Contracts Questions

3. Strangelove hired Lemay to build a bomb shelter in his back yard. Lemay had built bomb shelters in the neighborhood for other nervous families worried about global nuclear war at a fixed price of $25,000 each. Lemay quoted Strangelove the standard price. While digging, Lemay hit unstable ground, including quicksand. He truthfully told Strangelove that he could still build the structure but would need to pour extra reinforced concrete, increasing the price to $40,000. Afraid that nuclear war might break out at any moment, Strangelove told Lemay to go ahead, paying the additional sum. When the structure was complete, Strangelove sued Lemay to recover the extra $15,000. What sentence best describes the legal status of the contract between Strangelove and Lemay? (a) Lemay may retain the additional $15,000 because the modification appears to have been made in good faith to address an unanticipated circumstance and Lemay relied on the promise in continuing work. (b) Lemay may retain the additional $15,000 because no consideration is required to modify a contract for a sale of goods transaction (applying the predominant purpose test to this contract). (c) Lemay must return the additional $15,000 because the risk of additional expense had been allocated to Lemay by virtue of a fixed price contract. (d) Lemay must return the additional $15,000 because Strangelove agreed to make the payment without consideration.

(a) Lemay may retain the additional $15,000 because the modification appears to have been made in good faith to address an unanticipated circumstance and Lemay relied on the promise in continuing work. R2d § 89: (a) A promise modifying a duty under a K not fully performed on either side is binding if the modification is fair and equitable in view of circumstances not anticipated by the parties when the K was made B is not correct because it is not a sale of goods D is not correct because it is an overstatement of the law

4. Banque loaned $300 to Deadbeat. The maturity date of the loan was 2 years from the day Banque advanced the money. After 1 year and 10 months of making interest payments on time, Deadbeat fell on hard times and stopped making payments. Banque told Deadbeat, "If you pay me $200 next month (i.e. on the maturity date), I will forgive the balance of the loan." Deadbeat made the $200 payment on time. A month later, Banque sued Deadbeat for the $100 balance, plus accrued interest. Under common law, what best describes the likely outcome of Banque's suit? (a) Banque wins: the promise is not binding because at common law such a settlement deal must have been in writing. (b) Banque wins: the promise is not binding because it lacks consideration. (c) Deadbeat wins: the promise is binding because it constitutes settlement of a claim. (d) Deadbeat wins: the promise is supported by consideration adequate for Banque and the law will generally not inquire into the adequacy of consideration if Banque is satisfied.

(b) Banque wins: the promise is not binding because it lacks consideration. Changing the maturity date would mean consideration, but date had not changed. Paying lesser sum in exchange for greater sum without giving something up, there is no consideration. Have to open consideration up. Would have to change date along with changed price for consideration

7. A group of legal migrant workers signed a contract with Key West Fishing Co. to harvest stone crabs for the upcoming season, working off the coast of Florida in United States territorial waters. Each worker was to earn a fixed fee per day of work of $80. Upon arriving at the marina from which they would work, they discovered that the traps and other equipment were different than they were used to working with in their home country. Moreover, they learned local workers doing the same job were paid $100 per day. They demanded an increase in wages to $100 per day. Key West argued but eventually agreed to the wage increase in an additional signed writing because fishing season was about to start, and it worried about the hassle of hiring replacement workers. At the end of the season, Key West refused to pay the increased wages despite the additional signed document. The migrant group sued for breach of contract. How would you expect a court to decide the case under the common law? (a) No extra wages are due because, on these facts, the agreement to pay the increased wages lacks consideration no matter how the agreement for higher wages was documented. (b) Extra wages likely would be due if the migrant group and Key West had agreed to terminate the existing agreement and then, shortly thereafter, entered into a new agreement specifying the higher wage. (c) Extra wages likely would be due if the migrant group and Key West had agreed to amend the existing agreement to provide for the higher wages because no consideration is likely needed for an amendment under the modern interpretation of the common law on these facts. (d) No extra wages are due on these facts because the migrant worker group and Key West should have entered into a settlement agreement, rather than an amendment or a new agreement.

(b) Extra wages likely would be due if the migrant group and Key West had agreed to terminate the existing agreement and then, shortly thereafter, entered into a new agreement specifying the higher wage. R2d § 89 (Illustration 3) Opposite of Alaska Packers because other workers in this example had comparable wages to gauge their own. Alaska Packers held employers under duress without good reason. In this case, they held employees under duress with good reason because there were other people performing the same work for more pay.

6. Buyer and Seller argue over a sale of goods for a price of $600. Buyer announces that he will sue Seller for failure to deliver 100 widgets on June 1, 20XX. Seller protests that Buyer never specified a quantity in the signed contract. Buyer claims he told Seller the quantity in a telephone conversation. To settle the dispute, Buyer and Seller enter into a signed agreement in which Buyer agrees to drop her claim and Seller agrees to provide a 10% discount on the next two widget orders. Later, Seller regrets agreeing to the discount. What result under US domestic law? (a) Seller is not bound because on these facts there was no consideration for the settlement—there having been a failure to specify a quantity term in the first contract for sale and it not being evidenced by a signed writing of some sort. (b) Seller is bound because no consideration is necessary to modify a contract for the sale of goods. (c) Seller is bound because Buyer gave consideration by dropping her claim even though the underlying contract for sale may have been unenforceable. (d) On these facts, Seller is not bound because the settlement agreement should have specified the quantity of widgets for the next two orders and the agreement is not enforceable beyond the quantity stated.

(c) Seller is bound because Buyer gave consideration by dropping her claim even though the underlying contract for sale may have been unenforceable.

5. Contractor submitted a bid to City to construct a town swimming pool. In creating its bid to City, Contractor used a proposal from Drennan Tile to supply and install bathroom and shower tile for $50,900. After Contractor submitted the bid, Drennan Tile called Contractor and said, "My calculation was wrong—the amount should have been $59,090—I withdraw my earlier estimates." Two days later, City awarded the bid to Contractor. Contractor then called Drennan Tile and said, "I accept your bid at $50,900." What best describes the contract law status of the relationship between Contractor and Drennan Tile? (a) Drennan Tile is bound to perform for $50,900 only if separate consideration was given by Contractor to Drennan Tile to keep the bid open. (b) Drennan Tile is not bound because Drennan Tile withdrew its offer before Contractor accepted it. (c) Drennan Tile is not bound because Drennan Tile withdrew its offer at a time when Contractor could, as a practical matter, still withdraw or amend Contractor's bid to City. (d) Drennan Tile is bound to perform for $50,900 even if Contractor did not give separate consideration to Drennan Tile to keep the offer open.

(d) Drennan Tile is bound to perform for $50,900 even if Contractor did not give separate consideration to Drennan Tile to keep the offer open. Contractor relied upon the original price to submit the bid, therefore, it's binding once the bid is submitted.

2. In Florida, Mitch applies to Farm Distro Inc., a seller of farm goods made by Old McDonald Co., for a franchise to sell farm goods. Over 100 of these businesses operate all over Florida. These franchises are revocable "at will upon one year's prior written notice." Farm Distro Inc. promises to process the application but then incorrectly informs Mitch that Old McDonald has accepted Mitch's application and soon will grant the franchise and suggests that Mitch "get ready for business." Mitch spends $3,000 to prepare for a grand opening before learning that the franchise has not been granted. What damages might Mitch reasonably attempt to recover from Farm Distro on these facts? (a) None, because Farm Distro's promise was an illusory gift made without consideration. (b) $3000, plus lost profits expected to be earned in the farm goods business for a one year period. (c) $3000, plus lost profits expected to be earned in the farm goods business for a one year period but only if Mitch had previously owned or operated a farm goods business. (d) Mitch can only sue to recover the $3000 because justice demands a limitation of the remedy when recovery is sought on a reliance or promissory estoppel theory.

(d) Mitch can only sue to recover the $3000 because justice demands a limitation of the remedy when recovery is sought on a reliance or promissory estoppel theory. R2d 90 Partial Enforcement Illustration 8: Unless there is unjust enrichment of the promisor, damages should not put the promisee in a better position than performance of the promise would have put him.

8. While attending a class reunion, Rachel Rich, an alumna of Small College, made a pledge to donate $1 million to Small College—payable over 10 years in equal installments. After returning home, Rachel had second thoughts about her pledge. She called Small College one month after the reunion (and prior to making any payment) and said, "I hereby cancel and rescind my pledge to donate $1 million." The president of Small College told her, "You may not do that. Your promise is binding. I will need to bring a legal action against you to enforce your pledge. Please reconsider." What advice to Rachel most correctly states the legal status of her pledge? (a) Under the current state of the law (as reflected in R2d), the promise to make the donation will not be enforced unless Small College had relied on the promise (for example, by committing to make scholarships). (b) Under the current state of the law (as reflected in R2d), the promise to make the pledge is an unenforceable gift, lacking consideration. (c) Under the current state of the law (as reflected in R2d), the pledge should be enforceable on a doctrine of "moral" consideration. (d) Under the current state of the law (as reflected in R2d), the pledge could be enforced without any need to show detrimental reliance by Small College (either by action or forbearance).

(d) Under the current state of the law (as reflected in R2d), the pledge could be enforced without any need to show detrimental reliance by Small College (either by action or forbearance). R2d 90(2) Illustration 17: A charitable subscription or a marriage settlement is binding under Subsection 1 without proof that the promise induced action or forbearance. -Under S. 90, liability is granted even if there is no contract. It never mentions the word Contract -90(2) - Don't need reliance -It's not a contract imposed to grant liability, but instead a promise

24. Which of the following matters should be governed by Article 2 of the Uniform Commercial Code. a) The lease of a lawn mower by Rent Co to Dan Do-it-Yourself, a consumer. b) The transfer of a breach of warranty action claim by Injured against MotoX to Collection based upon a defective bicyle part. c) A breach of warranty action for an ill puppy by Hearbroken against Petmatcher for the donation by Petmatcher of a bulldog puppy to Heartbroken while Heartbroken was recovering from a long term illness. d) None of the above should be governed by Article 2 of the UCC.

A - Article 2(a) for leases - not sale of good B - 2-105 (excludes things in action) - not governed C - Does the donation take it outside of article 2?. It seems to be a transaction in goods. Could be Correct D. Also could be correct if C is considered a donation

25. Which types of transactions are generally excluded from coverage by the CISG and yet are covered by the UCC a) The auction of goods by a professional auctioneer like Christie's in New York. b) The sale of goods for personal or household use. c) The sale of shares in a co-operative apartment in New York (accompanied by the related proprietary lease). d) All of the above.

A - Auctions aren't covered by UCC B - Not CISG C - Article 2 applies according to Case Law. 2-105 says otherwise, but case law makes it apply in NY - This is CORRECT D -

1. Otto Man entered Brigham Young University two years ago at the age of 22. At the time, his uncle promised 5k at the end of the year if he would not drink or smoke or have premarital sex. Otto agreed stating that he didn't even like alcohol or cigarettes or sex. Otto didn't consume any alcohol during the first year. At the end of the year he went to his uncle and was all like "give me the money." The uncle refused. A. Discuss B. Does it matter if Otto was 19 years old at the time the agreement was made?

A. Yes, the uncle is liable because forbearance is consideration. In this case, Ottoman was legally allowed to drink and he forbeared his legal right to get the $$$ from his uncle. Since the uncle didn't specify that he had to forbear all 3 sins, due to the use of "or" instead of "and," simply forbearing from one sin that he had a legal ability to do was sufficient consideration for his end of the contract. B. Yes, it does matter that Otto was 19 years old b/c his only action of forbearance expressed was not drinking. Because the drinking age is 21, 19-year old Otto would not be foregoing a legal right. Therefore, there's no consideration because Otto was not giving up a legal right (forbearance) by not drinking.

On October 30, 2008, L and T orally agree that T will lease L's apartment for a one year period beginning on January 1, 2009 A. Is this oral agreement enforceable? (see 125 comment b, and Gla. Stat. 725.01) B. What if on October 30, 2008, L orally agreed to employ T for a one year period beginning Jan 1, 2009. Would an oral agreement be enforceable?

A. Under R2d, it doesn't have to be in writing - one year leases are excluded from the one year provision and contract provision. B. No. K was made in October so that adds like 2 months to the K pushing it over a year and therefore, has to be in writing.

C is to guarantee B's debt of $499 to A. Must the agreement be in writing? What if the agreement was for $500?

A. Yes, a suretyship falls within Statute of Frauds and must be in writing. B. Yes, a suretyship falls within the Statute of Frauds and must be in writing, even if the price is $500 or more.

A orally agrees to sell her farm to B for $499. A. Is the agreement enforceable? B. What if K was for $500?

A. No. Sale of land must follow Statute of Fraud Provisions by being in writing. B. Still no because sale of land must satisfy statute of frauds provisions.

22. Historical research revealed that Farmer owned land on which was built an outhouse used by George Washington. The outhouse was in surprisingly good condition and Motoroil was determined to purchase the crude oil from Wellhead. Motoroil entered into a written contract with Wellhead for the purchase of the 50,000 barrels of crude to be extracted from Wellhead's homestead ranch property. This contract is governed by Article 2 of the UCC under what circumstances? a) Only if Motoroil is to remove the crude from the ground. b) Only if Wellhead is to remove the crude from the ground. c) If either Motoroil or Wellhead is to remove the crude from the ground. d) Never, because the crude in the ground is an interest in real estate, and not a moveable good covered by Article 2. (It only becomes a good subject to Article 2 following extraction.)

B only if Wellhead is to remove the crude from the ground because 2-107(1) says that oil removed from realty is a K for the sale of goods only when it is severed by the seller.

21. Historical research revealed that Farmer owned land on which was built an outhouse used by George Washington. The outhouse was in surprisingly good condition and Museum was determined to purchase the outhouse and move it to a new location on which various historical buildings were being preserved. Museum entered into a written contract with Farmer for the purchase of the outhouse. This contract is governed by Article 2 of the UCC under what circumstances? a) Only if Museum is to move the structure. b) Only if Farmer is to move the structure. c) If either Museum or Farmer is to move the structure. d) Never, because the outhouse is an interest in real estate, and not a moveable good covered by Article 2.

B only if farmer moves the structure. 2-107(1) says that a structure removed from realty is a K for the sale of goods only when it is severed by the seller.

6. Candy Cotton was raising a crop of cotton on her farm. About 6 weeks prior to the time for harvest, and while the cotton was still growing, she made an agreement to sell the crop to Wendy Weaver. The cotton could not be presently harvested. This transaction is governed by Article 2 of the UCC if Wendy is to harvest the cotton prior to sale. a) TRUE. b) FALSE.

True - 2-207(2) - If Wendy is to harvest the crop prior to sale (or even if she doesn't) then UCC applies. Harvested goods are different from minerals (Q3)

8. Timber Quebec, a Canadian lumber company, agreed to sell logs to a lumber mill in upstate New York in a written contract. The contract stated that it would be governed by "the laws of the Province of Quebec". This transaction will be governed by the CISG. a) TRUE. b) FALSE.

True - Both Canada and US are members of CISG. Timber is not excluded from CISG. Major absentees from the CISG are India and the UK.

11. Penny Pincher went to a yard sale held on Saturday afternoon in the garage of Henry Hoarder. Penny found an antique sewing machine for which she orally agreed to pay $400 in cash. They agreed she would pay for the item and pick it up the following Tuesday evening. This transaction is governed by Article 2 of the UCC. a) TRUE. b) FALSE.

True - Probably enforceable because it is under $500. Applies to transactions regardless of price.

Seller and Buyer signed a written contract in which Seller agreed to sell Buyer 100 plexico widgets for a total price of $300. Seller imports plexonium minerals from Upper Plexonia to make widgets. Shortly thereafter, a revolutionary group replaced Upper Plexonia's government in a coup, halting all exports from that country. Seller called Buyer on the telephone and explained that it must now use more expensive minerals from Lower Plexonia to make the widgets. Seller asked that Buyer agree to a price increase of $150 to reflect its increased manufacturing costs. Though surprised by the manufacturing details, Buyer agreed to the price change on the telephone call. Seller shipped the widgets to Buyer. Buyer mailed Seller a check for $300 that it marked "payment in full." Upon receiving the check, Seller called Buyer and demanded the additional $150 that had been agreed on the telephone call. Would you expect Seller to be successful in a lawsuit against Buyer to recover the increased purchase price for the plexico widgets? (a) No, because the modification to increase the price was not supported by consideration. (b) No, because the parol evidence rule would bar testimony about the telephone call. (c) Yes, because Buyer accepted the price change in good faith. (d) Yes, unless Seller cashed the check from Buyer.

C. Yes, because Buyer accepted the price change in good faith. UCC 2-209(1)(2) - For the sale of Goods - (1)An agreement modifying a K within this article needs no consideration to be binding. (2) A signed agreement which excludes modification or recission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party. R2d § 89: (a) A promise modifying a duty under a K not fully performed on either side is binding if the modification is fair and equitable in view of circumstances not anticipated by the parties when the K was made

10. Penny Pincher went to a yard sale held on Saturday afternoon in the garage of Henry Hoarder. Penny found an antique sewing machine for which she orally agreed to pay $600 in cash. They agreed she would pay for the item and pick it up the following Tuesday evening. This transaction is governed by Article 2 of the UCC. a) TRUE. b) FALSE.

True - Probably should have been in writing because it was $500 or more and therefore needs to be within the provisions of the Statute of Frauds to be enforceable.

23. Lumber Inc agreed with Jack Co that Lumber would purchase all of the standing timber located on a 40 acre plot of forested land owned by Jack in fee simple. Under what circumstances will Article 2 of the UCC apply to the transaction? a) Article 2 of the UCC will not apply to the transaction until such time as the standing timber is severed from the land. b) Article 2 of the UCC will apply if Lumber is to cut the timber from the land. c) Article 2 of the UCC will apply if Jack is to cut the timber from the land. d) Both answer (b) and answer (c) are correct.

D 2-107(2) says timber to be cut is a K for the sale of goods whether it is cut by the seller or the buyer

12. Fred Fabrikator purchased a "racing car parts kit" from Speed Demon to prepare a custom automobile for Racy Racoon, a customer who demanded extreme modifications. Fred spent over 1000 hours assembling the parts into a fully modified vehicle for delivery to Racy. This transaction is subject to Article 2 of the Uniform Commercial Code. a) TRUE. b) FALSE.

True - Specially manufactured goods are still goods. Doesn't matter amount of time spent on it.

13. Mary Mathematics ordered 10 Epsilon Prime Ultra computers from HAL 9000 Inc., a U.S. maker of electronics products. The order specified a "purchase price" of $100,000 for the computers. Because they contained a new operating system, Mary also order a 6 month technical service package. Unfortunately, after 3 months Mary and Hal 9000 had a significant dispute over the terms of the service portion of the contract. Under the majority view in the United States, Article 2 of the Uniform Commercial Code SHOULD NOT GOVERN the transaction because the dispute centers on services and not goods. a) TRUE. b) FALSE.

False. The predominant factor of the contract is for moveable goods.

14. Mary Mathematics ordered 20 Epsilon Prime Operating System software licenses for use on her existing computer hardware systems. As intangible personal property, these license contracts SHOULD NOT BE governed by Article 2 of the Uniform Commercial Code (at least according to the majority view expressed by courts). a) TRUE. b) FALSE.

False. The software licenses are treated more like a good here, so the UCC should apply. Most courts view software as a good.

20. Candy Cotton was raising a crop of cotton on her farm. About 6 weeks prior to the time for harvest, and while the cotton was still growing, she made an agreement to sell the crop to Wendy Weaver. The cotton could not be presently harvested. This transaction is governed by Article 2 of the UCC but only if Candy is to harvest the cotton prior to delivery. a) TRUE. b) FALSE.

False. This is governed by UCC Article 2 either way because 2-107(2) states crops can be harvested by the buyer or seller.

To induce B to marry him, A promises B's family a farm. Must the agreement be in writing?

Yes, it's a marriage K w/ consideration and is only enforceable if it is in writing. R2d 124 Illustration 2

9. Fuzzy Furs Quebec Ltd, a Canadian furrier, agreed to sell beaver pelts to a coat manufacturer in upstate New York in a written contract. The contract stated that it would be governed by "the laws of the State of New York". This transaction will be governed by Article 2 of the Uniform Commercial Code. a) TRUE. b) FALSE.

False

4. Paris Stilton, a cheese maker located in Paris, France, agreed to supply blocks of cheese to Milam's Market in Miami, Florida, pursuant to a written agreement. The agreement was silent as to the applicable choice of law to govern the substance of the agreement. On these facts Article 2 of the UCC should govern the transaction because delivery of the product will take place in Florida. a) TRUE. b) FALSE.

False - Both the US and France are signatories of CISG. They are both businesses...one in US and one in France

7. Hydro Quebec, a Canadian energy company, agreed to sell electricity to a consortium of industrial corporate users in upstate New York in a written contract. The contract stated that it would be governed by "the laws of the Province of Quebec". This transaction will be governed by the CISG. a) TRUE. b) FALSE.

False - CISG does not apply to the sale of electricity. Major absenttes from the CISG are India and the UK.

3. Stan Stone agreed to sell Betty Boulder 1000 square feet of marble rock from Stan's quarry located in upstate New York. The written contract granted Betty access to the quarry where she was to cut and remove the stone. This transaction is governed by Article 2 of the UCC. a) TRUE b) FALSE

False - The sale of minerals or the like has to be cut by the seller 2-107.

2. Fred Florida, in Miami, agreed in a telephone conversation with Nellie NewYork, in NYC, to purchase 1000 shares of Orange, Inc. stock which was represented by a physical certificate signed by Sleaze Gobs, as president and secretary of the corporation. Nellie had agreed to hand deliver the certificate to Fred on South Beach. This transaction is governed by Article 2 of the UCC. a) TRUE b) FALSE

False - UCC doesn't apply to securities (stocks and bonds). 2-105: Definition of what a good is. Specifically excludes investment securities even if represented by physical certificate

15. Buyer sent Seller a letter offering to purchase 100 widgets for $500. As luck would have it, on the same day, Seller sent Buyer an offer to sell 100 widgets for $500. They each received the letter from the other 2 days later. A contract was formed by this exchange of letters. a) TRUE. b) FALSE.

False.

14. Gatsby told Homeless, "If you walk to my tailor and give him my card, he will make you a new suit of clothes." Homeless took the card, and started walking to the tailor shop. Gatsby called tailor and said, "If a bum comes in for a coat, tell him No!" Homeless arrived at tailor and demanded a coat. On these facts, there is a contract. a) TRUE. b) FALSE.

False. This is a gift and a gift has no consideration.

9. A general contractor who suspects (but is not sure) that a subcontractor's bid is a mistake can still enforce the bid if he takes action in reliance on it. (a) TRUE. (b) FALSE.

False. Not relying on good faith.

11. Curious read a newspaper advertisement which said, "Special sale at Big Buy: Big screen TV only $500. Act now." Curious went to Big Buy and tendered $500. Big Buy said, "Sorry. We are out." Curious could make a successful suit at common law for breach of contract because it accepted the Big Buy offer in the newspaper ad when it tendered $500. a) TRUE. b) FALSE.

False. R2d §26 Comment B: Advertisements of goods are not ordinarily intended or understood as offers to sell. If an advertisement contains words expressing advertiser's commitment or promise to sell particular number units, or to sell the items in a particular manner, there may be an offer. Can be an offer if it is clear, definite, and explicit, and leaves nothing open for negotiation

17. Sally's award winning German shepherd dog was going to have puppies to be born in about 6 weeks. Yesterday, she orally agreed to sell the entire litter to a dealer in pure bred dogs for $750 per puppy. This morning, Sally is having second thoughts and might want to cancel the sale. Article 2 of the UCC SHOULD NOT govern the transaction because the puppies do not exist yet. a) TRUE. b) FALSE.

False. Article 2 governs the transaction because goods includes the unborn young of animals. 2-105. However, may not be enforceable in court because the price is $500 or more and needs to be in writing. But UCC still applies.

18. Larry Land owns a two acre plot of land in the Florida Keys. He has obtained permission from the local zoning board to subdivide the plot into 16 little lots for "tiny houses"--small moveable structures popular with hipsters and other environmentalists. Ownership of the little plots will be represented by paper deeds from Larry Land delivered to each purchaser. Article 2 of the UCC should govern this transaction. a) TRUE. b) FALSE.

False. Goods do not include the sale of land.

D owes C $1000. C is about to levy an attachment on D's factory. S, who is also a creditor of D's, fearing that the attachment will ruin D's business and thereby destroy his own chance of collecting his claim, orally promises C that if C will forbear to take legal proceedings against D for 3 months, S will pay D's debt if D fails to.

It is not included in the Statute of Frauds so it does not have to be in writing. So the promise is enforceable. R2d 116: A K where all or part of the 3rd person's duty shall be satisfied without being in the Statute of Frauds as a promise to answer the duty for another if the consideration for the promise is desired by the promisor for his own economic advantage, instead of to benefit the 3rd person.

A contracts with B to sell 100 widgets. The price for the widgets is $500 total. They execute the K in writing which states "A agrees to sell, and B agrees to buy for $500." Is the K enforceable. What if the K was $500.01. ... *Same as #1, but now the writing says "A agrees to sell 100 widgets, and B agrees to buy the same for $500." Neither party signs the writing. If A attempts to sue under the K for B's failure to pay is the K enforceable?*

No. Because B didn't sign it. The K for sale must be signed by the party against whom enforcement is sought.

12. Ma Bell called her best friend, Verison and said, "I offer to sell you my Donnie Osmond record collection for $100." The two friends then spoke for another 30 minutes about small talk. Ma Bell's telephone ran out of batteries, and the call terminated. Verison called back the next day and said, "I accept the offer to sell your record collection. I am buying that collection." At this moment, a contract was formed at common law. a) TRUE. b) FALSE.

R2d §41 comment D Lapse of Time: Offer does not expand beyond the phone call unless contrarily indicated prior to the call ending

5. Paris Stilton, a cheese maker formerly located in Paris, France, has permanently moved herself and her factory to rural England. Paris agreed to supply blocks of cheese to Milam's Market in Miami, Florida, pursuant to a written agreement. The agreement was silent as to the applicable choice of law to govern the substance of the agreement. On these facts Article 2 of the UCC should govern the transaction if the rules of private international law would apply United States law to the transaction even though the contract is international in character. a) TRUE. b) FALSE.

True - The U.K. is not a signatory of the US and the US took an Article 95 exemption. In US, when other party does not apply CISG, and the US takes article 95, then use UCC

1. In Florida, Karl Konsumer signed a contract with SecondBest Inc. to purchase a flat screen TV for Karl's vacation home. This contract is governed by Article 2 of the UCC. a) TRUE b) FALSE

True - sale of goods transaction

10. Under the UCC, a party who uses a seal on the written agreement makes it clear that consideration need not be proven for the contract to be enforceable so long as the agreement recites a valid consideration that is more than nominal. (a) TRUE. (b) FALSE.

True. R2d 95(1)(a) In the absence of statute a promise is binding without consideration if it's in writing and sealed.

19. Douglas Driver purchased a new automobile from Automall Inc in Miami Dade County. In Miami Dade County, as in most places in the United States, an automobile must be registered with the DMV (or department of motor vehicles) and the purchaser is protected by a "Lemon Law" in case the automobile has repeated mechanical problems. This sale is, nevertheless, governed by Article 2 of the UCC. a) TRUE. b) FALSE.

True. A car is a moveable good. However, other law may fill in gaps.

16. Ronald Drumpf, a New York real estate tycoon, needed to raise some funds quickly to pay unexpected legal bills. He agreed to sell a portrait of himself painted by Picassorito, a renowned portrait painter, to Bobby Miller, a collector of fine art for his personal collection where it would hang in the dinning room. This transaction is governed by Article 2 of the Uniform Commercial Code. a) TRUE. b) FALSE.

True. This is a transaction of goods.

15. Picassorito, a renowned portrait painter, signed a contract to paint the portrait of Ronald Drumpf, a New York real estate tycoon. The finished portrait would be delivered to Ronald in a custom, gilt-edged frame, hand carved by an artisan working for Picassorito. This transaction should not be governed by Article 2 of the UCC. a) TRUE. b) FALSE

True. This is does not have evidence a sale of goods exists. Common law should apply.. Use predominant purpose test--looks more like a service than a good

A contracts to sell 100 widgets to B for $500. Soon after delivery, B sends A a confirmation of delivery stating "100 widgets from A received." The confirmation is signed by B's manager. If A sues B for failure to pay under the K is it enforceable?

Yes, if the manager is authorized to sign on B's behalf.

2. Marge Simpson bought a pretzel wagon franchise on credit. Because a rival pita truck franchise was able to pay members of the Japanese mafia to increase their creditor, Fat Tony, told Marge he must collect the 500k she borrowed. She told Tony that she could not pay him, and that if she ha d to pay that amount she would have to liquidate her business and he would only receive about 50% of the claim. Marge then told Tony that if he agreed not to pursue the claim for 6 months she would pay 80% of her debt. Fat Tony issued a written agreement for a full settlement of the debt by 12/1/2011 at 8.5% interest. Was there consideration?

Yes. Because Fat Tony changed the date the debt was due along with the amount, there was consideration. Paying lesser sum in exchange for greater sum without giving something up, there is no consideration. Have to open consideration up. Would have to change date along with changed price for consideration and since he did so, there is consideration in this case.

A contracts with B to sell 100 widgets. The price for the widgets is $500 total. They execute the K in writing which states "A agrees to sell, and B agrees to buy for $500." Is the K enforceable. What if the K was $500.01.

Yes. It is enforceable because it was for $500, if the party against whom enforcement is sought has signed it. Same answer for $500.01

4. Manufacturer had ordered 1,000 widgets from Supplier in a purchase order for $5,000 for delivery in one month. Ten days before the scheduled delivery date, Supplier called Manufacturer and terminated the purchase order without a legal reason for the termination. Manufacturer did not try to cover by purchasing widgets from another source because 10 of its most skilled employees had just quit to work for a competitor (even though it could have made a substitute purchase on a "special offer for $4,500 at the time it learned of the termination). As luck would have it, the price for widgets was volatile. On the scheduled delivery date, the market price for replacement of 1,000 widgets was $6,000. If Manufacturer sued Supplier for breach of contract, what is the amount of damages, if any, that Manufacturer might expect to recover? a) Manufacturer could recover $1,000 (but not any consequential damages) on these facts. b) Manufacturer should not recover any damages because it was required to mitigate damages and it failed to do so. c) Manufacturer should not recover any damages on these facts because it benefitted from the termination due to the loss of its skilled employees. d) Manufacturer could recover $1,000 (plus any consequential and incidental damages, less any savings attributable to the breach).

a) Manufacturer could recover $1,000 (but not any consequential damages) on these facts. Manufacturer had an unanticipated but good reason not to mitigate or cover. Therefore, no consequential damages are awarded. If Manufacturer did try to cover, then 2-715(2)(a) would allow consequential damages and D would be correct.

2. Shifty sent Brighty a letter offering to sell Oliveacre for $10,000. Brighty received the letter and was anxious to make the purchase. Before sending a letter of acceptance, Brighty quickly visited Uncle to see if Uncle would help Brighty finance the purchase. Uncle said he would help, but he told Brighty he had seen Lucky recording a deed for Oliveacre from Shifty at the recording office earlier that day. Brighty mailed an acceptance letter to Shifty within the hour. What is the best explanation of whether Brighty may successfully sue Shifty for breach of contract? a) Shifty wins because Brighty was no longer free to accept the offer. b) Brighty wins because he accepted the offer by mail, the method of communication selected by Shifty, before Shifty withdrew the offer by mail. c) Brighty wins because he accepted the offer before Shifty withdrew the offer (which Shifty could have done by any reasonable method, including but not limited to letter). d) Shifty wins because the implied covenant of good faith and fair dealing does not apply to negotiations but only to performance of enforceable contracts.

a) Shifty wins because Brighty was no longer free to accept the offer. This is not a sale of goods, therefore not UCC, it is for the sale of land. R2d §43 Illustration 1 & Comment B. If the offeror, after making such an offer, sells or contracts to sell his interest to another person than the offeree, his act manifests an intention not to perform in accordance with the offer and creates a probably inability to perform.

2. Wanda had signed a two-year contract with Glamour Inc. to act as treasurer to manage the finances for 10 spas in Miami Dade county for a salary of $200,000 per year. After one year, Glamour Inc. fired Wanda without cause, breaching the employment agreement. Hair Palace Co. wanted to hire Wanda and offered her a one-year contract to act as chief financial officer to oversee its 12 hair salons, also in Miami Dade county, for a salary of $185,000 per year. If Wanda declines the offer from Hair Palace, a court is likely to award Wanda damages in what amount for a breach of contract action against Glamour Inc? Pick the most likely outcome. a) Wanda should recover only $15,000 on these facts because she failed to mitigate damages. b) Wanda may recover $200,000 because the law permits her to hold Glamour Inc. to its contract (though she would not be permitted to cover any additional consequential damages because she failed to mitigate). c) Wanda may recover the full $200,000 because, on these facts, Wanda was not offered a comparable position which she might have taken to mitigate damages. d) Wanda may recover $200,000 for the direct contract breach (but not any consequential or incidental damages), less any amount Wanda saved in commuting costs and dry cleaning bills.

a) Wanda should recover only $15,000 on these facts because she failed to mitigate damages. In this case, Wanda was offered a comparable job for the same amount of time and failed to mitigate her losses by not accepting the job. Therefore, she would receive the difference between the job offered that she failed to mitigate and the salary she would have received at the job she was fired from. If the new job offered was not comparable, she could recover for the full $200,000. Think 20th Century Case.

8. Developer offered to sell Blackacre (a lot one removed from the ocean near South Beach, Florida) to Shifty for $600 in a signed letter. Shifty signed the offer letter, but below the signature Shifty wrote, "Would you consider giving me an easement through Saltacre to the beach?" Shifty returned the letter to Developer. What answer best describes the relationship between Developer and Shifty under common law? a) A binding contract does not exist because the mirror image rule was violated in this case. b) A binding contract does not exist because land contracts require a witness signature to be recorded. c) A binding contract exists whether or not Developer grants the easement. d) A binding contract exists only if Developer grants the easement.

c) A binding contract exists whether or not Developer grants the easement. R2d §39 Comment b: A mere inquiry regarding the possibility of different terms, a request for a better offer, or a comment upon the terms of the offer is ordinarily not a counter-offer.

6. In New York, Acme sent an order form to Beta for the purchase of 100 widgets for a price of $600. From Florida, Beta sent back a confirmation form that specified that all litigation must take place in the courts of Florida—an additional term not stated in Acme's purchase order. Acme accepted delivery of the widgets two weeks later and paid cash for the order. Three months later, Acme decided to sue Beta for a breach of warranty claim. Both are merchants. Is Acme likely bound by contract to sue Beta in Florida on its claim? a) Yes, because Acme became bound to the additional term when it did not timely object to the forum selection clause. b) No. The forum selection clause was "knocked out" because a contract was formed by conduct and the exchanged forms did not agree on forum selection. c) No because the forum selection clause is clearly a material alteration to which Acme is presumed to have objected. d) Yes because Acme became bound to the forum selection clause when it accepted delivery of the widgets and paid for them by application of the so-called "last shot rule." (WOULD APPLY UNDER COMMON LAW)

a) Yes, because Acme became bound to the additional term when it did not timely object to the forum selection clause. This is a sale of goods and is within the statute of frauds, so the UCC applies. UCC 2-207 a contract may be formed even if the acceptance has different or additional terms than the offer. Under 2-207 (2) it becomes part of the agreement between 2 merchants unless...3 reasons. Specific examples of material alterations are listed in 2-207.

9. Actress signed a written contract with Surgeon to correct a double chin and wrinkles she had acquired as she got older. Surgeon "guaranteed" to correct both imperfections and make Actress look 15 years younger. The price for the procedure was $50,000. The surgery was very painful (though Surgeon told her it would be), with a 6 week recovery time, during which recovery time Actress could not work (losing $125,000 in a possible assignment to make a toothpaste commercial—for a company she had worked for in the past). At the end of the recovery period, there was only a slight improvement in her appearance. Assume this amounted to a breach. Though she could continue to get toothpaste and other commercial work without the improvement, Actress privately estimated that she could not get roles in hit movies without the improvements promised by Surgeon. She had not worked as an actress in a hit film for over 20 years (when she appeared in a single feature film). What might Actress realistically expect to recover from Surgeon in a breach of contract action for which she was given the maximum likely damage award on these facts? a) Actress might recover her out of pocket expenses of $50,000 for the surgery, plus an allowance for pain and suffering, plus $125,000 in lost wages for the toothpaste commercial. b) Actress might recover $50,000 for the surgery, plus an allowance for pain and suffering, but nothing else because lost wages on these facts can only be recovered on an expectation damages theory which is not available on these facts. c) Actress might recover expectation damages for failure to land future leading roles in feature films, but nothing for the price of the surgery or the pain and suffering because she would have incurred those costs even if the surgery had been successful. d) Actress might recover expectation damages for lost wages, including both for the toothpaste commercial and the reasonably estimated lost wages for the failure to land leading roles in future feature films, but not her out of pocket expenses in addition to those amounts.

b) Actress might recover $50,000 for the surgery, plus an allowance for pain and suffering, but nothing else because lost wages on these facts can only be recovered on an expectation damages theory which is not available on these facts. R2d 351 Illustration 19: recovery for loss incurred in reliance on the K, including fees and expenses for procedure, and pain and allowance. Will not get $125 b/c she knew about the recovery period before surgery and did not rely on it. Also no expectation damages b/c you can't prove with reasonable certainty that her improved looks would have given her big roles b/c she hadn't had such roles in over 20 years.

12. Tiny Tim was a "little person" famous for acting roles in Hollywood. He commissioned a luxury builder to construct a "mini-me" mansion in Beverly Hills. The concept for the building project was that all ceilings would be a mere 7 feet in height—well below the height of a conventional home (which would have 8 to 12 foot ceilings). While the main house was so constructed for little people, the guest cottage was built with 9 foot ceilings (on the theory that not all guests would be short people). Tiny Tim was extremely upset and he sued the builder for damages—computing them based on the cost to lower all the ceilings in the guest cottage. Builder agreed that it had breached the agreement but asserted that damages should be nominal, or nothing at all, because the market value of the guest cottage was actually higher with 9 foot ceilings. Pick the answer that best describes how a court should compute damages in this case. a) Builder is correct that damages should be nominal or non-existent—Tiny Tim just has to grin and bear it—for damages like this are computed based on market differential. b) Builder is correct that damages should be nominal or non-existent—Tiny Tim just has to grin and bear it—for damages like this are computed based on market differential. However, Tiny Tim could have changed this damage calculation by specific language in the construction contract making it clear that lower ceilings in all buildings were essential to the purpose of the contract. c) Tiny Tim is correct because for specific custom work a court will use the "cost to correct" as the appropriate measure of damages. d) Neither party is correct, as the appropriate remedy for real estate and fixtures is specific performance ordering Builder to lower the ceiling (which, of course, Tiny Tim could always waive in exchange for a cash settlement to be negotiated between the parties).

b) Builder is correct that damages should be nominal or non-existent—Tiny Tim just has to grin and bear it—for damages like this are computed based on market differential. However, Tiny Tim could have changed this damage calculation by specific language in the construction contract making it clear that lower ceilings in all buildings were essential to the purpose of the contract. It would be a unique good if the contract stated lower ceilings were essential to the K. Otherwise, damages should be nominal because specific performance is much more expensive than loss of value.

11. Chef signed a binding letter of intent with Franchise to own and operate a new sushi restaurant in South Miami called "Fishy Fishy". The term of the franchise was to be 10 years. The Fishy Fishy franchise already had ten successful locations across Florida run by other owner operators (these other businesses made between $30,000 and $35,000 per location every quarter for the last 3 years). Chef had never run a restaurant before, though he had been a short order cook at a Pancake Hut restaurant for 10 years. Chef made a non-refundable deposit of $5,000 with a landlord on a location to lease (which he would forfeit as liquidated damages if he terminated the lease early). He also hired an architect for a flat fee of $2,000 to design his space. Despite these expenditures and the binding letter of intent, Franchise never granted a Fishy Fishy franchise to Chef. What might Chef expect to recover from Franchise in a breach of contract action as its maximum recovery? a) Chef may only recover $7,000 in out of pocket expenses because lost profits may not be computed on these facts because any future profits would be purely speculative. b) Chef may recover his out of pocket expenses plus an allowance for lost future profits as consequential damages because, on these facts, a reasonable basis exists for the calculation. c) Chef may not recover any amount for lost future profits because, as he would be running a new business, a per se rule would deny him recovery of these speculative amounts. d) On these facts, it is likely that Chef might recover the present value of ten years of lost profits, but nothing additional for the lease deposit or the architect.

b) Chef may recover his out of pocket expenses plus an allowance for lost future profits as consequential damages because, on these facts, a reasonable basis exists for the calculation. Chinese Restaurant Case.

15. Seller agreed to sell 700 experimental widgets to Buyer for $21,000 with a firm delivery date of November 1. Buyer felt it was essential to his new products initiative that these widgets be delivered "on time" for a sales show at the local convention center. Alas, Seller failed to deliver on time. Buyer sued Seller for breach. The written contract provided, however, that in the case of a delivery failure damages "would be limited to payment of the liquidated amount of $2100." Buyer intends to sue Seller for lost profits expected from the new product sales initiative, claiming that the liquidated damages agreement should not be enforced. What is the likely outcome of a lawsuit. a) Liquidated damages of $2100, or 10% of the contract price, is reasonable on these facts and should be enforced. b) Damages should be limited to $500, plus any additional damages provable (which likely are equal to $0 because consequential damages are too speculative for a new product initiative). c) Damages should be limited to Buyer's out of pocket expenses on a reliance measure of damages, rather than an expectation measure, ignoring the $2100 as a penalty clause. d) Damages equal to the lost profit on sales of 700 units should be awarded if they exceed $2100 because the liquidated amount is tested both at the time of contracting and the time of breach.

b) Damages should be limited to $500, plus any additional damages provable (which likely are equal to $0 because consequential damages are too speculative for a new product initiative). However, A would be correct if the court deemed $2100 to be a reaosnable amount for a liquidated damage

6. Landscaper was hired by Home's Inc. to create a "green space" park at the northwest end of its new housing development for a completed price of $200,000. The market price for such a project would typically be $300,000 but Landscaper had offered to do the work at a bargain price—hoping to get more future business from Home's Inc. Landscaper completed one-half of the project but then disaster struck. The entire park was swallowed by a massive sinkhole! Assume that this land area can now only be used for a decorative lake and that Home's Inc. had not made any progress payments to Landscaper. Pick the answer that best describes the recovery that Landscaper might expect, if any, from Home's Inc., and the basis for that recovery. a) Landscaper should not expect any recovery because, in the case of a true "contractual accident" for which neither party is at fault, there is no basis to shift the loss from one innocent party to another. b) Landscaper should recover $150,000 on a restitution theory because, on these facts, that is the amount that best represents the extent to which Landscaper improved the property of Home's Inc. c) Landscaper should recover $100,000, representing the pro rata portion of the contract price due on an expectation theory of damages through the date of termination of the contract due to an act of God. d) Landscaper should recover its out of pocket expenses incurred through the date of contract termination, but no more, because Home's Inc. did not receive any true benefit from the work performed.

b) Landscaper should recover $150,000 on a restitution theory because, on these facts, that is the amount that best represents the extent to which Landscaper improved the property of Home's Inc. Restitution Theory looks at market price not contract price.

13. Buyer contracted to purchase 100 widgets from Seller for $5000. Seller delivered the widgets but Buyer refused to accept them, claiming a breach of warranty. Seller covered by purchasing replacement widgets for $6000 and then sued Buyer for breach of contract, seeking $1000 in money damages plus incidental and consequential damages. Seller made a counterclaim for consequential damages resulting from loss of a bonus Seller would have made from meeting a sales target. Pick the answer that best describes the likely outcome of the claims and counterclaims. a) The law allows both Buyer and Seller to make claims for consequential damages. b) Only Buyer may make a claim for consequential damages. c) Only Seller may make a claim for consequential damages. d) Consequential damages are not available when a party has mitigated by cover because then the actual damages are known with certainty.

b) Only Buyer may make a claim for consequential damages. Consequential Damages: UCC 2-715(2): Allows damages for any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and injury to person or property proximately resulting from any breach of warranty

7. Studio ordered a large photo printer from TechNo for a price of $12,000 for delivery in six weeks. Two weeks after placing the order, another company, Fototech, announced a brand new technology for printing that became the new industry standard overnight—rendering the custom photo printer from TechNo obsolete (though not worthless). To keep up with the competition, Studio would need to order a new technology printer from Fototech for $15,000. Studio had refurbished a room in its offices at a cost of $5,000 to house the large photo printer on order from TechNo. This work was needless because the new technology printers took up only a small amount of space. As luck would have it, TechNo defaulted and did not deliver the large photo printer to Studio. Studio was relieved, but it decided to sue Tech for breach anyway. At the time of the failed delivery, the large photo printer could have been sold for $9,000. How much might Studio recover, if anything, from TechNo in a breach of contract action? a) Studio might recover $5,000 on a reliance theory of damages for the expenses it incurred in anticipation of the failed delivery by TechNo. b) Studio might recover $2,000 on these facts, representing its net damages of reliance expenses minus savings realized from TechNo's breach c) Studio should recover nothing on these facts because, on a classic expectation theory of damages, it would have incurred the remodeling expenses even in the case of full performance and Studio suffered no expectation damages at all because it had a losing contract with TechNo. d) Studio should recover $3,000 in damages representing the difference between the $12,000 contract price for the TechNo printer and the $15,000 market price of the replacement Fototech printer.

b) Studio might recover $2,000 on these facts, representing its net damages of reliance expenses minus savings realized from TechNo's breach UCC 2-713 Reliance Expenses ($5000) - Savings from breach ($15,000 - 12,000=$3,000) = $2000

3. Marx sent a letter to Engels on May 5 offering to sell him 1000 pamphlets containing a "Critique of the Gotha Programme." Engels received the letter on the evening of May 8. On the afternoon of May 8, Marx changed his mind about the sale and wrote another letter to Engels retracting the offer. He posted the retraction letter later that afternoon. At noon on May 9, Engels mailed a letter to Marx accepting the offer to purchase the pamphlets. Engels received the retraction letter on May 11. Marx received the acceptance letter on May 12. Do Marx and Engels have a binding contract under common law? a) There is no binding contract because Marx made a valid retraction prior to Engels acceptance of the offer. b) There is a binding contract because Engels made an effective acceptance when he mailed his response. c) There is no binding contract because Engels received the retraction letter before Marx received the acceptance letter. d) There is a binding contract because (unless otherwise expressly stated) offers remain open for a reasonable amount of time and Marx's attempt at a retraction violated this implied condition regardless of when sent or received.

b) There is a binding contract because Engels made an effective acceptance when he mailed his response. R2d §40 Time When Rejection or Counter-Offer Terminates the Power of Acceptance: Mailbox rule applies only to acceptances by mail, not revocations. A revocation is not effective until received by the offeree. As long as the offeree sends his acceptance prior to receiving the revocation, the acceptance is valid and binding.

7. Fred, a law professor, leaves a note on Helen's car under a windshield wiper, offering to buy the car in one week for $5,000. Helen, a dancer, writes back to Fred at the listed address in the note saying "I agree to your terms but I need to use the car for an afternoon in three months to take my mother to a doctor's appointment. I will keep my insurance current." What is the likely status of the transaction? a) A contract has been formed that includes Helen's additional term (assuming it is not viewed as material and Fred does not send a notice of objection in a timely manner). b) No contract has been formed because Helen made a counter offer. c) A contract has been formed but it does not include Helen's addition unless Fred agrees to it. d) A contract will only be formed based on conduct if the deal is closed—with Helen's proviso "knocked out" of the deal.

c) A contract has been formed but it does not include Helen's addition unless Fred agrees to it. UCC 2-207 (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. A would be correct if it was between two merchants.

3. Builder signed a contract to pave 3 parking lots for the Miami for a total price of $90,000. After completing the job for the first parking lot, a town council member called Builder and told him that he would be wise to stop work because of an anticipated budget shortfall that would be discussed at the next town meeting in ten days. Builder was upset but kept working despite the warning, completing the paving job for the second parking lot. When this job was complete, the city council voted to terminate the contract with Builder due to budget problems and ordered Builder to stop all work. Builder stopped work after getting this order. Each paving job cost Builder $20,000 to complete. Builder has asked you what measure of damages he might likely expect to recover against the City of Miami on these facts. a) Having completed substantial performance on the contract, Builder should receive the contract price of $90,000. b) Builder should receive $30,000 representing his expected total profit on the contract. c) Builder should receive $70,000 representing the sum of the pro rata contract price for two parking lots plus the lost profit on the third uncompleted parking lot. d) Builder should receive $50,000 representing the sum of the pro rata contract price for the work completed when he was first advised to stop work plus the lost profit on the two uncompleted parking lots.

c) Builder should receive $70,000 representing the sum of the pro rata contract price for two parking lots plus the lost profit on the third uncompleted parking lot. This depends on whether or not town council member is considered to have authority. If he is not authoritative, then C is correct because $40,000 in pro rata + $30,000 in profit (from original $90,000 K). If he is authoritative, D is correct because he would be adding unnecessary damages.

4. Buffy posted reward notices on telephone poles around her neighborhood offering $100 for the return of her dog, Spotless. Dino found a lost dog and went door to door trying to find the dog's owner. Buffy was thrilled when Dino returned Spotless to her. Buffy noticed that Dino was not fluent in English. She said nothing about the reward and Dino did not ask for one. Later Dino's parish priest told him about the reward and blessed him for his good deed. Dino returned to Buffy's house and demanded the reward. Buffy told Dino to "buzz off." Dino sued Buffy for breach of contract. Was a contract formed? a) Yes because rewards, unlike advertisements, invite acceptance by performance. b) Yes because Dino was free to collect the reward after performance because Buffy had not withdrawn the offer of the reward. c) No because Dino could not accept an offer that he did not know about. d) No because searching for the owner could not serve as acceptance.

c) No because Dino could not accept an offer that he did not know about. R2d §51 Promisee must be aware of promise → if promisee is not aware of promise, any act she performs is obviously not bargained for. Cannot recover an award for an act performed without knowledge of the reward

8. Buyer signed a written contract to purchase Black Acre Farm for $10,000 from Seller. Buyer made a $2,000 deposit on the purchase. However, Buyer breached its obligation to close the sale. The Seller was able to resell the property to another purchaser for $9,500. Buyer wants to sue Seller to recover as much of its deposit as is possible. On these facts, how much of the deposit should Buyer recover? Assume that the written contract stated that, in the event of a breach, Seller would retain the entire deposit as "liquidated damages." a) Seller may retain $500 of the deposit, representing the actual losses incurred due to the breach. b) Seller may retain $500 (the maximum allowed liquidated damages amount) plus $500 to account for actual damages incurred. c) Seller may retain the entire $2,000 amount as liquidated damages (assuming a court agrees that this was a reasonable pre-estimate of loss and not a penalty). d) Seller may retain the entire $2,000 amount because it does not exceed 20% of the purchase price.

c) Seller may retain the entire $2,000 amount as liquidated damages (assuming a court agrees that this was a reasonable pre-estimate of loss and not a penalty). Rule: Damages for breach by either party may be liquidated in the contract, but the provision will not be enforced and will be void as a penalty unless the amount it fixes as damages is reasonable in light of anticipated or actual harm caused by the breach

1. Farmer signed a written contract to purchase manure for $2,000 from Seller (who once a year cleaned his barns and sold the manure thus harvested). Farmer made a $500 deposit on the purchase. However, Farmer breached its obligation to close the sale. The Seller was able to resell the manure to another purchaser for $2,000. Farmer wants to sue Seller to recover as much of his deposit as is possible. On these facts, how much of the deposit should Farmer recover? Assume that the written contract was otherwise silent on the treatment of the deposit in the event of a breach. a) Farmer should recover the entire deposit because Seller suffered no damages and the law avoids forfeitures. b) Seller should retain the entire $500 deposit, as the maximum amount specified by the UCC. c) Seller should retain $400, and return $100 to Farmer. d) Seller may retain $500 as the implied amount of liquidated damages at law.

c) Seller should retain $400, and return $100 to Farmer. Rule—§2-718(2): where seller justifiably withholds deliver of goods because of buyer's breach, buyer is entitled to restitution of any amount by which the sum of his payments exceeds (a) the amount which seller is entitled by virtue (enforceable liquidated damages provision) or (b) in the absence of such a provision, 20% of the value of the total performance for which the buyer is obligated under K, or $500 whichever is smaller

1. Collector calls Curator and suggests a meeting later in the day at the Rembrandt Martini Bar. Over drinks, Collector tells Curator, "I offer to sell you my painting titled 'Aristotle contemplating the bust of Homer Simpson' for $600 just let me know in due course." The conversation drifts to other subjects. After an hour of pleasant chatter, Curator politely excuses himself so as not to be late for the opera. The next day, Curator decides the painting might fit well with an exhibit she is arranging on popular culture, and she consults you. What answer best describes the ability of Curator to accept Collector's offer under US domestic law? a) The offer likely expired because in face to face negotiations an offer expires at the end of the conversation. b) Likely the offer remained open for at least a few days because, when the time for acceptance is not specified, the offeree has a reasonable time to accept the offer. c) The offer is not capable of acceptance under these circumstances because the price of the goods is $600 and the offer was not made in a signed writing. d) The offer likely may be accepted because Collector had made it reasonably clear that the power of acceptance was intended to extend beyond the conversation.

c) The offer is not capable of acceptance under these circumstances because the price of the goods is $600 and the offer was not made in a signed writing. Because UCC 2-201 Statute of Frauds requires an offer of $500 or more to be in writing and signed by the party making the offer.

10. Collector signed a contract to sell a rare 1965 Mustang to Florida Auto Museum for $25,000. However, after signing the contract, Collector's husband complained that "I love that car; if you love me, you won't sell it!" Collector then called Museum to repudiate the contract. The museum sued Collector for specific performance. Collector claimed specific performance should not be an option because money damages might be reasonably estimated by using sales figures for comparable vehicles sold at auction in Arizona and California. The sales contract stated that "Specific Performance Shall be the Only Remedy for a Breach of this Contract." What answer best describes the likely outcome of such a law suit? a) Specific performance should not be available on these facts because the 1965 Mustang is not a unique item. A court would attempt to compute damages to provide a remedy even though the contract specifies that specific performance shall be the only remedy. b) Specific performance should not be available on these facts because the 1965 Mustang is not a unique item and a court should decline to order specific performance because the Florida Auto Museum was trying to drive too hard a bargain. c) A court might elect to order specific performance on these facts even though the 1965 Mustang was not a unique item, but the museum will nevertheless have to pay its costs and expenses of enforcement. d) A court might elect to order specific performance on these facts, including payment of the cost of enforcing the specific performance order, to place Florida Auto Museum in the same position as it would have been in absent the breach by Collector—for nothing else gives the full effect of specific performance.

d) A court might elect to order specific performance on these facts, including payment of the cost of enforcing the specific performance order, to place Florida Auto Museum in the same position as it would have been in absent the breach by Collector—for nothing else gives the full effect of specific performance. The Mustang is considered "rare" and a unique good. Therefore, the only remedy that will put the Collector in the same position it would have been is through specific performance.

5. On June 15, 20XX, Cleo mailed a letter to Holmes that said: "I offer to let you clean my pool while I am away over the summer for $200 per month. You must accept this offer within 10 days by completing the first cleaning." Holmes received the offer on June 18, 20XX (the normal time for such a letter delivery). What answer best describes the amount of time and method that Holmes has to accept the offer? a) Holmes must commence performance not later than the close of business on June 25, 20XX. b) Holmes may mail an acceptance letter to Cleo or commence performance not later than the close of business on June 28, 20XX because mail is a reasonable mode of acceptance given that the offer was sent by mail. c) Holmes may accept by depositing a letter in the mail to bind Cleo but will be in breach if the first cleaning does not occur by the close of business on June 28, 20XX. d) Holmes must accept an offer of this sort by commencing performance with a first pool cleaning by June 28, 20XX..

d) Holmes must accept an offer of this sort by commencing performance with a first pool cleaning by June 28, 20XX.. R2d §41 Comment E Offers made by mail or telegram: Where the parties are at a distance from each other, the normal understanding is that the time for acceptance is extended at least by the normal time for transmission of the offer and for the sending of the offeree's reply.

14. Manufacturer makes "stunt" skateboards for use by older children and young adults who "live for the moment." Realizing that use of a skateboard can be risky, manufacturer limits it contract liability by the following language: Cool dudes don"t sue. Consequential damages are not available for any use of this product. Our liability is limited to repair or replacement, at our election, for any defect with this product. Cool Dude, a purchaser of a stunt skateboard was seriously injured when the front wheels on his board broke. Assume this was a manufacturing defect. The accident damaged Cool Dude's car when, as part of the accident in an unlikely chain of events, he crashed into streetlamp, knocking it through the windshield of his vintage 1965 Mustang automobile. What best describes Manufacturer's liability? a) Manufacturer is likely liable for repair and replacement of the skateboard, and the injuries to Cool Dude, despite the limitation of liability, but not for the damage to the windshield. b) On these facts, Manufacturer is likely liable for all damages because a seller of goods may not limit liability in a consumer goods transaction. c) Manufacturer is liable for nothing, other than repair or replacement because, as a matter of law, the limitations on liability to repair and replacement were not unconscionable. d) Manufacturer is liable for nothing, other than repair or replacement unless the court finds that the limitation caused remedies to fail of their essential purpose.

d) Manufacturer is liable for nothing, other than repair or replacement unless the court finds that the limitation caused remedies to fail of their essential purpose.

5. Publisher had ordered 200 rolls of paper from Factory for $10,000, with delivery to take place in 45 days. Fifteen days before the delivery date, Factory had a rush order from Desperate for 200 rolls of paper. Desperate offered Factory $13,000 for these 200 rolls and Factory sold them at this price. Thus, Factory had no inventory to fill Publisher's order—breaching its binding contract with Publisher. Publisher learned of this sale and was furious—but it found a comparable purchase at a going out of business sale for $9,000—though it had to pay a $1,500 commission to a broker to acquire the replacement rolls of paper on the scheduled delivery date. What is the highest damage recovery that Publisher might expect to recover from Factory? a) Publisher might recover $3,000 from Factory on a restitution theory to prevent unjust enrichment of Factory for its breach, from which Factory should not benefit. b) Publisher should not recover any damages from Factory because the price of cover was actually less than the contract price at the date of delivery. c) Publisher might recover $1,500 from Factory for incidental damages even though Publisher might not recover any basic contract damages based on the difference between the contract price and the market price at the time of breach. d) Publisher might recover $500 from Factory—the net amount of economic damages it suffered due to the breach.

d) Publisher might recover $500 from Factory—the net amount of economic damages it suffered due to the breach. 2-712(2) [(Original K less Cover $) less incidental $] -$10,000 + $9,000 - $1500 = $500

9. Shaggy lost his pet dog Scooby Doo. He placed an advertisement in the local newspaper offering a reward of $100 for the return of Scooby Doo. Neighbor read about the reward in the newspaper and told her friend Teenager about the reward. Teenager found Scooby Doo and returned the dog to Shaggy stating, "I am sure glad Neighbor told me about the reward." Which answer best describes Shaggy's obligations, if any, to Teenager under US domestic law? a) Shaggy owes $100 to Teenager because Teenager is an intended beneficiary (and not merely an incidental beneficiary) of the offer made to the general public and thus may accept the offer. b) Shaggy does not owe anything to Teenager because Shaggy did not make an offer to Teenager. c) Shaggy owes $100 to Teenager but only if Teenager told Shaggy he would search. d) Shaggy owes Teenager $100 because Teenager is permitted to accept an offer by performance on these facts even though he did not read the offer.

d) Shaggy owes Teenager $100 because Teenager is permitted to accept an offer by performance on these facts even though he did not read the offer. R2d §51 Promisee must be aware of promise → if promisee is not aware of promise, any act she performs is obviously not bargained for. Cannot recover an award for an act performed without knowledge of the reward

10. On Monday, a surf shop owner received a rush order for a custom surfboard that needed to be specially made. The surf shop owner began shaping the custom surfboard on Monday evening. On Wednesday, the buyer called to cancel the order. On the phone, the surf shop owner insisted on going through with the deal, telling the buyer (for the first time) that she had already started making the surfboard. Would a court applying the UCC hold that the buyer was bound by a contract to buy the surfboard? a) No because the surf shop owner may not accept the order without first notifying the buyer. The order was withdrawn prior to proper acceptance. b) Yes because the surf shop owner may accept the order by performance without the need to notify the buyer. c) No because the buyer may treat his offer to the surf shop owner as having lapsed by the passage of time. d) Yes but only if notice of acceptance given on Wednesday was found to be a reasonable time following acceptance by commencement of a requested performance.

d) Yes but only if notice of acceptance given on Wednesday was found to be a reasonable time following acceptance by commencement of a requested performance. UCC 2-206(2): Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

13. Camper left her tent pitched in the forest to come home early when she did not feel well. She offered to pay Woodsman $150 to go take down her tent and bring it home. Woodsman loaded up his Jeep and started driving to the campsite, but en route camper called Woodsman to withdraw the offer. Woodsman said, "You cannot retract your offer now, I am part way there!" Woodsman is correct on these facts. a) TRUE. b) FALSE.

§45(d): Beginning to Perform Option K If the invited performance takes time, the invitation to perform necessarily includes an invitation to begin performance. In most such cases, the beginning of performance carries with it an express or implied promise to compete performance. However, in §45(F) Beginning preparation though they may be essential to carrying out the K or accepting the offer is not enough. Also, §87(2) requires the action or forbearance to be of a substantial character on the part of the offeree and does induce such action or forbearance. If so, then the contract is binding to the extent necessary to avoid injustice. Once you start performance on an Option K, you cannot revoke