blaw exam 3

Matt sells bikes at a local discount store. To encourage Bob to buy a more expensive model than he originally contemplated, Matt tells Bob, "This is the most awesome bike money can buy at this price. You can expect lots of riding pleasure." Based on this statement Bob buys the bike. A week later, before his bike is fully paid for, Bob sees a far superior bike for a lower price at another store. Bob

cannot avoid the contract because the statements were opinions or sales puffing.

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.

To be effective, an offer must:

- be communicated to the offense - be sufficiently definite and certain - manifest an intent to enter into a contract

There are certain transactions that are enforceable without consideration. These include:

- promises to pay a debt barred by the statute of limitations. - a promise to pay a debt that has been discharged in bankruptcy if certain requirements are met. - a new promise to perform a voidable obligation that has not previously been avoided.

Aron ordered an truck bed toolbox for $249.99. Before it was delivered, the same store from which he ordered the toolbox ran an ad in the paper for the same toolbox at $179.99. Aron called the store and demanded the advertised price. If the store says "okay":

Aron must pay $179.99.

If Coy tells Sari that he will give her two days to decide if she wants to buy his motorcycle, he cannot sell it to anyone else during that time.

False

Ron offers to sell Pete his stamp collection. Pete gives Ron $10 to induce Pete into keeping his offer open for a week. If Ron decides on day four of the week that he really does not want to sell to Pete, he can revoke his offer without fear of a breach of contract lawsuit being filed against him.

False

Serafina's Boutique places an ad in the Sunday paper for finely tailored, top-of-the-line designer suits for $10.00, which is a misprint. Alice sees the ad in the paper and goes to the store to stock up on business suits for her new job. Serafina apologizes for the misprint. Alice has just finished a class in contract law and insists that the store sell her five suits for $50. Alice threatens to sue Serafina 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.

Which of the following would be considered to be a misrepresentation of a material fact for purposes of establishing fraud in the inducement?

"This car has a new radiator."

Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she wants additional sequin trim around the neck and calls Mary who says it will now cost $60. When Mary finishes the dress (with the sequin trim), Georgia must pay:

$60, since the modified agreement is supported by additional consideration.

Which of the following, if any, are requisites for fraud in the inducement?

-The representation is justifiably relied on. -False representation of a fact that is material. -Representation is made with knowledge of its falsity and the intention to deceive.

Which of the following would NOT be a merchant under Article 2 of the UCC?

A person who inherits three motorcycles and wants to sell them to buy a car.

Which of the following would generally be considered to be a revenue-raising licensing law?

A statute requiring that salespeople be licensed, but not establishing any educational or training requirements.

Don offers to sell his diamond ring to Emily. If Diane overhears the offer and says, "I accept the offer":

Diane cannot accept because the offer wasn't made to her.

Bill is currently enrolled in law school. He expects to graduate and take the bar exam in order to be able to practice law. Before Bill becomes a lawyer, he promises to represent his friend, Tom, in a breach of contract action if Tom will pay him 25% of the settlement. Bill negotiates and the case settles for $50,000. Tom refuses to pay Bill. Bill then graduates and attempts to sue Tom. Bill has a legal right to enforce the agreement.

False

D owes C a past-due undisputed debt of $500. D sees C in a bar and pays him $400. C then says to D, "Forget about the other $100 you owe me. I'm glad to get the $400." C's promise to discharge the remainder of the debt is binding.

False

Dana gives care to Marnie's dog when Dana finds Marnie's dog injured on the side of the road. After Marnie locates her dog, Marnie promises to reimburse Dana for the cost of treating the dog. Marnie's promise is binding, because there is a bargained-for-exchange.

False

David's question to Albert, "Would you be interested in buying my computer for $800?" is an offer to Albert.

False

Sam, a student, promises to act as a guide on a fishing trip for a group of visiting dignitaries. The dignitaries agree to pay him $200 for his services. Sam guides them, but when they discover that Sam does not have a fishing license, they refuse to pay him. The agreement is an illegal one, which is not enforceable.

False

The Abbot Corporation contracts with the Baker Corporation to sell to Baker its entire production. After signing the agreement, Abbot can increase its production from one shift to two shifts and Baker will have to buy all of the doubled production.

False

The common law "mirror image" rule applies to an offer and the acceptance of that offer in a contract for the sale of goods.

False

You want to go sky diving and the business you plan to use requires you to sign an agreement including an extensive exculpatory clause. Which statement is correct?

If you were injured during the dive due to the company's negligence, the exculpatory clause would excuse the sky dive company from liability for its tortious conduct.

George offered to paint Catherine's barn for $3,000. Catherine said she would accept the offer if George would paint the woodshed, too.

Presuming George receives Catherine's response and then starts painting, based on his conduct he has accepted her offer which includes painting the woodshed.

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.

Which of the following would not be enforceable without additional consideration?

The settlement of an undisputed debt.

The UCC provides missing contract terms in which of the following instances?

Both failure to specify the price and failure to specify the place of deliver.

An agreement to refrain from a particular trade, profession, or business is enforceable if two requirements are met: that the purpose of the restraint is to protect a property interest of the promisee and the restraint is no more extensive than is reasonably necessary to protect that interest.

True

An exculpatory clause attempts to excuse one from liability for her own tortious conduct.

True

B& B, Inc. pays an attorney to draft and lobby for a bill which will greatly lessen B & B's tax liability to the state and federal governments. B&B gives the attorney $20,000 in cash to pay legislators for taking the time to listen to him. This is an agreement which is a violation of public policy.

True

If Marguarite promises to pay Neal $300 not to defame her, the promise is unenforceable because tort law imposes a preexisting obligation on Neal to refrain from such an act.

True

If no time is stated, an offer will terminate automatically after a reasonable period of time.

True

Pedro receives an unordered three-CD set in the mail accompanied by the statement, "This CD set can be purchased for the special price of $19.95. If the CDs are not returned within two weeks they will be deemed accepted and the payment is due within 30 days of receipt of the CDs." Pedro is under no obligation to either return the CDs or to pay for them; he may use them or give or throw them away.

True

The legal effect of a usurious loan varies from state to state.

True

Under the common law, a modification of a preexisting contract must be supported by mutual consideration; under the Code, a contract can be modified without new consideration.

True

Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship.

True

When does acceptance of an offer to enter into a unilateral contract generally occur?

Upon full performance by the offeree.

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.

Nadira mails an offer to Cade on March 15. Cade receives the offer on March 16. Nadira mails a revocation of the offer on March 17. Cade mails a letter of acceptance on March 18. Cade receives the revocation on March 19. Nadira receives the letter of acceptance on March 20. Was a contract formed?

Yes, on March 18.

Lyle offers to sell his house to Dennis for $95,000. Dennis responds, "I will pay you $95,000 for the house if you first paint the second floor." This response could best be described as:

a counteroffer.

On January 1st, Mask Manufacturing Inc. makes an agreement to sell to Helping Hands Hospital all of the protective masks that Helping Hands needs for a period of 3 months. Helping Hands normally uses about 1,000 month although the number varies a little. On March 1st, Helping submitted an order for 5,000 masks. Mask Manufacturing only provides 1,000. Which statement is true?

This a requirements contract and Mask is not in breach of contract for failing to provide 5,000.

Brooks offers to sell four acres of land to Jennifer for $8,000 and further offers to keep the offer open for one month if Jennifer will pay him $100 for the privilege. Jennifer pays Brooks $100. Which statement describes the payment of $100?

This created an irrevocable option contract under the common law so Jennifer has one month to decide if she wants to buy the land.

Marilyn contracted with Bravo Builders to build an addition to her house for $15,000. After digging the foundation, Bravo decides that it will take more work and more concrete than it had originally thought and that it will need to charge an additional $5,000 for the job. Assuming Marilyn agrees, which of the following is correct?

This is a modification of a preexisting contract, which under common law must be supported by additional consideration on the part of Bravo Builders.

Ezekiel wrote a letter to his friend Fernando offering to sell Fernando an 75-acre farm for $150,000. After mailing the letter, Ezekiel learns that the farm is actually worth 200,000 and changes his mind about selling. In this case, Ezekiel:

can revoke his offer at any time before Fernando accepts it, because there is no consideration to keep it open.

Jill contracts to purchase Kevin's automobile under the belief that she can sell it at a profit to Linda, but after Jill has bought the car, she finds out that Linda isn't interested in buying it. Jill:

cannot avoid the contract.

Archie bets his friend Jerry $100 that the Packers will win the next Super Bowl. This is an:

illegal wagering agreement.

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Bob wasn't sure as to the nature of the stone, but told Albert he thought it was a topaz and believed that to be true. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut diamond worth about $700. The sales contract:

is a valid contract that should be enforced by the law, because neither party knew the exact nature of the stone at the time of the sale.

Orwin, owner of a used furniture store, gives Maggie a signed offer to buy her living room furniture for $800. This offer:

is irrevocable for a reasonable time, not to exceed three months, even if there was no consideration.

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:

is unenforceable and opposed to public policy.

Marilyn read an ad in the school newspaper offering a $1,000 swimming scholarship to anyone who could swim 500 laps in the school pool. Marilyn called the advertiser and began swimming. She has reached lap number 460; she feels great and is sure she can make it all the way. The advertiser:

must permit Marilyn the opportunity to finish her attempt to swim the 500 laps, or pay damages if he interferes with the completion of the laps.

Remo helped Hank study all night for an important exam. After Hank got an "A" on the exam, he told Remo, "I will give you $10 for helping me get a good grade." Remo said, "Thanks, I'll take it." There is:

no contract because there is no valid consideration.

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(n) __________ is a measure designed to protect the public from unqualified practitioners.

regulatory license

Marcus is a salesman for Outdoor Life. He is telling a potential customer the virtues of a particular tent, by making the claim that "It's tougher than a Baylor bear!" If this customer buys the tent, only to find it destroyed by bears in the campground,

she does not have a valid claim because Marcus' talk was just sales puffery.

Abner 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 the terms of the agreement include a grossly unreasonable price and he 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:

substantive unconscionability.

Carl and Ron both work in road construction. They know that several jobs are going to be up for public bids, and agree between themselves that Carl will bid on one job and Ron will bid on the other, so that they both have work for the summer. When the bids are opened, Carl realizes that Ron has bid on both jobs. Ron is awarded both contracts. If Carl now wants to sue Ron for breach of contract:

the agreement will not be enforced by the courts because it violates public policy.

Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's estate, which is currently being probated. She expects to know for sure how much she will receive within a week or so. If Edward agrees:

the consideration from Darla to Edward is the promise of $6,000 subject to a condition.

Alatan owns a building supply store in Russ County. His trade extends throughout River City, the largest city in Russ County, but not beyond the county limits. He sells his store to Hilary and, as part of the transaction, agrees not to engage in the same business anywhere in River City for a period of two years. In this case:

the geographic restraint is reasonable.

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.

Clint contests the amount of a bill he received from Car Care Specialists. If they reach an agreement that Clint will pay less,

there would be valid consideration for the modification if at the time of the settlement the claim was doubtful because of uncertainty as to the facts.

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 his mother is not getting any legal benefit for her promise to pay for his books.

A __________ is a law establishing a maximum rate of permissible interest for which a lender and borrower of money may contract.

usury statute

Rorzex, Inc. entered into a contract with Denzil under the terms of which Denzil would receive $20,000 if he stole trade secrets from the leading competitor of Rorzex. Denzil performed his end of the agreement by delivering the trade secrets. Rorzex now refuses to pay Denzil for his services. Denzil:

will be unable to recover, because this is an illegal contract.

A bank robbery has occurred, and the banker's association has offered a $1,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming to be entitled to the money. Which of them is eligible?

An off-duty deputy sheriff from a county other than the one where the bank robbery and arrest occurred.

Adam wants to buy a six-passenger car. The salesman tells him that the two-seat sports car Adam sees on the car lot would be just perfect for six people. Adam test drives the car and then buys it.

Adam is not entitled to relief based on fraud because he was not justified in relying upon the salesman's representation that the car would seat six people.

Al, an accountant, has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sale contract, he agrees that he will refrain from practicing accounting anywhere within a 60-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home. In this case:

Al is in violation of the sale agreement, which contained restrictions that would probably be held to be valid.

Which of the following results in a void contract?

Duress by physical force.

American courts generally will enforce a gambling agreement.

False

Jim threatens to hit Kai in the head with a baseball bat unless Kai signs a contract agreeing to pay Jim $400 for his computer. Because of the threat, Kai signs the contract.

Jim has committed physical duress against Kai and the contract would be void.

Nell gives Big Al $50 in return for Al's promise to defame Sara. Nell hopes to ruin Sara's chances at a promotion. Nell finds out that Al did not hold up his end of the agreement. Which of the following statements is true?

Legally, Nell can neither get the money back nor force Al to do as he promised.

Marge, a sports collector, puts an ad in her company's newsletter saying she would pay $400 for a specific Kobe Bryant rookie basketball trading card. She said she would pay the first person who accepted her offer by bringing her the card. Marge then decides she would rather buy some new shoes,and changes her mind about investing in the card. Marge posts a sign at her office's executive break room saying the offer is no longer valid. A foreman from a branch plant read the newsletter ad and drove two hours to the Chicago main office to see Marge. When he walked in her office and said "I've brought your card" she replied, "But I don't want it anymore." What result?

Marge must pay him the $400 because he accepted the offer.

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 to Tom.

Aunt Ellie promises her 21-year-old nephew, Robbie, that she will pay him $100 if he quits smoking for a month. If Robbie does, is there a binding contract?

Yes, because Robbie gave up a legal right.

Steven has a typed copy of a contract, which he would like to have Thomas sign. Thomas, who needs glasses to read typing, doesn't want to sign until he has read the document, but Steven convinces Thomas to sign it anyway, because it is a "standard" contract for this type of situation. Is the contract which Thomas signed binding upon him?

Yes, because he was negligent in not ascertaining its contents.

Under the common law, the __________ must be the mirror image of the __________.

acceptance, offer.

Alice says to Brian, "If I decide to buy a digital camera next year, I will buy it from you." This is an example of:

an illusory promise.

The Cameron Park Zoo offered to rent its facilities to Kids Kamp, a local organization, to hold an Easter Egg hunt for all children in the community on April 1st. However, before Kids Kamp can accept, the City of Waco passed a law making it illegal for groups of 10 or more to gather until April 7th. The City's new law

automatically terminates the offer.

To be effective, an offer must:

be communicated to the offeree.