Contracts Q's
A biker agreed to buy a vintage motorcycle from a mechanic for $10,000, once the mechanic finished restoring the motorcycle. The agreement provided that the biker would pick up and pay for the motorcycle on May 15. To protect the motorcycle from damage in his busy shop, the mechanic rented a garage to store the motorcycle while he restored it. After storage fees and the costs of the restoration materials, the mechanic expected a $4,000 profit from the contract. On May 15, when the biker came to pick up the motorcycle, even though the motorcycle was well-restored, the biker, for personal financial reasons, refused to pay for the motorcycle. The mechanic stored the motorcycle in the garage for another six months while he looked for another buyer, paying a total of $900 in storage fees for those six months. He then sold the motorcycle for $7,000 to another buyer. Which of the following is the highest proper measure of the mechanic's damages? A. $3,900, the difference between the contract price and the price obtained from reselling the motorcycle, plus the cost of six months of storage B. $4,900, the mechanic's expected profit for the contract, plus the cost of six months of storage C. $3,000, the difference between the contract price and the price obtained from reselling the motorcycle D. $4,000, the mechanic's expected profit for the contract.
A
Barb, a teacher, is shopping in a furniture store and sees a sofa she likes. She takes the store manager's business card home with her. When she gets home, Barb measures her living room and decides that the sofa would be perfect. Barb calls the store manager and places an order for the sofa, which is to be custom made in the neon pink mohair fabric Barb selected. The store manager confirms the order by mailing Barb an invoice. The invoice states the price of $6,000, style number, measurements, neon pink color, and the mohair fabric number. The invoice also states: "Any disputes relating to this sale will be submitted to arbitration." Barb pays for and accepts delivery of the neon pink sofa. It is only months later that she realizes that the fabric is cotton, not mohair. When she cannot get the store manager to respond to her calls or emails, Barb brings a lawsuit against the furniture store for breach of contract. Assume the invoice is partially integrated. In the store, during Barb's discussion with the manager, the manager told Barb that the sofa would be delivered within 20 days from placing the order. The invoice said nothing about delivery date. The sofa was delivered 40 days after Barb placed the order. In addition to breaching the contract by delivering the wrong fabric, Barb wants to argue that the store breached by delivering the sofa late. In determining when delivery was due, will the court consider the conversation that Barb and the store manager had about delivery? A. Yes, because the conversation is not inconsistent with the invoice B. No, because the conversation is parol evidence C. Yes, because 20 days is a reasonable time for delivery D. No, because the conversation is within the scope of the invoice
A
On Friday morning, Susan sent the following text message to her neighbor Barb: "my lawnmower won't start. I'm about to head out of town for the weekend. I'll pay you $100 if you fix it this weekend. The lawnmower is in the garage. You know the garage code, so please just let yourself in and fix it if you have time, or let me know if you can do it." Barb received Susan's text message and, on Friday afternoon, Barb walked over to Susan's house and inspected the lawnmower and diagnosed the problem. Barb planned to go to the store on Saturday morning to purchase replacement parts, and then install those parts. On Friday evening, Susan texted Barb: "forget about yesterday's text." Barb immediately responded: "No way. I already went over to your place and figured out the problem with the lawnmower. Was going to buy replacement parts and fix the lawnmower tomorrow." Susan responded: "I'm so sorry, I just ordered a new lawnmower and I don't need that old one any longer." If Barb initiates a suit for breach of contract, which of the following is Susan's strongest argument that no contract was formed between Susan and Barb? A. Although Barb was preparing to perform, she had not actually begun the requested repair work when Susan revoked the offer. B. Barb had not completed performance before Susan revoked the offer. C. Since Susan made the offer by text message, Barb could accept only by text message D. Susan's offer could only be accepted by a return promise.
A is correct. It is the best argument for Susan. Here, the offer does not specify how Barb should accept, and it is reasonable for Barb to accept by promise or performance. In this situation, Barb's commencement of performance would bind the parties to a contract (Restatement 2d §62). So, Susan's best argument is that simply inspecting the lawnmower was merely preparation to perform, not the act of repairing the lawnmower, which was the requested performance. If Susan wins this argument, then no contract was formed by Barb inspecting the lawnmower, and Susan was free on Friday evening to revoke. Of course, a court might find that inspecting the lawnmower was commencement of performance and not merely preparation to perform, but this is still Susan's strongest argument that she was free to revoke when she did.
A painter and a homeowner entered into a contract for the painter to paint the exterior of the homeowner's house at a cost of $5,000. The homeowner agreed to supply the paint; the contract was solely for the painter's services. The job would take about 1 month from the date of contracting to complete. After execution of the contract, but before beginning performance, the painter realized he forgot to include the exterior of the garage in the estimate for the painting job. He phoned the homeowner, explained the matter, and demanded an additional $1,000 in order to perform the job. The homeowner orally agreed, after securing the painter's agreement to also paint the interior walls of the garage and the basement. When the homeowner tendered a check for $5,000 to the painter, the painter demanded the agreed upon contract price of $6,000. Is the painter likely to prevail in his demand for the full $6,000? A. Yes, because the painter's duties under the contract were modified. B. Yes, because the homeowner agreed to pay the higher amount. C. No, because the painter did not suffer a detriment D. No, because the oral modification violated the Statute of Frauds
A is correct. There is additional consideration to bind the parties to the modification because the painter is agreeing to paint the interior portions of the garage and basement, which is more than the painter had originally agreed to do. In exchange, the homeowner agreed to pay an additional $1,000.
On January 1, 2020, Chill, a retailer of air conditioners, faxed to Ben, a homeowner and customer, a signed offer: "Can sell you the X-$ Central Air System for $1000. This offer will remain open until May 1, 2020." Thereafter, On January 29, 2020, Chill sent another fax to Ben stating: "The offer dated January 1 is hereby revoked." Chill's January 29 fax is: A. Not a valid revocation, because Chill gave assurance the offer would remain open until May 1. B. A valid revocation, because there was no consideration to support to option contract. C. A valid revocation, because Ben is not a merchant. D. Not a valid revocation, because using the word revoke does not necessarily make the communication a revocation
A is correct. This is a sale of a good. No consideration is needed to bind the offeror to hold the offer open because the offer meets the definition of a firm offer under UCC 2-205.
A farmer contracted in writing to sell his land. While the farmer believed that the land's groundwater was contaminated by the operation of a nearby ore smelting plant, the farmer never had the groundwater tested. The farmer did not disclose to the buyer that he believed the groundwater was contaminated. Before closing of title, the buyer had the groundwater tested and found no traces of contaminants. The buyer did not disclose the results of groundwater test to the farmer. After closing, the farmer found out that the groundwater was not contaminated. The farmer wants to void the sale. If the farmer sues to void the contract, what is the likely outcome? A. The buyer will prevail, because the farmer assumed the risk that the groundwater on the land was not in fact contaminated. B. The buyer will prevail, because the farmer failed to disclose that he believed the groundwater was contaminated. C. The farmer will prevail, because the buyer had a duty to disclose everything the buyer knew about the land. D. The farmer will prevail, because there was a unilateral mistake.
A is correct. While there was a unilateral mistake, the farmer bears the risk of the mistake due to his conscious ignorance about the quality of the groundwater.
A homeowner contracted with a builder to construct a home for the price of $500,000, to be paid upon completion of construction. The homeowner provided the plans and specifications for the construction, which included the installation of a BeSafe security system. About a week before the security system was to be installed, the builder discovered that the BeSafe system was backordered for six months, but that the BeAlert system, which possessed the same style, quality, features and cost as the BeSafe system, was immediately available. Unable to contact the homeowner, the builder installed the BeAlert system and completed construction. Unhappy with the substitution, the homeowner refused to pay the builder for his services in constructing the home. The cost to replace the BeSafe system with the BeAlert system is $80,000 because it requires a rewiring of the entire home. The decrease in the value of the building due to the substitution is $100. The builder has completed the construction, but the homeowner has not yet made any payment to the builder. In an action by the builder to recover for his performance, how much should the court award the builder? A. $500,000 B. $499,900 C. Whatever it cost the builder to construct the home D. $420,000
B
A local bar association commissioned an artist to paint a portrait of the state's chief judge, who had recently retired. The organization and the artist entered into a valid written contract to paint the judge's commissioned portrait for $20,000. The contract contained a clause by which the artist's payment was conditioned upon the organization's satisfaction with the portrait. After the judge sat for the artist, and the artist completed the painting, he revealed the painting to the organization's president. The president was appalled that the artist had painted the judge against a neon pink background, instead of using a dark background pallet, which was customary for formal portraits. Even though the portrait was of very high quality and would be objectively valued at approximately $20,000, the president disliked the aesthetic choice of background color made by the artist and the organization refused to accept or pay for the portrait. The artist subsequently sued to recover his fee under the contract. Is the artist likely to recover under the contract? A. Yes, because the artist completed the portal commissioned by the contract B. No, because the artist's payment was conditioned upon the organization's satisfaction. C. No, because the organization did not accept or pay for the portrait. D. Yes, because the portrait satisfied an objective standard of quality.
B
Barb, a teacher, is shopping in a furniture store and sees a sofa she likes. She takes the store manager's business card home with her. When she gets home, Barb measures her living room and decides that the sofa would be perfect. Barb calls the store manager and places an order for the sofa, which is to be custom made in the neon pink mohair fabric Barb selected. The store manager confirms the order by mailing Barb an invoice. The invoice states the price of $6,000, style number, measurements, neon pink color, and the mohair fabric number. The invoice also states: "Any disputes relating to this sale will be submitted to arbitration."Assume the invoice is partially integrated. In the store, during Barb's discussion with the manager, the manager told Barb that the sofa would be delivered within 20 days from placing the order. The invoice said nothing about delivery date. The sofa was delivered 40 days after Barb placed the order. In addition to breaching the contract by delivering the wrong fabric, Barb wants to argue that the store breached by delivering the sofa late. Barb pays for and accepts delivery of the neon pink sofa. It is only months later that she realizes that the fabric is cotton, not mohair. When she cannot get the store manager to respond to her calls or emails, Barb brings a lawsuit against the furniture store for breach of contract. The store manager did not sign the invoice. If the store argues that the contract is not enforceable under the statute of frauds, which of the following would be a correct ruling from the court? A. The statute of frauds is satisfied because the invoice is in writing B. The contract falls within an exception to the requirements of the statute of frauds C. The contract is not within the statute of frauds D. The statute of frauds is not satisfied because the invoice is not signed by the store manager
B
Burger Queen, a fast-food chain, purchased commercial time on a television network for children's programming to advertise its Merry Meal™. Burger Queen hired Video Company to shoot a series of four commercials to air on that channel. The written contract between the parties included a "production fee clause" which provided that Video Company would be "paid a $100,000 fee for each suitable commercial, which would cover the entire cost of filming and editing each commercial." The "production fee clause" also provided that filming and editing would be directed by Video Company's creative director, Dara. The "production fee clause" made no other representation concerning compensation; however, later in the contract it mentioned without definition a "producer fee." Thereafter, Video Company filmed and edited the first commercial, which Burger Queen approved. Video Company then filmed and edited the second commercial, which Burger Queen also approved. When production was complete on the third commercial, Video Company sent Burger Queen an invoice for $150,000, which, according to Video Company, represented the $100,000 "production fee" for filming and editing the commercial, plus a $50,000 "producer fee" for Dara's work as director. Denying any additional liability, Burger Queen sent Video Company a check for $100,000. Video Company then brought suit against Burger Queen to recover the $50,000 for Dara's services. A court determines that the contract is ambiguous concerning what was intended by a "producer fee." Upon completion of the fourth commercial, Burger Queen refuses to pay, stating that the commercial is not "suitable" for children's television. Burger Queen provides no reason or explanation for why the commercial is, in its view, not "suitable." Video Company disagrees and believes it should be paid for its work. Video Company suspects that Burger Queen has not even viewed the commercial to make a determination of its suitability. Which of the following is the best prediction of the outcome if Video Company sues Burger Queen? A. the court will find that the agreement is illusory B. The court will find that Burger Queen breached the implied duty of good faith and fair dealing if it did not even view the commercial before determining that it was not suitable C. The court will refuse to interfere with the judgment of Burger Queen concerning the suitability of the commercial D. The court will find that Burger Queen did not breach the implied duty of good faith and fair dealing because the contract requires the commercials to be suitable
B
On May 1, the plaintiff, a licensed real estate broker, entered into a written contract with the defendant. According to the contract, the plaintiff was given the exclusive right to sell the defendant's home at a price of $190,000 for a period of three months. The defendant agreed to pay the plaintiff a 6% commission "upon transfer of title." On June 1, as the result of plaintiff's efforts, a buyer agreed to purchase the defendant's home at a price of $190,000. According to the terms of the contract, the defendant was to deliver evidence that the water in the home was potable by EPA standards. At the defendant's request, the water was tested, and the defendant obtained a report stating that the water met EPA standards. The defendant did not deliver the report to the buyer, however, because defendant's daughter, who lived nearby, begged defendant not to move. the daughter insisted that defendant try to get out of the deal. On June 21, the buyer notified defendant that he would not go through with the transaction because of defendant's failure to deliver the water report. The plaintiff sued the defendant for ^5 commission based on the defendant's contract with the buyer. Which of the following would be the plaintiff's most effective argument in support of her claim? A. The plaintiff delivered a buyer "ready, willing, and able" to purchase the defendant's property. B. But for the willful breach by the defendant, the buyer would have taken title to the realty. C. The defendant and the buyer entered into a contract for the sale of the defendant's realty as a result of plaintiff's efforts. D. The defendants refusal to deliver the water report merely breached a covenant of the contract of sale.
B
Beantown Sports (the "Store") published the following advertisement in the Daily Times on Wednesday, June 1, 2022: "1 Brand New 9.7 Dagger Katana Sea KAYAK in aqua blue ... usually sells for $1,299.99... out it goes ... Saturday June 12, only $20.00. FIRST COME, FIRST SERVED" On Saturday, June 12, Brad was the first person to arrive at the Store and he presented the $20 and demanded the kayak. The Store manager refused to sell the kayak because the manager decided to keep it for himself. If Brad brings a suit against the Store for their refusal to sell him the kayak, Brad will: A. lose, because the advertisement was only intended as an invitation to make an offer. B. win, because the ad should be construed as an offer, which Brad accepted. C. win, because the store is a merchant D. lose, because Brad did not notify the Store in writing that he intended to accept the offer.
B is correct. Do the facts sound familiar? They are very much like Lefkowitz v. Minneapolis Surplus Store. The ad is sufficiently definite and leaves nothing open to negotiation, so it would be considered an offer, which Brad accepted by being the first one to show up with the $20.
In January, during a fundraising dinner with the C.E.O. of a hospital, a wealthy philanthropist promised to donate $2,000,000 to the hospital if it performed 50 successful organ transplants by December 31. At dinner, the C.E.O. told the philanthropist that she accepted the philanthropist's donation. The C.E.O. thereafter caused the hospital to convert a wing of its facility to surgery rooms equipped for transplant procedures, and also hired two transplant surgeons, all at significant cost. On December 15, the philanthropist's secretary contacted the C.E.O. and told the C.E.O. that the philanthropist withdrew his promise to make the donation. Two days later, the hospital completed its 50th successful organ transplant. The hospital sued the philanthropist based on the promise to make the donation. Is the hospital likely to receive relief in its suit against the philanthropist? A. No, because the philanthropist revoked his offer before the hospital completed the 50th successful organ transplant. B. Yes, because the hospital detrimentally relied on the philanthropist's promise. C. Yes, because the C.E.O. accepted the philanthropist's offer prior to revocation D. No, because there was no consideration to support the philanthropists promise.
B is correct. The hospital's detrimental reliance on the promise provides the hospital with an argument for relief based on promissory estoppel.
Barry rented an event space to host a 2023 New Year's Eve party. After the party, the event space owner emailed Barry a rental agreement for New Year's Eve 2024. The rental agreement set forth in great detail all of the same terms as the prior year, including price and rental duration. The rental agreement was transmitted with a cover page on the event space's letterhead. The cover page, which was signed by the owner, stated: "In consideration of one dollar, receipt of which is acknowledged, we will provide you until February 1 to sign the attached rental agreement for New Year's Eve 2024." Did the events space's email constitute an offer? A. Yes, because consideration for the option can be inferred from the previous rental agreement B. yes, because the email manifested a willingness to enter into a specific bargain that would be concluded by Barry's assent. C. No, unless Barry paid or tendered the one dollar to the event space D. No, because Barry still had the ability to negotiate the terms of the rental agreement.
B is correct. This is correct because it answers the question. The email, which contains a detailed proposed agreement, meets the definition of an offer. That definition is incorporated in this answer.
On May 10, 2022, Steve, a teacher, posted to Facebook that he was offering surfing lessons during the summer after school let out. On May 11, 2022, Bonnie reached out to Steve to ask about surfing lessons for her daughter. Steve emailed Bonnie an offer: "Can provide your daughter with a two-hour lesson at 9am every Friday in July for $200 per lesson. I will hold this time slot and price for you until May 20, 2022. After that, I have to open up the slot for other potential students. Surfs up! Steve." Thereafter, on May 17, 2022, Steve sent Bonnie another e-mail stating "Sorry, but I can no longer offer you the Friday 9am surfing lesson slot in July." Steve's May 17 e-mail is: A. not a valid revocation, because Steve gave assurance the offer would remain open until May 20. B. A valid revocation, because there was no consideration to support the promise to hold the offer open until May 20. C. Not a valid revocation, because there is no indication that Steve gave someone else the Friday 9AM slot. D. A valid revocation, because Steve is not a merchant.
B. statement requires consideration to bind an offeror to an assurance to hold an offer open. There are no facts to indicate that Bonnie relied in any way on the offer, so reliance does not serve as an alternative to form an option contract.
Barb, a teacher, is shopping in a furniture store and sees a sofa she likes. She takes the store manager's business card home with her. When she gets home, Barb measures her living room and decides that the sofa would be perfect. Barb calls the store manager and places an order for the sofa, which is to be custom made in the neon pink mohair fabric Barb selected. The store manager confirms the order by mailing Barb an invoice. The invoice states the price of $6,000, style number, measurements, neon pink color, and the mohair fabric number. The invoice also states: "Any disputes relating to this sale will be submitted to arbitration." Barb pays for and accepts delivery of the neon pink sofa. It is only months later that she realizes that the fabric is cotton, not mohair. When she cannot get the store manager to respond to her calls or emails, Barb brings a lawsuit against the furniture store for breach of contract. The store argues the lawsuit should be dismissed because the dispute is subject to arbitration. Will the court compel the parties to arbitrate? A. No, because the invoice is a contract of adhesion B. Yes, because arbitration is a default rule under the UCC C. No, because Barb never manifested assent to the arbitration term D. Yes, Because the invoice stated that any disputes relating to the sale would be submitted to arbitration
C
On June 1, a contractor agreed to build an outdoor shower for homeowner's vacation home. The homeowner wanted the shower to be complete before July 1. The contract required the homeowner to pay half of the price on June 15; the remainder of the price would be due upon completion of the work. The contractor agreed to begin the work on June 16, with the promise to complete it in ten days. On June 12, before the homeowner's first payment was tendered, the contractor called the homeowner and left her a message: "I think I broke my foot, I may not be able to begin the work on the schedule we discussed." Which of the following correctly states the homeowner's rights and obligations immediately after the message from the contractor on June 12? A. The homeowner has no cause of action for breach of contract, and must make the payment due on June 15 to preserve her rights under the contract B. The homeowner can treat the contractor's message as an anticipatory repudiation and sue to enjoin an actual breach by the contractor C. The homeowner has no cause of action for breach of contract, but can demand assurances that the contractor will perform and may refrain from making the first payment until the contractor provides adequate assurances he will perform D. The homeowner can treat the contractor's message as an anticipatory repudiation and immediately commence a lawsuit fro breach of the entire contract
C
The owner of a 1970 Plymouth Road Runner needed a part to repair the horn (when honked, the horn's sound is "meep meep"). The part was difficult to locate because of the horn's unique sound. The owner located the part and the seller contracted to sell and ship the part for $300, with delivery in one week and payment due upon delivery. The transaction was consummated online, and nothing was discussed other than price and delivery terms. Two weeks later, the owner had still not received the part and did not hear back from the seller. The owner located the part elsewhere and contracted to purchase it for $500. In an action against the seller, how much should the court award the owner? A. $300 B. $500 C. $200 D. $200, plus all of the expected revenue from car shows the owner missed during the weeks he was without a working car horn
C
Ann sold her Peloton bike to her neighbor for $450. While they were moving the bike out of Ann's apartment, Ann's dog got very upset and bit the neighbor, causing the neighbor to require two stitches on her arm. Ann told the neighbor, "If you promise not to sue me for damages related to the dog bite, I will return the $450 to you." For eight months, the neighbor did not sue Ann for damages resulting from the dog bite, but Ann refused to return the neighbor's $450. If the neighbor sues Ann for return of the $450, will the neighbor succeed? A. No, because there was inadequate consideration as $450 was not equal in value to refraining from filing a lawsuit for damages related to the dog bite. B. No, because the neighbor's promise to refrain from suing Ann has no tangible economic value. C. Yes, because the agreement between Ann and the neighbor was supported by consideration. D. Yes, because the neighbor detrimentally relies upon Ann's promise to pay the neighbor $450
C is correct. Consideration is evidenced by a bargained-for change in the legal position between the parties. Here, the neighbor agreed to not sue Ann for damages if Ann returned the $450. Thus, there was a bargained-for legal exchange between the two parties and the agreement can be enforced.
On May 1, a pet store sent an order to a pet food manufacturer to purchase 10 cases of Extra Crunchy Bison Bites for $500 per case, which was the price quoted in the manufacturer's catalog. On May 5, the manufacturer sent the pet store an email, which stated, "We are pleased to fulfill your order. We will ship in two separate crates, both to arrive the same day." The manufacturer's email otherwise confirmed the identical quantity, price, and the product ordered by the pet store. As of May 5, which of the following is an accurate statement concerning the relationship between the pet store and the manufacturer? A. There is no contract because the manufacturer expressly conditioned its acceptance on the pet store's assent to an additional term. B. There is no contract because the manufacturer's purported acceptance contained a term that was not found in the offer. C. There is a contract that includes the term regarding shipment in two crates, so long as it does not materially alter the contract. D. There is a contract that does not include the term regarding shipment in two crates, as that term is merely a proposal, which the pet store can choose to accept or reject.
C is correct. It requires an application of UCC 2-207. The Extra Crunchy Bison Bites are a good. When pet store places an order, that's the offer. It is accepted by the manufacturer's reply email. That manufacturer's email adds a term (shipment in two separate crates), but the manufacturer does not condition acceptance of the order on the pet store agreeing to shipment in two separate crates. Therefore, a contract is formed under UCC 2-207(1). Is the shipment in separate crates part of that contract? Under UCC 2-207(2), since both of the parties are merchants, it is presumed that the shipment term is part of the contract unless it materially alters the contract.
On January 7, a vinter (wine prod) sent a signed, written offer to a liquor store containing the following: "we will seek you our last 20 cases of Springs White Wine of $550 per case." Upon receiving the vintners offer, the store took a few days to check its inventory and decide whether to make the purchase. On January 11th, the vintner mailed a signed letter to the store, informing the store that it sold the 20 cases of wine to another buyer. On January 14, the store decided it wanted the wine and the store mailed a signed acceptance to the vintner. On January 15, the store received the vintners January 11 letter. On January 16, the vintner received the store's acceptance letter. Which of the following is an accurate statement regarding the relationship between the store and the vintner? A. no contract was formed because the vintners offer was revoked on January 11 B. A contract was formed on January 16. C. A contract was formed on January 14 D. No contract was formed because the vintners offer was revoked on January 15
C is correct. The vintner's/offeror's revocation is not effective until received by the offeree/store.
On February 1, a toy store sent an order to a kite company to purchase 50 kites for the price of $1,000, which was the price quoted on the kite company's website. On February 7, the kite company mailed the toy store a form, which stated: "We are pleased to accept your offer. However, we condition our acceptance on your agreement to pay for the kites five days before delivery." The form was otherwise identical with respect to the quantity, price, and the product ordered. As of February 7, which of the following is an accurate statement concerning the relationship between the toy store and the kite company? A. There is a contract that does not include the term regarding prepayment as that term is merely a proposal, which the toy store can choose to accept or reject. B. There is no contract because the kite company's purported acceptance contained a term that was not found in the offer letter. C. There is no contract because the kite company expressly conditioned its acceptance on the toy store's assent to an additional term. D. There is a contract that includes the term regarding prepayment so long as it does not materially alter the contract
C is correct. Under UCC 2-207, there is no contract if the purported acceptance (here, the kite company's form response) conditions the kite company's acceptance on the toy store's assent to additional terms (here, prepayment of the purchase price).
A college student wanted to purchase an ice cream truck to make money over the summer break. After looking at a few used ice cream trucks, the student negotiated to purchase one from a seller and to pay the purchase price in monthly installment payments for a year. The seller said he would agree to monthly installment payments, but only if the student had someone who could guarantee the payments. The student contacted his grandmother, who agreed to guarantee payment of the entire purchase price. There was no economic advantage to the grandmother, she just wanted to see her grandson happy. The grandmother accompanied the student to meet with the seller. The grandmother told the seller, "I'll guarantee the full purchase price so that my grandson can buy this ice cream truck." The grandmother and seller shook hands and the student rode off with the ice cream truck. After two months, the student stopped making the installment payments to the seller. Can the seller recover the outstanding installment payments from the grandmother? A. Yes, because the grandmother agreed to guarantee the payments B. Yes, because the grandmother is primarily liable for the payments. C. No, because the agreement to guarantee the payments was not in writing. D. No, because guarantees are void as against public policy.
C is the correct answer. Although the grandmother agreed to guarantee the payments , the Statute of Frauds applies to suretyship agreements. Suretyship is a three-party contract, wherein one party (the surety) promises a second party (the obligee) that the surety will be responsible for any debt or other obligation of a third party (the principal) resulting from the principal's failure to pay as agreed. A promise to answer for the debt of another must generally be in writing to be enforceable. Here, the grandmother agreed to act as a surety for the student. However, the agreement was not in writing. Therefore, because the grandmother's main purpose was not her own economic advantage, the seller cannot enforce the agreement against the grandmother without a writing.
A homeowner entered into a written contract with a contractor to convert a detached garage into an office. After commencing the conversion, the contractor discovered that the garage doors, which were intended to be salvaged and refinished, had a relatively common mold infestation and would be toxic if left untreated. Neither the homeowner nor the contractor had knowledge of the mold infestation when they entered into the contract, but the contractor knew that this mold was common in the area and did not request an inspection. The contractor also knew that mold remediation treatment was available at a high cost, but after treatment, it would cost substantially more to refinish the doors. When the contractor informed the homeowner that he would not perform under the contract unless the homeowner provided at least 75% of the additional costs now needed, the homeowner refused to pay the additional amount. The homeowner then sued the contractor for breach of contract. What is the likely result? A. the homeowner wins, because the mold infestation did not render performance impossible B. The contractor wins, because neither party was aware of the mold infestation C. The contractor wins, because his performance was discharged due to impracticability D. The homeowner wins, because the contractor assumed the risk of the mold infestation
D
Burger Queen, a fast-food chain, purchased commercial time on a television network for children's programming to advertise its Merry Meal™. Burger Queen hired Video Company to shoot a series of four commercials to air on that channel. The written contract between the parties included a "production fee clause" which provided that Video Company would be "paid a $100,000 fee for each suitable commercial, which would cover the entire cost of filming and editing each commercial." The "production fee clause" also provided that filming and editing would be directed by Video Company's creative director, Dara. The "production fee clause" made no other representation concerning compensation; however, later in the contract it mentioned without definition a "producer fee." Thereafter, Video Company filmed and edited the first commercial, which Burger Queen approved. Video Company then filmed and edited the second commercial, which Burger Queen also approved. When production was complete on the third commercial, Video Company sent Burger Queen an invoice for $150,000, which, according to Video Company, represented the $100,000 "production fee" for filming and editing the commercial, plus a $50,000 "producer fee" for Dara's work as director. Denying any additional liability, Burger Queen sent Video Company a check for $100,000. Video Company then brought suit against Burger Queen to recover the $50,000 for Dara's services. A court determines that the contract is ambiguous concerning what was intended by a "producer fee." Which of the following arguments would be most persuasive to support Video Company's contention that a "producer fee" means that Burger Queen agreed to pay Video Company a $50,000 fee for Dara's services in addition to the $100,000 "production fee" for filming and editing the commercial? A. according to the trade practice of the video industry, in addition to a production fee to the company, the director of a commercial is paid a producer fee B. On a past project to create a chicken finder commercial, Burger Queen paid a separate producer fee to Video Company for the director's services C. The court should supply a reasonable price for Dara's services D. Burger Queen paid an additional $50,000 fee for Dara's services upon completion of the first and second commercials under this deal
D
Cake Co. is a bakery that specializes in cookies and cakes. Hen Co. is a chicken farm. Cake Co. agreed to purchase, and Hen Co. agreed to sell, all of the eggs that Cake Co. needed for its bakery for the year 2022 for a wholesale price of $1.50 per dozen, with the price locked in for the year. In November of 2022, Cake Co. put in an order for 2000 dozen eggs, which far exceeded the capacity of Hen Co. to produce and deliver. Cake Co. had placed the extremely large order because the retail market price for eggs had significantly increased and, since it had such a good wholesale price from Hen Co., Cake Co decided to re-sell the eggs to its bakery customers for $5.00 per dozen, which was a steep discount on the rising market price. If Cake Co. sues Hen Co. for failure to deliver the eggs, which of the following will be Hen Co.'s strongest defense? A. The court should supply a reasonable quantity term for the parties B. The contract is too indefinite to be enforced C. Both parties are merchants and, therefore, the extremely large order is part of their contract unless it materially alters it D. Baking Co. breached an implied duty of good faith and fair dealing
D
On January 1, Stan mailed a letter to Ben that stated: "While I love my boat, I haven't been able to get out on it as much as I'd like. I am thinking of selling it and I would consider parting with it for $95,000." On January 3, Ben mailed the following response to Stan: "I will buy your boat for $95,000." Stan received this letter on January 5. On January 6, Stan mailed a note to Ben that said: "We have a deal." On January 7, before Ben had received the January 6th letter, Ben phoned Stan to say that he no longer wanted to buy the boat. Which of the following statements concerning this exchange is accurate? A. There is a contract as of January 3 B. There is no contract C. There is a contract as of January 5. D. There is a contract as of January 6
D is correct. upon mailing the acceptance, a contract is formed
On February 1, 2023, Sally, the manager of a used car dealership, e-mailed to Billy, a dentist, a signed offer: "Can sell you the 1980 Grand Prix White Porsche 911 Turbo Coupe for $62,000. The offer will remain open until February 15, 2023." Thereafter, on February 7, 2023, Sally sent Billy another e-mail stating: "The offer dated February 1 is hereby revoked." Sally's February 7th e-mail is: A. A valid revocation, because Billy is not a merchant. B. Not a valid revocation, because using the word "revoke" does not necessarily make the communication a revocation. C. A valid revocation, because there was no consideration to support the promise to hold the offer open until February 15. D. Not a valid revocation, because Sally gave assurance the offer would remain open until February 15.
D is the correct answer. Sally's offer is a firm offer under UCC 2-205. The car is a good. The offer is (1) in writing, (2) signed by the offeror (Sally), (3) Sally is a merchant of cars, and (4) the offer provides an assurance it will be held open until February 15. No consideration is necessary to bind Sally to hold the offer open until February 15 as promised.
A coffee roaster called and placed an order of "fair trade" coffee beans from a coffee farm (the "seller"). The seller shipped the beans with an invoice, which stated the quantity and price they had discussed on the phone. Printed on the invoice was a notice that stated: "Any lawsuit arising from this order must be commenced in Massachusetts." The roaster paid the invoice without objection. When the roaster realized the beans were not "fair trade," the roaster commenced a lawsuit against the seller in California. Can the seller successfully challenge the venue of the lawsuit and argue that it should have been brought in Massachusetts? A. No, because the parties did not have a contract B. No, because the choice of MA as avenue is not party of the contract C. Yes, because merchants are free to set whatever venue they want for lawsuits. D. Yes, because the roster failed to object to the invoice notice.
D. is correct. It is a correct application of UCC 2-207. The seller's written confirmation contains terms that were not part of the buyer/roaster's original order. But the confirmation does not condition the seller's acceptance on the buyer/roaster agreeing to Massachusetts as a venue. Therefore, under UCC 2-207(1), there is a contract. And, under UCC 2-207(2), because both parties are merchants, the choice of venue is assumed to be part of that contract unless one of the three exceptions applies. This answer choice incorporates one of those exceptions -- if the other party (here, buyer/roaster) objects to the additional term within a reasonable time. That did not happen here.
Bob was in his garage converting a vintage motorcycle to electric. A neighbor stopped by and asked about the motorcycle conversion. Bob told the neighbor that the motorcycle should be fully converted to electric by the end of next week. Bob then offered to sell the motorcycle to the neighbor for $6,000. The neighbor said she would let Bob know whether she would buy the motorcycle. Two days later, the neighbor saw Tom riding the motorcycle. The neighbor asked, "Isn't that Bob's electric conversion?" and Tom replied: "Yeah, it's a sweet ride. Bob sold it to me yesterday." The neighbor immediately went to Bob's house and told Bob that she accepted Bob's offer to sell the motorcycle for $6,000, but Bob explained that he had accepted another offer and could no longer sell the motorcycle to her. The neighbor subsequently brought an action against Bob for breach of contract. Is the neighbor likely to succeed in the action against Bob? A. No, because Bob revoked the offer when he informed the neighbor that he had accepted another offer for the motorcycle. B. Yes, because the neighbor accepted Bob's offer within a week C. Yes, because Bob did not revoke his offer until after the neighbor accepted it. D. No, because the neighbor learned that Bob had sold the motorcycle to someone else before the neighbor accepted Bob's offer.
D. is the correct answer. When the neighbor ran into Tom and learned that Bob had sold the motorcycle to him (Tom), the offer was indirectly revoked.