Contracts II - Final Exam - Defenses to Enforceability

A contractor submitted a bid proposal to renovate an office building for a company. The contractor calculated the cost to perform each aspect of the job and then summed each entry to arrive at its total bid. However, the contractor accidentally omitted one of the entries in its summation. The contractor therefore submitted a bid proposal for a lower amount than it had intended. The company accepted the contractor's bid. The contractor then realized its mistake and sought to void the contract. Which of the following facts, if true, would NOT help the contractor in seeking to void the contract? AThe contractor had exercised due care in the preparation of the bid proposal. BThe contractor's bid was significantly lower than all the other bids on the project. CThe contractor would lose a significant amount of money if forced to renovate the office building at the accepted bid amount. DThe company saw each entry in the bid proposal and realized that the entries did not sum to the total bid amount.

Answer option A is correct. A mistake is a belief not in accordance with the facts existing at the time of the contract. Restatement (Second) of Contracts § 151 (1981). A unilateral mistake occurs when only one of the parties has a mistaken belief. There are four elements for a unilateral mistake. First, the mistake must concern a basic assumption on which the contract was made. Second, the mistake must have a material effect on the agreed-upon exchange of performances. Third, the adversely affected party must not bear the risk of the mistake and must also have been the mistaken party. Fourth, the mistake must cause unconscionability, the other party must know of the mistake, or the other party's fault must cause the mistake. Id. at § 153 (1981).

A man had an old car that no longer ran. He sought to sell the car for its scrap value of $500. A friend met the man to inspect the car. The friend asked the man why the car no longer ran. The man responded that he had no idea and did not care. The friend opened the hood of the car and saw that two wires were disconnected. The friend believed that the car could be fixed by simply connecting the two wires. The car would have a value of $3,000 if it ran. The friend agreed to purchase the car for $500. After the friend had towed the car back to his house, he connected the wires and was surprised to see that the car still did not run. The friend later learned that the car had numerous mechanical problems and was unrepairable. The friend sued the man, seeking to void the sale on the grounds of mistake. Is the friend likely to succeed? ANo, because he was not adversely affected by the mistake. BNo, because the friend bore the risk of mistake because he inspected the car. CYes, because the friend's mistake was reasonable under the circumstances. DYes, because the man bore the risk of mistake because he was consciously ignorant of why the car was not working.

Answer option A is correct. A mistake is a belief not in accordance with the facts existing at the time of the contract. Restatement (Second) of Contracts § 151 (1981). A unilateral mistake occurs when only one of the parties has a mistaken belief. There are four elements for a unilateral mistake. First, the mistake must concern a basic assumption on which the contract was made. Second, the mistake must have a material effect on the agreed-upon exchange of performances. Third, the adversely affected party must not bear the risk of the mistake and must also have been the mistaken party. Fourth, the mistake must cause unconscionability, the other party must know of the mistake, or the other party's fault must cause the mistake. Id. at § 153 (1981). Here, the friend cannot void the contract because he was not adversely affected by his mistake. He paid $500, the scrap value of the car, and obtained exactly what he paid for: a nonfunctioning car. The friend hoped that he would be able to easily fix the car, but failure to reap a windfall is not the same as being adversely affected. The friend will not be able to void the contract.

A man and a woman orally agreed to marry each other in two years. After six months, the woman changed her mind and told the man that she no longer intended to honor the contract. Under the Statute of Frauds, is the contract enforceable? ANo, because it could not be completed in under a year. BNo, because it is a contract made in anticipation of marriage. CYes, because the couple could have married within a year. DYes, because the contract is only for a mutual promise to marry without additional consideration.

Answer option A is correct. The Statute of Frauds forbids the enforcement of a contract unless it is set down in a signed writing. There are six classes of contracts that fall within the Statute of Frauds: (1) marriage contracts, (2) contracts that cannot be performed within one year, (3) land contracts, (4) executor-administrator contracts, (5) sale of goods contracts for $500 or more, and (6) suretyship contracts. Restatement (Second) of Contracts § 110 (1981). Here, the terms of the contract themselves call for the marriage to occur after two years. Therefore, the contract cannot be performed within one year. It falls within the Statute of Frauds and is not enforceable without a writing. Answer option B is incorrect because the contract is only for a mutual promise to marry, without additional consideration. It thus falls into an exception to the Statute of Frauds for promises made in anticipation of marriage. Id. at § 124. Answer option C is incorrect because the contract, by its terms, could not be performed within a year. Although the couple could marry within a year, the contract itself was for the couple to marry in two years. Answer option D is incorrect because a contract will be subject to the Statute of Frauds if it falls into any of the six categories, even if it falls into an exception or exemption from another class. Here, because the contract falls into the class of contracts that cannot be performed within one year, it is subject to the Statute of Frauds and unenforceable, even though it falls into this exception for marriage contracts.

A tenant was broke and needed money to pay her rent. The tenant recalled that one of her neighbor's had admired a painting she owned. The tenant asked the neighbor if he would be interested in buying the painting. The painting was worth $10,000, but the neighbor offered her only $2,000, saying, "take it or leave it." The tenant was so desperate that she accepted his offer. The tenant and the neighbor agreed that the neighbor would bring the tenant a check the next day, at which time she would give him the painting. There was no written agreement. The next day, the tenant had second thoughts and refused to sell the painting to the neighbor. The neighbor sued the tenant to force the tenant to sell the painting, but the court refused to force the tenant to go forward with the sale. Which of the following states the most likely ground(s) for the court's refusal to enforce the sale contract? AOnly the statute of frauds. B Only the statute of frauds and duress. C Only the statute of frauds and inadequate consideration. DThe statute of frauds, duress, and inadequate consideration.

Answer option A is correct. The most likely reason that the court refused to enforce this contract is because this agreement was required to be in a signed writing under the statute of frauds. The statute of frauds generally requires that the following types of contracts to be in a writing signed by the person against whom enforcement is sought: (1) contracts made upon the consideration of marriage; (2) contracts that cannot be fully performed within one year; (3) contracts that transfer an interest in land; (4) contracts in which the executor or administrator of a decedent's estate agrees to answer for an obligation of the decedent; (5) contracts for the sale of goods for $500 or more; and (6) suretyship contracts, in which the promisor agrees to answer for the duty of another person. Here, this contract was for the sale of a painting for $2,000. Because this contract was for a sale of goods for $500 or more, it was subject to the statute of frauds. Therefore, this sale contract needed to be in writing to be enforceable. Relying on the statute of frauds, a court would likely refuse to enforce the contract because there was no signed writing to memorialize the agreement.

The owner of a commercial building leased the building to a law firm for a five-year term. The parties agreed that the agreement was covered by the statute of frauds. In addition to being memorialized in writing, what further action does the statute of frauds require in order for the rental contract to be enforceable? AThat the contract be signed by the parties to be charged. BThat the contract be witnessed by at least one impartial witness. CThat the contract be notarized. DThat the contract be dated.

Answer option A is correct. Under the statute of frauds, particular types of contracts are unenforceable unless the terms are set forth in a writing signed by the party to be charged. See U.C.C. § 2-201 (2002); Restatement (Second) of Contracts §§ 110, 132, with comments. Put simply, the party to be charged is the party against whom enforcement is sought. A signature might include not only a typical handwritten signature, but also any other mark placed on the writing that (1) identifies the signer and (2) manifests intent to adopt or authenticate the writing. See 72 Am. Jur. 2d Statute ofFrauds § 257, Westlaw (database updated Aug. 2019); U.C.C. § 2-201 cmt. 1 (2002). Therefore, here, the statute of frauds requires that the contract be signed by the parties being charged in order to be enforceable. Answer options B, C, and D are incorrect because each misstates a requirement for the enforcement of a contract covered by the statute of frauds.

A landowner contracted to sell a plot of land to a buyer for $50,000. After agreeing to the sale, the landowner discovered a mineral deposit on the land, driving the worth of the land up to $500,000. The contract did not indicate that either party would bear the risk of a mistake as to the value of the land or as to the absence or presence of any mineral deposits on the land. The landowner now refuses to sell the land as agreed, and the buyer has sued for specific performance of the contract. Which of the following facts, if true, would be most helpful to the landowner in resisting the sale? AUnbeknownst to the buyer at the time of contract, the landowner was suffering severe financial difficulties. BUnbeknownst to the landowner at the time of contract, the buyer had recently discovered a mineral deposit of the same kind, just across the boundary line on adjacent land. CPrior to the parties' contract, the landowner had done extensive excavation work on the land and had never before found any indication of a mineral deposit. DPrior to the parties' contract, the buyer had misrepresented the status of the bank loan that the buyer intended to use to pay for the land.

Answer option B is correct. A mistake is a belief not in accordance with the facts existing at the time of the contract. See Restatement (Second) of Contracts § 151 (1981). If a mutual mistake regarding a basic assumption of the contract is made, then the adversely affected party may avoid performing the contract as long as the mistake had a material effect on the exchange and the party seeking to avoid performance did not bear the risk of the mistake. See id. §152(1). Here, the value of the land was a basic assumption of the contract and the mistake will have a material effect on the exchange. However it is uncertain whether a court would place the risk of the mistake on the landowner. In the absence of an allocation of risk by the parties, the court will look to what is reasonable under the circumstances, and if both parties were mistaken, a court in this case might determine that the landowner was in a better position than the buyer to know about underground mineral deposits. None of the incorrect answer options (A, C, or D) undermines this line of reasoning in which the landowner had the upper hand over the buyer in discovering the truth about the mineral deposits, and therefore should bear the risk. However, the correct option B suggests that the buyer might have already known about a mineral deposit on the land, in which case this would be a case of unilateral mistake rather than mutual mistake.

A large computer store changed its logo. The computer store orally contracted with a printing company to create new business cards, stationery, laptop bags, and other items with the new logo, at a cost of $10,000. After the printing company had accepted the payment, but before beginning any preparation or work on the job, the computer store called the printing company and said that it was cancelling the contract. If the printing company sues the computer store, is a court likely to enforce the oral contract despite the Statute of Frauds? AYes, because the contract was for the sale of specially manufactured goods. BYes, because the printing company had accepted payment. CNo, because the printing company had not yet made a substantial beginning in manufacturing the goods. DNo, because the computer store had not yet received any goods.

Answer option B is correct. The Statute of Frauds forbids the enforcement of a contract unless it is set down in a signed writing. There are six classes of contracts that fall within the Statute of Frauds: (1) marriage contracts, (2) contracts that cannot be performed within one year, (3) land contracts, (4) executor-administrator contracts, (5) sale of goods contracts for $500 or more, and (6) suretyship contracts. Restatement (Second) of Contracts § 110 (1981). For contracts for the sale of goods for $500 or more, there are three exceptions that allow a contract to be enforceable without a signed writing: (1) the goods are specially manufactured goods, but only if the seller has already made a substantial beginning in manufacturing the goods or made a commitment to procure the goods by the time the buyer's repudiation is received; (2) the non-injured party admits in court that the contract was made, and (3) payment has already been made and accepted, or the goods have already been received and accepted. Uniform Commercial Code § 2-201 (3).

A woman agreed to sell a parcel of land to a man. The woman and the man both believed that the woman had good title to the land, but neither of them knew for certain. Neither party ran a title check to verify the woman's good title. The contract for the sale of the land stated that the woman was conveying all the title that she had to the land, but the contract made no explicit representation that the woman's title was good. The woman's title to the land was in fact defective due to a lien on the property of which neither party knew. If the man sues to void the contract for the sale of land, is he likely to succeed? AYes, because the court will allocate the risk of mistake to the seller of the property. BYes, because both the parties mistakenly believed that the woman had good title to the land. CNo, because the contract allocates the risk of mistake to the man by making no guarantees about the soundness of the woman's title to the land. DNo, because only mistaken beliefs of fact, not mistaken beliefs of law or legal consequences, will void a contract on the grounds of mistake.

Answer option C is correct. A party bears the risk of mistake of fact when (1) the parties agreed in the contract to allocate the risk to that party, (2) a court allocates the risk to that party because the risk is reasonable under the circumstances, or (3) the party was consciously ignorant of the relevant facts. Restatement (Second) of Contracts § 154 (1981). A contractual provision that agrees to allocate the risk to a certain party does not need to explicitly state that one party bears the risk of mistake. Such a conclusion may be inferred from the language of the contract.

A man paid a company to construct a large apartment complex on his property. The company contracted with a subcontractor to install appliances in the building. After one year of construction, when the apartment complex was mostly completed, the company started experiencing financial difficulties. The subcontractor, afraid that the company would not be able to pay for the appliances, asked the man to guarantee payment in the event that the company was unable to pay. The man was concerned that the apartment complex would not open in time if the appliances were not delivered and installed as scheduled, which would cause him significant financial loss. The man orally promised the subcontractor that he would pay for the appliances if the company defaulted on its obligation to pay for them. The subcontractor delivered and installed the appliances. The company declared bankruptcy and did not fully pay the subcontractor. What rationale best explains why the man's promise to pay the subcontractor is enforceable, despite the Statute of Frauds? AAlthough the apartment complex took over a year to complete, it was not impossible to complete construction in under a year. BThe appliances were already received and accepted. CThe man would have suffered significant financial loss had the appliances not been delivered and installed as scheduled. DThe subcontractor incurred a detriment by making significant improvements to the land by installing the appliances.

Answer option C is correct. The Statute of Frauds forbids the enforcement of a contract unless it is set down in a signed writing. There are six classes of contracts that fall within the Statute of Frauds: (1) marriage contracts, (2) contracts that cannot be performed within one year, (3) land contracts, (4) executor-administrator contracts, (5) sale of goods contracts for $500 or more, and (6) suretyship contracts. Restatement (Second) of Contracts § 110 (1981).

A homeowner put her home up for sale. A buyer went to look at the home. The homeowner told the buyer in good faith, "I truly believe that home values in this area are going to go through the roof in the next couple of years." Relying on this statement, the buyer entered into a contract to purchase the home. Before the closing, the buyer learned that professional forecasts of real estate appreciation in the neighborhood were low. The buyer refused to close on the deal. Under which of the following circumstances would the homeowner's opinion be most likely to support a misrepresentation defense to enforcement of the contract? AThe homeowner and the buyer knew each other previously. BThe homeowner was a real estate agent, regardless of whether the buyer knew it. CThe homeowner was an urban planner in the city, and the buyer knew it. DThe homeowner was very gullible.

Answer option C is correct. The defense of misrepresentation requires that the defendant justifiably relied on the other party's untrue factual assertion that induced the defendant's assent to the contract, and reliance on the other party's mere opinion is generally not justified. However, there are three situations in which reliance on the other party's opinion regarding a material fact may be justified: (1) where the party has a relationship of trust and confidence with the other party, such that it is reasonable to rely on the other party's opinion; (2) where the party reasonably believes that the other party has special skill, judgment, or objectivity regarding the subject matter; or (3) where the party is particularly susceptible to the misrepresentation, due to reasons such as illiteracy or unusual gullibility. If the homeowner was an urban planner, that might give her the special skill, judgment, or objectivity that would make the buyer's reliance on her opinion justified. This would also be true if the homeowner was a real estate agent, provided that the buyer knew of such expertise. Answer option B is incorrect because it states that the homeowner's occupation as a real estate agent would support the buyer's misrepresentation defense "regardless of whether the buyer knew" that the homeowner was a real estate agent. In fact, the buyer's knowledge of the homeowner's profession would be critical to making the buyer's reliance justified. Answer option A presents a circumstance that is less likely to support a misrepresentation defense, because the parties knowing each other falls short of the buyer having a "relationship of trust and confidence" with the homeowner. Answer option D is incorrect because the exception for susceptibility based on, for example, unusual gullibility, applies to the person relying on the opinion, not the person offering the opinion. Therefore, the homeowner's gullibility is irrelevant.

A woman contracted to sell her ring to a coworker for $300. Both parties believed that the ring had a cubic zirconia stone and was worth $300. The parties agreed that the woman would bear the risk of any mistake regarding the worth of the ring. In reality, the stone in the ring was a diamond, and the ring was worth $2,000. Upon learning of this mistake, the woman refused to sell the ring to the coworker for $300. If the coworker sues to enforce the contract, is she likely to prevail? ANo, because the woman was unaware of the actual worth of the ring. BNo, because the woman would be unduly burdened by selling the ring for only $300. CYes, because the woman agreed to bear the risk of a mistake regarding the worth of the ring. DYes, because both parties believed the ring was only worth $300.

Answer option C is correct. The woman agreed to bear the risk of a mistake regarding the worth of the ring. Remember that a party may bear the risk of a mistake based on allocation by party agreement, allocation by the court, or the party's conscious ignorance of the truth. See Restatement (Second) of Contracts § 154 (1981). Here, as noted, the contract stipulated that the woman bore the risk of a mistake regarding the worth of the ring. Answer option A is incorrect because although the woman was unaware of the actual worth of the ring, she will not be able to avoid performance, because she agreed to bear the risk of this mistake. Answer option B is incorrect because the resulting imbalance in the contract's favorability to the coworker will not override the terms of the contract, which the parties agreed included a term placing the risk of a mistaken valuation on the woman. Note that the difference between $300 and $2,000 is likely not great enough to raise a defense of unconscionability. Answer option D is incorrect because although both parties were mistaken regarding the actual worth of the ring, the woman agreed to bear the risk of this mistake.

A lawyer husband drafted a separation agreement that provided that the wife would receive no spousal or child support and would relinquish any claim to their joint marital and personal property. The wife, an immigrant who was not literate in English, was suffering from severe postpartum depression in connection with the birth of their three-week-old baby. The husband directed the wife to sign the agreement, telling her that if she did not, he would report her depression to social services, which would immediately take custody of the baby. The wife, believing the husband, signed the agreement. Which of the following considerations is dispositive of whether the wife may disaffirm the separation agreement on the ground of duress? AWhether the husband's threat was genuine. BWhether the husband's threat was capable of execution. CWhether a reasonable person would have signed the agreement. DWhether the wife had a reasonable alternative to signing the agreement.

Answer option D is correct. A party may disaffirm a contract on the ground of duress, if the party's assent to the contract was induced by an improper threat that left the party no reasonable alternative but to assent. SeeRestatement (Second) of Contracts §175, with comments. For duress to apply, the threatened party must have no reasonable alternative but to assent. This generally means that the party subjectively believed that the threat, if carried out, would subject the threatened party to irreparable harm. See 28 Williston on Contracts § 71:14 (4th ed.). Therefore, whether the wife had a reasonable alternative to signing the agreement is dispositive of whether the wife may disaffirm the agreement on the ground of duress. Answer option A is incorrect because whether an improper threat is genuine is not dispositive of whether a party's assent to a contract was induced by duress. See Restatement (Second) of Contracts §175, with comments. Therefore, whether the husband's threat was genuine is not dispositive of whether the wife may disaffirm the agreement on the ground of duress. Answer option B is incorrect because whether an improper threat is capable of execution is not dispositive of whether a party's assent to a contract was induced by duress. See id. Therefore, whether the husband's threat was capable of execution is not dispositive of whether the wife may disaffirm the agreement on the ground of duress. Answer option C is incorrect because the test for whether an improper threat induced a party's assent is a subjective one. Threats that may be sufficient to induce one person's assent may be insufficient to induce another person's assent. Therefore, a court must consider all of the attendant facts and circumstances regarding a party and the party's assent in determining whether the improper threat induced the party's assent. See id. Whether a reasonable person would have signed the agreement is not dispositive of whether the wife may disaffirm the agreement on the ground of duress.

A father promised his son that if the son married the daughter of a politician within 18 months, the father would assume responsibility for the son's student loans. The father was primarily motivated to make this promise by a tax deduction that he thought would be available to him if he paid the son's student loans, although he was also glad to help his son and hoped the son would marry the politician's daughter. The son agreed because he already planned to propose to the politician's daughter, but the father and son never signed a written contract. Fourteen months later, the son married the politician's daughter. The father refused to make any payments on the son's loans, however, because the father had learned that he would not in fact qualify for any tax deductions. Is the father's oral promise to pay off the son's student loans enforceable? AYes, because the main purpose doctrine provides an exception to the statute of frauds for surety contracts. BYes, because the contract could have been, although it was not, fully performed within one year. CNo, because the contract allowed for performance extending beyond one year. DNo, because a contract made in consideration of marriage must be in writing.

Answer option D is correct. If a contract falls within two or more classes of contracts that are subject to the statute of frauds, the contract must be in a signed writing to be enforceable if there is at least one class for which the circumstances do not exempt the contract from the statute. This contract falls within two classes of contracts subject to the statute of frauds: surety contracts and contracts made in consideration of marriage. The contract is a surety contract because the father promised to pay his son's debt. However, because the father made the promise primarily for his own economic advantage, thinking he would be entitled to a tax deduction, the main purpose doctrine exempts this particular surety contract from the statute of frauds requirements. Nevertheless, answer option A is incorrect because the parties' agreement was also a contract mad in consideration of marriage, and there is no relevant exception applicable to the facts. Contracts made in consideration of marriage must be in a signed writing unless they consist only of mutual promises to marry, which is not the case here. Accordingly, there had to be a signed writing in order to enforce the contract against the father. Similarly, answer option B is incorrect because, while it is true that this contract could have been performed within one year, and therefore would not be part of the class of contracts that fall within the statute of frauds by virtue of being impossible to perform within a year, again, this contract must be in writing in order to be binding since it is a marriage contract. Answer option C suggests that the contract was one that could not be performed within one year because it allowed for performance beyond one year. This mischaracterizes the class of contracts that fall within the statute of frauds by virtue of being impossible to perform within a year. Such performance must be truly impossible for the contract to be properly categorized in this class. If there is any possibility of performance within a year, then the contract is not subject to the statute of frauds as part of this class (although it may be subject to the statute of frauds as part of another class). Here, it would be possible for the son to marry the politician's daughter and for the father to pay off the son's student loans within a year. Thus, the reason presented in answer option C would not prevent enforcement of the contract, making it incorrect.

An animal rescue center had a litter of puppies it was trying to place. A dog lover agreed to adopt two of the puppies and paid, in advance, for the puppies' first medical examinations and vaccines. The parties agreed that after the puppies' examinations and vaccines, when they reached six weeks old, the puppies would go home with the buyer. When the center's veterinarian examined the puppies, she determined that the puppies were not mutts, but were Swedish Vallhunds, a rare, expensive dog breed worth approximately $2,500 per puppy. The center sought to void the agreement with the dog lover so it could try to sell the puppies to a pet store. The dog lover refused. If a court were to adjudicate the dispute, which of the following is the most likely outcome? AA court would find that there was no contract because there was no meeting of the minds. BA court would void the contract on the ground of unilateral mistake. CA court would void the contract on the ground of mutual mistake. DA court would enforce the contract.

Answer option D is correct. In contract law, a mistake is a belief that is not in accordance with the facts and law as they exist at the time of contracting. The term mistake does not refer to an exercise of poor judgment or to a prediction of future events. A mistake may be mutual or unilateral. See Restatement (Second) of Contracts §§ 151-52, with comments. A mistake must relate to a basic assumption on which the contract was made. See id. at §152. Basic assumptions generally do not include assumptions regarding the value of any consideration exchanged, market conditions, and the like, because a vital purpose of making a contract is to account for volatility and uncertainty in these things. See 30 Williston on Contracts § 77:52 (4th ed.); Restatement (Second) of Contracts §§ 151-52, 261-62, with comments. Here, because the puppies' value was not a basic assumption of the parties' agreement, the center cannot avoid performance. See Wood v. Boynton, 25 N.W. 42 (Wis. 1885).

A 16-year-old planned to throw a party while his parents were out of town. He texted a 23-year-old friend and asked the friend to purchase liquor for him. At first the friend declined, knowing that it is unlawful for a person to supply alcohol to a minor. The 16-year-old texted back, "I will transfer $500 into your online bank if you purchase the alcohol," and the 23-year-old then agreed by text. The 16-year-old transferred $500 into the 23-year-old's account, but the 23-year-old did not purchase the liquor. Can the 16-year-old enforce the contract? AYes, because the contract was only voidable by the 16-year-old. BYes, because the text messages satisfy the statute of frauds. CNo, because the 16-year-old lacked capacity to enter into a contract. DNo, because the contract was illegal.

Answer option D is correct. The 16-year-old cannot enforce the contract because the contract is illegal. The contract is illegal because its subject was the furnishing of alcohol to a minor, which is unlawful. Answer option A is incorrect because this contract is void for illegality, regardless of whether it might also be voidable by the minor due to his incapacity. Note that either party can raise the defense of illegality. Answer option B is incorrect because even if the texts sufficed as a "writing" in satisfaction of the statute of frauds, putting an illegal contract in writing does not make it enforceable. Answer option C is incorrect because while a valid contract cannot be enforced against a person suffering a legal incapacity, the person with the incapacity can enforce the contract against the other party—assuming that the contract is valid, which it is not in this case.

A man orally agreed to sell his car to a woman for $5,000. Under the terms of the agreement, the woman would make a down payment of $1,000, and then monthly payments of $200 for 20 months. The parties agreed that the woman could make larger monthly payments to pay off the debt on the car earlier if she wanted to. The woman took immediate possession of the car under the terms of the contract. After the woman took possession of the car, she made significant improvements to it, repainting it and repairing several dents in the body. Does the contract for the sale of the car fall within the Statute of Frauds? AYes, because it is a contract for the sale of goods for $500 or more. BYes, because the contract is for more than one year. CNo, because the woman made significant repairs to the car. DNo, because the woman already took possession of the car.

Answer option D is correct. The Statute of Frauds forbids the enforcement of a contract unless it is set down in a signed writing. There are six classes of contracts that fall within the Statute of Frauds: (1) marriage contracts, (2) contracts that cannot be performed within one year, (3) land contracts, (4) executor-administrator contracts, (5) sale of goods contracts for $500 or more, and (6) suretyship contracts. Restatement (Second) of Contracts § 110 (1981). For contracts for the sale of goods for $500 or more, there are three exceptions that allow a contract to be enforceable without a signed writing: (1) the goods are specially manufactured goods, (2) the non-injured party admits in court that the contract was made, and (3) payment already has been made and accepted, or the goods have already been received and accepted. Uniform Commercial Code § 2-201 (3).

A woman owned a plot of fallow farmland. She entered into an oral agreement with a farmer on the following terms: the farmer would immediately take possession of the land and start farming it. The farmer would pay 25 percent of his earnings from the sale of his crops to the woman until he had paid enough to pay off the purchase price, at which point he would own the land. The parties anticipated that it would take three years of harvests for the farmer to earn enough to pay for the property. The farmer moved onto the land and immediately installed an irrigation system and built a farmhouse. After six months, the farmer told the woman that the farmland was not nearly as fertile as he had hoped and that therefore he did not want to continue with the agreement to purchase the land. If the woman sues the farmer, is a court likely to enforce the oral contract, despite the Statute of Frauds? AYes, because the farmer already took possession of the property. BYes, because the farmer made significant improvements to the property. CNo, because it is for a contract with a duration of over one year. DNo, because it is a contract for land and no relevant exception applies.

Answer option D is correct. The Statute of Frauds forbids the enforcement of a contract unless it is set down in a signed writing. There are six classes of contracts that fall within the Statute of Frauds: (1) marriage contracts, (2) contracts that cannot be performed within one year, (3) land contracts, (4) executor-administrator contracts, (5) sale of goods contracts for $500 or more, and (6) suretyship contracts. Restatement (Second) of Contracts § 110 (1981). For land contracts, an exception exists if the injured party has incurred a detriment by making significant repairs or improvements to the land. Id. at § 129.

An accountant placed an order with a silkscreen printer for 200 computer bags to be printed with the accountant's firm name and logo, at a cost of $2,000. The printer gave the accountant an invoice for future payment. Neither party signed the invoice. A week later, when the printer had already completed 90 computer bags, the printer sent a sample bag to the accountant. The accountant called the printer and said, "I know we had an agreement, but please cancel the order." If the printer sues the accountant for payment, which of the following facts will likely be dispositive? AThe accountant received and accepted the sample. BThe agreement was memorialized in a writing. CThe accountant admitted that they had an agreement. DThe seller completed almost half the order before the accountant canceled the order.

Answer option D is correct. The contract here is subject to the statute of frauds, because it is for the sale of goods for $500 or more. The statute of frauds requires such contracts to be evidenced by a signed writing. Here, the invoice could suffice as a "writing" that memorialized the agreement, but since the accountant did not sign the invoice, it does not satisfy the statute of frauds (making answer option B incorrect). However, there is an exception to the statute of frauds for the sale of specially manufactured goods that are not suitable for sale to others in the ordinary course of the seller's business, where the seller has already made a substantial beginning in manufacturing the goods at the time the seller receives the buyer's notice of repudiation. UCC § 2-201(3)(a). Here, the printer completed close to half the accountant's order of customized computer bags before the accountant canceled the order. This fact, since it is directly relevant to a recognized exception to the statute of frauds, would likely be dispositive. A second exception to the statute of frauds exists where the party against whom enforcement is sought admits in court to making the contract. UCC § 2-201(3)(b). Here, however, the accountant's admission was not made in court, and therefore it is unlikely to be dispositive, making answer option C incorrect. Answer option A is incorrect because it does not offer a fact that would support a recognized exception to the statute of frauds for a contract for the sale of goods over $500. While the Uniform Commercial Code (UCC) § 2-201(3)(c) presents an exception to the statute of frauds where the goods are received and accepted by the buyer, a single sample is not likely to suffice.

A woman went to an antiques store to purchase an antique clock. The woman discussed purchasing a particular clock with the proprietor of the store. The proprietor praised the clock as a "unique, priceless antique" that would "tell time until the end of time." In reality, the clock was a reasonably well-crafted antique clock that was not exceptionally valuable or rare. The woman decided to purchase the clock. Shortly before coming into the store, the woman had taken a new prescription medication that had substantially impaired her ability to act reasonably in relation to the transaction. However, the woman's impairment was not obvious, and the proprietor had no reason to suspect that the woman was intoxicated. If the woman later tries to prevent enforcement of the contract on the grounds of misrepresentation and lack of capacity, on which grounds, if any, is she likely to succeed? ABoth misrepresentation and lack of capacity. BOnly misrepresentation. COnly lack of capacity. DNeither lack of capacity nor misrepresentation.

Answer option D is correct. The defense of lack of capacity may be asserted by a party who lacks capacity at the time the contract is formed. The lack of capacity may be based on infancy, mental illness or defect, or intoxication. Restatement (Second) of Contracts § 14, 15, 16 (1981).

A woman went to an art gallery looking to purchase a painting. When the woman expressed interest in a particular painting, the gallery owner told her that the painting was an excellent choice. The gallery owner described the artist as a "brilliant, emerging talent" whose fame would soon increase. The gallery owner stated that the painting was a "steal" at its listed price of $2,000 and that he personally believed the painting to be worth at least $3,000. Relying on the gallery owner's assertions, the woman purchased the painting for $2,000, without signing any written contract. Later, when the woman took the painting to be appraised for insurance purposes, she was told that it was valued at only $500. If the woman seeks to avoid enforcement of the contract, what is her best argument? AInadequacy of consideration. BUnconscionability. CThe contract did not satisfy the statute of frauds. DMisrepresentation.

Answer option D is correct. The defense of misrepresentation may be asserted by a party whose assent was induced by a misrepresentation, or untrue assertion, that was either fraudulent or material, as long as the party's reliance on the assertion was justified. A misrepresentation is fraudulent when intended to induce the party's assent and made by someone who knows or believes that the assertion is untrue or who is not confident that the assertion is true. A misrepresentation is material when it is likely to induce a reasonable person's assent, or when it is known to be likely to induce the party's assent. Restatement (Second) of Contracts § 162 (1981). Generally, a party's reliance on an opinion is not justified. However, a party is justified in relying on the other party's opinion if one of three circumstances exist: (1) there is a relationship of trust and confidence between the two parties; (2) the relying party reasonably believes that the other party, on whose opinion he is relying, has special skill, judgment, or objectivity with respect to the subject matter; or (3) the party relying on the opinion is particularly susceptible to a misrepresentation of the type involved. Id. at § 169.