Blaw Test 2
Which of the following would most probably be considered a valid offer?
"$100 reward for return of lost white-gold, men's wedding band inscribed with initials 'TEA' to Tony Adams, 350 Main Street, Peoria."
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."
If untrue, which of the following would probably be considered a misrepresentation of a material fact?
"This car has new brakes."
Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she wants ruffles around the neck and calls Mary who says it will now cost $60. When Mary finishes the dress (with ruffles), Georgia must pay:
$60, since the modified agreement is supported by additional consideration.
Ken promises not to foreclose on a mortgage that he holds on an office complex that Christopher owns. In reliance on this promise, Christopher expends $200,000 to remodel the complex. Which of the following is correct with regard to Ken's promise?
(D) All of the above - Ken's promise not to foreclose is unsupported by consideration. - Ken's promise is noncontractual - Ken's promise will be enforced against him based upon the doctrine of promissory estoppel.
Contracts that are implied in law:
(D) All of the above - are obligations imposed by law on grounds of justice and equity - are intended to prevent unjust enrichment - do not rest upon the assent of the contracting parties
Contract law is significant in that it is basic to other fields of law such as:
(D) All of the above -sales of personal property -commercial paper -secured transactions
The remedies of damages and rescission are available for:
- fraudulent misrepresentation - negligent misrepresentation - innocent misrepresentation (ALL OF THE ABOVE)
Sales of personal property are governed by Article of the Uniform Commercial Code (UCC).
2
Promissory estoppel is found in Section ____ of the Restatement (Second) of Contracts.
90
Define fiduciary and discuss its effect on a contract
A fiduciary is a person in a confidential relationship who owes a duty of trust, loyalty, and confidence to another. A fiduciary owes a duty to make full disclosure of all relevant facts when entering into a transaction with the other party to the relationship.
What is a formal contract? How does a formal contract differ from an informal contract?
A formal contract is legally binding because of its particular form or mode of expression. A formal contract differs from an informal contract because informal contracts do not depend on mere formality for their legal validity.
Define "mistake," "mutual mistake," and "unilateral mistake." Explain how the law treats these two types of mistake.
A mistake is a belief that is not in accord with the facts. Mutual mistake occurs when both parties are mistaken as to the same set of facts, and unilateral mistake occurs when only one of the parties is mistaken. If a mutual mistake relates to a basic assumption on which a contract is formed and it has a material effect on the agreed exchange, it is voidable by the adversely affected party unless that party bears the risk of the mistake. Courts are hesitant to grant relief for a unilateral mistake even if it relates to a basic assumption on which the party entered into the contract and it has a material effect on the agreed exchange.
Which of the following is enforceable without consideration?
A new promise to pay a debt barred by the statute of limitations
Which of the following is correct with regard to a contract
A person who deposits money in a bank account has entered into a contract with the bank.
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
According to the Restatement, manifesting an intention to act or an intention to refrain from acting in a specified manner is considered to be:
A promise
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
Which of the following would most likely be enforceable?
A substitute agreement to settle an undisputed debt
Define a substituted contract and describe how it affects an agreement.
A substituted contract results when the parties to a contract mutually agree to rescind their original contract and enter into a new one. The rescission is binding in that each party, giving up his rights under the original contract, has provided consideration to the other, as long as each party still has rights under the original contract. Where the rescission and new agreement are simultaneous, the effect is the same as a contractual modification.
What is the difference between a valid contract and a void contract?
A valid contract is one that meets all the requirements of a binding contract. It is an enforceable promise or agreement. A void contract is an agreement that does not meet all of the requirements of a binding contract. It is merely a promise or agreement having no legal effect.
Which of the following is NOT always necessary in order for a valid contract to be formed?
A writin
Which of the following is an informal contract?
A written contract for the sale of a 5-acre tract of land.
If there is no time specified for the acceptance of an offer, when does the offer terminate?
After a reasonable period of time
What is the legal effect of an agreement that is criminal, tortious, or otherwise contrary to public policy, and why does it have that effect?
Agreements that are criminal, tortious, or otherwise contrary to public policy are illegal and unenforceable (as opposed to void). An illegal bargain is made unenforceable to discourage such undesirable conduct and to preclude the inappropriate use of the judicial process in carrying out such socially undesirable bargains.
Al 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 sales contract, he agrees that he will refrain from practicing accounting anywhere within a 20-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.
Al is in violation of the sales agreement.
Albert read Gem City's ad in the local newspaper advertising a one-quarter carat diamond ring for $89. Albert rushed to the store to buy the ring only to be told by the salesperson that the ad was a misprint and the price should have been $289. Albert gave the salesperson $89 plus sales tax and demanded the ring.
Albert is merely making an offer to Gem City to buy the ring for $89 plus sales tax.
The UCC Battle of the Forms rule:
All of the above
Which is an irrevocable offer?
All of the above
Which of the following is correct with regard to counteroffers?
All of the above are correct.
Which of the following gratuitous promises are enforceable by statute?
All of the above are enforceable by statute.
Which of the following is true with regard to an exculpatory clause?
All of the above are true.
Which of the following can meet the scienter requirement to establish fraud in the inducement?
All of the above meet the requirement.
Numerous states impose no limit on the rate of interest that may be charged on
All of the above.
The UCC provides that if a court as a matter of law finds a contract for the sale of goods or a clause of such a contract to have been unconscionable at the time it was made, the court may:
All of the above.
Which of the following is correct with regard to an enforceable restraint of trade?
All of the above.
Which of the following would be considered a valid and legally enforceable agreement?
An agreement by a car salesman not to sell automobiles or automobile parts in Marin County for a period of one year after terminating his employment
Which of the following would always be considered to be contrary to public policy?
An agreement to pay someone to make false, negative statements about a competitor's product
In general, which of the following will not terminate an offer?
An inquiry by the offeree as to size or materials
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 arrest occurred
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?
An unenforceable restraint of trade contrary to public policy
Andrew agrees to paint Betty's house for $500. Two days after he starts the job, he decides that $500 isn't enough money. He refuses to finish the job unless Betty agrees to pay him $100 more. What law applies to this fact situation?
Andrew gives no additional consideration in return for modification of a preexisting contract.
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 Federal Express, but due to an 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?
At 11 a.m. on Tuesday
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.
No contract exists due to mutual mistake of fact as to the existence or identity of the subject matter of the contract.
If a person, without knowing of an advertised reward for information leading to the return of a lost dog, gives information that leads to its return, is she entitled to the reward?
No. The finder's act was not an acceptance of the offer because she could not accept something of which she had no knowledge.
Which of the following would most likely be a merchant with respect to the goods in question under the UCC definition?
None of the above would be merchants.
Name the two types of nonfraudulent misrepresentation. Identify the remedies that may be available.
Nonfraudulent misrepresentation includes negligent and innocent misrepresentation. Negligent misrepresentation is made without due care, and innocent misrepresentation is made without knowledge of the falsity of the representation. The remedies available for nonfraudulent misrepresentation are rescission and damages.
Any property other than an interest in real property is:
Personal property
Article 2 of the Unifom Commercial Code deals with what type of property?
Personal property
A person who makes a promise is a(n):
Promisor
What is the doctrine of promissory estoppel and when is it used?
Promissory estoppel is a doctrine used to enforce noncontractual promises where there has been justifiable reliance on the promise and justice requires the enforcement of the promise. It is used to avoid injustice when the promisor reasonably expected that the promisee, in reliance on the promise, would be induced to take definite and substantial action or to forbear, and the promisee does take such action or does forbear.
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 is an offeree's refusal to accept an offer.
Rejection
Distinguish between a rejection of an offer and a revocation of an offer.
Revocation and rejection are both methods of terminating an offer, but they differ in who does the termination. Revocation of an offer is the cancellation or the withdrawal of an offer by an offeror before its acceptance. The rejection of an offer is the refusal of an offeree to accept an offer.
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. Brian accepts without correcting his earlier misrepresentation of fact.
Rosalind may avoid the contract
According to the UCC, an enforceable agreement involving the transfer of title of goods from a seller to a buyer for a price is called a(n):
Sale
R&R, Inc. entered into a contract with Scott, an agent, under the terms of which Scott would receive $20,000 if he stole trade secrets from the leading competitor of R&R. Scott performed his end of the agreement by delivering the trade secrets. R&R now refuses to pay Scott for his services.
Scott will be unable to recover, because this is an illegal contract.
Eliza was an antique expert. She went to a tea party at Grandma Jones' house and saw a magnificent Queen Anne table out on the back porch. She asked Grandma about it and was told it was in the way so they were going to store it in the barn. Eliza offered to buy it from her for $200. The next week, Grandma saw it in Eliza's store on sale for $3,000. Which of the following is true?
She cannot rescind the contract because Eliza did not have a duty to tell her the value of the table.
Maxine has revoked her offer to Tom.
She may not accept since the offer is terminated.
Discuss silence as acceptance of an offer.
Silence or inaction does not ordinarily indicate acceptance of an offer because an offeree is generally under no legal duty to reply to an offer. In some cases, by custom, usage, or course of dealing, the offeree's silence or inaction may operate as an acceptance. If an offeror sends unordered or unsolicited merchandise to a person and states that the goods may be purchased at a specified price and that the offer will be deemed to have been accepted unless the goods are returned within a stated period, the federal government and most states have enacted statutes providing that the recipient of the goods may keep them as a gift and is under no obligation to return or pay for them.
Caroline signs a contract to work as a sales rep for Incellmed Corporation for a period of two years. This contract is governed by:
State common law
Contracts are governed primarily by:
State common law
What transactions are enforceable even though they are not supported by consideration?
Such transactions would include: a. promises to perform prior unenforceable obligations, b. promises which induce detrimental reliance (promissory estoppel), c. promises made under seal, and d. promises made enforceable by statute (UCC: modification of contracts for the sale of goods, written waivers or renunciations signed and delivered by the aggrieved party, and firm offers by merchants).
Which of the following need NOT be proved in order to establish the defense of economic duress?
That one party explicitly made an economic threat.
Michelle's Boutique places an ad in the Sunday paper for beautiful, top-of-the- line designer suits for $3.00. Irene 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. Irene has just finished a class in contract law and insists that the store sell her 5 suits for $15.00. Irene 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, Irene will not be able to successfully sue for breach of contract
Marilyn read an ad in the school newspaper offering a thousand dollar 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.
Wayne helped Hank study all night for an important exam. After Hank got an A on the exam, he told Wayne, "I will give you $10 for helping me get a good grade." Wayne said, "Thanks, I'll take it."
There is no contract because there is no valid consideration.
Alice offers to sell her computer, monitor, and printer to Bradley for $300. Bradley says he will accept provided that Alice includes her word processing software. What is the status of their discussions?
There is no contract, because Bradley has made a counteroffer.
Carlos ordered an aluminum storm door for $249.99. Before it was delivered, the same store from which he ordered the door ran an ad in the paper for the same storm door at $179.99. Carlos calls the store and demands the advertised price. They say okay
Carlos must pay $179.99.
Which of the following is NOT an element of fraud?
Competent parties
Define consideration.
Consideration is the inducement for a promise or performance. It is that which is exchanged to make a promise enforceable. Consideration has two basic elements: (1) legal sufficiency (something of value) and (2) bargained-for exchange.
List and discuss the essential elements of a contract.
Contractual elements are: (1) mutual assent; (2) consideration; (3) legality of object; and (4) capacity of the parties. In addition, in a limited number of instances, a contract must be in writing to be enforceable. The parties to a contract must manifest by words or conduct that they have agreed to enter into a contract. The usual method of showing mutual assent is by offer and acceptance. Consideration is the intentional exchange of a legal benefit or legal detriment as an inducement to the other party to make a return exchange. The purpose of a contract must not be criminal, tortious, or otherwise against public policy. The parties to a contract must have contractual capacity. Adjudicated incompetents have no legal capacity to contract. Minors, incompetent persons, and intoxicated persons have limited capacity to contract.
Leonard offers to sell his diamond ring to Emily. Diane overhears the offer and says, "I accept the offer."
Diane cannot accept the offer, because it wasn't made to her.
William recently sold his successful business to Janice. The contract for the sale contained an unreasonable restriction that did not allow William to open a similar business for fifteen years. The courts would, in this instance,
Either (a) or (d). - reform the contract to make it reasonable and enforceable. - refuse to enforce the unreasonable restriction
Elmer wrote a letter to his friend Fred offering to sell Fred an 80-acre farm for $200,000. After mailing the letter, Elmer learns that the farm is actually worth $300,000 and changes his mind about selling.
Elmer can revoke his offer at any time before acceptance, because there is no consideration to keep the offer open.
Tate enters into a contract with Smith under the terms of 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
Executed contrant
A(n) contract is one in which the parties have manifested their agreement by oral or written language, or both.
Express
Which of the following is not generally required in order to have a valid contract?
Fairness of the bargain
Courts usually will require evidence of what factors for a transaction to be usurious?
For a transaction to be usurious, courts usually require evidence of: (a) a loan or forbearance (b) of money, (c) which is repayable absolutely and in all events (d) for which an interest charge is exacted in excess of the interest rate allowed by law.
Which of the following will support a contract?
Forbearance to do an act
Which of the following results in a void, rather than voidable, agreement?
Fraud in the execution
Rob repairs a door for Howard. In return, Howard is supposed to pay Rob $75 on November 1 at Howard's house. Which of the following would constitute legally sufficient consideration?
Howard pays Rob $60 on November 1 but, after checking with Rob, brings payment to Rob's house.
Stan purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the gloves were defective, and a dispute arose as to the amount due and owing under the contract. Stan refuses to pay the $800, and Isaac is threatening to sue. Which of the following is correct with regard to this transaction?
If Isaac agrees to accept $600 to settle the dispute and Stan agrees to pay that amount, the substitute agreement is enforceable.
In which of the following situations will a smaller sum be unable to discharge a larger debt?
If the smaller sum is paid when the larger sum would ordinarily be due, but the debtor is on the verge of insolvency.
One of the changes in contract law between the nineteenth century and the twentieth century is that in more recent times:
Intended third-party beneficiaries may sue in their own right.
21. Jason's mother would like him to go to college, so in June he enrolls at State University. He also quits his job and tells his mother his plans to continue taking 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. Which of the following is true regarding his mother's promise?
It is unenforceable, because Jason had already enrolled in school and there is no consideration.
A collection agency threatened to sue Martha for the unpaid hospital bills from her heart operation. She signed a promissory note at a high but not illegal rate of interest. What result?
It is valid because the threat to bring a civil suit to collect money owed is permissible.
Ken, a research chemist, has been promised a fellowship with a stipend of $10,000 to do research on synthetic fuel oil. Under the terms of the fellowship, Ken is free to use the money as he sees fit. Ken decides to build his own laboratory, so he will not have to rent one. He hires a carpenter who begins working on shelving and cabinets in the laboratory. Then Ken receives a telegram saying the fellowship has been canceled. No reason is given for the cancellation. If Ken sues, will he be able to collect the money from the foundation which promised the fellowship? Explain your answer using legal terminology.
It might be argued that since no work product is required, there was no consideration for the fellowship. Therefore it may be revoked. However, Ken has detrimentally relied on the promise of the fellowship, and under the doctrine of promissory estoppel, the courts would in all likelihood stop the grantors from rescinding the fellowship.
James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $900 for a motor. Because of the threat, Kenneth signs the contract.
James has committed physical duress against Kenneth.
Janet promises Eli $4,000 for one of his original paintings on the condition that she receive $1 million from her mother's will.
Janet's promise is legally sufficient unless Janet knew at the time she made the promise that she could not inherit the $1 million
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 void the contract.
Kyle wants to buy a six-passenger car. The salesperson tells him that the two-seat sports car Kyle sees on the car lot would be just perfect for six people. Kyle test drives the car and then buys it.
Kyle was not justified in relying upon the salesperson's representation that the car would seat six people.
The case in which the court held that a newspaper advertisement was an offer because it contained a promise of performance in definite terms in return for a requested act was:
Lefkowitz v. Great Minneapolis Surplus Store, Inc.
Define legal detriment.
Legal detriment means (1) doing (or undertaking to do) that which the promisee was under no prior legal obligation to do or (2) refraining from doing (or undertaking to refrain from doing) that which he was previously under no legal obligation to refrain from doing.
Nell gives 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.
Which of the following requires consideration in order to be binding upon the parties?
Material alteration of a personal service contract
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.
Maxine has revoked her offer to Tom.
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 is most accurate?
McHenry is liable to Nancy based on the concept of promissory estoppel.
Chad has offered to take Miles into his accounting firm as a partner upon payment of $5,000 cash. In response, Miles says, "I'll give you $3,000 cash now and I will pay you the remainder in two months after I see whether things are working out as a partnership."
Miles has made a counteroffer; hence there is no contract.
Which of the following statements is most accurate concerning charitable subscription promises?
They are generally enforceable if there is reliance by the charity.
Sarah is working hard on the mayoral campaign of Timothy. She thinks that just a few more votes could win the election, so she promises to pay her friend Violet $50 to register and vote. Violet does so, but Timothy loses the election, and Sarah now refuses to pay.
This agreement is unenforceable and opposed to public policy.
Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Although Bob knew what the stone was, he told Albert that he wasn't sure as to the nature of the stone, but that he thought it was a topaz. 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.
This contract can be voided based upon fraud in the inducement.
Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph County. Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed.
This is a mistake of law.
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.
Abe is involved in an automobile accident and is injured. While he is unconscious, the police call an ambulance which takes him to a hospital. Abe is treated at the hospital and released a day later. The hospital sends him a bill for $2,400, which Abe refuses to pay, claiming it is too high and he never consented to the treatment because he was unconscious.
This is a quasi-contractual agreement
Carl and Rob are both engaged in road construction work. 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 Rob will bid on the other, so that they both have work for the summer. When the bids are opened, Carl realizes that Rob has bid on both jobs. Rob is awarded both contracts. Carl now wants to sue Rob for breach of contract.
This is an agreement in violation of public policy that will not be enforced by the courts.
Bill bets his friend $100 that the Patriots will win the next Super Bowl.
This is an illegal wagering agreement.
James 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 James $100. Which statement describes the payment of $100?
This is an option contract.
Contract law:
Today usually recognizes contractual obligations whenever the parties manifest an intent to be bound.
Tom tries to sell his classic car to Victoria for $12,000. Tom tells Victoria, "I paid $12,000 for the car in 1978 and it's worth twice that today." Tom really paid $8,000 for the car in 1978. If Victoria buys the car, basing her decision on Tom's statement, which of the following correctly states the situation?
Tom's statements provide grounds to set the contract aside.
Tyler contracts to build a garage for Wilbur for a price of $6,000. Because of an increase in the cost of labor and materials, Tyler refuses to perform. Wilbur wants the garage, so he agrees to pay an additional $500.
Tyler has given no additional consideration, and under the common law must perform at the agreed upon original price.
Define "unconscionability" and distinguish between procedural and substantive unconscionability.
Unconscionability means contrary to the dictates of conscience; unscrupulous or unprincipled; exceeding that which is reasonable or customary; inordinate, unjustifiable. Procedural unconscionability involves scrutiny for the presence of unfair or irregular bargaining or negotiation. Substantive unconscionability involves the actual terms of a contract and whether they are oppressive or grossly unfair.
Under which of the following circumstances would a court be likely to enforce an illegal contract?
Under certain circumstances in which the aggrieved party was unaware of the illegality
Define undue influence and name some of the relationships that would be affected.
Undue influence is the unfair persuasion of a person by a party generally in a dominant position based upon a confidential relationship. Some of the relationships that would be affected would include: guardian-ward, trustee-beneficiary, principal-agent, spouses to one another, parent-child, attorney-client, physician-patient, and clergy-parishioner.
Sarah offers to pay Allison $150 if Allison will paint her apartment while she is out of town on vacation for two weeks. Allison makes no promise but tells Sarah that she will think about it. While Sarah is out of town, Allison paints the apartment. This is best described as a(n):
Unilateral contract
When does acceptance of an offer to enter into a unilateral contract generally occur?
Upon full performance by the offeree with the intention of accepting.
Lee has been declared incompetent by the court and is under the care of his sister. Without his sisters knowledge, Lee rents the 30,000-seat civic center for his birthday party. Lee's contract to rent the civic center is best described as a:
Void contract (not voidable)
Steve intentionally makes a material misrepresentation of fact regarding his motorcycle to Thelma who agrees to buy the motorcycle based upon the misrepresentation. This contract is:
Voidable
11. Gary mails an offer to Brian on June 15. Brian receives the offer on June 16. Gary mails a revocation of the offer on June 17. Brian mails a letter of acceptance on June 18 and Gary receives the acceptance on June 20. Brian receives the revocation on June 19. Was a contract formed?
Yes on June 18
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
Sue owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year. She has been offered a two-year graduate fellowship, but she will not be able to pay the loan back if she accepts the fellowship. The bank manager tells Sue that if she pays $3,000 now, they will forgive the loan. Should Sue accept the offer?
Yes, because the early payment of the loan is consideration that makes the bank's promise binding
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.
Wes, who is an art collector, offered to buy a print from Le Monde Gallery. Le Monde balked at the price, sending Wes a letter of rejection. That day it discovered that the print was not as highly valued as originally thought. Le Monde immediately telephoned Wes to accept his offer. Is there a contract?
Yes, since the acceptance was received before the rejection
Ron owes Matt an unsecured debt of $3,000. Ron has a discharge of all his unsecured debts by a bankruptcy court. Can the contract between Matt and Ron be reinstated?
Yes, the contract can be reinstated if Ron acknowledges that he has had his debt discharged and then makes a promise to Matt to pay regardless of that fact. A promise to pay a debt that has been discharged in bankruptcy is enforceable without consideration. However, the Bankruptcy Act imposes a number of requirements before a promise to pay a debt discharged in bankruptcy may be enforced.
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
Gail sent a letter of acceptance to an offer that has expired. Gail has made:
an offer
The way parties usually show mutual assent is by:
an offer by words or conduct and an acceptance by words or conduct.
Non-compete agreements drafted for employees of Internet companies:
are subject to larger geographic restrictions than for other types of companies
An offer need not take any particular form to have legal validity. To be effective, however, it must:
be communicated to the offeree.
Contracts induced by threats of are voidable, regardless of whether the coerced party has committed an unlawful act.
criminal prosecution
An offer under Article 2 of the UCC that is irrevocable even though no consideration is given to keep it open is known as a(n):
firm offer
An intentional misrepresentation of a material fact made with knowledge of the falsity and intention to deceive and which a party justifiably relies upon to his detriment is known as:
fraud in the inducement
Sam wants to sell his Golden Retriever to Jordan. Sam tells Jordan that the dog is three years old and that he will point, back, and retrieve. Although the dog is three years old and will point at birds, he will not back (honor another dog's point). Jordan relies on these statements and purchases the bird dog. The buyer has most probably been a victim of:
fraud in the inducement.
Theresa is a travel agent at the Fly Away Travel Agency. She has signed an agreement with her employer which prohibits her from working in any similar business in any town within a 100-mile radius of where she works. If she wants to quit her job and go to work for another travel agency, it is likely that:
if no trade secrets are involved, and she has no dominion over customers, a court would rule the restrictions to be invalid.
An ad in a newspaper or a circular describing goods and stating prices would generally be considered a(n):
invitation to buyers to make an offer to buy goods.
The requirement of legally sufficient consideration:
is that the parties have agreed to an exchange and it imposed a legal detriment upon the promisee or conferred a legal benefit upon the promisor.
Divided Parcel (DP) includes the following on its mailing receipts: "We are not responsible for any damages to packages whether or not through the fault or negligence of our employees. Send packages at your own risk." Mary reads this clause but sends her watch back to its 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 is a common carrier.
In order to form a contract, the parties must
manifest their agreement objectively
To be effective, notice of revocation of an offer:
may be communicated indirectly to the offeree through a third person.
When both parties misunderstand the same set of facts relating to a basic assumption on which a contract is made, it is termed:
mutual mistake
Before granting an injunction enjoining a former employee from competing in a described territory, the courts insist that the employer demonstrate that the restriction is:
necessary to protect the employer's legitimate interest.
A fiduciary is a:
person who owes a duty of trust, confidence, and loyalty to another.
Tommy's parents died in a plane crash and he went to live with his guardian, Aunt Rose. Rose had a very small house and did not have a separate bedroom and bath for 12- year-old Tommy. She and Tommy decided to use some of his inheritance to pay for an addition to the house. He had some shares of stock transferred into Rose's name so that she could sell them when the money was due to be paid. The stock transfers are:
presumed voidable unless Rose can show no unfair advantage was taken.
Custom Sales and Rentals uses a four-page contract with important contract terms buried in the fine print. This is an example of:
procedural unconscionability.
If a restriction in an employment contract is found to be too harsh, a court may do any of the following EXCEPT:
refuse to void the restriction.
A(n) is a measure designed to protect the public from unqualified
regulatory license
A purchaser's agreement to buy from a particular seller all the materials of a particular kind he needs is a(n) contract.
requirements
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:
substantive unconscionability.
Distinguish between: (a) express and implied contracts; (b) executed and executory contracts; and (c) bilateral and unilateral contracts.
A contract in which the parties manifest assent in words, either oral or written, is called an express contract; a contract formed by conduct is an implied contract. Implied contracts are also called implied in fact contracts. The difference between express and implied contracts is in the manner in which the parties manifest assent. Both are genuine contracts and are equally enforceable. (b) A contract that has been fully carried out by all of the parties is an executed contract. The term executory contract applies to contracts that are still partially or entirely unperformed by one or more of the parties. (c) When a contract is formed by the exchange of promises, each party is under a duty to the other. Each party is both a promisor (the party making a promise) and a promisee (the party to whom a promise is made). This is referred to as a bilateral contract. A unilateral contract occurs when only one of the parties has made a promise and the other party must perform an act or forbear from acting to form the contract. A unilateral contract is formed when the promisee performs the act or makes the requested forbearance.
The Uniform Commercial Code would be applied in which of the following situations?
A contract to buy living room furniture
A misrepresentation is material if:
BOTH (A) AND (B). - it would likely induce a reasonable person to enter into a transaction. - the maker knows it would likely induce the other party to enter into the transaction.
Ralph sold a motel to Steve by stating that he had paid $250,000 for it and that his net average annual profit from the business has been $40,000. In reality he paid $100,000 for the motel and has earned a net average annual profit of only $30,000. Steve made no attempt to verify the statements until after the transaction was completed.
BOTH (B) AND (C) - Steve is bound by the contract, because he failed to verify the statements which were made to him. - The contract is voidable at Steve's option.
Alex wants to submit a bid on a city sewer project. He computes the cost, but mistakenly omits the cost of one item. Accordingly, he submits a bid of $430,000 to the city. The next highest bid is $675,000, and the rest of the bids are even higher. The city is happy to have such a low bid, so it accepts Alex's bid and awards him the contract for the job, even though the city engineer is of the opinion the job cannot be done for less than $650,000.
BOTH (B) AND (C) - The city was aware of or should have been aware of Alex's mistake. When it accepted the bid with knowledge of Alex's mistake, the city sought to take an unconscionable advantage of Alex's error. - This case is an example of a palpable unilateral mistake.
Which of the following are the two basic elements to consideration?
Bargained-for exchange and legal sufficiency
A contract in which both parties exchange promises is a:
Bilateral contract
Anna by mistake delivers to Bob a plain, unaddressed envelope containing $50 intended for Cora.
Bob's obligation to return the money is quasi contractual.
Promissory estoppel is a contractual doctrine that includes the following:
Both (a) & (b) - the courts use the doctrine of promissory estoppel to enforce noncontractual promises. - Under this doctrine the promisor reasonably expects that the promisee, in reliance on the promise, will be induced by the nature of the promise to take action or refrain from taking action and then the promisse does so.
A valid contract may be unenforceable for which reason(s)?
Both (a) and (b) - Failure to satisfy the Statute of Frauds - Running of the Statute of Limitations
A promise against public policy:
Both (a) and (b) - can be contractual. -is enforceable if the parties have capacity and mutual assent and they exchange consideration.
Express contracts and implied contracts are:
Both (a) and (b). - both genuine contracts. - equally enforceable
Doug obtains an exclusive franchise to sell widgets for the Acme Widget Company. The exclusive franchise covers the entire State of Wisconsin for a period of three years.
Both (a) and (b). - Acme is obligated to use its best efforts to supply the goods even if no such clause appears in the written franchise agreement. - According to the UCC, unless otherwise agreed, Doug must use his best efforts to promote the sale of the widgets in his territory.
Barbara, a wealthy widow, promises the pastor of her church that she will donate $20,000 to the church to help pay off its mortgage if the stewardship committee can obtain enough pledges for the balance of the $80,000 mortgage. Other pledges are obtained to pay off the mortgage, but now Barbara has changed her mind and plans to take an around-the-world cruise instead.
Both (a) and (c). - The doctrine of promissory estoppel can be applied to this case. - Under the Restatement, Barbara's promise is enforceable.
If an offer requires acceptance by mail and the offeree faxes acceptance:
Both (b) and (c) are correct. - there is a contract if the acceptance is actually received within the time the authorized means would have arrived. - under the Restatement, if the acceptance is received within the time the authorized means would have arrived, the acceptance is effective when sent.
Andrew owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Betty and, as part of the transaction, agrees not to engage in the same business anywhere within the state for a period of three years.
Both (b) and (c). - The agreement is unreasonable. - The agreement unduly interferes with the interests of the public.
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.
Both (b) and (c). - The consideration moving from Darla to Edward is the promise of $6,000 subject to a condition. - Darla's conditional promise is sufficient consideration unless Darla knows she cannot receive at least $6,000 from her uncle's estate.
Which of the following does not exemplify a relationship that typically leads to scrutiny of a contract for undue influence?
Brother and sister
Alice says to Brian, "If I decide to buy a word processor next year, I will buy it from you." This is an example of:
an illusory promise.
Discuss how the common law of contracts, Article 2 of the Uniform Commercial Code, and the Restatement of the Law of Contracts combine to form the law of contracts. Is there a difference between how a court would regard Article 2 of the UCC and the Restatement of the Law of Contracts? Why? Explain your answer.
The basic law of contracts is state common law. The Restatement of the Law of Contracts is an authoritative statement of the common law in the United States. The UCC was drafted by the National Conference of Commissioners on Uniform State Laws and the American Law Institute and has been adopted by the legislatures of all states, except Louisiana. Article 2 deals with sales of goods, which are defined as tangible, movable personal property. All other contracts are governed by state common law. The UCC is state statutory law, whereas the Restatements are authoritative, but do not represent the law of every state in the United States.
Elvis makes an offer to Miguel, but before Miguel can accept, the state supreme court decides a case that makes the offer illegal. What is the effect of the court decision on the
The court decision automatically terminates the offer.
Patrick agrees to sell two different goods to his friend Ron, a retailer. One item is legal, and one item is illegal. The contract price is $2,000.
The court may view the contract as in (a) or (b). - Patrick may recover for the legal item, but he may not recover for the illegal item. - Patrick may not recover payment for either of the goods if delivered.
12. Andrew owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Betty and, as part of the transaction, agrees not to engage in the same business anywhere in River City for a period of five years.
The geographic restraint is reasonable.
Is a promise to pay a pre-existing moral obligation enforceable? Explain.
The law does not regard the performance of or promise to perform a pre-existing legal duty, public or private, as either a legal detriment or a legal benefit. Under the common law, a promise made in order to satisfy a pre-existing moral obligation is likewise unenforceable for lack of consideration. Instances involving such moral obligation include promises to pay for board and lodging previously furnished to a needy relative or promises to pay debts owed by a relative. The Restatement and a minority of states give considerable recognition to moral obligations as consideration.
Shirley hears about a reward being offered by the local television station for information leading to the arrest and conviction of a local rapist. She supplies the requested information, and the suspect is then arrested and convicted.
The offer by the television station was an offer made to the general public to enter into a unilateral contract, which offer Shirley has accepted.
Destruction of the subject matter has what effect on the offer?
The offer is terminated.
For an offer to be valid, which of the following elements must be present?
The offeree must have knowledge of the offer.
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.
The parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000.
The State of Florida enters into a contract with Treasure Salvors governing the salvage of a Spanish galleon that sunk in the 1600's. Under the terms of the contract, the salvagers agree to relinquish 25% of the items recovered to the State of Florida in return for the right to salvage on state lands. At the time the parties enter into the contract, they both believe that the seabed where the ship lies is state land. Subsequently, the United States Supreme Court holds that the continental shelf on which the ship rests has never been owned by Florida. The salvagers sue to rescind the contract.
The parties made a mutual mistake for which the contract should be avoided.
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 such a good imitation that even the dealer thought it was authentic.
The sale is voidable by the purchaser for mutual mistake.
Which of the following contracts is covered by Article 2 of the Uniform Commercial Code?
The sale of a new car
Jesse makes an offer to Ike, and Ike accepts; then the state legislature passes a law that makes performance of the contract illegal. What is the effect of the new statute on the contract?
The statute discharges the obligations of both parties under the contract.
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 yards of carpet at $20 per 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 yards of Saxony "heather blue" carpeting at the price of $20 per 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, Bob Which of the following is true?
There is a contract for only 100 yards of carpeting.
Lance has a contract with Smith to resurface a driveway at the Smith residence. Lance by mistake stops at the Jones residence and resurfaces Jones' driveway. Jones lives next door to Smith and knows that Lance is at the wrong residence. Jones, however, says nothing and watches while Lance resurfaces his driveway. Is Jones under any contractual obligation to pay Lance for resurfacing his driveway? Explain your answer.
Yes. In addition to express and implied in fact contracts there are implied in law contracts or quasi contracts. A quasi-contractual obligation is imposed by law to prevent injustice. Jones is obligated because he had knowledge of the benefit he received and did not prevent Lance from conferring this benefit.
On June 1, Edward visited a bicycle sales and service center. Edward spotted a used bike he liked and was told by the dealer that he could have the bike for $100 cash. Since Edward needed a few days to get the money, Edward got a signed, written statement by the dealer that Edward could buy the bike for $100 at anytime on or before June 15. On June 10 Edward came to the dealer with the money, but the bike had been sold to another customer. Was the dealer under any obligation to Edward to keep this offer open until June 15? Give legal reasoning for your answer.
Yes. The dealer made a firm offer. A firm offer is an irrevocable offer by a merchant to sell or buy goods. A firm offer is in a signed writing that gives assurance that the offer will not be rescinded for up to three months. No consideration need be given for the promise not to revoke the offer during the stated time period.
Lynn offers to sell his house to Dennis for $95,000. Dennis responds, "I will pay you $95,000 if you will paint the second floor." This response could best be described as:
a counteroffer.
Actionable fraud would be likely to be based on falsity of:
a realtor's statement that, "The contractor used 25-year warranted shingles on the roof."
An agreement of a seller to supply a buyer with all of the buyer's requirements for certain goods is known as:
a requirements contract.
What are the ways in which an offer may be terminated?
a. acceptance. b. lapse of time. c. revocation. d. rejection. e. counteroffer. f. death or incompetency of the offeror or offeree. g. destruction of the subject matter. h. subsequent illegality.
Under the common law, the ______ must be the mirror image of the _____.
acceptance, offer
A contract prepared on a standard form and offering terms on a take-it-or-leave-it basis is called:
an adhesion contract.
Hannah, as a joke, offers to sell her violin to Mike. Her statement would have legal effect if:
the intended jest is so successful that Mike as a reasonable person under the circumstances believes the joke is an offer and he accepts.
A party to a contract may be able to avoid the contract if:
there was a mistake and the mistaken party was at fault in not discovering the problem before making the contract.
The UCC provides that a merchant is bound to keep a written offer open for a stated period but no longer than:
three months