______ and is ___________ on seller to select _________ goods. Seller does not have to be any kind of ______ at all.

particular; goods; fit; purpose buyer; purpose; relying; suitable merchant

An offeree's addition or changing a term is only included if: both _______ are merchants it is not a ________ change; and no _________ to it within a reasonable time

parties material objection *this term would become part of the deal

Promisor has liability to the third-________ beneficiary.

party

Third-party problems include : Entrustment Third-______ beneficiary Assignment of _______ to a Third Party Delegation of Duties to a ______ Party

party Rights Third

Common law, injured ____ can recover damages for ___ breach of contract, whether breach material or not.

party; any

Even if deadline passed, if there are ___ deals between Seller & Buyer in which Buyer didn't insist on ______.

past; perfection

EXAMPLE: Calandrillo ___ Eddie Vedder $25,000 to sing for Chryssa on her birthday.

pays

Two _____ enter a contract intending to _____ a third party, this creates a third party _______.

people; benefit; beneficiary

Performance does not have to be ______. Substantial _____ its all that is required [i.e., a party cannot commit a ____ breach.]

perfect; performance; material

Perfect Tender Rules - Seller must deliver ____ goods in the ____ place at the right _____.

perfect; right; time