Contracts Practice Questions

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Seisin and Vendee, standing on Greenacre, orally agreed to its sale and purchase for $5,000, and orally marked its bounds as "that line of trees down there, the ditch that intersects them, the fence on the other side, and that street on the fourth side." In which of the following is the remedy of reformation most appropriate? (A) As later reduced to writing, the agreement by clerical mistake included two acres that are actually beyond the fence. (B) Vendee reasonably thought that two acres beyond the fence were included in the oral agreement but Seisin did not. As later reduced to writing, the agreement included the two acres. (C) Vendee reasonably thought that the price orally agreed upon was $4,500, but Seisin did not. As later reduced to writing, the agreement said $5,000. (D) Vendee reasonably thought that a dilapidated shed backed up against the fence was to be torn down and removed as part of the agreement, but Seisin did not. As later reduced to writing, the agreement said nothing about the shed.

(A) As later reduced to writing, the agreement by clerical mistake included two acres that are actually beyond the fence.

A dairy farmer hired a local company to assemble milking machines that the farmer had purchased. The written contract between the parties provides that the company would assemble and install the milking machines in the farmer's dairy barn within 30 days, in time for the arrival of additional cows, and the farmer agreed to pay the company $10,000. Three weeks into the job, the company realized that it would lose $2,500 on the job, due to a new wage agreement forced on the company by its employees' union after the contract was executed. The company approached the farmer and told him that the job could not be completed for less than $12,500. After some discussion, the farmer and the company executed an agreement obligating the farmer to pay an additional $2,500 upon completion of the job. The company completed the work on time, but the farmer now refuses to pay the additional $2,500. In a suit by the company against the farmer, which of the following would be the farmer's strongest position? (A) He has no duty to pay the company more than $10,000, because this was a contract for services and the modification was not supported by consideration. (B) The modification is voidable because the company knew that the farmer needed the machines up and running in 30 days and took advantage of his duress. (C) The company's mistake regarding the cost of providing its services is not grounds for voiding the original contract. (D) During initial contract negotiations, the company assured the farmer that the milking machines would be assembled and installed for no more than $10,000.

(A) He has no duty to pay the company more than $10,000, because this was a contract for services and the modification was not supported by consideration.

On July 18, Snowco, a shovel manufacturer, received an order for the purchase of 500 shovels from Acme, Inc., a wholesaler. Acme had mailed the purchase order on July 15. The order required shipment of the shovels no earlier than September 15 and no later than October 15. Typed conspicuously across the front of the order form was the following: "Acme, Inc. reserves the right to cancel this order at any time before September 1." Snowco's mailed response, saying, "We accept your order," was received by Acme on July 21. As of July 22, which of the following is an accurate statement as to whether a contract was formed? (A) No contract was formed because of Acme's reservation of the right to cancel. (B) No contract was formed because Acme's order was only a revocable offer. (C) A contract was formed, but prior to September 1 it was terminable at the will of either party. (D) A contract was formed, but prior to September 1 it was an option contract terminable at will of Acme.

(A) No contract was formed because of Acme's reservation of the right to cancel.

A seller's form conspicuously states on the front page, "THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED." Is that language sufficient to disclaim the implied warranty of merchantability? (A) No, because it does not use the word "merchantability." (B) No, because it is not conspicuous. (C) No, because it is disclaimed only when the implied warranty of fitness for a particular purpose is disclaimed. (D) Yes, because the disclaimer is in writing and conspicuous.

(A) No, because it does not use the word "merchantability."

A mechanic agreed in writing to make repairs to a landscaper's truck for $12,000. The mechanic properly made the repairs, but when the landscaper tendered payment, the mechanic refused to deliver the truck unless the landscaper promised to pay an additional $2,000. The customary charge for such work was $14,000. Because the landscaper needed the truck immediately to fulfill existing contractual obligations, and because no rental trucks of the same type were available, the landscaper promised in writing to pay the mechanic an additional $2,000. The mechanic then delivered the truck. Will the mechanic be able to enforce the landscaper's promise to pay the additional $2,000? (A) No, because the landscaper had no reasonable alternative but to yield to the mechanic's wrongful threat. (B) No, because the mechanic exerted undue influence over the landscaper with respect to the modification. (C) Yes, because the landscaper could have obtained possession of the truck through legal action rather than by agreeing to the increased payment. (D) Yes, because the modified contract price did not exceed a reasonable price.

(A) No, because the landscaper had no reasonable alternative but to yield to the mechanic's wrongful threat.

An innkeeper, who had no previous experience in the motel or commercial laundry business and who knew nothing about the trade usages of either business, bought a motel and signed an agreement with a laundry company for the motel's laundry services. The agreement was for a term of one year and provided for "daily service at $500 a week." From their conversations during negotiation, the laundry company owner knew that the innkeeper expected laundry services seven days a week. When the laundry company refused to pick up the motel's laundry on two successive Sundays and indicated that it would never do so, the innkeeper canceled the agreement. The laundry company sued the innkeeper for breach of contract. At trial, clear evidence was introduced to show that in the commercial laundry business "daily service" did not include service on Sundays. Is the laundry company likely to succeed in its action? (A) No, because the laundry company knew the meaning the innkeeper attached to "daily service," and therefore the innkeeper's meaning will control. (B) No, because the parties attached materially different meanings to "daily service," and therefore no contract was formed. (C) Yes, because the parol evidence rule will not permit the innkeeper to prove the meaning he attached to "daily service." (D) Yes, because trade usage will control the interpretation of "daily service."

(A) No, because the laundry company knew the meaning the innkeeper attached to "daily service," and therefore the innkeeper's meaning will control.

Becky, age 92, has only $25,000 to her name and is fearful that she will outlive her financial resources. On August 10, 2012, Becky explains her concern to her wealthy grand-nephew Logan. On that same day, by signed writing, Logan makes her this promise: "When you exhaust the 25,000 you now have, I will provide you, as a gift, any amount of money you request, up to a maximum of $50,000 per year for the remainder of your life." In September 2012, Becky's grandson Thane asks Becky for $25,000. Unable to resist, and believing that she can turn to Logan for any money she may need, Becky gives Thane the $25,000 in her bank account—all that she has in the world. Becky then contacts Logan. Explaining what she has done, she asks him for $25,000. Logan responds, "I did not make my promise to you so that you could give the money away to Thane. I'm not going to keep the promise." To what extent does the doctrine of promissory estoppel require that Logan keep his promise of August 10, 2012? (A) Not at all, because Becky did not reasonably rely on it. (B) To the extent of $25,000, because that is the extent to which Becky relied on it. (C) To the extent of $25,000, because that is less than amount he promised to pay per year. (D) Fully, because Becky believed that Logan would honor his promise.

(A) Not at all, because Becky did not reasonably rely on it.

An unsophisticated elderly patient in a hospital needed insulin immediately to treat her diabetes. The hospital forced her to sign a contract relinquishing any right to sue for physical injuries that might develop from the medicine and the price was three times as high as the price available in public drug stores. The insulin was defective causing her death. If her personal representative sues the hospital and it defends on the basis of the insulin contract relinquishment, the result is (A) The court (judge) would likely hold the contract relinquishment unconscionable. (B) The jury would likely hold the contract relinquishment unconscionable. (C) Dismissal because the estate can only prove procedural unconscionability not substantive unconscionability. (D) Dismissal because the estate can only prove substantive unconscionability not procedural unconscionability.

(A) The court (judge) would likely hold the contract relinquishment unconscionable.

A man offered to sell a piano to a female acquaintance for $400. The woman had been to the man's house and knew that he owned a Steinberg piano, so she accepted. Unbeknownst to the woman, the man also owned a Hairwin piano, and that was the piano that he intended to sell, although he was aware that the woman had only seen the Steinberg. If the woman sues the man to obtain the Steinberg, who will prevail? (A) The woman, because the man knew of the ambiguity. (B) The woman, because that was her objective intent. (C) The man, because there was a mutual mistake. (D) The man, because he subjectively intended to sell the Hairwin instead of the Steinberg.

(A) The woman, because the man knew of the ambiguity.

On July 26, a manufacturer of computer accessories received a purchase order form from a retailer who ordered 2,000 ergonomic mouse pads for delivery no later than September 1 for a total price of $10,000, as quoted in the manufacturer's current catalog. Two days later, the manufacturer faxed its own purchase order acceptance form to the retailer, who was a first-time customer. This form stated that it was an acceptance of the specified order, was signed by the manufacturer's shipping manager, and contained all of the terms of the retailer's form, but it also contained an additional printed clause stating that all disagreements under this sale are subject to arbitration by the American Arbitration Association. Assuming no further communication between the parties, which of the following is an accurate statement of the legal relationship between the manufacturer and the retailer? (A) There is an enforceable contract between the parties whose terms probably do not include the arbitration clause in the manufacturer's form. (B) There is an enforceable contract between the parties whose terms include the arbitration clause in the manufacturer's form. (C) There is no enforceable contract between the parties because the manufacturer's form constituted a rejection of the retailer's offer and a counteroffer by the manufacturer. (D) There is no enforceable contract between the parties because the manufacturer's form added an additional term that materially altered the terms of the retailer's offer.

(A) There is an enforceable contract between the parties whose terms probably do not include the arbitration clause in the manufacturer's form.

A gambler owed his uncle $9,000, which was due on January 1. On January 15, the gambler offered to pay the uncle $8,000 if he would agree to accept the amount in full satisfaction of the $9,000 debt. The uncle agreed and the gambler paid him the $8,000. If the uncle then sues the gambler for $1,000, the uncle will: (A) Win, because the gambler had an obligation to pay $9,000 on January 1. (B) Lose, because of the uncle's agreement to accept $8,000. (C) Lose, because there was an accord and satisfaction. (D) Lose, because the uncle agreed to the $8,000 after the January 1 due date.

(A) Win, because the gambler had an obligation to pay $9,000 on January 1.

On Dec. 15, Lawyer received from Stationer, Inc., a retailer of office supplies, an offer consisting of its catalog and a signed letter stating, "We will supply you with as many of the items in the enclosed catalog as you order during the next calendar year. We assure you that this offer and the prices in the catalog will remain firm throughout the coming year." No other correspondence passed between Stationer and Lawyer until the following April 15 (4 months later), when Stationer received from Lawyer a faxed order for "100 reams of your paper, catalog item # 101." Did Lawyer's April 15 fax constitute an effective acceptance of Stationer's offer at the prices specified in the catalog? (A) Yes, because Stationer had not revoked its offer before April 15. (B) Yes, because a one-year option contract had been created by Stationer's offer. (C) No, because under applicable law the irrevocability of Stationer's offer was limited to a period of three months. (D) No, because Lawyer did not accept Stationer's offer within a reasonable time.

(A) Yes, because Stationer had not revoked its offer before April 15.

A consumer buys a candy bar (Almond Joy) from a grocery store, bites into it, and breaks a tooth on a piece of metal imbedded in the candy bar. Does the consumer have a claim for breach of warranty against the store? (A) Yes, because a candy bar that breaks a tooth is probably not merchantable. (B) No, because the consumer assumed the risk of such injury. (C) No, because if anyone is to blame, it is the manufacturer and not the seller. (D) No, because no promises were made about the candy bar.

(A) Yes, because a candy bar that breaks a tooth is probably not merchantable.

Brenda and Sarah are law students. Brenda tells Sarah (a senior editor of the law review) that she needs word processing software to write her law review article. Sarah says, "I just bought new software, so I'll sell you my old software." Brenda buys the software and discovers that although it otherwise works perfectly well, it does not create footnotes and is therefore not useful for writing her law review article. Assuming Article 2 applies to this transaction, has Sarah breached the implied warranty of fitness for a particular purpose? (A) Yes, because she impliedly promised that the software would create footnotes. (B) Yes, because the software is not fit for the ordinary purpose of word processing. (C) No, because neither party is a merchant. (D) No, because no warranty was given in writing.

(A) Yes, because she impliedly promised that the software would create footnotes.

A woman owed her auto mechanic $2,000. The debt remained unpaid until any claim for its repayment became barred by the statute of limitations. The woman then agreed in writing to pay the mechanic $1,500, but failed to pay him. If the mechanic sues the woman for the $1,500, will the court rule in his favor? (A) Yes, because the woman's promise to pay the $1,500 is in writing. (B) Yes, because the woman had a preexisting legal duty to pay the mechanic. (C) No, because the woman's promise to pay the $1,500 is not supported by consideration. (D) No, because there has not been part performance.

(A) Yes, because the woman's promise to pay the $1,500 is in writing.

Tom wants to change the oil in his automobile, and to do so, he needs to purchase an oil filter. He goes to the auto supply store and tells the clerk that he needs to change the oil in his vehicle and wants an appropriate oil filter for his make and model of vehicle. The clerk recommends oil filter XYZ-2. Tom purchases the oil filter, takes it home, and puts it on his vehicle. The oil filter (which has no defects) isn't suited for the vehicle and, as a result, the vehicle is damaged. Tom can sue the auto supply store successfully based on breach of (A) implied warranty of fitness for a particular purpose. (B) implied warranty of merchantability. (C) implied warranty of merchantability and implied warranty of title. (D) implied warranty of title.

(A) implied warranty of fitness for a particular purpose.

Ozzie owned and occupied Blackacre, which was a tract of land improved with a one-family house. His friend, Victor, orally offered Ozzie $50,000 for Blackacre, the fair market value, and Ozzie accepted. Because they were friends, they saw no need for attorneys or written contracts and shook hands on the deal. Victor paid Ozzie $5,000 down in cash and agreed to pay the balance of $45,000 at an agreed closing time and place. Before the closing, Victor inherited another home and asked Ozzie to return his $5,000. Ozzie refused, and, at the time set for the closing, Ozzie tendered a good deed to Victor and declared his intention to vacate Blackacre the next day. Ozzie demanded that Victor complete the purchase. Victor refused. The fair market value of Blackacre has remained $50,000. In an appropriate action brought by Ozzie against Victor for specific performance, if Ozzie loses, the most likely reason will be that (A) the agreement was oral. (B) keeping the $5,000 is Ozzie's exclusive remedy. (C) Victor had a valid reason for not closing. (D) Ozzie remained in possession on the day set for the closing.

(A) the agreement was oral.

Laura resolved to pull a prank on Billy. She revealed to her friends that she would pretend to offer Billy $300 for his old laptop computer. She knew that Billy needed money and that his computer had a market value of just $50. When Laura offered Billy $300 for his computer, she explained her interest by saying, "I think there's a collector's item underneath all those dents and scuffs." Billy blushed but immediately replied, "I accept your offer and will deliver the computer to you tomorrow." Laura said, "Thanks," and walked away. When Billy presented Laura with the computer the next day, Laura and her assembled friends burst into laughter. "You doofus!" Laura said, "Nobody wants your junky laptop! I was just pulling a prank and you fell for it." Billy stormed off. Based on these facts, it is most likely that: (A) A contract exists because Billy commenced performance. (B) A contract exists because Billy reasonably believed that Laura made a serious offer, which he accepted. (C) No contract exists because Laura did not intend to make an offer. (D) No contract exists because Laura told her friends that the offer was made in jest.

(B) A contract exists because Billy reasonably believed that Laura made a serious offer, which he accepted.

Under the terms of a written contract, Karp agreed to construct for Manor a garage for $10,000. Nothing was said in the parties' negotiations or in the contract about progress payments during the course of the work. After completing 25% of the garage strictly according to Manor's specifications, Karp demanded payment of $2,000 as a "reasonable progress payment." Manor refused, and Karp abandoned the job. If each party sues the other for breach of contract, which of the following will the court decide? (A) Both parties are in breach, and each is entitled to damages, if any, from the other. (B) Only Karp is in breach and liable for Manor's damages, if any. (C) Only Manor is in breach and liable for Karp's damages, if any. (D) Both parties took reasonable positions and neither is in breach.

(B) Only Karp is in breach and liable for Manor's damages, if any.

In order to raise revenue, a city required home-repair contractors who performed work within the city limits to pay a licensing fee to a city agency. A contractor who was unaware of the fee requirement agreed to perform home repairs for a city resident. After the contractor completed the work, the resident discovered that the contractor had not paid the licensing fee, and she refused to pay for the repairs, which were otherwise satisfactory. If the contractor sues the resident for breach of contract, how is the court likely to rule? (A) Although the contract violates the law and is void, the court will require the homeowner to pay the contractor the reasonable value of the work accepted. (B) Although the contract violates the law, the court will find that public policy does not bar enforcement of the contract, because the purpose of the fee is merely to raise revenue. (C) Because the contract violates the law and is void, the court will not enforce it. (D) Because the purpose of the fee is merely to raise revenue, the court will find that the contract does not violate the law but will allow the contractor to recover his costs only.

(B) Although the contract violates the law, the court will find that public policy does not bar enforcement of the contract, because the purpose of the fee is merely to raise revenue.

Buyer faxed the following signed message to seller, his longtime widget supplier: "Urgently need blue widgets. Ship immediately three gross at your current list price of $600." Upon receipt of the fax, seller shipped three gross of red widgets to buyer and faxed to buyer the following message: "Temporarily out of blue. In case red will help, I am shipping three gross at the same price. Hope you can use them." Upon buyer's timely receipt of both the shipment and seller's fax, which of the following best describes the rights and duties of buyer and seller? (A) Buyer may accept the shipment, in which case he must pay seller the list price, or he must reject the shipment and recover from seller for total breach of contract. (B) Buyer may accept the shipment, in which case he must pay seller the list price, or he may reject the shipment, in which case he has no further rights against seller. (C) Buyer may accept the shipment, in which case he must pay seller the list price, less any damages sustained because of the nonconforming shipment, or he may reject the shipment and recover from seller for total breach of contract, subject to seller's right to cure. (D) Buyer may accept the shipment, in which case he must pay seller the list price, less any damages sustained because of the nonconforming shipment, or he may reject the shipment provided that he promptly covers by obtaining conforming widgets from another supplier.

(B) Buyer may accept the shipment, in which case he must pay seller the list price, or he may reject the shipment, in which case he has no further rights against seller.

Same facts as the prior slide, but for this question only assume that on January 15, having at that time received no reply from Lawyer, Stationer notified Lawyer that effective February 1, it was increasing the prices of certain specified items in its catalog. Is the price increase effective with respect to catalog orders Stationer receives from Lawyer during the month of February? (A) No, because Stationer's original offer, including the price term, became irrevocable under the doctrine of promissory estoppel. (B) No, because Stationer is a merchant with respect to office supplies; and its original offer, including the price term, was irrevocable throughout the month of February. (C) Yes, because Stationer received no consideration to support its assurance that it would not increase prices. (D) Yes, because the period for which Stationer gave assurance that it would not raise prices was longer than three months.

(B) No, because Stationer is a merchant with respect to office supplies; and its original offer, including the price term, was irrevocable throughout the month of February.

A buyer of goods (Retailer) sends a purchase order to a seller (Manufacturer) on its form. The seller responds with an acknowledgment form that has additional and different terms. In addition, the seller's form states, "Acceptance is expressly made conditional on assent to the additional or different terms in this acknowledgment." When it receives the form, the buyer refuses to go through with the deal. Is the buyer in breach? (A) No, because under the common law there was a counteroffer that was not accepted. (B) No, because the UCC says there was no acceptance and therefore no contract. (C) Yes, because the UCC says there is an acceptance and therefore a contract. (D) Yes, because there was acceptance by conduct.

(B) No, because the UCC says there was no acceptance and therefore no contract.

Tenant rented a commercial building from Landlord, and operated a business in it. The building's large front window was smashed by vandals six months before expiration of the Tenant-Landlord lease. Tenant, who was obligated thereunder to effect and pay for repairs in such cases, promptly contracted with Glazier to replace the window for $2,000, due 30 days after satisfactory completion of the work. Sixty days later, Tenant mailed a $1,000 check to Glazier bearing on its face the following conspicuous notation: "This check is in full and final satisfaction of your $2,000 window replacement bill." Without noticing this notation, Glazier cashed the check and now sues Tenant for the $1,000 difference. If Tenant's only defense is accord and satisfaction, is Tenant likely to prevail? (A) No, because Glazier failed to notice Tenant's notation on the check. (B) No, because the amount owed by Tenant to Glazier was liquidated and undisputed. (C) Yes, because by cashing the check Glazier impliedly agreed to accept the $1,000 as full payment of its claim. (D) Yes, because Glazier failed to write a reservation-of-rights notation on the check before cashing it.

(B) No, because the amount owed by Tenant to Glazier was liquidated and undisputed.

Client consulted Lawyer about handling the sale of Client's building, and asked Lawyer what her legal fee would be. Lawyer replied that her usual charge was $100 per hour, and estimated that the legal work on behalf of Client would cost about $5,000 at that rate. Client said, "Okay, let's proceed with it," and Lawyer timely and successfully completed the work. Because of unexpected title problems, Lawyer reasonably spent 75 hours on the matter and shortly thereafter mailed Client a bill for $7,500, with a letter itemizing the work performed and time spent. Client responded by a letter expressing his good-faith belief that Lawyer had agreed to a total fee of no more than $5,000. Client enclosed a check in the amount of $5,000 payable to Lawyer and conspicuously marked, "Payment in full for legal services in connection with the sale of Client's building." Despite reading the "Payment in full..." language, Lawyer, without any notation of protest or reservation of rights, endorsed and deposited the check to her bank account. The check was duly paid by the Client's bank. A few days later, Lawyer unsuccessfully demanded payment from the Client of the $2,500 difference between the amount of her bill and the check, and now sues Client for that difference. What, if anything, can Lawyer recover from Client? (A) Nothing, because the risk of unexpected title problems in a real-property transaction is properly allocable to the seller's attorney and thus to Lawyer in this case. (B) Nothing, because the amount of Lawyer's fee was disputed in good faith by Client, and Lawyer impliedly agreed to an accord and satisfaction. (C) $2,500, because Client agreed to an hourly rate for as many hours as the work reasonably required, and the sum of $5,000 was merely an estimate. (D) The reasonable value of Lawyer's services in excess of $5,000, if any, because there was no specific agreement on the total amount of Lawyer's fee.

(B) Nothing, because the amount of Lawyer's fee was disputed in good faith by Client, and Lawyer impliedly agreed to an accord and satisfaction.

Five years ago, Sally acquired Blackacre, improved with a 15-year-old dwelling. This year Sally listed Blackacre for sale with Bill, a licensed real estate broker. Sally informed Bill of several defects in the house that were not readily discoverable by a reasonable inspection, including a leaky basement, an inadequate water supply, and a roof that leaked. Paul responded to Bill's advertisement, was taken by Bill to view Blackacre, and decided to buy it. Bill saw to it that the contract specified the property to be "as is" but neither Bill nor Sally pointed out the defects to Paul, who did not ask about the condition of the dwelling. After closing and taking possession, Paul discovered the defects, had them repaired, and demanded that Sally reimburse him for the cost of the repairs. Sally refused and Paul brought an appropriate action against Sally for damages. If Sally wins, it will be because (A) Sally fulfilled the duty to disclose defects by disclosure to Bill. (B) The contract's "as is" provision controls the rights of the parties. (C) Bill became the agent of both Paul and Sally and thus knowledge of the defects was imputed to Paul. (D) The seller of a used dwelling that has been viewed by the buyer has no responsibility toward the buyer.

(B) The contract's "as is" provision controls the rights of the parties.

A contractor sends a company its bid on a construction job. The bid consists of specifications and prices, followed by a number of boilerplate provisions. The company responds by writing up the price and specifications on its own form, which it sends to the contractor. The contractor completes the project and the company inspects it after 25 days. The company finds some unfinished work and demands payment for it. The contractor claims that he is not responsible for the unfinished work because the form he sent says that inspection must be completed within 20 days after construction, and the company did not timely inspect. However, the company's form indicates that it has 30 days after completion to inspect. Who is responsible for the unfinished work? (A) The owner, because the contractor's form governs. (B) The contractor, because the company's form governs. (C) Neither, because there is no agreement on this term. (D) Both terms are knocked out and the party who would be responsible is supplied by trade usage or by a court.

(B) The contractor, because the company's form governs.

A park board in a large suburb announced that it was accepting bids for renovation work on its recreation center. A builder advertised for sub-bids for the electrical work, and a local electrician submitted to the builder by electronic bidding service a sub-bid of $130,000. However, due to the bidding service's negligence, the sub-bid that the builder received from the electrician read $30,000 instead of $130,000. Because this was the lowest sub-bid that the builder received for the electrical work, and $60,000 less than the next lowest sub-bid, the builder awarded the subcontract to the electrician. Based in part on the electrician's sub-bid, the builder came up with a bid for the job that beat out all of the competition and thus won the job. The electrician's best argument to successfully refuse to perform the resulting contract is: (A) The contract is voidable due to mutual mistake. (B) The great difference between the $30,000 figure and the next lowest bid should have alerted the builder to the existence of a mistake in the sub-bid. (C) The electrician was not responsible for the negligence of the bidding service. (D) The builder's own negligence in not checking out all sub-bids precludes enforcement of the contract.

(B) The great difference between the $30,000 figure and the next lowest bid should have alerted the builder to the existence of a mistake in the sub-bid.

Filmore purchased a Miracle color television set from Allison Appliances, an authorized dealer, for $499. The written contract contained the usual one-year warranty as to parts and labor as long as the set was returned to the manufacturer or one of its authorized dealers. The contract also contained an effective disclaimer of any express warranty protection, other than that which was included in the contract. It further provided that the contract represented the entire agreement and understanding of the parties. Filmore claims that during the bargaining process Surry, Allison's agent, orally promised to service the set at Filmore's residence if anything went wrong within the year. Allison has offered to repair the set if it is brought to the service department, but denies any liability under the alleged oral express agreement. Which of the following would be the best defense for Allison to rely upon in the event Filmore sues? (A) The Statute of Frauds. (B) The parol evidence rule. (C) The fact that all warranty protection was disclaimed other than the express warranty contained in the contract. (D) There was no consideration given for the oral agreement.

(B) The parol evidence rule.

A seller and a buyer have dealt with each other in hundreds of separate grain contracts over the last five years. In performing each contract, the seller delivered the grain to the buyer and, upon delivery, the buyer signed an invoice that showed an agreed-upon price for that delivery. Each invoice was silent in regard to any discount from the price for prompt payment. The custom of the grain trade is to allow a 2% discount from the invoice price for payment within 10 days of delivery. In all of their prior transactions and without objection from the seller, the buyer took 15 days to pay and deducted 5% from the invoice price. The seller and the buyer recently entered into a contract for a single delivery of wheat at a price of $300,000. The same delivery procedure and invoice were used for this contract as had been used previously. The seller delivered the wheat and the buyer then signed the invoice. On the third day after delivery, the buyer received the following note from the seller: "Payment in full in accordance with signed invoice is due immediately. No discounts permitted. /s/Seller." Which of the following statements concerning these facts is most accurate? (A) The custom of the trade controls, and the buyer is entitled to take a 2% discount if he pays within 10 days. (B) The parties' course of dealing controls, and the buyer is entitled to take a 5% discount if he pays within 15 days. (C) The seller's retraction of his prior waiver controls, and the buyer is entitled to no discount. (D) The written contract controls, and the buyer is entitled to no discount because of the parol evidence rule.

(B) The parties' course of dealing controls, and the buyer is entitled to take a 5% discount if he pays within 15 days.

A producer of cherries offers his crop to a fruit wholesaler. The producer shows the wholesaler sample cherries from his crop and, in a written agreement, the wholesaler agrees to buy the entire cherry crop for a certain price. When the cherries arrive, most of them are less plump and less ripe than the ones the producer had shown to the wholesaler. Does the wholesaler have a claim for breach of warranty? (A) Yes, but only if the producer told the wholesaler the cherries would be plump and ripe. (B) Yes, because the sample created an express warranty that the goods would conform to that sample. (C) No, because no warranty was in writing. (D) No, because the wholesaler bore the risk that the goods did not conform to the sample.

(B) Yes, because the sample created an express warranty that the goods would conform to that sample.

On June 1, T, a wholesaler of widgets, received a purchase-order form from W, a retailer of widgets, in which W ordered 10 anti-recoil widgets for delivery no later than August 30 at a total price of $1,000, as quoted in T's catalog. On June 2, T mailed to W its own form, across the top of which it was written, "We are pleased to accept your order. This acceptance is expressly made conditional on your assent to the additional or different terms contained herein." T's form contained the same terms as W's form except for an additional printed clause that provided for a maximum liability of $10 for any breach of contract by T. As of June 5, when W received T's acceptance form, which of the following is an accurate statement concerning the legal relationship between T and W? (A) There is no contract because the liability-limitation clause in T's form is a material alteration of W's offer. (B) There is no contract unless W thereafter consents to the liability-limitation clause in T's form. (C) There is an enforceable contract whose terms do not include the liability-limiting clause in T's form because such clause is a material alteration of W's offer. (D) There is an enforceable contract whose terms do not include the liability-limiting clause in T's form because W did not consent to the liability-limitation clause in T's form.

(B) There is no contract unless W thereafter consents to the liability-limitation clause in T's form.

Assume that Walker purchases the bike, it breaks down, and he returns it to Trek. Walker says to Trek, "You lied to me about the seriousness of the crack in the frame. I'm going to sue you for fraud unless you pay me a $90 refund." Trek agrees but later refuses to pay the refund. (A) Walker cannot enforce this agreement because he obtained it under threat of a lawsuit. (B) Walker cannot enforce this agreement because Trek is a minor. (C) Walker can enforce this agreement because avoiding lawsuits is a necessity for Trek. (D) Walker can enforce this agreement because it is based not on a contract claim but a tort claim of fraud.

(B) Walker cannot enforce this agreement because Trek is a minor.

Trek, though only 17 years old, has for several years owned and operated a business buying and selling bicycles. Walker, though 25 years old, has never owned a bicycle. Walker visited Trek's store and looked over a bicycle with a slight crack in the frame. Walker asked if the crack would impair the bicycle's utility. "Not a bit," Trek replied. In fact, Trek knew that the crack would probably cause the frame to collapse after very little use. Walker, not realizing the seriousness of the flaw, offered $100 for the bike. Trek prepared one of his standard sales forms, which both parties signed, and promised to have the bike cleaned and ready for pick-up the following week. Later that day, Walker learned from his friend Raleigh that the crack would probably cause the bicycle frame to collapse after little use. If Walker tells Trek that he will not accept the bicycle and Trek asserts a breach of contract claim against Walker, who will prevail? (A) Walker, because Trek is a minor and lacks capacity to contract. (B) Walker, because he relied on a material misrepresentation. (C) Trek, because the contract is voidable only at Trek's election. (D) Trek, because his statement about the crack was an opinion.

(B) Walker, because he relied on a material misrepresentation.

After negotiations, a painting contractor agreed with a homeowner to paint the exterior of her house for $20,000. The painter further agreed to use only top quality paint because the homeowner wanted the paint to last for many years. The painter filled out his standard form contract, but deliberately did not include a brand name for the paint that he would use. After telling the homeowner that the contract contained the terms agreed to, she signed without reading it. On completion of the job, the homeowner saw some empty paint cans in the painter's truck and realized that top quality paint had not been used. If the homeowner sues the paint contractor for misrepresentation, any statements made by the painter before the contract was signed: (A) Would be barred by the parol evidence rule. (B) Would not be barred by the parol evidence rule. (C) Would be admitted if the contract was proved to be an incomplete agreement of the parties. (D) Would not be admitted because they occurred prior to the signing of the contract.

(B) Would not be barred by the parol evidence rule.

A consumer goes to a jewelry store and points out to the clerk a particular watch on display that he wishes to purchase. The clerk goes to the back of the store and emerges with a watch that he briefly shows to the consumer before wrapping it. The consumer buys the watch. When he gets home, the consumer discovers that the watch he purchased differs from the one that he pointed out in the display. Does the consumer have a claim for breach of warranty? (A) Yes, because an express warranty was created by affirmation of fact or promise. (B) Yes, because an express warranty was created by sample or model. (C) No, because he had an opportunity to inspect the goods before purchase. (D) No, because there was no language of warranty.

(B) Yes, because an express warranty was created by sample or model.

An online search engine corporation wishing to acquire a smaller website entity hired a law firm to perform its target's audit for a bundled fee of $2.5 million. A first fee installment of $1 million was to be paid on completion of the data collection process, which was to be completed within three weeks. A second installment was to be paid on receipt of a valuation of the target website entity's liabilities, due after another five weeks. The contract provided in part that "any amendments to this agreement must be in writing signed by both parties." On completion of data collection after 25 days, the law firm demanded payment of the first installment payment of $1 million. The client refused, but negotiations conducted between the parties resulted in an oral agreement that the client would pay $750,000 immediately, and then the $1.5 million second installment as originally agreed, after valuation of all liabilities. Was the oral agreement that the client pay $750,000 to the law firm after 25 days a valid modification of the original agreement? (A) Yes, because the Statute of Frauds does not bar subsequent oral modification of a written agreement to which it is applicable. (B) Yes, because contracts for services may be orally modified, if consideration is present, despite the existence of a no-oral-modification clause. (C) No, because it was not in writing. (D) No, because it was not supported by consideration.

(B) Yes, because contracts for services may be orally modified, if consideration is present, despite the existence of a no-oral-modification clause.

Purvis purchased a used car from Daley, a used car dealer. Knowing that they were false, Daley made the following statements to Purvis prior to the sale: -Statement 1. This car has never been involved in an accident. -Statement 2. This car gets 25 miles to the gallon on the open highway. -Statement 3. This is as smooth-riding a car as you can get. If Purvis seeks to rescind the contract based on fraud, which of the false statements made by Daley would support Purvis' claim? (A) Statement 1 only. (B) Statement 2 only. (C) Statements 1 and 2 only. (D) Statements 2 and 3 only.

Dominique obtained a bid of $10,000 to tear down her old building and another bid of $90,000 to replace it with a new structure in which she planned to operate a sporting goods store. Having only limited cash available, Dominque asked Hardcash for a $100,000 loan. After reviewing the plans for the project, Hardcash in a signed writing promised to lend Dominique $100,000 secured by a mortgage on the property and repayable over ten years in equal monthly installments at 10% annual interest. Dominique promptly accepted the demolition bid and the old building was removed, but Hardcash thereafter refused to make the loan. Despite diligent efforts, Dominique was unable to obtain a loan from any other source. Does Dominique have a cause of action against Hardcash? (A) Yes, because by having the building demolished, she accepted Hardcash's offer to make the loan. (B) Yes, because her reliance on Hardcash's promise was substantial, reasonable, and foreseeable. (C) No, because there was no bargained-for exchange of consideration for Hardcash's promise to make the loan. (D) No, because Dominique's inability to obtain a loan from any other source demonstrated that the project lacked the financial soundness that was a constructive condition to Hardcash's performance.

(B) Yes, because her reliance on Hardcash's promise was substantial, reasonable, and foreseeable.

Buyer and Seller deal in electrical equipment. In its catalog, Seller lists the prices for some of its products, but not for #4 conducting wire. On July 11, Buyer sends Seller this signed written message: "We wish immediately to have 4,000 feet of your #4 conducting wire. We do not see the price listed in your catalog, so we propose that the price be agreed on later. Please ship." On July 12, Seller responds with this signed writing: "Thank you. We will ship." Have Buyer and Seller formed a contract? (A) Yes, because where the goods are bought and sold between merchants, price is not a material term. (B) Yes, because notwithstanding the open price term, their interaction reflects finality of agreement. (C) No, because parties do not form a contract if they agree that a material term will be subject to future agreement. (D) No, because a seller who declines to publish its price shows an intention not to sell.

(B) Yes, because notwithstanding the open price term, their interaction reflects finality of agreement.

The owner of a store in a small beach town contacted a manufacturer about buying 100 Adirondack chairs. The parties reduced their agreement to sell and buy the 100 chairs to a signed writing that contained all of the essential terms, as well as a merger clause. When the chairs were delivered to the store owner, she discovered that they were not "Adirondack chairs," as she understood that term and as that term was commonly used, but a different style of chair altogether that was manufactured in the Adirondack region of New York. The store owner refused delivery, and the manufacturer sued the store owner for breach of contract, arguing that he complied with the terms of the contract. Will the store owner be allowed to introduce evidence of the meaning of the term "Adirondack chair"? (A) Yes, because the parol evidence rule does not apply to subsequent modifications. (B) Yes, because of the dispute between the parties over the meaning of the term "Adirondack chair." (C) No, because the written agreement of the parties was a complete integration. (D) No, because the contract was for a sale of goods between merchants.

(B) Yes, because of the dispute between the parties over the meaning of the term "Adirondack chair."

On July 15, in a writing signed by both parties, Fixtures, Inc., agreed to deliver to Druggist on August 15 five storage cabinets from inventory for a total price of $5,000 to be paid on delivery. On August 1, the two parties orally agreed to postpone the delivery date to August 20. On August 20, Fixtures tendered the cabinets to Druggist, who refused to accept or pay for them on the ground that they were not tendered on August 15, even though they otherwise met the contract specifications. Assuming that all appropriate defenses are seasonably raised, will Fixtures succeed in an action against Druggist for breach of contract? (A) Yes, because neither the July 15 agreement nor the August 1 agreement was required to be in writing. (B) Yes, because the August 1 agreement operated as a waiver of the August 15 delivery term. (C) No, because there was no consideration to support the August 1 agreement. (D) No, because the parol evidence rule will prevent proof of the August 1 agreement.

(B) Yes, because the August 1 agreement operated as a waiver of the August 15 delivery term.

During negotiations between two friends over the sale of a boat, the seller tells the buyer that the engine was warranted to be free of defects for a period of two years. The parties finally sign a written agreement that contains no warranty terms. After 14 months, the engine develops problems because of a defect. A court finds that the writing is a partial integration and that the promise was actually made. Is the seller liable under the warranty? (A) Yes, because the gap fillers will supply an implied warranty. (B) Yes, because the oral promise does not contradict the terms of the writing. (C) No, because the writing was a final expression of their agreement as to the warranty. (D) No, because the buyer would have a claim even under the written warranty.

(B) Yes, because the oral promise does not contradict the terms of the writing.

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) 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.

Green contracted in a signed writing to sell Greenacre, a 500-acre tract of farmland, to Farmer. The contract provided for exchange of the deed and purchase price of $500,000 in cash on January 15. Possession was to be given to Farmer on the same date. On January 15, Green notified Farmer that because the tenant on Greenacre wrongfully refused to quit the premises until January 30, Green would be unable to deliver possession of Greenacre until then, but he assured Farmer that he would tender the deed and possession on that date. When Green tendered the deed and possession on January 30, Farmer refused to accept either, and refused to pay the $500,000. Throughout the month of January, the market value of Greenacre was $510,000, and its fair monthly rental value was $5,000. Will Green probably succeed in an action against Farmer for specific performance? (A) Yes, because the court will excuse the delay in tender on the ground that there was a temporary impossibility caused by the tenant's holding over. (B) Yes, because time is ordinarily not of the essence in a land-sale contract. (C) No, because Green breached by failing to tender the deed and possession on January 15. (D) No, because Green's remedy at law for monetary relief is adequate.

(B) Yes, because time is ordinarily not of the essence in a land-sale contract.

Olivia Owen and Paul Paige agree that Paul will buy Olivia's house for $300,000. They draft the following memo: I agree to buy Olivia Owen's house at 111 Elm Street, Nashville Tennessee for $300,000. signed/Paul Paige/ Does the writing constitute an enforceable contract? (A) No, because it fails to comply with the Statute of Frauds. (B) Yes, but only against Paul. (C) Yes, but only against Olivia. (D) Yes, against both Paul and Olivia.

(B) Yes, but only against Paul.

At a country auction, P acquired an antique cabinet that he recognized as a "Morenci," an extremely rare and valuable collector's item. Unfortunately, P's cabinet had several coats of varnish and paint over the original finish. Its potential value could only be realized if these layers could be removed without damaging the original oil finish. A professional restorer of antique furniture recommended that P use Restorall to remove the paint and varnish from the cabinet. P obtained and read a sales brochure published by Restorall, Inc., which contained the following statement: "This product will renew all antique furniture. Will not damage original oil finishes." P purchased some Restorall and used it on his cabinet, being careful to follow the instructions exactly. Despite P's care, the original Morenci finish was irreparably damaged. When finally refinished, the cabinet was worth less than 20% of what it would have been worth if the Morenci finish had been preserved. If P sues Restorall, Inc. to recover the loss he has suffered as a result of the destruction of the Morenci finish, will P prevail? (A) Yes, unless no other removal technique would have preserved the Morenci finish. (B) Yes, if the loss would not have occurred had the statement in the brochure been true. (C) No, unless the product was defective when sold by Restorall, Inc. (D) No, if the product was not dangerous to persons.

(B) Yes, if the loss would not have occurred had the statement in the brochure been true.

A law professor sells a refrigerator that she owns to a student. After the purchase, Sears repossesses the refrigerator from the student because the law professor gave Sears a security interest in it. Assuming it was legal for Sears to do this, does the student have a claim against the professor for breach of warranty? (A) Trick question! Article 2 doesn't apply to this transaction. (B) Yes, the professor warranted that the goods were free from any security interest. (C) No. Because the professor owned the refrigerator, she transferred good title to the student. (D) No, because it is the responsibility of the buyer to check for security interests.

(B) Yes, the professor warranted that the goods were free from any security interest.

Buyer, Inc. contracted in writing with Shareholder, who owned all of XYZ Corporation's outstanding stock, to purchase all of her stock at a specified price per share. At the time this contract was executed, Buyer's contracting officer said to Shareholder, "Of course, our commitment to buy is conditioned on our obtaining approval of the contract from Conglomerate, Ltd., our parent company." Shareholder replied, "Fine. No problem." Shareholder is willing and ready to consummate the sale of her stock to Buyer, but the latter refuses to perform on the ground (which is true) that Conglomerate has firmly refused to approve the contract. If Shareholder sues Buyer for breach of contract and seeks to exclude any evidence of the oral condition requiring Conglomerate's approval, the court will probably (A) admit the evidence as proof of a collateral agreement. (B) admit the evidence as proof of a condition to the existence of an enforceable obligation, and therefore not within the scope of the parol evidence rule. (C) exclude the evidence on the basis of a finding that the parties' written agreement was a complete integration of their contract. (D) exclude the evidence as contradicting the terms of the parties' written agreement, whether or not the writing was a complete integration of the contract.

(B) admit the evidence as proof of a condition to the existence of an enforceable obligation, and therefore not within the scope of the parol evidence rule.

Stirrup, a rancher, and Equinox, a fancier of horses, signed the following writing: "For $5,000, Stirrup will sell to Equinox a gray horse that Equinox may choose from among the grays on Stirrup's ranch." Equinox refused to accept delivery of a gray horse timely tendered by Stirrup or to choose among those remaining, on the ground that during their negotiations Stirrup had orally agreed to include a saddle, worth $100, and also to give Equinox the option to choose a gray or a brown horse. Equinox insisted on one of Stirrup's brown horses, but Stirrup refused to part with any of his browns or with the saddle as demanded by Equinox. If Equinox sues Stirrup for damages and seeks to introduce evidence of the alleged oral agreements, the court probably will (A) admit the evidence as to both the saddle and the option to choose a brown horse. (B) admit the evidence as to the saddle but not the option to choose a brown horse. (C) admit the evidence as to the option to choose a brown horse but not the promise to include the saddle. (D) not admit any of the evidence.

(B) admit the evidence as to the saddle but not the option to choose a brown horse.

Employee, aged 60, who had no plans for early retirement, had worked for Employer for 20 years as a managerial employee-at-will when he had a conversation with Employer's president (President), about Employee's post-retirement goal of extensive travel around the U.S. A month later, President handed Employee a written, signed resolution of Employer's Board of Directors stating that when and if Employee should decide to retire, at his option, the company, in recognition of his past service, would pay him a $4,000-per-month lifetime pension. The company had no regularized retirement plan for at-will employees. Shortly thereafter, Employee retired and immediately bought a $50,000 recreational vehicle for his planned travels. After receiving the promised $4,000 monthly pension from Employer for six months, Employee now unemployable elsewhere, received a letter from Employer advising him that the pension would cease immediately because of recessionary budget constraints affecting in varying degrees all managerial salaries and retirement pensions. In a suit against Employer for damages, Employee will probably (A) win, because he retired from the company as bargained-for-consideration for the Board's promise to him of a lifetime pension. (B) win, because he timed his decision to retire and to buy the recreational vehicle in reasonable reliance on the Board's promise to him of a lifetime pension. (C) lose, because the Board's promise to him of a lifetime pension was an unenforceable gift promise. (D) lose, because he had been an employee-at-will throughout his active service with the company.

(B) win, because he timed his decision to retire and to buy the recreational vehicle in reasonable reliance on the Board's promise to him of a lifetime pension.

During negotiations, the seller of a boat promised the buyer that the engine was warranted to be free of defects for a period of two years. The parties eventually signed a written agreement that contained no express warranty terms. Fourteen months after the purchase, the engine developed problems because of a defect. A court found that the writing is a complete and exclusive statement of the terms of agreement. Is the seller liable under the oral warranty? (A) It remains to be determined as a question of fact whether the promise was made. (B) Yes, because the oral promise does not contradict the terms of the writing. (C) No, because the writing was a complete and exclusive expression of their agreement. (D) No, because the buyer would have a claim even under the written warranty.

During negotiations, the seller of a boat promises the buyer that the engine was warranted to be free of defects for a period of two years. The parties then sign a written agreement that contains a warranty term with standard disclaimers of express and implied warranties, followed by language stating that "seller warrants that the engine will be free of defects for a period of one year." After 14 months, the engine develops problems because of a defect. A court finds that the writing is a partial integration and that the promise was actually made. Is the seller liable under the warranty? (A) Yes, because the parties did not intend their writing to be final as to the warranty. (B) Yes, because the oral promise does not contradict the terms of the writing. (C) No, because the writing was a final expression of their agreement as to the warranty. (D) No, because the buyer would have a claim even under the written warranty.

A general contractor who wished to bid on a construction project solicited bids from a variety of subcontractors. Four electrical subcontractors submitted bids to the contractor in the amounts of $75,000, $85,000, $90,000, and $95,000, respectively. As he was making out his company's bid, which was higher than he wanted it to be, the contractor called the low bidder on the electrical work and told him, "We won't be able to do it with your present bid, but if you can shave off $5,000, I'm sure that the numbers will be there for us to get that project." The low bidder told the contractor that he could not lower his bid, adding that the bid he submitted was based on a $15,000 error, and he could not do the job for less than $90,000. The contractor lost the construction job and subsequently sued the low bidder. The low bidder is liable for: (A) Breach of contract, because the mistake was not so unreasonably obvious as to make acceptance of his bid unconscionable. (B) Breach of contract, because the mistake was unilateral. (C) Nothing, because the low bidder rejected the contractor's counteroffer. (D) Nothing, because even though the low bidder lacked authority to renege on its bid, the contractor suffered no damages because no bidder was willing to do the work for $70,000.

Breeder bought a two-month-old registered boar at auction from Pigstyle for $800. No express warranty was made. Fifteen months later, tests by experts proved conclusively that the boar had been born incurably sterile. If this had been known at the time of the sale, the boar would have been worth no more than $100. In an action by Breeder against Pigstyle to avoid the contract and recover the price paid, the parties stipulate that, as both were and had been aware, the minimum age at which the fertility of a boar can be determined is about 12 months. Which of the following will the court probably decide? (A) Breeder wins, because the parties were mutually mistaken as to the boar's fertility when they made the agreement. (B) Breeder wins, because Pigstyle impliedly warranted that the boar was fit for breeding. (C) Pigstyle wins, because Breeder assumed the risk of the boar's sterility. (D) Pigstyle wins, because any mistake involved was unilateral, not mutual.

Assume the same facts as the last question. For this question only, assume that Dominique has a cause of action against Hardcash. If she sues him for monetary relief, what is the probable measure of her recovery? (A) Expectancy damages, measured by the difference between the value of the new building and the old building, less the amount of the proposed loan ($100,000). (B) Expectancy damages, measured by the estimated profits from operating the proposed sporting goods store for ten years, less the cost of repaying a $100,000 loan at 10% interest over ten years. (C) Reliance damages, measured by the $10,000 expense of removing the old building, adjusted by the decrease or increase in the market value of Dominique's land immediately thereafter. (D) Nominal damages only, because both expectancy and reliance damages are speculative, and there is no legal or equitable basis for awarding restitution.

(C) Reliance damages, measured by the $10,000 expense of removing the old building, adjusted by the decrease or increase in the market value of Dominique's land immediately thereafter.

A 17-year-old boy walked into a medical clinic and requested assistance with a deep cut he received when he fell off his bike. The doctor told the boy that if he agreed to work at the clinic for 45 hours a week for four weeks, he would stitch the wound and apply a medicated bandage. The clinic typically charges $225 for such treatment. Although it seemed like a lot of work for $225, the boy needed immediate medical attention, so he accepted the offer and promised to report for work the next day, after which the doctor treated the boy's injury. On his way home from the clinic, the medicated bandage fell into a ditch and was lost for good. The boy refused to report for work the next day. If the medical clinic sues the boy for $225 and loses, it will be because: (A) The boy was a minor. (B) The medicated bandage was destroyed and thus there was a breach of the implied warranty of merchantability. (C) The contract was unconscionable. (D) It was impossible for the boy to perform.

Which of the following requirements must be met for modification of a sales contract under the Uniform Commercial Code? (A) There must be consideration present if the contract is between merchants. (B) There must be a writing if the original sales contract is in writing. (C) The modification must satisfy the Statute of Frauds if the contract as modified is within its provisions. (D) The parol evidence rule applies and thus a writing is required.

In a single writing, Painter contracted with Farmer to paint three identical barns on her rural estate for $2,000 each. The contract expressly provided for Farmer's payment of $6,000 upon Painter's completion of the work on all three barns. Painter did not ask for any payment when the first barn was completely painted, but she demanded $4,000 after painting the second barn. Assume that Farmer rightfully refused Painter's demand for payment. If Painter immediately terminates the contract without painting the third barn, what is Painter entitled to recover from Farmer? (A) Nothing, because payment was expressly conditioned on completion of all three barns. (B) Painter's expenditures plus anticipated "profit" in painting the first two barns, up to a maximum recovery of $4,000. (C) The reasonable value of Painter's services in painting the two barns, less Farmer's damages, if any, for Painter's failure to paint the third barn. (D) The amount that the combined value of the two painted barns has been increased by Painter's work.

(C) The reasonable value of Painter's services in painting the two barns, less Farmer's damages, if any, for Painter's failure to paint the third barn.

Which of the following transactions is most likely covered by Article 2? (A) Blood injected into a patient as part of an operation. (B) A product put on a person's hair as part of a haircut. (C) The sale of the unborn young of animals. (D) A lease of a rental car by an agency.

For an agreed price of $20 million, Bildko, Inc., contracted with Venture to design and build on Venture's commercial plot a 15-story office building. In excavating for the foundation and underground utilities, Bildko encountered a massive layer of granite at a depth of 15 feet. By reasonable safety criteria, the building's foundation required a minimum excavation of 25 feet. When the contract was made, neither Venture nor Bildko was aware of the subsurface granite, for the presence of which neither party had hired a qualified expert to test. Claiming accurately that removal of enough granite to permit the construction as planned would cost him an additional $3 million and a probable net loss on the contract of $2 million, Bildko refused to proceed with the work unless Venture would promise to pay an additional $2.5 million for the completed building. If Venture refuses and sues Bildko for breach of contract, which of the following will the court probably decide? (A) Bildko is excused under the modern doctrine of supervening impossibility, which includes severe impracticability. (B) Bildko is excused, because the contract is voidable on account of the parties' mutual mistake concerning an essential underlying fact. (C) Venture prevails, because Bildko assumed the risk of encountering subsurface granite that was unknown to Venture. (D) Venture prevails, unless subsurface granite was previously unknown anywhere in the vicinity of Venture's construction site.

During an ice storm, a man's car slipped down an embankment and became lodged against a large tree. The man called a towing company and told the company's manager that the car was 100 feet down the embankment. "That's lucky," said the manager, "because our winch only goes 100 feet." After the manager and the man agreed on a price, an employee of the company attempted to reach the car but could not because the car turned out to be 120 feet down the embankment. Is the towing company's performance excused on the grounds of mistake? (A) No, because both parties were uncertain about the distance. (B) No, because the towing company assumed the risk by the manager's failure to examine the distance himself. (C) Yes, because at the time of contracting, both parties were mistaken about a basic assumption on which the contract was based. (D) Yes, because the agreement did not allocate the risk of mistake to either party.

(C) Yes, because at the time of contracting, both parties were mistaken about a basic assumption on which the contract was based.

In early July, the owner of a toy store entered into a contract with a craftsman for the purchase of 25 hand-carved wooden rocking horses for the holiday sales season. The agreement failed to state a delivery date for the horses. After several months went by without any word from the craftsman, the owner forgot about the agreement. On October 15, the owner ordered a quantity of mass-produced resin-based rocking horses to sell in his store for the upcoming holiday season. One week later, the craftsman arrived at the toy store with a truck carrying the horses and demanded payment, but the toy store owner refused, stating that he already had more than enough rocking horses to sell. The craftsman sued the owner for breach of contract. May the craftsman enforce the contract? (A) No, because the contract was missing an essential term, the delivery date, at the time of formation. (B) No, because so much time had passed without word from the craftsman that the toy store owner had reasonable grounds for insecurity and was entitled to cancel the contract and mitigate his damages. (C) Yes, because the delivery date was reasonable given the nature of the goods. (D) Yes, because the craftsman accepted the contract by completing the hand-carved horses.

An employer offered to pay a terminated employee $50,000 to release all claims the employee might have against the employer. The employee orally accepted the offer. The employer then prepared an unsigned release agreement and sent it to the employee for him to sign. The employee carefully prepared, signed, and sent to the employer a substitute release agreement that was identical to the original except that it excluded from the release any age discrimination claims. The employer signed the substitute release without reading it. Shortly thereafter, the employee notified the employer that he intended to sue the employer for age discrimination. Is the employer likely to prevail in an action seeking reformation of the release to conform to the parties' oral agreement? (A) No, because the employer acted unreasonably by failing to read the substitute release prior to signing it. (B) No, because the parol evidence rule will preclude evidence of the oral agreement. (C) Yes, because the employee's fraudulent behavior induced the employer's unilateral mistake. (D) Yes, because the parties were mutually mistaken regarding the contents of the signed release.

A sporting goods shop contracted with a publisher to buy, for sale in its store, 1,200 posters featuring a professional golfer. During production, the image of the golfer was inadvertently reversed and the right-handed golfer appeared to be left-handed. When the posters were delivered on the date provided in the contract, the sporting goods shop noticed the discrepancy, which had no provable significant impact on the effectiveness of the poster. In the opinion of the shop management, however, the posters did not look as good as they had in the catalog from which the shop had ordered them. Is the sporting goods shop legally entitled to reject the posters? (A) No, because the nonconformity does not materially alter the value of the posters to the sporting goods shop. (B) No, because the publisher must be given an opportunity to cure the nonconformity before the sporting goods shop can reject the posters. (C) Yes, because the posters do not conform to the contract. (D) Yes, because the publisher has breached an implied warranty of fitness for a particular purpose.

On June 1, Buyem, Inc., a widget manufacturer, entered into a written agreement with Mako, Inc., a tool maker, in which Mako agreed to produce and sell to Buyem 12 sets of newly designed dies to be delivered August 1 for the price of $50,000, payable ten days after delivery. Encountering unexpected expenses in the purchase of special alloy steel required for the dies, Mako advised Buyem that production costs would exceed the contract price; and on July 1 Buyem and Mako signed a modification to the June 1 agreement increasing the contract price to $60,000. After timely receipt of 12 sets of dies conforming to the contract specifications, Buyem paid Mako $50,000 but refused to pay more. Is Mako entitled to $10,000 for breach of Buyem's July 1 promise? (A) No, because Mako provided no new consideration for the July 1 agreement. (B) No, because Mako had a pre-existing duty to perform. (C) Yes, if Mako was acting in good faith. (D) Yes, but only if Mako agreed to deliver the dies prior to August 1.

Best Music, Inc. offers to buy from Sound Products Corporation (SPC) 100,000 blank Sony CDs. Without notifying Best, SPC timely ships 100,000 RCA CDs. This shipment is: (A) an acceptance of Best's offer. (B) a breach of the parties' contract. (C) both (a) and (b). (D) a counteroffer.

Carl goes to a store to buy a television. At the store, there's a television playing. Carl thinks the picture and sound on that television are good, so he buys the same model. He takes it home, plugs it in, and finds that the picture and sound, while reasonably good, aren't as good as what he saw in the store. He sues for breach of warranty. If he wins, it will be because (A) there's a failure of consideration. (B) there's a breach of the warranty of fitness for a particular purpose. (C) the demonstration of the model constituted a warranty that proved false. (D) there's a breach of the implied warranty of merchantability.

O orally agrees to sell Blackacre to B. B pays O the full price, takes possession, and begins to plant crops on Blackacre. O, however, repudiates the agreement. If B sues for specific performance, B's best argument would be: (A) the Statute of Frauds. (B) the doctrine of promissory estoppel. (C) the doctrine of part performance. (D) the doctrine of equitable conversion.

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, its terms would 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) 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.

Shortly after a series of burglaries took place within a city, the city council approved the offering of a $25,000 reward for the arrest and conviction of the perpetrator of the burglaries. Information concerning the reward was published in the local newspaper. In which of the following ways could the city's reward offer be effectively accepted? (A) Only by an offeree's return promise to make the arrest and assist in the successful conviction of a burglar within the scope of the offer. (B) Only by an offeree's return promise to make a reasonable effort to bring about the arrest and conviction of a burglar within the scope of the offer. (C) By an offeree's communication of assent through the same medium (local newspaper) used by the city in making its offer. (D) By an offeree's supplying information leading to arrest and conviction of a burglar within the scope of the offer.

(D) By an offeree's supplying information leading to arrest and conviction of a burglar within the scope of the offer.

Loomis, the owner and operator of a small business, encourages "wellness" on the part of his employees and supports various physical fitness programs to that end. Learning that one of his employees, Graceful, was a dedicated jogger, Loomis promised to pay her a special award of $100 if she could and would run one mile in less than six minutes on the following Saturday. Graceful thanked him, and did in fact run a mile in less than six minutes on the day specified. Shortly thereafter, however, Loomis discovered that for more than a year Graceful had been running at least one mile in less than six minutes every day as a part of her personal fitness program. He refused to pay the $100. In an action by Graceful against Loomis for breach of contract, which of the following best summarizes the probable decision of the court? (A) Loomis wins, because there is a compelling inference that Loomis' promise did not induce Graceful to run the specified mile. (B) Loomis wins, because Graceful's running of the specified mile was beneficial, not detrimental, to her in any event. (C) Graceful wins, because running a mile in less than six minutes is a significantly demanding enterprise. (D) Graceful wins, because she ran the specified mile as requested, and her motives for doing so are irrelevant.

(D) Graceful wins, because she ran the specified mile as requested, and her motives for doing so are irrelevant.

Albert engaged Bertha, an inexperienced actress, to do a small role in a new Broadway play for a period of six months at a salary of $800 a week. Bertha turned down another role in order to accept this engagement. On the third day of the run, Bertha was hospitalized with influenza and Helen was hired to do the part. A week later, Bertha recovered, but Albert refused to accept her services for the remainder of the contract period. Bertha then brought an action against Albert for breach of contract. Which of the following is Bertha's best legal theory? (A) Her acting contract with Albert was legally severable into weekly units. (B) Her performance of the literal terms of the contract was physically impossible. (C) Her reliance on the engagement with Albert by declining another acting role created an estoppel against Albert. (D) Her failure to perform for one week was not a material failure so as to discharge Albert's duty to perform.

(D) Her failure to perform for one week was not a material failure so as to discharge Albert's duty to perform.

Homeowner hired Incompetent, a professional carpenter, to construct a new deck on Homeowner's house. Under the arrangement, Incompetent was to provide all the materials (the wood, nails, etc.) and to complete construction for a price of $2,000. The materials themselves cost only $300. After Incompetent finished and received payment, Homeowner had a party. When Doug Drinker, one of the guests, walked out onto the deck, the deck collapsed and Drinker was severely injured. If Drinker sues Incompetent for breach of the UCC's implied warranty of merchantability and implied warranty of fitness for a particular purpose, Drinker most likely will: (A) Prevail on both warranties. (B) Lose on the implied warranty of merchantability because Incompetent is not a merchant, but prevail on the implied warranty of fitness for a particular purpose. (C) Prevail on the implied warranty of merchantability because Incompetent is a merchant, but lose on the implied warranty of fitness for a particular purpose. (D) Lose on both warranties.

(D) Lose on both warranties.

Walmart purchases a full-page ad in the weekly newspaper. In this week's ad, Walmart lists a Samsung DVD player for $75. The newspaper, however, made a mistake. The advertisement should have listed the DVD player at $475. Upon seeing the ad, Buyer goes to the nearest Walmart, walks up to the electronics department, shows the advertisement to the clerk, and before the clerk can say a word, Buyer says, "I accept." At this point in time, do the parties have a contract? (A) Yes, because Buyer accepted before Walmart revoked the offer. (B) No, if Walmart attempted to retract the advertisement within a reasonable time after its publication. (C) No, because such contracts must be in writing. (D) No, because Buyer's attempted acceptance was nothing but an offer, which Walmart has yet to accept.

(D) No, because Buyer's attempted acceptance was nothing but an offer, which Walmart has yet to accept.

Dumont, a real estate developer, was trying to purchase land on which he intended to build a large commercial development. Perkins, an elderly widow, had rejected all of Dumont's offers to buy her ancestral home, where she had lived all her life and which was located in the middle of Dumont's planned development. Finally, Dumont offered her $250,000. He told her that it was his last offer and that if she rejected it, state law authorized him to have her property condemned. Perkins then consulted her nephew, a lawyer, who researched the question and advised her that Dumont had no power of condemnation under state law. Perkins had been badly frightened by Dumont's threat, and was outraged when she learned that Dumont had lied to her. If Perkins asserts a claim based on misrepresentation against Dumont, will she prevail? (A) Yes, if Dumont knew he had no legal power of condemnation. (B) Yes, if Dumont tried to take unfair advantage of a gross difference between himself and Perkins in commercial knowledge and experience. (C) No, if Dumont's offer of $250,000 equaled or exceeded the market value of Perkins's property. (D) No, because Perkins suffered no pecuniary loss.

(D) No, because Perkins suffered no pecuniary loss.

A widget seller negotiates with a buyer for the purchase of 100 widgets for $10,000, with delivery 30 days from the signing of the agreement. After the parties sign the agreement, which contains a merger clause, the buyer asks the seller if delivery could be in 20 days and the seller says, "Yes, I promise we will do that." The seller does not deliver until 30 days from signing. The buyer sues the seller and the seller seeks to bar the evidence that the seller promised delivery in 20 days. Will the evidence be excluded under the parol evidence rule? (A) Yes, because it contradicts a term of the written agreement. (B) Yes, because it supplements a written agreement that is complete and exclusive. (C) No, because it is offered for the purpose of interpreting the writing. (D) No, because it is offered on an issue of modification.

(D) No, because it is offered on an issue of modification.

Seller and Buyer enter into an agreement by which Seller agrees to sell a Robert Shapiro painting (currently valued at $5,000) to Buyer for $15,000. Both parties are aware that Robert Shapiro is on his death bed, and both believe that Shapiro's paintings will significantly increase in value when he dies. Two weeks after the sale, Shapiro dies but his paintings do not increase in value. As a result, Buyer brings suit to rescind the contract. What is the likely outcome of such litigation? (A) Buyer will prevail because Buyer mistakenly believed the painting would be worth at least $15,000. (B) Buyer will prevail because Seller mistakenly believed painting would be worth at least $15,000. (C) Buyer will prevail because both Buyer and Seller mistakenly believed the painting would be worth at least $15,000. (D) Seller will prevail because the mistake was nothing more than an inaccurate prediction.

(D) Seller will prevail because the mistake was nothing more than an inaccurate prediction.

The Kernel Corporation, through its president, Gritz, requested from Vault Finance, Inc., a short-term loan of $100,000. On April 1, Gritz and Vault's loan officer agreed orally that Vault would make the loan on the following terms: (1) The loan would be repaid in full on or before the following July 1 and would carry interest at an annual rate of 5%; and (2) Gritz would personally guarantee repayment. The loan was approved and made on April 5. The only document evidencing the loan was a memorandum, written and supplied by Vault and signed by Gritz for Kernel, that read in its entirety: -"April 5 -In consideration of a loan advanced on this date, Kernel Corporation hereby promises to pay Vault Finance, Inc., $100,000 on September 1. -Kernel Corporation -By /s/ Demeter Gritz -Demeter Gritz, President" Kernel Corporation did not repay the loan on or before July 1, although it had sufficient funds to do so. On July 10, Vault sued Kernel as principal debtor and Gritz individually as guarantor for $100,000, plus 5% interest from April 5. At the trial, can Vault prove Kernel's oral commitment to repay the loan on or before July 1? (A) Yes, because the oral agreement was supported by an independent consideration. (B) Yes, because the evidence of the parties' negotiations is relevant to their contractual intent concerning maturity of the debt. (C) No, because such evidence is barred by the preexisting duty rule. (D) No, because such evidence contradicts the writing and is barred by the parol evidence rule.

(D) No, because such evidence contradicts the writing and is barred by the parol evidence rule.

A consumer is test-driving a car of a used car dealership. She hears a sound under the car and asks the salesperson about it. The salesperson says, "Don't worry about that. We stand behind the cars we sell. If anything goes wrong in the next 60 days, we will fix it free of charge." Relieved, the consumer agrees to buy the car. Two days later, the transmission fails. She brings it back to the dealer and tells the manager what the salesperson said. The manager tells her that the salespeople aren't allowed to negotiate terms and all the terms are found in the writing. He points out that the writing effectively disclaims all warranties and conspicuously states that the car is sold "AS IS." He also points out a merger clause that states that there are no promises or understandings other than those found in the writing. Is the consumer likely to recover? (A) Yes, because the evidence does not contradict the writing. (B) Yes, because the parol evidence rule does not apply to consumers. (C) No, because the writing is a partial integration and the evidence does not contradict the writing. (D) No, because the writing is a full integration.

(D) No, because the writing is a full integration.

In a state where gaming is legal, a professional gambler ran up a tab of $50,000 at his favorite casino. Pursuant to a longstanding agreement between the gambler and the casino, once the gambler's tab reached $50,000 he was required to repay the debt in five monthly installments of $10,000 before putting any additional charges on his tab. After making three repayments, the gambler approached the casino owner and offered an immediate payoff of $15,000 in cash as payment in full. The casino owner had a cash flow problem and needed the money, so he agreed. The gambler made the cash payment of $15,000 that same day. A few days later, the casino owner demanded $5,000 from the gambler. Does the casino owner have a right to collect $5,000 from the gambler? (A) Yes, because the gambler had a preexisting duty to pay the full $50,000. (B) Yes, because the casino owner acted under duress when he accepted the immediate payoff of $15,000 in cash as payment in full for the gambler's debt. (C) No, because there was a discharge by release. (D) No, because there was an accord and satisfaction.

(D) No, because there was an accord and satisfaction.

A consumer sees a television set for sale at a retail store with a price of $800. After she buys the set, she discovers that another store is selling the same set for a price of $400. She complains, but the store refuses to do anything. What is consumer's best argument to avoid this contract? (A) The seller did not act in good faith in setting a price twice as high as the market price. (B) It is unconscionable to sell a television set at a price twice as high as others are selling it for. (C) The price was not within the consumer's reasonable expectations. (D) None of the above is a good argument.

(D) None of the above is a good argument.

Landholder was land-rich by inheritance but money-poor, having suffered severe losses on bad investments, but still owned several thousand acres of unencumbered timberland. He had a large family, and his normal, fixed personal expenses were high. Pressed for cash, he advertised a proposed sale of standing timber on a choice 2,000-acre tract. The only response was an offer by Logger, the owner of a large, integrated construction enterprise, after inspection of the advertised tract. Logger offered to buy, sever, and remove the standing timber from the advertised tract at a cash price of 70% lower than the regionally prevailing price for comparable timber rights. Landholder, by then in desperate financial straits and knowing little about timber values, signed and delivered to Logger a letter accepting the offer. If, before Logger commences performance, Landholder's investment fortunes suddenly improve and he wishes to get out of the timber deal with Logger, on which of the following defenses may he rely? (A) Statute of Frauds. (B) Economic Duress. (C) Physical Duress. (D) None of the above.

(D) None of the above.

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 woman saw a coat she did like and told the salesperson to bring one 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 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 to get her money back, under which theory would she most likely prevail? (A) Breach of the implied warranty of fitness for particular purpose. (B) Breach of the implied warranty of merchantability. (C) Breach of express warranty. (D) None of the listed warranties.

(D) None of the listed warranties.

A burglar stole Collecta's impressionist painting valued at $400,000. Collecta, who had insured the painting for $300,000 with Artistic Insurance Co., promised to pay $25,000 to Snoop, a full-time investigator for Artistic, if he effected the return of the painting to her in good condition. By company rules, Artistic permits its investigators to accept and retain rewards from policyholders for the recovery of insured property. Snoop, by long and skillful detective work, recovered the picture and returned it undamaged to Collecta. If Collecta refuses to pay Snoop anything, and he sues her for $25,000, what is the probable result under the prevailing modern rule? (A) Collecta wins, because Snoop owed Artistic a preexisting duty to recover the picture if possible. (B) Collecta wins, because Artistic, Snoop's employer, has a preexisting duty to return the recovered painting to Collecta. (C) Snoop wins, because Collecta will benefit more from return of the $400,000 painting than from receiving the $300,000 policy proceeds. (D) Snoop wins, because the preexisting duty rule does not apply if the promisee's (Snoop's) duty was owed to a third person.

(D) Snoop wins, because the preexisting duty rule does not apply if the promisee's (Snoop's) duty was owed to a third person.

Bobby, age 17, enters into an oral agreement to purchase Sally's 1974 Ford Pinto for $500. Prior to either party performing, Sally (age 21) repudiates. Bobby brings suit for breach of contract. If Sally wins, it will be because of: (A) Bobby's age. (B) Sally's age. (C) Lack of consideration. (D) The Statute of Frauds.

(D) The Statute of Frauds.

Neighbors of an apparently destitute couple bought a month's supply of food and gave it to them. Later, the wife confided in the neighbors that she and her husband did have money and that, because they had been so kind, she was leaving them money in her will. When the wife died, at the neighbors' request the husband gave the neighbors the following signed instrument: "In consideration of my wife's promise to our neighbors, and their agreement not to sue her estate, I agree to pay them the sum of $5,000." When the husband died of a heart attack several days later, the neighbors asked the administrator of his estate to pay them the $5,000. The administrator refused on the ground that there was no consideration for the agreement. On which of the following theories would it be most likely that the neighbors would recover? (A) The husband's written instrument was a binding unilateral contract. (B) The husband's acceptance of the food was fraudulent. (C) The husband is bound by promissory estoppel. (D) The husband and the neighbors entered into a valid compromise.

(D) The husband and the neighbors entered into a valid compromise.

The owner of a house put an ad for its sale in the paper. Her neighbor saw the ad and told her that he wanted to buy the house but had to arrange for financing. The owner suggested that they write a contract for sale then and there so that they would not have to waste any time while he got his financing. They orally agreed that the contract would not become binding unless the neighbor obtained financing, but the written contract did not mention this and appeared to be a fully integrated document. The neighbor could not obtain financing and the owner brings suit to enforce the written contract. Who will prevail? (A) The owner, because the contract was a fully integrated writing. (B) The owner, because parol evidence is not allowed to contradict a writing. (C) The neighbor, because the oral agreement that the contract would not be binding if the neighbor did not get financing was made contemporaneous with the writing. (D) The neighbor, because obtaining financing was a condition precedent.

(D) The neighbor, because obtaining financing was a condition precedent.

The owner of a parcel of land received the following letter from a buyer: "I will pay you $2,200 an acre for [the parcel]." The owner's letter of reply stated, "I accept your offer." Unknown to the owner, the buyer had intended to offer only $2,000 per acre but had mistakenly typed "$2,200." As both parties knew, comparable land in the vicinity had been selling at prices between $2,000 and $2,400 per acre. Which of the following states the probable legal consequences of the correspondence between the parties? (A) There is no contract, because the parties attached materially different meanings to the price term. (B) There is no enforceable contract, because the buyer is entitled to rescission due to a mutual mistake as to a basic assumption. (C) There is a contract formed at a price of $2,000 per acre, as the buyer intended. (D) There is a contract formed at a price of $2,200 per acre, regardless of the buyer's true intention.

(D) There is a contract formed at a price of $2,200 per acre, regardless of the buyer's true intention.

On June 1, Topline Wholesale, Inc. received a purchase-order form from Wonder-Good, Inc., a retailer and new customer, in which the latter ordered 1,000 anti-recoil widgets for delivery no later than August 30 at a delivered total price of $10,000, as quoted in Topline's current catalog. On June 2, Topline mailed to Wonder-Good its own form, across the top of which Topline's president had written, "We are pleased to accept your order." The form contained the same terms as Wonder-Good's form except for an additional printed clause in Topline's form that provided for a maximum liability of $100 for any breach of contract by Topline. As of June 5, when Wonder-Good received Topline's form, which of the following is an accurate statement concerning the legal relationship between Topline and Wonder-Good? (A) There is no contract, because the liability-limitation clause in Topline's form is a material alteration of Wonder-Good's offer. (B) There is no contract, because Wonder-Good did not consent to the liability-limitation clause in Topline's form. (C) There is an enforceable contract whose terms include the liability-limitation clause in Topline's form because liquidation of damages is expressly authorized by the UCC. (D) There is an enforceable contract whose terms do not include the liability-limitation clause in Topline's form.

(D) There is an enforceable contract whose terms do not include the liability-limitation clause in Topline's form.

A homeowner orally contracted to buy some custom made parts that the homeowner will use to build a retaining wall in the homeowner's back yard. The contract price for these materials was $2,000. The homeowner refused to take delivery even though the goods were conforming. The seller is unable to sell these parts to anyone else because they were individually designed for the homeowner. In a lawsuit against the homeowner by the seller of the parts: (A) The UCC would not apply because these goods will become real property when installed by the homeowner. (B) This contract is not enforceable because the price is more than $500. (C) This contract is not enforceable, unless the homeowner is a merchant in the materials purchased. (D) This contract is fully enforceable even though it is not in writing.

(D) This contract is fully enforceable even though it is not in writing.

The mother of a son and a daughter was dying. The daughter visited her mother in a hospice facility and said, "You know that I have always been the good child, and my brother has always been the bad child. Even so, you have left your property in the will to us fifty-fifty. But it would be really nice if you would sell me the family home for $100,000." "I don't know," said the mother. "It is worth a lot more than that—at least $250,000." "That is true," said the daughter. "But I have always been good and visited you, and my brother has never visited you, so that ought to be worth something. And besides, if you won't sell me the house for that price, maybe I won't visit you anymore, either." "Oh, I wouldn't want that," said the mother, and she signed a contract selling the house to her daughter for $100,000. Shortly thereafter, the mother died. When her son found out that the house had been sold and was not part of his mother's estate, he sued to have the contract avoided on behalf of the mother. On what ground would the contract most likely be avoided? (A) Duress. (B) Inadequate consideration. (C) Mistake. (D) Undue influence.

(D) Undue influence.

In a contract for the sale of goods, a merchant offeror's form states, "This contract is governed by the law of Texas." The merchant offeree's form states, "This contract is governed by the law of Vermont." In a jurisdiction that employs the knockout rule, which jurisdiction supplies the governing law? (A) Texas, because the offeror should be able to choose the applicable law. (B) Texas, because Vermont is materially different. (C) Vermont, because it is not materially different from Texas. (D) Whichever state prevails when the UCC choice of law rules are applied.

(D) Whichever state prevails when the UCC choice of law rules are applied.

A buyer of goods sends a purchase order to a seller on its form. The boilerplate on the form states that the seller is liable for consequential damages. The seller responds with an acknowledgment form that contains boilerplate that states that the seller is not liable for consequential damages. In addition, the seller's form states, "Acceptance is expressly made conditional on assent to the additional or different terms in this acknowledgment." After the forms are exchanged, the seller ships the goods and the buyer pays for them. The buyer then suffers consequential damages because of a breach by the seller. Is the seller liable for consequential damages? (A) No, because there is no contract between the parties. (B) No, because the seller's form governs. (C) Yes, because the buyer's form governs. (D) Yes, because the UCC provides for consequential damages.

(D) Yes, because the UCC provides for consequential damages.

During negotiations to purchase a used car, a buyer asked a dealer whether the car had ever been in an accident. The dealer replied: "It is a fine car and has been thoroughly inspected and comes with a certificate of assured quality. Feel free to have the car inspected by your own mechanic." In actuality, the car had been in a major accident, and the dealer had repaired and repainted the car, successfully concealing evidence of the accident. The buyer declined to have the car inspected by his own mechanic, explaining that he would rely on the dealer's certificate of assured quality. At no time did the dealer disclose that the car had previously been in an accident. The parties then signed a contract of sale. After the car was delivered and paid for, the buyer learned that the car had been in a major accident. If the buyer sues the dealer to rescind the transaction, is the buyer likely to succeed? (A) No, because the buyer had the opportunity to have the car inspected by his own mechanic and declined to do so. (B) No, because the dealer did not affirmatively assert that the car had not been in an accident. (C) Yes, because the contract was unconscionable. (D) Yes, because the dealer's statement was intentionally misleading and the dealer concealed evidence of the accident.

(D) Yes, because the dealer's statement was intentionally misleading and the dealer concealed evidence of the accident.

A company contracted with a builder to construct a new corporate headquarters for a fixed price of $100 million. At the time of the contract, structural steel was widely available and was included in the contract as a $6 million item. Before work began on the project, tornado damage shut down the production facility of the biggest structural steel supplier in the country, and the price of structural steel increased by 20% as a result. The builder informed the company of the steel price increase, and the parties then orally agreed to increase the project price to $101 million. The builder proceeded with construction and delivered the project on time. The company paid the builder $100 million but refused to pay the additional $1 million. If the builder sues the company for $1 million, is the builder likely to prevail? (A) No, because the modification was never reduced to a writing signed by the party to be charged. (B) No, because there was no consideration for the modification of the contract. (C) Yes, because the company's promise was supported by consideration. (D) Yes, because the modification was fair and equitable in view of the unanticipated increase in the price of structural steel.

(D) Yes, because the modification was fair and equitable in view of the unanticipated increase in the price of structural steel.

In late January, the manager of a grocery store announced via flyers and in the local newspaper that he would award a $700 in-store gift certificate to any shopper who generated more than $3,000 in sales on his or her store credit card for goods purchased in the store in the month of February. A woman with a large family who regularly shopped at the store decided that she had a good chance to win the contest. As a result, she bought a large freezer for $300 so she could buy food in bulk and store it at home. She then began buying large quantities of food and racking up purchases on her store credit card that were substantially higher than her usual monthly expenditures. About two weeks later, the store manager realized that, although a few customers had increased their spending in an effort to win gift certificates, receipts for the month thus far had not increased enough to justify the cost of awarding gift certificates, so he again put up flyers and took out an ad in the local newspaper, this time to announce that the contest was canceled. Although the woman saw the flyers, she continued to make larger than normal purchases at the store. At the end of the month, she had totaled more than $3,000 in purchases on her store credit card, but the store manager declined to give her the gift certificate. If the woman sues for breach of contract, will she prevail? (A) No, because the revocation was made in the same manner as the offer and, therefore, was effective. (B) No, because the woman knew that the offer had been revoked. (C) Yes, because she relied on the store's promise when she purchased the freezer. (D) Yes, because the offer could not be revoked as to the woman once she had begun to perform.

(D) Yes, because the offer could not be revoked as to the woman once she had begun to perform.

Buyer mailed a signed order to Seller that read: "Please ship us 10,000 widgets at your current price." Seller received the order on January 7 and that same day mailed to Buyer a properly stamped, addressed, and signed letter stating that the order was accepted at Seller's current price of $10 per widget. On January 8, before receipt of Seller's letter, Buyer telephoned Seller and said "I hereby revoke my order." Seller protested to no avail. Buyer received Seller's letter on January 9. Because of Buyer's January 8 telephone message, Seller never shipped the goods. Under the relevant and prevailing rules, is there a contract between Buyer and Seller as of January 10? (A) No, because the order was an offer that could be accepted only by shipping the goods; and the offer was effectively revoked before shipment. (B) No, because Buyer never effectively agreed to the $10 price term. (C) Yes, because the order was, for a reasonable time, an irrevocable offer. (D) Yes, because the order was an offer that Seller effectively accepted before Buyer attempted to revoke it.

(D) Yes, because the order was an offer that Seller effectively accepted before Buyer attempted to revoke it.

John, a law student, is selling his car to Mary. He says, "This car will get 25 miles per gallon around town. Of course, I disclaim all express warranties." The parties then enter into a partially integrated agreement that makes no mention of warranties or warranty disclaimers. Has John given Mary a warranty that the car will get 25 miles per gallon around town? (A) No, because John is not a merchant seller. (B) No, because the statement is puffing. (C) No, because all express warranties are disclaimed. (D) Yes.

(D) Yes.

Tune Corporation, a radio manufacturer, and Bill's Comex, Inc., a retailer, after extensive negotiations entered into a final, written agreement in which Tune agreed to sell and Bill's agreed to buy all of its requirements of radios, estimated at 20 units per month, during the period January 1, 1988, and December 31, 1990, at a price of $50 per unit. A dispute arose in late December, 1990, when Bill's returned 25 undefective radios to Tune for full credit after Tune had refused to extend the contract for a second three-year period. In an action by Tune against Bill's for damages due to return of the 25 radios, Tune introduces the written agreement, which expressly permitted the buyer to return defective radios for credit but was silent as to return of undefective radios for credit. Bill's seeks to introduce evidence that during the three years of the agreement it had returned, for various reasons, 125 undefective radios, for which Tune had granted full credit. Tune objects to the admissibility of this evidence. The trial court will probably rule that the evidence proffered by Bill's is (A) inadmissible, because the evidence is barred by the parol evidence rule. (B) inadmissible, because the express terms of the agreement control when those terms are inconsistent with the course of performance. (C) admissible, because the evidence supports an agreement that is not within the relevant statute of frauds. (D) admissible, because course-of-performance evidence, when available, is considered the best indication of what the parties intended the writing to mean.

(D) admissible, because course-of-performance evidence, when available, is considered the best indication of what the parties intended the writing to mean.

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