blaw exam 2
two basic elements to consideration?
Bargained-for exchange and legal sufficiency.
Although not covered by the original statute of frauds, most states have statutes requiring a writing to make all but which of the following contracts enforceable?
Contracts for the sale of securities.
ratification
Formal approval
James threatens to hit Kenneth in the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $400 for his saw. Because of the threat, Kenneth signs the contract
James has committed physical duress against Kenneth.
Jim contracted with Kevin to serve as a guide for Kevin on his three-week fishing trip to Canada. The contract was made on April 1 with the trip to begin on June 1. On May 1, Kevin notified Jim that he had changed his mind and would be unable to make the trip. He also refused to pay Jim any compensation. In this case:
Kevin has anticipatorily repudiated the contract and is immediately liable to Jim for damages.
Nancy, who lives in Birdville, wants to open a McHenry Roast Chicken franchise. Mark, a representative of McHenry, told Nancy, "If you will buy a lot and build a building in River City, we will give you a franchise." Nancy bought the lot and built the building as instructed only to discover that McHenry had awarded the franchise to a large corporation. McHenry claims no liability to Nancy since there was no consideration. Which statement best describes the situation?
McHenry is liable to Nancy based on the concept of promissory estoppel.
In the First State Bank of Sinai v. Hyland case, the Supreme Court of South Dakota held:
Mervin ratified his voidable contract by conduct, making it a fully valid legal obligation.
Barry's Sport Shop calls Champion Tee Shirt Company to order 200 designer tee shirts at $2 per shirt. The next day, Barry decides he can easily sell 100 more. Before the order is filled, he calls to change the order to 300 tee shirts. Champion sends 200. Can Barry force Champion to send the additional 100?
No, because Barry does not have a writing signed by Champion Tee Shirts.
Brian makes a material misrepresentation of fact regarding his horse to Rosalind while out riding one day. Later that day, Rosalind makes an offer to buy the horse which Brian accepts, without correcting his earlier misrepresentation of fact. In this case:
Rosalie may avoid the contract
Sid contracts to put new kitchen cabinets in Ned's house. Sid repeatedly tries to install the cabinets, but Ned does not grant him access to the house. In this case:
Sid is discharged from his duties under the contract because Ned's prevention of Sid's performance constitutes a material breach.
Which of the following is untrue regarding the contracts of intoxicated persons?
Slight intoxication will destroy one's contractual capacity.
Michelle's Boutique places an ad in the Sunday paper for beautiful, top-of-the-line designer suits for $3.00. Alice sees the ad in the paper and goes to the store to stock up on business suits for her new job. Michelle apologizes for the misprint. Alice has just finished a class in contract law and insists that the store sell her five suits for $15. Alice threatens to sue Michelle for breach of contract.
The ad in the newspaper is a solicitation seeking offers, but is not an offer to sell; therefore, Alice will not be able to successfully sue for breach of contract.
What is another name for the main purpose doctrine?
The leading object rule.
Claudia sells her highly successful hair salon to Carl. In the sales contract, Claudia agrees never to open a hair salon in the state. Which of the following best describes this contract clause?
Unenforceable as a violation of public policy.
What principle did the court apply in the case of Madison Square Garden Corp., Ill. v. Carnera?
When damages are not adequate, an injunction may be used to enforce a negative covenant regarding exclusive services that are unique and extraordinary.
Rose is working hard on Arlin's mayoral campaign. She thinks that just a few more votes could win the election, so she promises to pay her friend Violet $50 if she will register and vote for Arlin. Violet does so, but Arlin loses the election, and Rose now refuses to pay. Rose's agreement to pay Violet:
Where the agreement is with an unlicensed attorney.
Rebecca sees a pair of beautiful silver shoes in a store window. She goes in and tells the shopkeeper, "If I am asked to the prom, I will buy those shoes. Please hold them for me." If the shopkeeper signs a note that says, "Will hold for Rebecca silver shoes, style 1028, size 8," will he have to honor that promise?
Yes, and there is a condition precedent to the contract of sale.
Don has an employment contract with Dunkirk Ice Cream. He sells ice cream and novelty ice cream products. He has nine children and doesn't make enough money, so he decides to see if another dairy will hire him, too. "After all," he reasons, "most stores carry four or five different brands." His employment contract prohibits him from competing. If Don sells for another dairy in addition to Dunkirk, will he be in trouble under his contract?
Yes, it is likely to be enforceable during employment.
Jack moved from New Hampshire to Florida and decided to have an air conditioner installed in his car. After it was installed, Jack received a bill for $1,200. Jack called the dealer and told him he'd never heard of this service costing more than $500. They argued, but the dealer finally agreed to take $900. Is the agreement enforceable?
Yes, there is consideration for the modified amount.
implied-in-fact contract
a contract in which agreement between parties has been inferred from their conduct
The parol evidence rule is:
a rule of substantive law.
If there is no time specified for the acceptance of an offer, when does the offer terminate?
after reasonable time
The sole nursing home in the county offers a long-term care agreement. The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis. Such a contract is called:
an adhesion contract.
Stark enters into a contract with a contractor to build a large shopping mall in River City. Donner will greatly benefit from this contract since his convenience store is adjacent to the mall. Donner in this instance is:
an incidental beneficiary.
David enters into a contract giving Edward the right of first refusal on a tract of land owned by David. David subsequently offers the land to Fred without first offering it to Edward. An appropriate remedy for Edward to seek would be:
an injunction
A contract that binds the offeror to keep an offer open for a specified period of time is known as:
an option
In a contract for the sale of lawn care services, an issue arises about whether the homeowner would receive disproportionately less in service than the lawn care company would receive in compensation. This disparity may be relevant to the:
availability of certain defenses and remedies.
A contract in which both parties exchange promises is a:
bilateral contract
The law would most likely impose a duty of disclosure in a transaction between:
business partners
Harold hired Blake Painters to paint his house. Blake decides he has too many jobs and delegates the duties to the Andrews Company. If Andrews does a poor job, and drips paint on Harold's flowers and windows, Harold:
can sue both Blake and Andrews.
remedy
compensation
promises made enforceable by statute
contract modifications, renunciations, and firm offers
Under the UCC, __________ refers to the manner and extent to which the respective parties to a contract have accepted successive tenders of performance by the other party without objection.
course of performance
A transfer to a third party of a contractual obligation is known as a(n):
delegation of duties
The exercise of the power to avoid a contract is known as:
disaffirmance
Professor Doright has a life insurance policy on his own life that provides that in the event of his death, his mother will receive the proceeds. Professor Doright's mother is a(n):
donee beneficiary
The Uniform Commercial Code does not apply to:
employment contracts. service contracts. insurance contracts. contracts involving real property.
Samuel Tate enters into a contract with Bill Smith under the terms of which Smith is to pay Tate $7,000 and Tate is to build a garage, repair a boat, and build a doghouse. If the doghouse has not yet been built, which term describes the type of contract in existence?
executory contract
A gratuitous assignment is revocable even after the assignor has made an effective delivery of the assignment to the assignee.
false
A person who has made a financially unsound contract may be relieved from performance under the doctrine of commercial impracticability.
false
According to the Restatement, unless circumstances indicate the contrary, a contract term prohibiting assignment of the contract bars both the assignment of rights and the delegation to the assignee of the assignor's duty of performance.
false
An assignee's assent is required for any assignment to be valid.
false
Article 9 of the UCC makes waiver-of-defense clauses effective against assignees in consumer transactions.
false
Carl, a contractor, has a contract with Ron, a realtor, to construct a new condominium complex. The contract provides that Carl must furnish a certificate of occupancy and conformity with the local fire code before Ron has an obligation to pay. The furnishing of the certificate is an implied-in-fact condition subsequent to the construction of the building.
false
Courts of equity will grant specific performance of contracts for personal services.
false
Daniel, a cabinetmaker, contracts to make a china cabinet to Lora's satisfaction and Lora promises to pay Daniel $2,800 for the cabinet if she is satisfied with it when completed. Daniel completes the cabinet in a workmanlike manner using the wood Lora has chosen. If Lora tells Daniel that she is not satisfied with the cabinet and refuses to accept or pay for it, Daniel is entitled to recover from Lora the reasonable value of the cabinet if her dissatisfaction is unreasonable.
false
If West and Burton designated in their contract an amount to be paid in the event of a breach and the amount is found to be so high it is considered a penalty, the injured party will be left without a remedy.
false
If the parties to a contract stipulate an amount that will be paid in the event of a breach, the courts will always enforce it.
false
If there is a novation, the original promisor remains liable to the original promisee if the new promisor fails to perform.
false
Objective impossibility occurs if a particular contracting party is unable to perform because of financial inability or lack of competence.
false
Specific performance is the usual judicially granted remedy for breach of contract.
false
The "perfect tender rule" provides that only substantial deviations from the promised performance in a sales contract under the Code constitute a material breach and discharge the aggrieved party from the duty of performance.
false
The Code and the Restatement have no provisions for discharge of contractual duties in cases involving commercial impracticability.
false
The State Opera Company has a contract with a famous tenor to perform in its production of La Boheme. If the tenor chooses, he may delegate his duties under the contract to an equally well-known tenor.
false
The UCC prohibits assignments of $5,000 or more.
false
The costs or losses an injured party avoids by not having to perform are not figured in the computation of damages.
false
The majority of states allow the injured party who has been induced to enter into a contract by fraud to recover only "out-of-pocket" damages equal to the difference between the value of what she has received and the value of what she has given for it.
false
Sam wants to sell his golden retriever to Al. Sam tells Al that the dog is three years old and that he will point, back, and retrieve. Al relies on these statements and purchases the bird dog. Although the dog is three years old and will point at birds, he will not back (honor another dog's point). The buyer has most probably been a victim of:
fraud in the inducement
liquidated damages
generally uphold contract
executory contract
has not yet been fully performed
Bob, the tax accountant, promises to do Marge's individual federal, state, local, and gift taxes for the year. He completes all but the gift taxes. Under the substantial performance doctrine, Marge will:
have to pay Bob for all but the gift taxes.
Scott, a minor, sells his digital camera to Megan, who then sells it to Sherry. Under these circumstances:
if Sherry is a good faith purchaser for value and she buys the camera before Scott elects to rescind, no rescission is permitted.
Under E-Sign, an electronic agent:
is a computer program or other automated means used independently to initiate an action or respond to electronic records or performances.
Clint contests the amount of a bill he received from Car Care Specialists. Under the Restatement, settlement of the claim:
is valid consideration if at the time of the settlement the claim was doubtful because of uncertainty as to the facts
Lynne agrees to buy Harriette's farm for $200,000 and puts $20,000 down. Then Lynne learns she is allergic to hay and repudiates the contract. If Harriette can sell the farm in a good faith transaction for $190,000 a month later, she may:
keep $10,000 of Lynne's down payment.
usury statute
law establishing a maximum rate of interest
Divided Parcel (DP) includes the following on its mailing receipts: "We are not responsible for any damages to packages whether or not through the intentional or reckless fault or negligence of our employees. Send packages at your own risk." Mary reads this clause but sends her watch back to the manufacturer to be repaired anyway. The watch is destroyed when the DP driver uses the package for a ball and tosses it to his buddy. Mary is:
likely to collect from DP because it attempted to excuse intentional and reckless behavior.
The remedies of damages and rescission are available for:
material fraudulent misrepresentation negligent misrepresentation innocent misrepresentation
Maxine offered to sell her video camera to Tom for $200 and also stated to Tom, "I will give you two weeks to accept my offer." One week later Tom learned that Maxine had sold the video camera to Cindy. In this case:
maxine has revoked her offer
Harry said to Marge, "I have a ring once owned by Marilyn Monroe. Would you like to buy it for $500?" Marge pays for the ring, but the next day a friend tells her that Harry had recently purchased the ring at a local store. Marge enjoys wearing the ring and wears it constantly for twelve months. Finally, she goes to Harry and says, "Here is the ring you lied about. Give me my $500." Most likely Marge will:
not get her money back since she has affirmed the contract by taking an unduly long time to disaffirm.
implied-in-law contract(quasi contract)
not really a contract but instead a fiction created by the law to allow the enforcement of a contractual remedy where justice alone warrants such a remedy
Jeb submits a bid to construct a student union building for the local community college. He realizes after submitting the final bid that he forgot to include the cost of the window casings for the entire building. He may:
not revoke his bid due to the statutory irrevocability of the bid.
Substantive Unconscionability
oppressive or grossly unfair contractual terms
By holding a knife to his back, Ed compelled Sean to sign a contract advantageous to Ed. This contract was entered under:
physical duress
The privilege to play tennis and socialize at the Capital City Country Club (CCCC) is obtained through application, references, resumes, and fees. Steven and Chanel want to assign the remaining 4 years of their 5-year membership to Charles and Prissy so that Steven and Chanel may join the posh Silver Hawk Tennis and Polo Club. CCCC sues to enjoin Steven and Chanel from assigning their membership. CCCC will most probably:
prevail because the parties intended the contract to be personal and non-assignable.
John operates a small repair business and is in desperate need of a certain type of building material. He obtains the material from a large corporation, but is charged a grossly unreasonable price and is forced to buy other material he does not need. In view of the buyer's unequal bargaining power and unreasonable terms of the contract, this may be a case of:
procedural unconscionability
Nanette wanted to purchase a new car and found one she liked at Minson Motors. Several important contractual terms were buried in the written agreement and some of the meaning of the contract was obscured by legal jargon. The contract involved:
procedural unconscionability.
illusory promise
promise that does not impose any obligation on the promisor
An obligation imposed by law where there has been no agreement or expression of assent by word or act on the part of either party involved is a(n):
quasi contract
A change in contract law between the nineteenth and twentieth centuries was:
relaxation of requirements
Relationships that may lead to a court's careful scrutinization of contracts between the parties to make sure undue influence was not present include all but:
salesperson and customer
If the contract does not state otherwise, standard goods under a contract for sale to meet the satisfaction of the buyer must:
satisfy a reasonable person.
Busby contracts to build a house for Connell. Busby finishes approximately half of the house and quits. Connell files suit against Busby. Which remedy is not available
specific performance
Fay, age 17, ordered a pair of skis on the installment plan. She paid $20 every month until she turned 18, the age of majority. The next day, she sold the skis to Sharon and disaffirmed the contract. Fay is:
still liable because selling the skis amounted to a ratification.
When contract terms prohibiting the assignment of rights exist, most courts will:
strictly construe them. interpret a general term prohibiting assignments as a mere promise not to assign. award the obligor a right to damages for the breach of the terms forbidding the assignment.
Scienter is a legal term which means:
that the seller had knowledge that his statements were false and the statements were made with the intention to deceive.
Darrell owns a parcel of land that is encumbered by a mortgage held by the First National Bank. Darrell agrees to sell the land to Paul for $50,000. Darrell and Paul together go to the First National Bank to discuss the sale and purchase with the banker. Darrell, Paul, and the banker sign an agreement stating that Paul will assume the mortgage and that Darrell will be discharged from all further liability on the mortgage. In this case:
the agreement among the three is a novation.
Anita owes Brad $75,000. Brad signs a written statement granting Cal a gratuitous assignment of his rights from Anita. If Brad dies prior to delivering the statement to Cal:
the assignment is terminated upon Brad's death.
A power of avoidance held by a party may be lost if:
the contract is affirmed. there are unreasonable delays in exercising the power. the rights of third parties intervene.
In Berg v. Traylor, the court found that:
the disaffirmance of an agreement by a minor does not operate to terminate the contractual obligations of the parent who signed the agreement.
Promissory Estoppel
the legal enforcement of a contract bc one party relies on the contract
Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time. He buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius. He later learns the violin is an imitation, although it is a good imitation, which fooled even the dealer. In this case:
the sale may be rescinded, because the dealer has made a nonfraudulent misrepresentation.
Jack has been in the business of selling carpeting for 20 years. He calls Bob, who is opening another branch of his furniture stores, and offers to sell him 100 square yards of carpet at $20 per square yard. Bob agrees and sends back the following letter confirming the deal:Dear Jack:As we discussed on the phone January 3, we accept your offer of 100 square yards of Saxony "heather blue" carpeting at the rate of $20 per square yard. We also reserve the right to purchase any additional yardage we need to carpet our other showroom facilities at the same rate for one year from that date.Very truly yours,BobWhich of the following is true?
there is a contract for only 100 square yards of carpeting
Stan sends for a law school catalog from Ivory Towers University. According to the catalog, the law school applications are evaluated on the basis of undergraduate grades, standardized test scores, and references. Stan, who is a straight-A student, has high test scores and excellent references, applies and pays the $100 application fee. His application is rejected. Later he finds out that others with low grades and test scores were accepted based on their family connections and donations made to the University. If Stan followed all of the guidelines in the college catalog and paid the required application fee, then according to the court in Steinberg v. Chicago Medical School:
there is a valid contract; the school bound itself to honor the obligations set forth in the college catalog.
A breach of contract always gives rise to a cause of action for damages by the injured party.
true
A contract in which a party (the promisor) promises to render a certain performance not to the other party (the promisee) but to a third person (the beneficiary) is called a third-party beneficiary contract.
true
A contract may condition the performance of a party upon the approval of a third party.
true
After the coronation of Edward VII was postponed and parties who had entered into contracts in anticipation of the event filed numerous suits, the doctrine of frustration of purpose evolved.
true
An incidental beneficiary has no right to enforce a contract.
true
An unauthorized alteration of ANY of the material terms in a written contract discharges the entire contract.
true
At its discretion, a court of equity may grant an injunction against breach of a contractual duty when damages for a breach would be inadequate.
true
Concurrent conditions occur when mutual duties of performance are to take place simultaneously.
true
Even if a party has the power to avoid a contract for lack of capacity, duress, or undue influence, the party will lose that power by affirming the contract
true
Punitive damages are not always awarded as a deterrent in breach of contract cases.
true
Restitution can be obtained where a voidable contract is avoided.
true
Tender is an offer by a party, who is ready, willing, and able, to perform his obligations under the contract.
true
The general rule is that an assignee stands in the shoes of the assignor. He acquires the rights of the assignor but acquires no new or additional rights.
true
The purpose of reliance damages is to place the injured party in a position as good as he would have held if the contract had not been made
true
Unless otherwise provided by statute, an assignment may be made orally.
true
When the assignee gives consideration in exchange for an assignment, there is a contract between the assignor and the assignee that prevents the assignor from revoking the assignment without the assent of the assignee.
true
If Randall and Gale agree to an assignment of Randall's contract with Doug:
under both the Code and the Restatement, unless circumstances or language indicate the contrary, an assignment of "the contract" means the assignment of rights and a delegation of duties.
Jason's mother would like him to go to college, so in June he enrolls at the local university. He also quits his job and tells his mother his plans to take classes. His mother says, "I'm so happy that you are going to college that I want to pay for your books." Jason then sends her a bill for $485. Jason's mother's promise is:
unenforceable, because Jason had already enrolled in school when she made the statement that she wanted to pay for his books, and there is no consideration.
Procedural Unconscionability
unfair or irregular bargaining
Under the UCC, a(n) __________ is a practice or method of dealing regularly observed and followed in a place or vocation or trade.
usage of trade
Anna is 88 years old and under the legal guardianship of her daughter. One day Anna receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy. This contract is:
void
James offers to sell his fishing boat to Brenda for $3,000. Brenda says she will apply for a loan and will buy the boat within a week. A contract is formed:
when Brenda tells james she will buy the boat
does an accord in satisfaction discharge the debt
yes
If incorrect, which of the following would probably be considered a misrepresentation of a material fact?
"This car has new brakes."
Bart sends Carla an offer by express mail. Carla receives it at 10 a.m. on Tuesday. At 11 a.m. on Tuesday, Carla delivers an acceptance to Speedy Mail-to-You Express, Inc., but due to their error, the letter is not sent out by the company until Wednesday at 8 a.m. At what time does the law consider the acceptance to be effective?
11 am on tuesday
The UCC provides that a merchant is bound to keep a written offer open for the stated period, but no longer than:
3 months
mirror image rule
A common law rule that requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be formed.
condition subsequent
A condition in a contract that operates to terminate a party's absolute promise to perform.
express contract
A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written.
Compensatory Damages
A monetary award equivalent to the actual value of injuries or damage sustained by the aggrieved party.
Which of the following is true regarding noncompliance with the statute of frauds?
A party to a contract which was unenforceable because of the statute of frauds but who relied upon the contract may recover in restitution the benefits he conferred on the other party.
Which of the following would NOT be a merchant under Article 2 of the UCC?
A person who inherits three speedboats and wants to sell them to buy a car.
William agrees to drill a well up to 200-feet deep for John's rural cabin. The contract price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract. He offers to get a special drill, but says it will cost him more money, so that he will be unable to complete the project for the agreed price. Because John is anxious to have the well, he agrees to pay William an additional $1,000 to complete the job. However, once the well is finished, he changes his mind and now says he will pay only the originally agreed-upon amount. What is the result?
The parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000.
Action Play Equipment ordered 200 feet of chain, 400 clasps, and 50 swing seats from Brace Company for $1,600 to be delivered within three weeks of the order. Brace sent back an acceptance form which stated payment was due within 30 days of delivery or a finance charge of 2% per month would be added to the balance. What is the status of the interaction between Action and Brace?
There is a valid contract under the UCC, and the additional payment terms become part of the contract unless Action objects within a reasonable period of time.
charitable subscription promises?
They are generally enforceable if there is reliance or a probability of reliance by the charity.
Morris interviewed for a job as plant manager at Northland Bearings and was offered a two-year contract if she could relocate and start the new job within three weeks. Morris agreed. Northland promised to follow up the oral agreement with a written contract setting forth all the agreed terms, but the contract had not arrived within several days. Morris wanted to give two-weeks' notice to her present employer, so she called Northland to check on the written contract and was told it was ready to be sent to her and assured her the job was hers. She gave notice of her intention to quit her present job and moved two states away to the Northland location. When Morris arrived for her first day of work, she was told someone else with better qualifications had been found and hired for the position. Morris:
may be entitled to good-faith reliance damages under the doctrine of promissory estoppel to avoid injustice
Robert Briscoe is 17 years old. He lies to Bouyers Auto about his age in order to induce them to sell him a new pickup truck. Bouyers falls for this lie and sells him the pickup. Under the prevailing view, Robert:
may disaffirm and get his money back.
Melody, age 17, makes a contract with Seung, who is an adult. Melody:
may exercise the power of avoidance, called disaffirmance, while still a minor, and thereby be released from any liability on the contract.
valid contract
meets all requirements
The usual remedy for breach of contract is:
money damages
At age 17, Wanda purchased an expensive sound system from Lectronic City. If Wanda wishes to ratify this contract, Wanda:
must reach the age of majority and ratify the contract as a whole.
requirements for a contract
mutual assent, consideration, legality of the object, capacity
void contracts
no contract at all
A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay. Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were sailing from Bombay. One sailed in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good faith. When the goods failed to arrive on time, the buyer sued for breach of contract. The court found:
no contract existed due to mistake in meaning of terms.
A small breach of contract damage amount fixed without regard to the amount of loss is known as:
nominal damages
