Contracts Multiple Choice Practice

16. On April 1, a landowner and an investor signed a writing in which the landowner, "in consideration of $100 to be paid to the landowner by the investor," offered the investor the right to purchase the landowner's farm for $100,000 within 30 days. The writing further provided, "This offer will become effective as an option only if and when the $100 consideration is in fact paid." On April 20, the landowner, having received no payment or other communication from the investor, sold and conveyed the farm to a developer for $120,000. On April 21, the landowner received a letter from the investor enclosing a cashier's check for $100 payable to the landowner and stating, "I am hereby exercising my option to purchase the farm and am prepared to close whenever you're ready." Which of the following, if proved, best supports the investor's suit against the landowner for breach of contract? a. The investor was unaware of the sale to the developer when the landowner received the letter and check from the investor on April 21. b. On April 15, the investor decided to purchase the farm, and applied for and obtained a commitment from a bank for a $75,000 loan to help finance the purchase. c. When the April 1 writing was signed, the landowner said to the investor, "Don't worry about the $100; the recital of '$100 to be paid' makes this deal binding." d. The landowner and the investor are both professional dealers in real estate.

A

16. Wally Wholesaler and Roberta Retailer were negotiating the sale of 10 large cranes. Roberta's purchase order was for 10 cranes at $500,000 per unit payable in 30 days. Wally's invoice was also for 10 cranes at $500,000 per unit, but contained a clause disclaiming "any and all responsibility for the implied warranty of merchantability." The invoice also stated, "The buyer's sole remedy for damages is limited to the seller replacing or repairing any defective cranes." Roberta paid the invoice on a timely basis and did not comment on the disclaiming and damage limitation clauses. Two of the cranes proved defective. Under the above facts: a. Roberta has a claim against Wally because the merchantability disclaimer did not become a part of the contract. b. Roberta has a claim against Wally because the disclaimer was unconscionable. c. Roberta does not have a claim against Wally because she failed to object to the disclaimer within a reasonable period of time. d. Roberta does not have a claim against Wally because the disclaimer was enforceable.

A

4. A seller and a buyer entered negotiations over the telephone. They reached a general understanding that the buyer would buy widgets from the seller. Following their conversation, the seller sent the buyer a contract, already signed by the seller, agreeing to sell 1,000 widgets to the buyer for a total contract price of $10,000. Upon receipt of the contract in the mail, the buyer signed the contract and deposited an envelope containing the contract in the mailbox located in front of the buyer's office building. Before the seller received the contract, the buyer had a change of heart. He telephoned the seller and said, "Look, I just can't make a profit on those widgets. I'm not interested in that contract we talked about." The seller replied, "That's all right, I understand. Maybe we can do business some other time." The next day, the signed contract was delivered to the seller's office. The seller, also having had a change of heart, decided that he wanted to enforce the contract. Is the contract enforceable against the buyer? a. Yes, because the acceptance occurred prior to rejection. b. Yes, because of the parol evidence rule. c. No, because the offer to rescind was accepted and that discharged the original contract. d. No, because the rejection by telephone voided the acceptance by mail.

A

6. A seller and a buyer entered into negotiations over the telephone. They reached a general understanding that the buyer would buy widgets from the seller. Following their conversation, the seller sent the buyer a contract, already signed by the seller, agreeing to sell 1,000 widgets to the buyer for a total contract price of $10,000. Upon receipt of the contract in the mail, the buyer signed the contract and deposited an envelope containing the contract in the mailbox located in front of the buyer's office building. Before the seller received the contract, the buyer had a change of heart. He telephoned the seller and said, "Look, I just can't make a profit on those widgets. I'm not interested in that contract we talked about." The seller replied, "That's all right, I understand. Maybe we can do business some other time." The next day, the signed contract was delivered to the seller's office. The seller, also having had a change of heart, decided that he wanted to enforce the contract. Is the contract enforceable against the buyer? a. Yes, because the acceptance occurred prior to rejection. b. Yes, because of the parol evidence rule. c. No, because the offer to rescind was accepted and that discharged the original contract. d. No, because the rejection by telephone voided the acceptance by mail.

A

Albert engaged Bertha, an inexperienced actress, to do a small role in a new Broadway play for a period of six months at a salary of $200 a week. Bertha turned down another role to accept this engagement. On the third day of the run, Bertha was hospitalized with influenza and Helen was hired to do the part. A week later, Bertha recovered, but Albert refused to accept her services for the remainder of the contract period. Bertha then brought an action against Albert for breach of contract. 11. Which of the following, if true, would adversely affect Bertha's rights in her action against Albert? a. Albert could not find any substitute except Helen, who demanded a contract for a minimum of six months if she was to perform at all. b. Helen, by general acclaim, was much better in the role than Bertha had been. c. Albert had offered Bertha a position as Helen's understudy at a salary of $100 a week, which Bertha declined. d. Albert had offered Bertha a secretarial position at a salary of $300 a week, which Bertha declined.

A

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

B

12. Loyal, aged 60, who had no plans for early retirement, had worked for Mutate, Inc., for 20 years as a managerial employee-at-will when he had a conversation with the company's president, George Mutant, about Loyal's post-retirement goal of extensive travel around the United States. A month later, Mutant handed Loyal a written, signed resolution of the company's Board of Directors stating that "when and if Loyal should decide to retire, at his option, the company, in recognition of his past service, would pay him a $2,000-per-month lifetime pension." (The company had no regularized retirement plan for at-will employees.) Shortly thereafter, Loyal retired and immediately bought a $30,000 recreational vehicle for his planned travels. After receiving the promised $2,000 monthly pension from Mutate, Inc., for six months, Loyal, now unemployable elsewhere, received a letter from Mutate, Inc., advising him that the pension would cease immediately because of recessionary budget constraints affecting in varying degrees all managerial salaries and retirement pensions. In a suit against Mutate, Inc., for breach of contract, Loyal will probably: a. win, because he retired from the company as bargained-for consideration for the Board's promise to him of a lifetime pension. b. win, because he timed his decision to retire and to buy the recreational vehicle in reasonable reliance on the Board's promise to him of a lifetime pension. c. lose, because the Board's promise to him of a lifetime pension was an unenforceable gift promise. d. lose, because he had been an employee-at-will throughout his active service with the company.

B

15. On January 1, Barbara Buyer and Sarah Seller entered into a written contract to buy and sell, respectively, 300 units of widgets on February 28, at $5.00 per unit. On January 15, the market price rose to $6.00 per unit. On February 1, the market price rose to $7.00 per unit. Sarah then wrote to Barbara and stated, "I am not going to deliver the widgets due on February 28." Barbara wrote back to Sarah and stated, "I know you have repudiated your contract but hope you will reconsider before the due date of February 28." Sarah refused to reconsider and Barbara finally purchased substitute goods at $9.00 per unit on February 28. If Barbara brings suit on March 10 when the price was $8.00 per unit, the market price of the widgets for purposes of computing damages would be: a. $5.00 per unit, the agreed-upon price as of the contract date. b. $7.00 per unit, the market price on the contract repudiation date. c. $8.00 per unit if Sarah did not respond to Barbara's request for her to reconsider the repudiation. d. $9.00 per unit the market price on the date the buyer purchased substitute equivalent goods.

B

In the application for a life insurance policy, Mary answered in the negative the question, "Have you ever had any heart disease?" Both the application and the insurance policy which was issued provided: "Applicant warrants the truthfulness of the statements made in the application and they are made conditions to the contract of insurance." Unknown to Mary, she had had a heart disease at a very early age. The policy provided that the proceeds were not to be paid over to the named beneficiary, Mary's daughter, Joan, "until she reaches the age of 21." No contingent beneficiary was named in the policy. Mary was killed in an automobile accident two month after the policy was issued. Joan died one month later at the age of 19 from injuries incurred in the same accident. 2. If the question is raised in an action against the insurance company, how is the court likely to construe the clause dealing with the truthfulness of statements in the application? a. The clause is a condition, and because the condition was not met, the company will not be liable. b. The clause is a condition, but it will be interpreted to mean, "truthfulness to the best of my knowledge." c. The clause is not a condition, and therefore the company may be liable even though Mary's statement was not true. d. The clause is not a condition but is a promise, and therefore the company will have a cause of action against Mary's estate for any losses it suffered because of Mary's misstatement.

B

14. Seth owned a vacant lot known as Richacre. Seth entered into a written contract with Barnaby to build a house of stated specifications on Richacre and to sell the house and lot to Barnaby. The contract provided for an "inside date" of April 1, 2011 and an "outside date" of May 1, 2011, for completion of the house and delivery of a deed. Neither party tendered performance on the dates stated. On May 3, 2011, Barnaby notified Seth in writing of Barnaby's election to cancel the contract because of Seth's failure to deliver title by May 1. May 12, Seth notified Barnaby that some unanticipated construction difficulties had been encountered but that Seth was entitled to a reasonable time to complete in any event. The notification also included a promise that Seth would be ready to perform by May 29 and that he was setting that date as an adjourned closing date. Seth obtained a certificate of occupancy and appropriate documents of title, and he tendered performance on May 29. Barnaby refused. Seth brought an action to recover damages for breach of contract. The decision in the case will most likely be determined by whether: a. Seth acted with due diligence in completing the house. b. Barnaby can prove actual "undue hardship" caused by the delay. c. The expressions "inside date" and "outside date" are construed to make time of the essence. d. There is a showing of good faith in Barnaby's efforts to terminate the contract.

C

17. Ames painted Bell's house under a contract that called for payment of $2,000. Bell, contending, in good faith, that the porch had not been painted properly, refused to pay anything. On June 15, Ames mailed a letter to Bell stating, "I am in serious need of money. Please send the $2,000 to me before July 1." On June 18, Bell replied "I will settle for $1,800 provided you agree to repaint the porch." Ames did not reply to this letter. Thereafter, Bell mailed a check for $1,800 marked "Payment in full on the Ames-Bell painting contract as per letter dated June 18." Ames received the check on June 30. Because he was badly in need of money, Ames cashed the check without objection and spent the proceeds but has refused to repaint the porch. Bell's refusal to pay anything to Ames when Ames finished painting was a: a. partial breach of contract only if Ames had properly or substantially painted the porch. b. partial breach of contract whether or not Ames had properly or substantially painted the porch. c. total breach of contract only if Ames had properly or substantially painted the porch. d. total breach of contract whether or not Ames had properly or substantially painted the porch.

C

18. A furniture dealer had 500 chairs for sale. The chairs had a fair market value of $100 each. The manufacturer had discontinued production of the chairs, however, and they were the last ones the dealer had. For that reason, the dealer advertised them as $75 each, even though at that price, her profit would be only $10 per chair. An interior decorator had contracted with the dealer to provide furniture for a new hotel. On May 4, after seeing the chairs advertised, the decorator wired the dealer, "Please ship me 500 chairs as advertised at $75 per chair COD." On May 5, immediately upon receipt of the telegram, the dealer wired the decorator, "Accept your offer. Will ship 500 chairs tomorrow." The decorator telephoned the dealer immediately upon receipt of the dealer's telegram on May 6, saying that, after discussing the chairs with his client, he had decided to cancel the order. On May 7, the dealer sold all the chairs to another buyer in good faith and in a commercially reasonable manner at $60 each. If the dealer sued the decorator for breach of contract, what is the maximum amount the court should award the dealer if requested by the dealer: a. $5,000 (500 chairs at $10 profit per chair). b. $37,500 (500 chairs at $75 per chair). c. $12,500 (fair market value of $100 minus contract price of $75 times 500 chairs). d. $7,500 (contract price of $75 minus resale price of $60 times 500 chairs).

C

18. An investor was land-rich by inheritance but money-poor; having suffered severe losses on bad investments, but still owned several thousand acres of unencumbered timberland. He had a large family, and his normal, fixed personal expenses were high. Pressed for cash, he advertised a proposed sale of standing timber on a choice 2,000-acre tract. The only response was an offer by a logger, the owner of a large, integrated construction enterprise, after inspection of the advertised tract. The logger offered to buy, sever, and remove the standing timber from the advertised tract at a cash price 70 percent lower than the regionally prevailing price for comparable timber rights. The investor, by then in desperate financial straits and knowing little about timber values, signed and delivered to the logger a letter accepting the offer. If, before the logger commences performance, the investor's investment fortunes suddenly improve and he wishes to get out of the timber deal with the logger, which of the following legal concepts affords his best prospect of effective cancellation? a. Bad faith. b. Equitable estoppel. c. Unconscionability. d. Duress.

C

20. The seller was an importer of arts and crafts products from African countries, selling mainly to large department stores and import shops. To keep his sales force down to a minimum, the seller did most of his selling by sending catalogs describing products and prices to prospective customers and taking orders by mail on forms provided with the catalogs. The phrase "10 percent discount on COD orders only" appeared on the order form and on each page of the catalog. After receiving one of the seller's catalogs, the buyer decided to order 1,000 Ethiopian coffeepots for sale in her import shop. On April 25, she typed the following across the seller's order form: "Send immediately 1,000 Ethiopian coffeepots (Catalog #6047) at 10% discount. Payment within 10 days of receipt and acceptance." The seller received the order on April 27. On April 28, the seller shipped 1,000 Ethiopian coffeepots to the buyer, who received and accepted them on May 2. On April 29, the seller wrote to the buyer, "I am shipping pursuant to your request and will expect payment within 10 days. Since discounts only apply to COD shipments, you are herewith billed at full price." The buyer received the letter and enclosed bill on May 3. On May 4, the buyer sent the seller a check in payment of the amount billed, less 10%. When was a contract for sale of the coffee pots formed? a. On April 25, when the buyer sent the order to the seller. b. On April 27, when the seller received the order from the buyer. c. On April 28, when the seller shipped the coffeepots to the buyer. d. On May 2, when the buyer received the shipment of coffeepots.

C

20. While waiting in line to open an account with a bank, a customer read a poster on the bank's wall that said, "New Customers! $25 FOR 5 MINUTES! If you stand-in-line for more than five minutes, we will pay you $25! We like happy customers! (This offer may be withdrawn at any time.)" The customer started timing his wait and just as five minutes was about to pass, the bank manager tore the poster down and announced, "The $25 stand-in-line promotion is over." The customer waited in line for ten more minutes before being served. In the customer's action against the bank for $25, will the customer prevail? a. No, because the bank withdrew its offer before the customer completed the requested performance. b. No, because the bank's statement was a non-binding gift promise. c. Yes, because the bank could not revoke its offer once the customer had commenced performance. d. Yes, because the customer's presence in line served as notice to the bank that he had accepted.

C

5. Dave is a skilled carpenter who specializes in designing and installing kitchen cabinetry in Albany County. Three years ago, he engaged Lawyer to incorporate his kitchen cabinetry business. Lawyer formed Kitchen Corp. Last year, Contractor approached Dave and asked him to design and install kitchen cabinetry in all houses built by Contractor in a new, large development in Albany County. Contractor has contracts on 20 homes in the development that are close to being finished in the next 30 days. Contractor stands to lose 50,000 per a home not delivered on-time. Last month, Kitchen Corp. ordered 500 cabinet hinges from Supplier to be delivered on July 29, 2013. Dave expects to use about 20 hinges per a project. Kitchen Corp. had not previously done business with Supplier. On July 29, Supplier delivered 300 hinges to Kitchen Corp. and notified Kitchen Corp. that it could make delivery of the remaining 200 hinges in 30 days. In the business, hinges are sold in packages of 100. Kitchen Corp. does not need all of the hinges immediately and has learned that it can obtain comparable hinges within 30 days from another source at a lower price. What options does Kitchen Corp. have with respect to the 300 hinges received from Supplier? a. Kitchen Corp. must accept the 300 hinges. b. Kitchen Corp. must reject the 300 hinges. c. Kitchen Corp. may accept the 300 hinges. d. Kitchen Corp may revoke the 300 hinges.

C

7. Rene owned and operated Peaceful Pastures, a small but exclusive nursing home. Rene decided to develop a rose garden on the grounds and planned a walkway through the gardens where the residents could stroll and sit on benches in the cool evening hours. Rene and Duffy, the owner of Duffy's Concrete Supply, entered into a written contract whereby Duffy agreed to provide one truck load of "sunset rose" colored concrete to Rene for construction of a walkway that was to measure 3 feet wide and 45 feet long and 3 feet deep. Rene was going to do the work himself. Rene agreed to pay $45 per cubic yard of concrete. Rene refused to let Duffy's men on the property to pour the concrete. Duffy sued Rene for breach of contract. Duffy claimed damages for five cubic yards of concrete. Rene defends the breach of contract action by asserting that the damages cannot be proved to a reasonable certainty. Rene believes the damages are uncertain because the number of yards of concrete was not specified in the contract. The contract only says, "one truck load," and Duffy owns two kinds of trucks - one that carries five yards and one that carries ten yards of concrete - so there is no way of knowing which truck is being referenced in the contract. For purposes of the question, you can assume that the contract is the complete and exclusive statement of the terms of the agreement. If Duffy offers evidence to show that in the building trade, it is commonly understood that a cubic yard equals 3' X 3' X 3', and that the planned pathway would require 5 cubic yards of concrete, the court should find the evidence is: a. Admissible, because trade usage evidence can be used to explain a term in a written contract like the one in this fact pattern. b. Admissible, because there was a unilateral mistake in reducing the agreement to writing and the proof offered correctly states the true intentions of the parties. c. Not admissible, because Duffy is attempting to contradict the terms of a written contract. d. Not admissible, because Duffy is attempting to add to the terms of the written contract.

C

8. Super orally promised to sell to Better 100 cases of artichokes at $5/case. Super attached to the shipment its standard invoice on which Super's CEO wrote, "Sorry, but due to heavy rain we could fill only 80 cases." Better sued Super for breach of contract. Super's invocation of the statute of frauds defense will: a. Succeed, because the contract was not put into writing. b. Succeed, because Super did not sign the writing. c. Fail, because Super's CEO apologized for the shortfall. d. Fail, because Better accepted the goods.

C

BCD, a manufacturer of computers, pays its sales people a salary of $1,000 per month and a commission of 5% on billings actually rendered for machines that they sell. BCD sales people are employed at will under written agreements, which provide that in order to receive a commission the sales person must be in the employment of the company when the bill is sent to the customer. In 2009, John, a sales person for BCD, worked for eight months to get an order from Bobb Corporation for a large $750,000 computer. He consulted extensively with Bobb's top executives and worked with its operating personnel to develop detailed specifications for the new equipment. He also promised Bobb, with BCD's knowledge and approval, to assist Bobb for six months after installation in making the equipment work. On January 1, 2010, Bobb signed an order, and on March 1, the computer was installed. On March 15, BCD fired John on the stated ground that he had failed to meet his 2008 and 2009 sales quotas. John thought that BCD was correct in this statement. Another sales person, Franklin, was thereupon assigned to service the Bobb account. On March 31, BCD billed Bobb for the computer. 7. Assume for this question only that BCD's termination of John's employment was not wrongful. If John sues BCD for the reasonable value of his services, which of the following is the most likely result? a. John will win, because BCD benefitted because of John's services. b. John will win, because BCD made an implied-in-fact promise to pay a reasonable commission for services that result in sales. c. John will lose, because there is an express contractual provision preempting him from being compensated for his services. d. John will lose, because he cannot perform his agreement to assist the customer for six months.

C

In the application for a life insurance policy, Mary answered in the negative the question, "Have you ever had any heart disease?" Both the application and the insurance policy which was issued provided: "Applicant warrants the truthfulness of the statements made in the application and they are made conditions to the contract of insurance." Unknown to Mary, she had had a heart disease at a very early age. The policy provided that the proceeds were not to be paid over to the named beneficiary, Mary's daughter, Joan, "until she reaches the age of 21." No contingent beneficiary was named in the policy. Mary was killed in an automobile accident two month after the policy was issued. Joan died one month later at the age of 19 from injuries incurred in the same accident. 3. If no objection is made concerning Mary's misstatement in the application, how is the court most likely to construe the clause dealing with the payment of the proceeds to Joan? a. Joan's reaching the age of 21 is a constructive condition concurrent. b. Joan's reaching the age of 21 is a condition precedent to the insurance company's duty to pay anyone. c. Joan's reaching the age of 21 has legal significance only with respect to the time of payment. d. Joan's reaching the age of 21 has no legal significance.

C

1. OSI is in the business of supplying live plants and flowers to decorate office building lobbies and atriums. Peckendorf owns 40 large office buildings in Manhattan and contracts with OSI to supply all its needs for live flowers for one year at $25,000 per month. OSI delivers on schedule for two months. At the end of the second month, it receives a notice from Iris Nurseries, its source of live flowers, advising OSI that Iris must suspend all deliveries because of a storm which has wiped out its flower beds. OSI can get the flowers from a nursery in Holland for $7,500 per month more than it would pay Iris. At that price, OSI will lose $7,500 per month, a loss which may cause it to fail. OSI notifies Peckendorf that it cannot make any fut1her deliveries without an increase of $9,000 per month. Peckendorf refuses to adjust the contract and OSI makes no further deliveries. Peckendorf purchases the flowers from another supplier and sues OSI. What result? a. Peckendorf will prevail because OSI can order the flowers from Holland. b. OSI will prevail because the subject matter of the contract was destroyed. c. Peckendorf will prevail because OSI breached the agreement. d. OSI will prevail because the loss to it was extreme and unforeseeable.

D

10. A buyer mailed a signed order to a seller that read: "Please ship us 10,000 widgets at your current price." The seller received the order on January 7 and that same day mailed to the buyer a properly stamped, addressed, and signed letter stating that the order was accepted at the seller's current price of $1O per widget. On January 8, before receipt of the seller's letter, the buyer telephoned the seller and said, "I hereby revoke my order." The seller protested to no avail. The buyer received the seller's letter on January 9. Because of the buyer's January 8 telephone message, the seller never shipped the goods. Under the relevant and prevailing rules, is there a contract between the buyer and the seller as of January 10? a. No, because the order was an. offer that could be accepted only by shipping the goods; and the offer was effectively revoked before shipment. b. No, because the buyer never effectively agreed to the $10 price term. c. Yes, because the order was, for a reasonable time an irrevocable offer. d. Yes, because the order was an offer that the seller effectively accepted before the buyer attempted to revoke it.

D

11. On June 1, a seller and a buyer contracted in writing for the sale and purchase of the seller's cattle ranch (a large single tract), and to close the transaction on December 1. On October 1, the buyer told the seller, "I'm increasingly unhappy about our June 1 contract because of the changes in the cattle market, and do not intend to buy your ranch unless I'm legally obligated to do so." If the seller sues the buyer on October 15 for breach of contract, the seller will probably: a. win, because the buyer committed a total breach by anticipatory repudiation on October 1. b. win, because the buyer's October 1 statement created reasonable grounds for the seller's insecurity with respect to the buyer's performance. c. lose, because the parties contracted for the sale and conveyance of a single tract, and the seller cannot bring suit for breach of such a contract before the agreed closing date. d. lose, because the buyer's October 1 statement to the seller was neither a repudiation nor a present breach of the June 1 contract.

D

13. A home improvement store faxed an appliances manufacturer on June 1, "At what price will you sell 100 of your QT-Model garbage-disposal units for delivery around June 10?' Thereafter, the following communications were exchanged: 1. Fax from the manufacturer received by the store on June 2: "You're in luck. We have only 100 Q-T model units, all on clearance at 50 percent off usual wholesale price of $120 per unit, for delivery at our shipping platform on June 12." 2. Letter from the store received in U.S. mail by the manufacturer on June 5: "I accept. Would prefer to pay in full 30 days after invoice. 3. Fax from the manufacturer received by the store on June 6: "You must pick up at our platform and pay C.O.D." 4. Letter from the store received in U.S. mail by the manufacturer on June 9: "I don't deal with people who can't accommodate our simple requests." 5. Fax from the store received by the manufacturer on June 10, after the manufacturer had sold and delivered all 100 of the Q-T model garbage disposal units to another buyer earlier that day: "Okay. I'm over a barrel and will pick up the goods on your terms June 12." The store now sues the manufacturer for breach of contract. Which of the following arguments will best serve the manufacturer's defense? a. The manufacturer's fax received on June 2 was merely a price quotation, not an offer. b. The store's letter received on June 5 was not an acceptance because it varied the terms of the manufacturer's initial fax. c. The store's use of the mails in response to the manufacturer's initial fax was an ineffective method of acceptance. d. The store's letter received on June 9 was an unequivocal refusal to perform that excused the manufacturer even if the parties had previously formed a contract.

D

13. The Pizza Soul Food Company ("Pizza Soul") is a business in need of a new industrial oven. The company is headquartered in Atlanta, Georgia. It also has its flagship restaurant there too. Pizza Soul recently contacted several domestic and foreign suppliers of restaurant equipment in an effort to buy a new industrial pizza oven for its Atlanta location. After several calls and reviews of brochures, it eventually chose to buy an industrial oven from DeMartino's Ovens, Ltd., which is located in Florence, Italy. DeMartino's has been making industrial ovens since 1885 and has a worldwide representation of making first-class ovens. After having made its decision, Pizza Soul sent a letter to DeMartino's offering to purchase a single oven, Model # 1100-Z, for the price of $40,000. Upon receipt of the letter, DeMartino's mailed a letter back to Pizza Soul accepting the offer but, before Pizza Soul received the letter, the president of DeMartino's, Joe, called Pizza Soul to say that he had a change of heart and that he would no longer sell the oven to Pizza Soul. Other than a change of heart, Joe offered no other reasons for declining the sale. Its rumored that he is growing older, and he is If Pizza Soul sues DeMartino's for breach of contract, what law should govern the resolution of this dispute? a. Article 2 b. Article 2A c. Common Law d. CISG

D

19. The buyer operated a grocery store in which he sold fresh fish and other food items. The seller was a wholesaler of fresh fish. By a written contract, the buyer and the seller agreed that the buyer would purchase from the seller 100 kilograms per week of a fish known as "blue gills" at a specified price that was higher than the market price of "tilapia," another type of fish. When the seller made the first delivery under the contract, however, the buyer refused to accept it, complaining that the fish delivered by the seller was tilapia, a species unrelated to blue gills. The buyer was aware of the fact that tilapia is frequently referred to as "blue gills." The seller subsequently asserted a breach-of-contract claim against the buyer. At the trial, the seller attempted to testify that in the fresh fish industry, tilapia are frequently referred to as "blue gills." If the buyer objects, the seller's testimony should be a. excluded, because it modifies the terms of a written contract that buyer and the seller intended to be a complete record of their agreement. b. excluded, because the price to which the buyer and seller agreed is higher than the market price of tilapia. c. admitted, because the buyer was aware of the fact that tilapia is frequently referred to as "blue gills." d. admitted, to explain the meaning of the term "blue gills" as used in the contract.

D

2. Frameco sells license plate frames engraved with custom messages. It sent a "Dear friend" flyer to several hundred potential customers, including Adtech. Frameco's flyer said that it was offering frames at $1 per item. It further specified that orders had to be for at least 1,000 frames and that the inscriptions could have no more than 25 letters each. Adtech faxed Frameco, "Send me 2,000 frames, at $1 each, with the following inscription . . . ." The inscription contained 22 letters. The next day, Frameco called Adtech to say that due to an unforeseen increase in the cost of production the purchase price had risen to $1.25 per frame. On these facts, if Adtech sues Frameco for breach of contract, it is most likely that: a. Adtech will prevail because it accepted Frameco's flyer by its return fax. b. Adtech will prevail because Frameco is estopped to deny that it reasonably expected Adtech to rely on its promise, which Adtech did. c. Frameco will prevail because Adtech's fax was not in a manner and by a medium invited by the offer. d. Frameco will prevail because its letter to Adtech did not constitute an offer.

D

9. The Register, a newspaper printer, called Cutter, a paper maker, and asked for the price of newsprint. Via a signed letter dated April 1, Cutter told Register, "For the next month we'll be running a special: newsprint @ 50 cents/pound." One week later, Cutter sent Register a letter stating that due to a forest fire the price of its newsprint had increased to 80 cents per pound, same terms. One week after Cutter's second letter, Register sent a signed letter to Cutter stating, "We accept your offer of April 1 for newsprint at 50 cents per pound. Please ship two tons ASAP." If Cutter refuses to sell Register newsprint by the terms of the April 1 letter, and Register brings suit: a. Register will prevail because Cutter's April 1 letter was a firm, non-revocable offer. b. Register will prevail because Cutter reasonably expected Register to rely on its promise and Register did so. c. Cutter will prevail because the April 1 letter failed to recite a purported consideration. d. Cutter will prevail because the April 1 letter was a price quotation rather than an offer.

D

9. The Soul Food Company is a business in need of a new industrial oven. The company is headquartered in Atlanta, Georgia. It also has its flagship restaurant there too. Soul Food recently contacted several domestic and foreign suppliers of restaurant equipment to buy a new industrial oven for its Atlanta location. After several calls and reviews of brochures, it eventually chose to buy an industrial oven from Brazil Ovens, Ltd., which is in Rio de Janeiro, Brazil. Brazil Ovens has been making industrial ovens for a very long time, and it has a worldwide representation of making first-class ovens. After having made its decision, Soul Food sent a letter to Brazil Ovens offering to purchase a single oven, Model # 3000-X, for the price of $20,000. Upon receipt of the letter, Brazil Ovens mailed a letter back to Soul Food accepting the offer but, before Soul Food received the letter, the president of Brazil Ovens, Helena Rizzo, called Soul Food to say that she had a change of heart and that she no longer wanted to sell the oven to Soul Food. Other than a change of heart, Ms. Rizzo offered no other reasons for declining the sale. If Soul Food sues Brazil Ovens for breach of contract, what law should govern the resolution of this dispute? a. Article 2 b. Article 2A c. Common Law d. CISG

D

Albert engaged Bertha, an inexperienced actress, to do a small role in a new Broadway play for a period of six months at a salary of $200 a week. Bertha turned down another role to accept this engagement. On the third day of the run, Bertha was hospitalized with influenza and Helen was hired to do the part. A week later, Bertha recovered, but Albert refused to accept her services for the remainder of the contract period. Bertha then brought an action against Albert for breach of contract. 10. Which of the following is Bertha's best legal theory? a. Her acting contract with Albert was legally severable into weekly units. b. Her performance of the literal terms of the contract was physically impossible. c. Her reliance on the engagement with Albert by declining another acting role created an estoppel against Albert. d. Her failure to perform for one week was not a material failure so as to discharge Albert's duty to perform.

D

BCD, a manufacturer of computers, pays its sales people a salary of $1,000 per month and a commission of 5% on billings actually rendered for machines that they sell. BCD sales people are employed at will under written agreements, which provide that in order to receive a commission the sales person must be in the employment of the company when the bill is sent to the customer. In 2009, John, a sales person for BCD, worked for eight months to get an order from Bobb Corporation for a large $750,000 computer. He consulted extensively with Bobb's top executives and worked with its operating personnel to develop detailed specifications for the new equipment. He also promised Bobb, with BCD's knowledge and approval, to assist Bobb for six months after installation in making the equipment work. On January 1, 2010, Bobb signed an order, and on March 1, the computer was installed. On March 15, BCD fired John on the stated ground that he had failed to meet his 2008 and 2009 sales quotas. John thought that BCD was correct in this statement. Another sales person, Franklin, was thereupon assigned to service the Bobb account. On March 31, BCD billed Bobb for the computer. 6. Assume for this question only that BCD's termination of John's employment was not wrongful. If John, after demand and refusal, sues BCD for the Bobb sale commission, which of the following, is the most likely result? a. John will win, because he had procured the sale of the computer. b. John will win, because he had promised Bobb to assist in making the equipment work. c. BCD will win, because Franklin is entitled to the commission on a quantum meruit basis. d. BCD will win, because John was not employed as a BCD sales person when Bobb was billed for the computer.

D

BCD, a manufacturer of computers, pays its sales people a salary of $1,000 per month and a commission of 5% on billings actually rendered for machines that they sell. BCD sales people are employed at will under written agreements, which provide that in order to receive a commission the sales person must be in the employment of the company when the bill is sent to the customer. In 2009, John, a sales person for BCD, worked for eight months to get an order from Bobb Corporation for a large $750,000 computer. He consulted extensively with Bobb's top executives and worked with its operating personnel to develop detailed specifications for the new equipment. He also promised Bobb, with BCD's knowledge and approval, to assist Bobb for six months after installation in making the equipment work. On January 1, 2010, Bobb signed an order, and on March 1, the computer was installed. On March 15, BCD fired John on the stated ground that he had failed to meet his 2008 and 2009 sales quotas. John thought that BCD was correct in this statement. Another sales person, Franklin, was thereupon assigned to service the Bobb account. On March 31, BCD billed Bobb for the computer. 8. Contractor promises to build a home theater room addition onto Owner's house. The room addition will cost Contractor $20,000 to build. Owner agreed to pay Contractor $40,000 to build the room. The Contractor went about busily about buying the materials needed to build the room, spending $5,000 at Lowe's. Once he brought the materials, he started to build the room addition immediately. Three weeks into the job; however, Owner became disinterested in the project and kicked the Contractor off his property. At that time, Contractor had spent $4,000 on labor and the $5,000 spent on the materials he purchased at Lowe's. Contractor can recover $1,500 of the money he spent on the materials purchased at Lowe's by using these same materials on a future job but the rest is a loss. Owner gave Contractor a $2,500 down payment that Contractor still has. What, if any damages, can Contractor recover from Owner in a lawsuit for breach of contract? a. $29,000 b. $15,000 c. $27,500 d. $25,000

D