BUL Unit 6

Customer ordered fried chicken strips at the drive-in window of Famous Burger. One of the "strips" turned out to be an entire chicken head, battered and deep fried. Famous Burger tested the head and found that it was, indeed, cooked in their batter and in their oil. Pictures of Customer with the fried head showed up in newspapers and on the Internet. Famous Burger offered Customer a cash settlement in exchange for Customer's promises not divulge the amount of the settlement, sue Famous Burger over the incident, or ever speak of it in public again. Agreeing not to exercise these three rights in exchange for the settlement is an example of ____________________.

An accord and satisfaction

How is promissory estoppel best described?

An equitable remedy when one party suffers an unbargained-for detriment

In which of the following circumstances would the remedy of rescission be used?

All of the above are grounds for rescission.

Which of the following statements is true about modifying contracts governed by the Code?

All of the above are true statements

Consideration in a bilateral contract always involves both

A legal benefit and a legal detriment

What does consideration in a bilateral contract always involve?

A legal benefit and a legal detriment

Which of the following promises would be legally adequate consideration in a bilateral contract?

A promise not to sue someone on a claim that the promisor believes in good faith is valid.

Which of the following is an example of an unliquidated debt?

A promissory note for the sum of 10,000 to be repaid in 6 years at 5 interest.

Which of the following is not an element of a valid contract?

A written document with notarized signatures

Ellen has a contract with Sue to buy her riding lawn mower for 200. Ellen has given Sue 200 in cash, and Sue has given Ellen possession of the mower. What is the status of this contract between Sue and Ellen?

Executed

What is another term for punitive damages?

Exemplary

An accord and satisfaction can be used to settle both liquidated and non-liquidated debts.

False

Manny Manufacturer sent an e-mail to its widget supplier with this message: "Please confirm by return e-mail if you will be able to send me an additional ten dozen red widgets for the usual price by the thirtieth of this month." Supplier e-mailed back: "Yes, the additional widgets will be part of our delivery to you on the morning of the thirtieth." This exchange created what type of contract?

Bi-lateral

Which of the following is the kind of contract in which each party offers as consideration a promise to do something?

Bi-lateral

Bob promised to pave Sue's driveway and Sue promised to pay him $5000 when the work was completed. The contract between Bob and Sue is a __________________contract.

Bilateral

Mutuality of consideration is a requirement for a n_________________.

Bilateral contract

Vivian offered to buy Ben's violin for $2,000 and Ben accepted. Three days later Vivian gave Ben $2,000 in cash and Ben gave Vivian possession of the violin. Which of the following sets of terms best describes the contract between Vivian and Ben?

Bilateral, express, valid and executed

Bay Crab Processor has a contract with Jim, a local crabber, to buy all the crabs Jim catches during the season for 35 per bushel. Which of the following actions would constitute a breach of the contract between Bay Crab and Jim?

Both a and b

T/F $1 is never legally adequate consideration in a contract because no one will willingly incur a legal detriment for $1.

False

T/F A plaintiff may be awarded either compensatory damages or consequential damages, but not both.

False

T/F Another term for promissory estoppel is restitution.

False

T/F Contracts formed by the conduct of the parties, rather than expressed in words, are implied-in-law contracts.

False

T/F Contracts in which both sides have completely performed their duties are executory.

False

T/F Courts do not enforce output contracts as a matter of public policy.

False

T/F Damages that involve only a very small monetary award are called liquidated damages.

False

T/F During a violent storm, Nelson saved Reggie's boat from being destroyed. Reggie was so grateful that he promised to give Nelson $100. Reggie's promise is unenforceable because it is based on moral obligation.

False

T/F Giving up a legal right is adequate consideration for a contract governed by the Uniform Commercial Code, but not for contracts under common law

False

T/F Legal detriments always entail economic losses.

False

T/F Lost profits cannot be used in calculating damages because profits are always uncertain and speculative.

False

T/F Only liquidated debts can be discharged in an accord and satisfaction

False

T/F Promissory estoppel is the contract doctrine that requires that accords be in writing.

False

T/F Quantum meruit refers to the compensation owed a party under an express contract

False

T/F Sham consideration is sufficient for a unilateral contract, but not for a bilateral contract.

False

T/F Since it is up to the parties to determine the dollar amount in a liquidated damages clause, courts will enforce any amount called for in the contract.

False

T/F The Uniform Commercial Code governs the sale of all commercial services and goods

False

T/F The innocent party in a contract breach must choose between collecting punitive damages or compensatory damages because a court cannot grant both

False

T/F The winning party in a breach of contract case is normally entitled to attorney's fees, witness fees and filing costs.

False

T/F You make an appointment with a dentist. Upon arriving at the Dentist's office, you enter the office and receive treatment. Since you've said nothing about paying, it is not a term of the contract

False

The Uniform Commercial Code requires that any modification to a contract for the sale of goods must be supported by new consideration.

False

Which of the following is not an element of promissory estoppel

There must be an underlying enforceable bilateral contract.

Plaintiff sued a National Football League team, alleging that she had been sexually assaulted by several team members in a hotel room after a game. Team offered the plaintiff a cash settlement in exchange for two promises: (1) plaintiff would never discuss publically the suit or the terms of the settlement; and (2) plaintiff would never again sue the team or the individual players on any claim connected with the incident. Agreeing not to exercise these legal rights constitutes ___________________.

Forbearance

Brenda was the lead detective assigned to investigate the murder of a prominent local businessman. A local civic group offered a 10,000 reward to anyone who provided information leading to the arrest and conviction of the murderer. The murderer was found, tried, and convicted largely due to Brenda's efforts. Can Brenda collect the reward?

No, Brenda had a preexisting contractual duty to find and try to convict the murderer.

Kelly received a cookbook in the mail that she had not ordered. The packing slip read: " Return this book to the publisher within 14 days or send $35 to the address below." She did not return the book within the 14 days and she did not send the money as requested. Is Kelly required to pay it?

No, federal law allows Kelly to treat the unsolicited book as a gift and she may do whatever she wants with it.

Kelly received a cookbook in the mail that she had not ordered. The packing slip read: " Return this book to the publisher within 14 days or send a check for 35 to the address below." Kelly did not return the book within the 14 days and she has not sent the money as requested. Is Kelly required to pay for the cookbook?

No, federal law allows Kelly to treat the unsolicited book as a gift, and she may do whatever she wants with it.

The person who makes an offer to form a contract is the ______________.

Offeror

Under which of the following is a contract voidable?

One of the parties has the option to set aside the contract.

Bay Crab Processor has a contract with Jim, a local crabber, to buy all the crabs Jim catches during the season for 35 per bushel. This is an example of a n ___________contract.

Output

Typically in construction contracts there will be a provision awarding damages to the buyer at "X" amount of dollars per day for each day the builder is late in completing the work. The parties to the contract agree upon this amount in advance because they know the buyer will incur added costs, or will lose profits, because of the delay. If the amount fixed for the damages is unreasonably high, the court will consider it a ________________and will not enforce it.

Penalty

Allison, who raises horses, promised to give her friend Gil a pony for his daughter. She advised Gil that he would need to enclose a section of his property and recommended a specific type of fencing. Gil bought the recommended materials and had the fence built on his property. Allison now refuses to give Gil the pony. Allison will be liable to Gil for the cost of fencing his property based on the theory of

Promissory estoppel

Detrimental reliance is another term for

Promissory estoppel

Exemplary damages are also known as _________________ damages

Punitive

Big Oil Company has a contract with homeowner to deliver however much heating oil homeowner needs for the fall and winter seasons. This is an example of an __________________contract

Requirements

Betty Buyer discovers that the pin she bought from Sally Seller is not a ruby as Sally had claimed. She believes that Sally's misrepresentation was innocent, but she wants to get her money back. The contract remedy Betty should seek is

Rescission

Under which of the following circumstances will cashing a check marked "paid in full" create an accord and satisfaction?

The check is for an unliquidated debt and both parties know of the dispute

Law enforcement officers are normally not allowed to collect reward money offered for the capture and conviction of criminals because

The officers have a preexisting legal duty to apprehend criminals.

In an accord and satisfaction, the satisfaction is

The performance of the action called for in the substitute agreement

An offeree is

The person to whom the offer to form a unilateral or bilateral contract is made.

An illusory promise is created when

The promise is conditional on an event happening first that is totally within the promissor's control.

A court will order the remedy of specific performance only if

The subject matter of the contract is unique and the innocent party cannot be made whole with money damages.

In an accord and satisfaction, the accord is

The substitute agreement

An accord and satisfaction can take place only if

There are unliquidated debts based on contract or tort claims.

Famous Chef told Shrimp Boat Captain: I will buy your catch if I think the shrimp are large enough." What is the status of this promise?

This is a valid promise because the chef must make the decision in good faith.

Courts generally cannot order specific performance when the contract is for personal services because of the Thirteenth Amendment.

True

Courts may look into the adequacy of consideration if there is evidence of fraud or undue influence by one of the parties.

True

Grace has a valid contract with Al to buy a desk once owned by James Madison. Al now refuses to go through with the sale. Because the item is unique, Grace can seek a decree of specific performance to enforce the contract.

True

In a liquidated debt, the parties agree on the exact amount that is due.

True

Nominal consideration is another term for sham consideration.

True

T/F A contract entered into by a minor is voidable at the option of the minor.

True

T/F A party who seeks to rescind a contract must notify the other party in a timely fashion

True

T/F A renunciation is a written waiver of a right arising out of a contract.

True

T/F An illusory promise is not a promise at all.

True

T/F Another term for punitive damages is exemplary damages

True

T/F Bob promises to sell Jane his Harley Davidson for $13,000, and Jane promises to pay Bob $13,000 for his Harely Davidson. This is a bilateral contract.

True

T/F Cal Contractor did extensive work renovating Hailey Homeowner's kitchen. The construction work has been completely finished, but Hailey has not yet paid Cal. This is an example of a partially executed contract.

True

T/F Courts generally cannot order specific performance when the contract is for personal services because of the Thirteenth Amendment.

True

T/F Excessive punitive damage awards may violate the constitutional protection of due process.

True

T/F Failure to rescind a contract within a reasonable time amounts to an affirmation of the contract

True

T/F For promissory estoppel to be granted as a remedy, the promisor must have known or expected that the promisee would rely on the promise.

True

T/F General damages are also called compensatory damages.

True

T/F Giving up the right to do something that one is legally entitled to do can serve as consideration in a contract.

True

T/F Grace has a valid contract with Al to buy a desk once owned by James Madison. Al now refuses to go through with the sale. Because the item is unique, Grace can seek a decree of specific performance to enforce the contract.

True

T/F In a liquidated debt, the parties agree on the exact amount that is due.

True

T/F In an accord and satisfaction, the accord is the new agreement.

True

T/F In bilateral contracts, both parties must be bound to the contract or neither party is bound.

True

T/F Nominal consideration is another term for sham consideration

True

T/F Parties to a contract may not offer as consideration promises to do what they are already legally required to do.

True

T/F Rescission is the remedy that cancels the contract and returns each party to his pre-contract position

True

T/F Susan says to Mark, "Mark, if you mow my lawn by the end of the day, I promise to pay you $50.00." Mark mowes Susan's lawn by the end of the day. A unilateral contract has been created.

True

T/F Tamara left her car in a line of other cars waiting to be washed. Tamara expects to pay for the service and the car wash expects to be paid. The contract that exists between Tamara and the car wash is an implied in fact contract.

True

T/F The statute that requires that certain contracts be in writing is the Statute of Frauds.

True

T/F To meet the element of consideration, each party to a contract must gain a legal benefit and incur a legal detriment.

True

T/F Under common law, modifications to existing contracts require new consideration from each party.

True

T/F Under the Code, parties may agree to modify the terms of an existing contract without providing new consideration.

True

T/F Under the common law, modifications to existing contracts required new consideration from each party

True

T/F You are walking down Lexington Ave and come upon a grocery stand filled with apples under a sign stating 35 cents per apple. You pick up one and take a bite. At that moment, an implied in fact contract is created, largely based on conduct.

True

The Uniform Commercial Code governs contracts for the sale of goods.

True

The Uniform Commercial Code is an important source of contract law for businesses in the United States.

True

Under the Uniform Commercial Code, provisions in a contract will not be enforced if they are so one-sided and unfair that the provisions are unconscionable.

True

Liz read the following announcement in the newspaper: "100 reward for the return of my lost dog, Duffy." This announcement is an offer to form what type of contract?

Unilateral

Promissory estoppel is often used in which of the following business situations?

When a contractor submits a bid in reliance on the bids of his subcontractors

T/F The amount of damages sustained in a breach of contract case is a question of fact to be presented to the jury.

true

Nellie Neighbor made the following offer to two students who lived next door: "I will give you each 50 if you come to my house and move some furniture for me on Saturday." This is an offer to form what type of contract?

unilateral

Typically in construction contracts there will be a provision awarding damages to the buyer at "X" amount of dollars per day for each day the builder is late in completing the work. The parties to the contract agree upon this amount in advance because they know the buyer will incur added costs, or will lose profits, because of the delay. What type of damages are these contractually fixed payments?

liquidated

When there is a time is of the essence clause in a contract, the parties will normally also include in the contract a dollar amount that will be paid the innocent party each day it takes to complete the work after the contract date. This is an example of a __________________damages clause.

liquidated

Plaintiff's duty to take steps to lessen the damages that result from a defendant's breach of contract is the duty to ______________.

mitigate

The person to whom an offer to form a contract is made is called the___________.

offeree

National Chip Company has contracts with numerous farmers in which it agrees to buy all the potatoes the farmers harvest and the farmers agree to sell their potatoes only to National Chip Company. The contracts between the farmers and National Chip Company are ________________contracts.

output

Which of the following is not a legal detriment?

A 20 year old who lives in a state where the drinking age is 21 promises not to drink alcohol.

Which of the following is an unliquidated debt

A bill from a divorce lawyer for $8,000 that is past due, interest to run at 5%. Client is actively disputing the number of hours billed and other charges.

The purposes of nominal damages is to

Acknowledge that a right has been violated even though no monetary loss. resulted

Which of the following is a requirement for a valid contract?

All of the above are elements of a valid contract.

Under common law, modifications to existing contracts require ___________to be enforceable.

New consideration

Another term for special damages is _______________ damages.

Consequential

Bill Builder entered into a contract with Carl's Carpets to supply him with the carpeting he needed to complete the renovation of Famous Restaurant. When Carl did not deliver the carpeting on the contract date, Bill had to find similar carpeting from a different vendor for 5 a yard more than he would have paid to Carl. There was a time is of the essence clause in Bill's contract with Famous Restaurant. Bill was to lose 300day for each day after the contract date that he was late in finishing the renovation. The 300 day represented the profit Famous Restaurant would lose each day it was not in operation. Bill told Carl about this clause, impressing on Carl the need for him to deliver the carpet on time. Bill finished the renovation three days after the contract date. The delay was due solely to Carl's failure to deliver the carpet on time. Bill can recover the 900 he lost from Carl as ___________ damages.

Consequential

Which element of a contract is met by a bargained-for exchange?

Consideration

Another term for promissory estoppel is

Detrimental reliance

Steve enters into a contract with Diana for $3,000, to buy steve's favorite drug, crack cocaine. Steve smokes all the crack cocaine and refuses to pay Diana. Diana sues Steve in Court.

Diana will not recover bacuase the sale of an illegal substance will not be enforceable in court

Nellie Neighbor made the following offer to two students who lived next door: "I will give you each 50 if you come to my house and move some furniture for me on Saturday." To accept this offer, what should the students do

Go to Nellie's house on Saturday and move the furniture.

Which of the following statements is true about an accord and satisfaction?

It can be used for unliquidated debts based on contract or tort claims.

Which of the following statements about quantum meruit is correct?

It is an equitable remedy to prevent unjust enrichment when there is no contract.

Barbara sues Mike to recover $10,000 for a breach of contract. Barbara is seeking a___________________.

Legal remedy

Sam Student transferred to another college and had to leave his apartment with 5 months remaining on the lease. Landlord must try to find a suitable replacement tenant before he can sue Sam for damage because landlord has a duty to _____________damages.

Mitigate

Benny bought shares in Big Chip Maker BCM when the shares were trading for 37 a share. For the past 9 years BCM shares have not traded above 21. Can Benny rescind his purchase based on failure of consideration?

No, unless he was induced into buying the shares through fraud or other wrongdoing.

Jerry agreed to sell Marge 12 cartons of cigars. Jerry then watched a commercial and decided he would never sell tobacco again. Marge was able to buy the cigars from Alan for the same price. Marge sues Jerry for breach of contract. What type of damages can she recover from Jerry?

Nominal

The award of a very small amount of money, such as 1, acknowledges that a wrong has been done, even though there were no monetary losses. This award represents what type of damages?

Nominal

Which of the following statements about nominal consideration is correct?

Nominal consideration will support an enforceable contract.

Which of the following is false about a renunciation?

Renunciations are valid in common law but not under the Code

What is another term for consequential damages

Special

What is another term for consequential damages?

Special

If the seller of a parcel of real property breaches and refuses to sell, the best legal remedy for the buyer who wants this particular piece of property is

Specific Performance

The Garcia family hired Home Improvements, Inc., a local construction company, to put an addition on their home. What type of law governs the contract between the Garcia's and Home Improvement?

State common Law

June was hired to be the store manager of Big Kahuna Surf Shop in Ocean City. The law governing this employment contract is

State common law

Which of the following statements about the Uniform Commercial Code is false

The Code is only concerned that a contract reflect a freely bargained for exchange; it does not look to see if the contract provisions are one-sided or unconscionable

Todd bought a lawn tractor from LawnToysRus. The law that governs this sales contract is

The Uniform Commercial Code

A firm offer that is in writing and signed by a merchant cannot be revoked even though the other party gave no consideration.

True

When is an illusory promise created?

When the promise is conditional on an event happening first that is totally within the promissor's control.

Local Delivery Service had a one year contract with Supply Co. to make four deliveries a month to Supply's customers who live across the Bay. There is only one bridge spanning the Bay for 200 miles in each direction. Without warning, the state closed the bridge to all traffic for 10 months after an inspection revealed dangerous structural problems. Local now has to travel an extra 400 miles for each of the scheduled deliveries. Local asked Supply Co. for an additional 60 per trip above the contract price and Supply Co. agreed. Under common law, is this an enforceable contract?

Yes, the request is made in good faith for an unforeseen difficulty

Bill Builder entered into a contract with Carl's Carpets to supply him with the carpeting he needed to complete the renovation of Famous Restaurant. When Carl did not deliver the carpeting on the contract date, Bill had to find similar carpeting from a different vendor for 5 a yard more than he would have paid to Carl. The difference between the cost of the carpet in the contract with Carl and the cost Bill had to pay the new vendor can be recovered from Carl as _________ damages.

compensatory

Another term for promissory estoppel is ____________.

detrimental reliance