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Contracts/Sales Questions (Bar)

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A builder contracted to build a house for a newly married couple. Terms of the contract provided that the builder would receive the contract price when the building was fully completed. Just when the builder had completed one-half of the structure, a tornado struck the area and demolished the building. What is the builder entitled to recover from the couple under the contract? A. Nothing. B. One-half of the contract price. C. One-half of the fair market value of what remains of the house. D. Cost of materials and reasonable labor costs.

A. Nothing.

C. No, because Deligor's duties were of a personal nature, involving his reputation, taste and skill.

Loomis, the owner and operator of a small business, encourages "wellness" on the part of his employees and supports various physical fitness programs to that end. Learning that one of his employees, Graceful, was a dedicated jogger, Loomis promised to pay her a special award of $100 if she could and would run one mile in less than six minutes on the following Saturday. Graceful thanked him, and did in fact run a mile in less than six minutes on the day specified. Shortly thereafter, however, Loomis discovered that for more than a year Graceful had been running at least one mile in less than six minutes every day as a part of her personal fitness program. He refused to pay the $100. In an action by Graceful against Loomis for breach of contract, which of the following best summarizes the probable decision of the court? A. Loomis wins, because there is a compelling inference that Loomis' promise did not induce Graceful to run the specified mile. B. Loomis wins, because Graceful's running of the specified mile was beneficial, not detrimental, to her in any event. C. Graceful wins, because running a mile in less than six minutes is a significantly demanding enterprise. D. Graceful wins, because she ran the specified mile as requested, and her motives for doing so are irrelevant.

D. Graceful wins, because she ran the specified mile as requested, and her motives for doing so are irrelevant.

Buyer, Inc. contracted in writing with Shareholder, who owned all of XYZ Corporation's outstanding stock, to purchase all of her stock at a specified price per share. At the time this contract was executed, Buyer's contracting officer said to Shareholder, "Of course, our commitment to buy is conditioned on our obtaining approval of the contract from Conglomerate, Ltd., our parent company." Shareholder replied, "Fine. No problem." For this question only, assume that Conglomerate orally approved the contract, but that Shareholder changed her mind and refused to consummate the sale on two grounds: (1) when the agreement was made there was no consideration for her promise to sell; and (2) Conglomerate's approval of the contract was invalid. If Buyer sues Shareholder for breach of contract, is Buyer likely to prevail? Same facts as the prior slide, but for this question only assume the following facts. Shareholder subsequently refused to consummate the sale on the ground that Buyer had neglected to request Conglomerate's approval of the contract, which was true. Conglomerate's chief executive officer, however, is prepared to testify that Conglomerate would have routinely approved the contract if requested to do so. Buyer can also prove that it has made a substantial sale of other assets to finance the stock purchase, although it admittedly had not anticipated any such necessity when it entered into the stock purchase agreement. If Buyer sues Shareholder for breach of contract, is Buyer likely to prevail? A. Yes, because the condition of Conglomerate's approval of the contract, being designed to protect only Buyer and Conglomerate, can be and has been waived by those entities. B. Yes, because Buyer detrimentally relied on Shareholder's commitment by selling off other assets to finance the stock purchase. C. No, because the express condition of Conglomerate's approval had not occurred prior to the lawsuit. D. No, because obtaining Conglomerate's approval of the contract was an event within Buyer's control and Buyer's failure to obtain it was itself a material breach of contract.

A. Yes, because the condition of Conglomerate's approval of the contract, being designed to protect only Buyer and Conglomerate, can be and has been waived by those entities.

Landholder was land-rich by inheritance but money-poor, having suffered severe losses on bad investments, but still owned several thousand acres of unencumbered timberland. He had a large family, and his normal, fixed personal expenses were high. Pressed for cash, he advertised a proposed sale of standing timber on a choice 2,000-acre tract. The only response was an offer by Logger, the owner of a large, integrated construction enterprise, after inspection of the advertised tract. Assume that Logger offered a fair price for the timber rights in question, and Landholder accepted the offer. Without legal excuse and over Landholder's strong objection, Logger repudiated the contract before commencing performance. Landholder could not afford to hire a lawyer and take legal action, and made no attempt to assign any cause of action he might have had against Logger. If Logger is sued for breach of the contract by Landholder's next-door neighbor, whose view of a nearby lake is obscured by the standing timber, the neighbor will probably A. lose, as only an incidental beneficiary, if any, of the Logger-Landholder contract. B. lose, as a maintainer of nuisance litigation. C. prevail, as a third-party intended beneficiary of the Logger-Landholder contract. D. prevail, as a surrogate for Landholder in view of his inability to enforce the contract.

A. lose, as only an incidental beneficiary, if any, of the Logger-Landholder contract.

In order to raise revenue, a city required home-repair contractors who performed work within the city limits to pay a licensing fee to a city agency. A contractor who was unaware of the fee requirement agreed to perform home repairs for a city resident. After the contractor completed the work, the resident discovered that the contractor had not paid the licensing fee, and she refused to pay for the repairs, which were otherwise satisfactory. In the contractor sues the resident for breach of contract, how is the court likely to rule? A. Although the contract violates the law and is void, the court will require the homeowner to pay the contractor the reasonable value of the work accepted. B. Although the contract violates the law, the court will find that public policy does not bar enforcement of the contract, because the purpose of the fee is merely to raise revenue. C. Because the contract violates the law and is void, the court will not enforce it. D. Because the purpose of the fee is merely to raise revenue, the court will find that the contract does not violate the law but will allow the contractor to recover his costs only.

B. Although the contract violates the law, the court will find that public policy does not bar enforcement of the contract, because the purpose of the fee is merely to raise revenue.

Buyer faxed the following signed message to seller, his longtime widget supplier: "Urgently need blue widgets. Ship immediately three gross at your current list price of $600." Upon receipt of the fax, seller shipped three gross of red widgets to buyer and faxed to buyer the following message: "Temporarily out of blue. In case red will help, I am shipping three gross at the same price. Hope you can use them." Upon buyer's timely receipt of both the shipment and seller's fax, which of the following best describes the rights and duties of buyer and seller? A. Buyer may accept the shipment, in which case he must pay seller the list price, or he must reject the shipment and recover from seller for total breach of contract. B. Buyer may accept the shipment, in which case he must pay seller the list price, or he may reject the shipment, in which case he has no further rights against seller. C. Buyer may accept the shipment, in which case he must pay seller the list price, less any damages sustained because of the nonconforming shipment, or he may reject the shipment and recover from seller for total breach of contract, subject to seller's right to cure. D. Buyer may accept the shipment, in which case he must pay seller the list price, less any damages sustained because of the nonconforming shipment, or he may reject the shipment provided that he promptly covers by obtaining conforming widgets from another supplier.

B. Buyer may accept the shipment, in which case he must pay seller the list price, or he may reject the shipment, in which case he has no further rights against seller.

Fixtures, Inc., in a signed writing, contracted with Apartments for the sale to Apartments of 50 identical sets of specified bathroom fixtures, 25 sets to be delivered on March 1, and the remaining 25 sets on April 1. The agreement did not specify the place of delivery, or the time or place of payment. Which of the following statements is correct? A. Fixtures must tender 25 sets to Apartments at Apartments place of business on March 1, but does not have to turn them over to Apartments until Apartments pays the contract price for the 25 sets. B. Fixtures has no duty to deliver the 25 sets on March 1 at Fixtures place of business unless Apartments tenders the contract price for the 25 sets on that date. C. Fixtures must deliver 25 sets on March 1, and Apartments must pay the contract price for the 25 sets within a reasonable time after their delivery. D. Fixtures must deliver 25 sets on March 1, but Apartments payment is due only upon the delivery of all 50 sets.

B. Fixtures has no duty to deliver the 25 sets on March 1 at Fixtures place of business unless Apartments tenders the contract price for the 25 sets on that date.

A contractor with a contract to deepen a well in a drought-stricken area mistakenly entered the wrong property and proceeded to deepen the well there. The owner of the property saw the contractor at work but said nothing. When the contractor completed the job, the property owner refused to pay his bill, and the contractor filed suit. In her answer, the property owner stated that she thought the contractor was employed by the county and that the government was paying for the work because of the drought. She knew, however, that many of her neighbors had recently paid private contractors to deepen their wells. Which of the following arguments offers the contractor his best chance for winning his lawsuit? A. Express contract. B. Implied-in-fact contract. C. Implied-in-law contract. D. Promissory estoppel. -If successful, how would the contractor's damages be measured?

B. Implied-in-fact contract. -The price the parties implicitly agreed upon or, if none, the reasonable value of contractor's services.

Retailer, a dry goods retailer, telephoned Manufacturer, a towel manufacturer, and offered to buy for $5 each a minimum of 500 and a maximum of 1,000 large bath towels, to be delivered in 30 days. Manufacturer orally accepted this offer and promptly sent the following letter to Retailer, which Retailer received two days later: "This confirms our agreement today by telephone to sell you 500 large bath towels for 30-day delivery. /s/ Manufacturer." Twenty-eight days later, Manufacturer tendered to Retailer 1,000 (not 500) conforming bath towels, all of which Retailer rejected because it had found a better price term from another supplier. Because of a glut in the towel market, Manufacturer cannot resell the towels except at a loss. In a suit by Manufacturer against Retailer, which of the following will be the probable decision? A. Manufacturer can enforce a contract for 1,000 towels, because Retailer ordered and Manufacturer tendered that quantity. B. Manufacturer can enforce a contract for 500 towels, because Manufacturer's letter of confirmation stated that quantity term. C. there is no enforceable agreement, because Retailer never signed a writing. D. there is no enforceable agreement, because Manufacturer's letter of confirmation did not state a price term.

B. Manufacturer can enforce a contract for 500 towels, because Manufacturer's letter of confirmation stated that quantity term.

At a country auction, P acquired an antique cabinet that he recognized as a "Morenci," an extremely rare and valuable collector's item. Unfortunately, P's cabinet had several coats of varnish and paint over the original finish. Its potential value could only be realized if these layers could be removed without damaging the original oil finish. A professional restorer of antique furniture recommended that P use Restorall to remove the paint and varnish from the cabinet. P obtained and read a sales brochure published by Restorall, Inc., which contained the following statement: "This product will renew all antique furniture. Will not damage original oil finishes." P purchased some Restorall and used it on his cabinet, being careful to follow the instructions exactly. Despite P's care, the original Morenci finish was irreparably damaged. When finally refinished, the cabinet was worth less than 20% of what it would have been worth if the Morenci finish had been preserved. If P sues Restorall, Inc. to recover the loss he has suffered as a result of the destruction of the Morenci finish, will P prevail? A. Yes, unless no other removal technique would have preserved the Morenci finish. B. Yes, if the loss would not have occurred had the statement in the brochure been true. C. No, unless the product was defective when sold by Restorall, Inc. D. No, if the product was not dangerous to persons.

B. Yes, if the loss would not have occurred had the statement in the brochure been true.

Buyer, Inc. contracted in writing with Shareholder, who owned all of XYZ Corporation's outstanding stock, to purchase all of her stock at a specified price per share. At the time this contract was executed, Buyer's contracting officer said to Shareholder, "Of course, our commitment to buy is conditioned on our obtaining approval of the contract from Conglomerate, Ltd., our parent company." Shareholder replied, "Fine. No problem." For this question only, assume that Conglomerate orally approved the contract, but that Shareholder changed her mind and refused to consummate the sale on two grounds: (1) when the agreement was made there was no consideration for her promise to sell; and (2) Conglomerate's approval of the contract was invalid. If Buyer sues Shareholder for breach of contract, is Buyer likely to prevail? Assume the same facts as the prior two slides, but for this question only assume the following facts. Shareholder is willing and ready to consummate the sale of her stock to Buyer, but the latter refuses to perform on the ground (which is true) that Conglomerate has firmly refused to approve the contract. If Shareholder sues Buyer for breach of contract and seeks to exclude any evidence of the oral condition requiring Conglomerate's approval, the court will probably A. admit the evidence as proof of a collateral agreement. B. admit the evidence as proof of a condition to the existence of an enforceable obligation, and therefore not within the scope of the parol evidence rule. C. exclude the evidence on the basis of a finding that the parties' written agreement was a complete integration of their contract. D. exclude the evidence as contradicting the terms of the parties' written agreement, whether or not the writing was a complete integration of the contract.

B. admit the evidence as proof of a condition to the existence of an enforceable obligation, and therefore not within the scope of the parol evidence rule.

Employee, aged 60, who had no plans for early retirement, had worked for Employer for 20 years as a managerial employee-at-will when he had a conversation with Employer's president (President), about Employee's post-retirement goal of extensive travel around the U.S. A month later, President handed Employee a written, signed resolution of Employer's Board of Directors stating that when and if Employee should decide to retire, at his option, the company, in recognition of his past service, would pay him a $4,000-per-month lifetime pension. The company had no regularized retirement plan for at-will employees. Shortly thereafter, Employee retired and immediately bought a $50,000 recreational vehicle for his planned travels. After receiving the promised $4,000 monthly pension from Employer for six months, Employee now unemployable elsewhere, received a letter from Employer advising him that the pension would cease immediately because of recessionary budget constraints affecting in varying degrees all managerial salaries and retirement pensions. In a suit against Employer for breach of contract, Employee will probably A. win, because he retired from the company as bargained-for-consideration for the Board's promise to him of a lifetime pension. B. win, because he timed his decision to retire and to buy the recreational vehicle in reasonable reliance on the Board's promise to him of a lifetime pension. C. lose, because the Board's promise to him of a lifetime pension was an unenforceable gift promise. D. lose, because he had been an employee-at-will throughout his active service with the company.

B. win, because he timed his decision to retire and to buy the recreational vehicle in reasonable reliance on the Board's promise to him of a lifetime pension.

A park board in a large suburb announced that it was accepting bids for renovation work on its recreation center. A builder advertised for sub-bids for the electrical work, and a local electrician submitted to the builder by electronic bidding service a sub-bid of $130,000. However, due to the bidding service's negligence, the sub-bid that the builder received from the electrician read $30,000 instead of $130,000. Because this was the lowest sub-bid that the builder received for the electrical work, and $60,000 less than the next lowest sub-bid, the builder awarded the subcontract to the electrician. Based in part on the electrician's sub-bid, the builder came up with a bid for the job that beat out all of the competition and thus won the job. The electrician's best argument to successfully refuse to perform the resulting contract is: A. The contract would be unconscionable. B. The great difference between the $30,000 figure and the next lowest bid should have alerted the builder to the existence of a mistake in the sub-bid. C. The electrician was not responsible for the negligence of the bidding service. D. The builder's own negligence in not checking out all sub-bids precludes enforcement of the contract.

B. The great difference between the $30,000 figure and the next lowest bid should have alerted the builder to the existence of a mistake in the sub-bid. If answer (B) were not available, what would be the best answer? (A)

On June 1, T, a wholesaler of widgets, received a purchase-order form from W, a retailer of widgets, in which W ordered 10 anti-recoil widgets for delivery no later than August 30 at a total price of $1,000, as quoted in T's catalog. On June 2, T mailed to W its own form, across the top of which it was written, "We are pleased to accept your order. This acceptance is expressly made conditional on your assent to the additional or different terms contained herein." T's form contained the same terms as W's form except for an additional printed clause that provided for a maximum liability of $10 for any breach of contract by T. As of June 5, when W received T's acceptance form, which of the following is an accurate statement concerning the legal relationship between T and W? A. There is no contract because the liability-limitation clause in T's form is a material alteration of W's offer. B. There is no contract unless W thereafter consents to the liability-limitation clause in T's form. C. There is an enforceable contract whose terms do not include the liability-limiting clause in T's form because such clause is a material alteration of W's offer. D. There is an enforceable contract whose terms do not include the liability-limiting clause in T's form because W did not consent to the liability-limitation clause in T's form.

B. There is no contract unless W thereafter consents to the liability-limitation clause in T's form.

Elda, the aged mother of Alice and Barry, both adults, wished to employ a live-in companion so that she might continue to live in her own home. Elda, however, had only enough income to pay one half of the companion's $2,000 monthly salary. Learning of their mother's plight, Alice and Barry agreed with each other in a signed writing that on the last day of January and each succeeding month during their mother's lifetime, each would give Elda $500. Elda then hired the companion. Alice and Barry made the agreed payments in January, February, and March. In April, however, Barry refused to make any payment and notified Alice and Elda that he would make no further payments. Will Elda succeed in an action for $500 brought against Barry after April 30? A. Yes, because by making his first three payments, Barry confirmed his intent to contract. B. Yes, because Elda is an intended beneficiary of a contract between Alice and Barry. C. No, because a parent cannot sue her child for breach of a promise for support. D. No, because Alice and Barry intended their payments to Elda to be gifts.

B. Yes, because Elda is an intended beneficiary of a contract between Alice and Barry.

In answer to a radio advertisement, a teenager two months shy of his 18th birthday contracted to buy a late model car from a car dealership. The agreement required a $1,500 down payment with the remainder of the $7,200 price to be paid in monthly installments to a local finance company. The teenager's first eight payments were made regularly until his driver's license was suspended. He then informed the company that no further payments would be forthcoming. The finance company sued for the remaining payments. The age of majority in the teenager's state is 18 years. Would the teenager be liable for the balance of the payments? A. Yes, because the car dealership was liable on the contract from the outset, notwithstanding the teenager's minority. B. Yes, because he kept the car for six months after reaching the age of majority. C. No, because he was a minor at the time of the contracting, and the contract is voidable by him. D. No, because he informed the finance company in a timely manner after his driver's license was suspended.

B. Yes, because he kept the car for six months after reaching the age of majority.

Buyer and Seller deal in electrical equipment. In its catalog, Buyer lists the prices for some of its products, but not for #4 conducting wire. On July 11, Buyer sends Seller this signed written message: "We wish immediately to have 4,000 feet of your #4 conducting wire. We do not see the price listed in your catalog, so we propose that the price be agreed on later. Please ship." On July 12, Seller responds with this signed writing: "Thank you. We will ship." Have Buyer and Seller formed a contract? A. Yes, because where the goods are bought and sold between merchants, price is not a material term. B. Yes, because notwithstanding the open price term, their interaction reflects finality of agreement. C. No, because parties do not form a contract if they agree that a material term will be subject to future agreement. D. No, because a seller who declines to publish its price shows an intention not to sell.

B. Yes, because notwithstanding the open price term, their interaction reflects finality of agreement.

The owner of a store in a small beach town contacted a manufacturer about buying 100 Adirondack chairs. The parties reduced their agreement to sell and buy the 100 chairs to a signed writing that contained all of the essential terms, as well as a merger clause. When the chairs were delivered to the store owner, she discovered that they were not "Adirondack chairs," as she understood that term and as that term was commonly used, but a different style of chair altogether that was manufactured in the Adirondack region of New York. The store owner refused delivery, and the manufacturer sued the store owner for breach of contract, arguing that he complied with the terms of the contract. Will the store owner be allowed to introduce evidence of the meaning of the term "Adirondack chair"? A. Yes, because the parol evidence rule does not apply to subsequent modifications. B. Yes, because of the dispute between the parties over the meaning of the term "Adirondack chair." C. No, because the written agreement of the parties was a complete integration. D. No, because the contract was for a sale of goods between merchants.

B. Yes, because of the dispute between the parties over the meaning of the term "Adirondack chair."

Buyer and Seller enter into a written contract whereby Buyer agrees to purchase Blackacre, an unimproved parcel of land, from Seller for $50,000 with closing on May 1. On April 30, Seller telephones Buyer and informs Buyer that he (Seller) will not be able to sell Blackacre for $50,000 because the price of land has increased significantly in the past few weeks. Seller tells Buyer that he (Seller) will sell for $55,000. Buyer reluctantly accepts and the parties memorialize the modification in writing. At closing, after Seller signs the deed transferring Blackacre to Buyer, Buyer tenders $50,000 but refuses to pay the additional $5,000. Is Buyer obligated to pay the additional $5,000? A. Yes, because the parties agreed in writing to the modification. B. Yes, if Seller was acting in good faith. C. No, because Seller gave no consideration for the modification. D. No, because Seller's $55,000 offer constituted a rejection. -What if Seller, as part of the April 30 modification, agreed to transfer a tractor (worth $1,000) to B in exchange for the additional $5,000?

C. No, because Seller gave no consideration for the modification. -Answer: The modification would be enforceable because both parties suffered a legal detriment. This is testing pre-existing legal duty

On July 1, a cattle rancher offered to sell his ranch to a dairy farmer for $150,000. The dairy farmer paid the cattle rancher $1,000 to hold the offer open for a period of 30 days. On July 10, the dairy farmer wrote to the cattle rancher, telling him that he could not pay more than $100,000 for the ranch, and that if the cattle rancher would not agree to accept that amount, the dairy farmer would not go through with the deal. The dairy farmer received no reply from the cattle rancher. On July 29, the dairy farmer mailed a letter to the cattle rancher telling him that he accepted his offer to sell the ranch and enclosed a check for $150,000. The cattle rancher received this letter on August 1. Has a contract been formed between the parties for the sale of the ranch? A. No, because the dairy farmer's letter of July 10 terminated the cattle rancher's offer. B. No, because the cattle rancher did not accept the dairy farmer's counteroffer of $100,000. C. No, because the cattle rancher did not receive the dairy farmer's acceptance within 30 days. D. Yes, because the dairy farmer dispatched his acceptance of the cattle rancher's offer prior to the expiration of 30 days.

C. No, because the cattle rancher did not receive the dairy farmer's acceptance within 30 days. 30 days has (hath) September, April, June, and November; all the rest have 31 (except February)

A department store runs an ad in a local newspaper that states, "Black lapin stoles--$100. This sale price is effective for the next 10 days." The department store then decides to stop this sale and the next day it runs an ad in the newspaper that states, "Effective at the close of business today, black lapin stoles are no longer available at the sale price. We regret any inconvenience this may cause." ls the sale price for the stoles still effective the next day? A. Yes, because it was a merchant's firm offer that is not revocable during the time stated. B. Yes, because the method of revocation through the newspaper was not effective. C. No, because the newspaper advertisement was not an offer. D. No, because the offer was not a firm offer because it was made to the general public, not to merchants.

C. No, because the newspaper advertisement was not an offer.

On June 1, Topline Wholesale, Inc. received a purchase-order form from Wonder-Good, Inc., a retailer and new customer, in which the latter ordered 1,000 anti-recoil widgets for delivery no later than August 30 at a delivered total price of $10,000, as quoted in Topline's current catalog. On June 2, Topline mailed to Wonder-Good its own form, across the top of which Topline's president had written, "We are pleased to accept your order." The form contained the same terms as Wonder-Good's form except for an additional printed clause in Topline's form that provided for a maximum liability of $100 for any breach of contract by Topline. As of June 5, when Wonder-Good received Topline's form, which of the following is an accurate statement concerning the legal relationship between Topline and Wonder-Good? A. There is no contract, because the liability-limitation clause in Topline's form is a material alteration of Wonder-Good's offer. B. There is no contract, because Wonder-Good did not consent to the liability-limitation clause in Topline's form. C. There is an enforceable contract whose terms include the liability-limitation clause in Topline's form because liquidation of damages is expressly authorized by the UCC. D. There is an enforceable contract whose terms do not include the liability-limitation clause in Topline's form.

D. There is an enforceable contract whose terms do not include the liability-limitation clause in Topline's form.

A buyer of goods sends a purchase order to a seller on its form. The boilerplate on the form states that the seller is liable for consequential damages. The seller responds with an acknowledgment form that contains boilerplate that states that the seller is not liable for consequential damages. In addition, the seller's form states, "Acceptance is expressly made conditional on assent to the additional or different terms in this acknowledgment." After the forms are exchanged, the seller ships the goods and the buyer pays for them. The buyer then suffers consequential damages because of a breach by the seller. Is the seller liable for consequential damages? A. No, because there is no contract between the parties. B. No, because the seller's form governs. C. Yes, because the buyer's form governs. D. Yes, because the UCC provides for consequential damages.

D. Yes, because the UCC provides for consequential damages.

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

D. Yes, because the order was an offer that Seller effectively accepted before Buyer attempted to revoke it.

D. lose, because Buyer's October 1 statement to Seller was neither a repudiation nor a present breach of the June 1 contract.

In which of the following situations does Article 2 apply? A. Seller is a giant corporation selling a million ballpoint pens to Buyer, another giant Corporation. B. Seller is a giant corporation selling a single ballpoint pen to Buyer, a consumer. C. Seller is an individual who is selling a single ballpoint pen to Buyer, a giant Corporation. D. Seller is an individual who is selling a single ballpoint pen to Buyer, a neighbor. E. All of the above.

E. All of the above.

John and Mary agreed on the telephone that John would buy Mary's Ted Williams autographed baseball for $400. Mary later told him, "The joke's on you. I got a better offer for the ball, and all I had with you was an oral contract, and that doesn't count." Is there an enforceable contract between Mary and John? A. Yes, because oral agreements for the sale of goods for less than $500 are enforceable. B. Yes, because the UCC does not apply to this agreement because John and Mary are not merchants. C. Yes, because Mary admitted making the agreement. D. No, because there is no writing signed by Mary.

A. Yes, because oral agreements for the sale of goods for less than $500 are enforceable.

A buyer and seller have a contract in which the seller agrees to sell 100 widgets to the buyer for $1,000. The contract provides, "This contract may not be assigned without the consent of the other party." The buyer tells the seller that he has "assigned" the widgets to another business to which it will be no more burdensome for the seller to deliver the widgets. The seller does not consent. Is the buyer in breach of the agreement? A) Yes, because the contract prohibits the assignment of rights. B) Yes, because the contract prohibits the delegation of duties. C) No, because the contract prohibits the assignment of rights. D) No, because the contract prohibits the delegation of duties.

D) No, because the contract prohibits the delegation of duties.

On April 1, Owner offered Buyer the right to purchase Greenacre for $100,000; Owner promised to hold the offer open for 30 days. On April 20, Owner, having received no communication from Buyer, sold and conveyed Greenacre to Citizen for $120,000. On April 21, Owner received a letter from Buyer stating, "I am hereby accepting your offer to sell Greenacre and am prepared to close whenever you're ready." Assume that Buyer prevails in a suit against Owner. Which of the following is Buyer entitled to recover? A. Nominal damages only, because the remedy of specific performance was not available to Buyer. B. The fair market value, if any, of an option to purchase Greenacre for $100,000. C. $100,000, which represents the contract price. D. The amount, if any, by which the fair market value of Greenacre on the date of Owner's breach exceeded $100,000.

D. The amount, if any, by which the fair market value of Greenacre on the date of Owner's breach exceeded $100,000.

On August 1, Geriatrics, Inc., operating a "lifetime care" home for the elderly, admitted Ohlster, who was 84 years old, for a trial period of two months. On September 25, Ohlster and Geriatrics entered into a written lifetime care contract with an effective commencement date of October 1. The full contract price was $20,000, which, as required by the terms of the contract, Ohlster prepaid to Geriatrics on September 25. Ohlster died of a heart attack on October 2. In a restitutionary action, can the administrator of Ohlster's estate, a surviving sister, recover on behalf of the estate either all or part of the $20,000 paid to Geriatrics on September 25? (A) Yes, because Geriatrics would otherwise be unjustly enriched at Ohlster's expense. (B) Yes, under the doctrine of frustration of purpose. (C) No, because Ohlster's life span and the duration of Geriatrics' commitment to him was a risk assumed by both parties. (D) No, but only if Geriatrics can show that between September 25 and Ohlster's death it rejected, because of its commitment to Ohlster, an application for lifetime care from another elderly person.

(C) No, because Ohlster's life span and the duration of Geriatrics' commitment to him was a risk assumed by both parties.

An innkeeper, who had no previous experience in the motel or commercial laundry business and who knew nothing about the trade usages of either business, bought a motel and signed an agreement with a laundry company for the motel's laundry services. The agreement was for a term of one year and provided for "daily service at $500 a week." From their conversations during negotiation, the laundry company owner knew that the innkeeper expected laundry services seven days a week. When the laundry company refused to pick up the motel's laundry on two successive Sundays and indicated that it would never do so, the innkeeper canceled the agreement. The laundry company sued the innkeeper for breach of contract. At trial, clear evidence was introduced to show that in the commercial laundry business "daily service" did not include service on Sundays. Is the laundry company likely to succeed in its action? (A) No, because the laundry company knew the meaning the innkeeper attached to "daily service," and therefore the innkeeper's meaning will control. (B) No, because the parties attached materially different meanings to "daily service," and therefore no contract was formed. (C) Yes, because the parol evidence rule will not permit the innkeeper to prove the meaning he attached to "daily service." (D) Yes, because trade usage will control the interpretation of "daily service."

(A) No, because the laundry company knew the meaning the innkeeper attached to "daily service," and therefore the innkeeper's meaning will control.

A pop musician of modest fame offered to sell his first guitar, the one he played as a teenager before he became famous, to a devoted fan for $2,000. The fan paid the musician $50 to keep the offer open for 60 days. Thirty days later, the musician suddenly died. The administrator of his estate found a copy of the agreement and informed the fan that the offer was revoked. Nevertheless, after the value of the musician's paraphernalia skyrocketed due to his death, the fan contacted the administrator to proceed with the sale for $2,000 just before the 60-day period expired. At that time, the value of the guitar was estimated to be $50,000. The administrator refused to sell the guitar to the fan for $2,000, so the fan sued the estate for breach of contract. Is the court likely rule in the fan's favor? (A) Yes, because he had an option contract that survived the musician's death. (B) Yes, because an offer may be effectively revoked only by direct communication from the offeror, and the offeror is dead. (C) No, because the option terminated by operation of law on the musician's death. (D) No, because the offer was revoked by the musician's estate, which had the power to do so after the musician's death.

(A) Yes, because he had an option contract that survived the musician's death.

Green contracted in a signed writing to sell Greenacre, a 500-acre tract of farmland, to Farmer. The contract provided for exchange of the deed and purchase price of $500,000 in cash on January 15. Possession was to be given to Farmer on the same date. On January 15, Green notified Farmer that because the tenant on Greenacre wrongfully refused to quit the premises until January 30, Green would be unable to deliver possession of Greenacre until then, but he assured Farmer that he would tender the deed and possession on that date. When Green tendered the deed and possession on January 30, Farmer refused to accept either, and refused to pay the $500,000. Throughout the month of January, the market value of Greenacre was $510,000, and its fair monthly rental value was $5,000. Will Green probably succeed in an action against Farmer for specific performance? (A) Yes, because the court will excuse the delay in tender on the ground that there was a temporary impossibility caused by the tenant's holding over. (B) Yes, because time is ordinarily not of the essence in a land-sale contract. (C) No, because Green breached by failing to tender the deed and possession on January 15. (D) No, because Green's remedy at law for monetary relief is adequate. -Would Farmer be entitled to any damages because of the delay?

(B) Yes, because time is ordinarily not of the essence in a land-sale contract. -Yes, the fair rental value of Greenacre for half a month (probably $2,500).

Client consulted Lawyer about handling the sale of Client's building, and asked Lawyer what her legal fee would be. Lawyer replied that her usual charge was $100 per hour, and estimated that the legal work on behalf of Client would cost about $5,000 at that rate. Client said, "Okay, let's proceed with it," and Lawyer timely and successfully completed the work. Because of unexpected title problems, Lawyer reasonably spent 75 hours on the matter and shortly thereafter mailed Client a bill for $7,500, with a letter itemizing the work performed and time spent. Client responded by a letter expressing his good-faith belief that Lawyer had agreed to a total fee of no more than $5,000. Client enclosed a check in the amount of $5,000 payable to Lawyer and conspicuously marked, "Payment in full for legal services in connection with the sale of Client's building." Despite reading the "Payment in full..." language, Lawyer, without any notation of protest or reservation of rights, endorsed and deposited the check to her bank account. The check was duly paid by the Client's bank. A few days later, Lawyer unsuccessfully demanded payment from the Client of the $2,500 difference between the amount of her bill and the check, and now sues Client for that difference. What, if anything, can Lawyer recover from Client? (A) Nothing, because the risk of unexpected title problems in a real-property transaction is properly allocable to the seller's attorney and thus to Lawyer in this case. (B) Nothing, because the amount of Lawyer's fee was disputed in good faith by Client, and Lawyer impliedly agreed to an accord and satisfaction. (C) $2,500, because Client agreed to an hourly rate for as many hours as the work reasonably required, and the sum of $5,000 was merely an estimate. (D) The reasonable value of Lawyer's services in excess of $5,000, if any, because there was no specific agreement on the total amount of Lawyer's fee.

(B) Nothing, because the amount of Lawyer's fee was disputed in good faith by Client, and Lawyer impliedly agreed to an accord and satisfaction.

Under the terms of a written contract, Karp agreed to construct for Manor a garage for $10,000. Nothing was said in the parties' negotiations or in the contract about progress payments during the course of the work. After completing 25% of the garage strictly according to Manor's specifications, Karp demanded payment of $2,000 as a "reasonable progress payment." Manor refused, and Karp abandoned the job. If each party sues the other for breach of contract, which of the following will the court decide? (A) Both parties are in breach, and each is entitled to damages, if any, from the other. (B) Only Karp is in breach and liable for Manor's damages, if any. (C) Only Manor is in breach and liable for Karp's damages, if any. (D) Both parties took reasonable positions and neither is in breach.

(B) Only Karp is in breach and liable for Manor's damages, if any.

A company agreed to employ a businesswoman for two years as a vice president at a salary of $250,000 per year. After six months, the company, without cause, fired the businesswoman. Which of the following statements best describes the businesswoman's rights after being fired? (A) She can recover the promised salary for the remainder of the two years if she remains ready to work. (B) She can recover the promised salary for the remainder of the two years if no comparable job is reasonably available and she does not take another job. (C) She can recover the promised salary for the remainder of the two years regardless of her efforts to mitigate damages. (D) She can get specific performance of her right to serve as a vice president of the company for two years.

(B) She can recover the promised salary for the remainder of the two years if no comparable job is reasonably available and she does not take another job.

P and D enter into a written contract, the essential part of which reads as follows: "P to paint D's portrait and complete it on or before December 15. Portrait guaranteed to be fully satisfactory to D." The portrait was completed and delivered to D on December 15. Although the portrait pleased D's family and friends, D refused to accept the portrait, stating "it makes me look old and mean." In an action by P against D, which of the following would be D's best defense? (A) The portrait, objectively viewed, was not satisfactory. (B) The portrait, subjectively viewed, was not satisfactory. (C) The portrait would expose D to ridicule. (D) At least some reasonably prudent artists would reject the portrait.

(B) The portrait, subjectively viewed, was not satisfactory.

The owner of a house put an ad for its sale in the paper. Her neighbor saw the ad and told her that he wanted to buy the house but had to arrange for financing. The owner suggested that they write a contract for sale then and there so that they would not have to waste any time while he got his financing. They orally agreed that the contract would not become binding unless the neighbor obtained financing, but the written contract did not mention this and appeared to be a fully integrated document. The neighbor could not obtain financing and the owner brings suit to enforce the written contract. Who will prevail? A. The owner, because the contract was a fully integrated writing. B. The owner, because parol evidence is not allowed to contradict a writing. C. The neighbor, because the oral agreement that the contract would not be binding if the neighbor did not get financing was made contemporaneous with the writing. D. The neighbor, because obtaining financing was a condition precedent.

D. The neighbor, because obtaining financing was a condition precedent.

A daughter was appointed guardian of her elderly father following an adjudication of his mental incompetence. The father had experienced periods of dementia during which he did not fully understand what he was doing. The father later contracted to purchase an automobile at a fair price from a seller who was unaware of the guardianship. At the time of the purchase, the father was lucid and fully understood the nature and purpose of the transaction. What is the legal status of the transaction? (A) The contract is enforceable, because a reasonable person in the situation of the seller would have thought that the father had the capacity to make the contract. (B) The contract is enforceable, because it was made on fair terms and the seller had no knowledge of the father's guardianship. (C) The contract is void, because the father was under guardianship at the time it was made. (D) The contract is voidable at the option of the father.

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

B. A contract exists because Billy reasonably believed that Laura made a serious offer, which he accepted.

A buyer and a seller entered into a contract for the sale of 10,000 novelty bracelets. The seller had the bracelets in stock. The contract specified that the seller would ship the bracelets by a third-party carrier. However, the contract did not specify either who was to pay the costs of carriage or the place of tender for the bracelets. On the above facts, when would the risk of loss of the bracelets pass to the buyer? (A) When the contract was made. (B) When the bracelets were identified to the contract by the seller, assuming that the goods conformed to the contract. (C) When the bracelets were delivered to a carrier and a proper contract for their carriage was made. (D) When the bracelets were unloaded on the buyer's premises by the carrier.

Albert engaged Bertha, an inexperienced actress, to do a small role in a new Broadway play for a period of six months at a salary of $1,200 a week. Bertha turned down another role in order to accept this engagement. On the third day of the run, Bertha was hospitalized with influenza and Helen was hired to do the part. A week later, Bertha recovered, but Albert refused to accept her services for the remainder of the contract period. Bertha then brought an action against Albert for breach of contract. Which of the following is Bertha's best legal theory? (A) Her acting contract with Albert was legally severable into weekly units. (B) Her performance of the literal terms of the contract was physically impossible. (C) Her reliance on the engagement with Albert by declining another acting role created an estoppel against Albert. (D) Her failure to perform for one week was not a material failure so as to discharge Albert's duty to perform.

(D) Her failure to perform for one week was not a material failure so as to discharge Albert's duty to perform.

A burglar stole Collecta's impressionist painting valued at $400,000. Collecta, who had insured the painting for $300,000 with Artistic Insurance Co., promised to pay $25,000 to Snoop, a full-time investigator for Artistic, if he effected the return of the painting to her in good condition. By company rules, Artistic permits its investigators to accept and retain rewards from policyholders for the recovery of insured property. Snoop, by long and skillful detective work, recovered the picture and returned it undamaged to Collecta. If Collecta refuses to pay Snoop anything, and he sues her for $25,000, what is the probable result under the prevailing modern rule? (A) Collecta wins, because Snoop owed Artistic a preexisting duty to recover the picture if possible. (B) Collecta wins, because Artistic, Snoop's employer, has a preexisting duty to return the recovered paining to Collecta. (C) Snoop wins, because Collecta will benefit more from return of the $400,000 painting than from receiving the $300,000 policy proceeds. (D) Snoop wins, because the preexisting duty rule does not apply if the promisee's (Snoop's) duty was owed to a third person.

(D) Snoop wins, because the preexisting duty rule does not apply if the promisee's (Snoop's) duty was owed to a third person.

On July 18, Snowco, a shovel manufacturer, received an order for the purchase of 500 shovels from Acme, Inc., a wholesaler. Acme had mailed the purchase order on July 15. The order required shipment of the shovels no earlier than September 15 and no later than October 15. Typed conspicuously across the front of the order form was the following: "Acme, Inc. reserves the right to cancel this order at any time before September 1." Snowco's mailed response, saying, "We accept your order," was received by Acme on July 21. As of July 22, which of the following is an accurate statement as to whether a contract was formed? A. No contract was formed because of Acme's reservation of the right to cancel. B. No contract was formed because Acme's order was only a revocable offer. C. A contract was formed, but prior to September 1 it was terminable at the will of either party. D. A contract was formed, but prior to September 1 it was an option contract terminable at will of Acme.

A. No contract was formed because of Acme's reservation of the right to cancel.

The mother of a son and a daughter was dying. The daughter visited her mother in a hospice facility and said, "You know that I have always been the good child, and my brother has always been the bad child. Even so, you have left your property in the will to us fifty-fifty. But it would be really nice if you would sell me the family home for $100,000." "I don't know," said the mother. "It is worth a lot more than that—at least $250,000." "That is true," said the daughter. "But I have always been good and visited you, and my brother has never visited you, so that ought to be worth something. And besides, if you won't sell me the house for that price, maybe I won't visit you anymore, either." "Oh, I wouldn't want that," said the mother, and she signed a contract selling the house to her daughter for $100,000. Shortly thereafter, the mother died. When her son found out that the house had been sold and was not part of his mother's estate, he sued to have the contract avoided on behalf of the mother. On what ground would the contract most likely be avoided? (A) Duress. (B) Inadequate consideration. (C) Mistake. (D) Undue influence.

(D) Undue influence.

During negotiations to purchase a used car, a buyer asked a dealer whether the car had ever been in an accident. The dealer replied: "It is a fine car and has been thoroughly inspected and comes with a certificate of assured quality. Feel free to have the car inspected by your own mechanic." In actuality, the car had been in a major accident, and the dealer had repaired and repainted the car, successfully concealing evidence of the accident. The buyer declined to have the car inspected by his own mechanic, explaining that he would rely on the dealer's certificate of assured quality. At no time did the dealer disclose that the car had previously been in an accident. The parties then signed a contract of sale. After the car was delivered and paid for, the buyer learned that the car had been in a major accident. If the buyer sues the dealer to rescind the transaction, is the buyer likely to succeed? (A) No, because the buyer had the opportunity to have the car inspected by his own mechanic and declined to do so. (B) No, because the dealer did not affirmatively assert that the car had not been in an accident. (C) Yes, because the contract was unconscionable. (D) Yes, because the dealer's statement was intentionally misleading and the dealer concealed evidence of the accident.

(D) Yes, because the dealer's statement was intentionally misleading and the dealer concealed evidence of the accident.

A debtor owed a lender $2,500. The statute of limitations barred recovery on the claim. The debtor wrote to the lender, stating, "I promise to pay you $1,500 if you will extinguish the debt." The lender agreed. Is the debtor's promise to pay the lender $1,500 enforceable? (A) No, because the debtor made no promise not to plead the statute of limitations as a defense. (B) No, because there was no consideration for the debtor's promise. (C) Yes, because the debtor's promise provided a benefit to the lender. (D) Yes, because the debtor's promise to pay part of the barred antecedent debt needs no consideration to be enforceable.

(D) Yes, because the debtor's promise to pay part of the barred antecedent debt needs no consideration to be enforceable.

A company contracted with a builder to construct a new corporate headquarters for a fixed price of $100 million. At the time of the contract, structural steel was widely available and was included in the contract as a $6 million item. Before work began on the project, tornado damage shut down the production facility of the biggest structural steel supplier in the country, and the price of structural steel increased by 20% as a result. The builder informed the company of the steel price increase, and the parties then orally agreed to increase the project price to $101 million. The builder proceeded with construction and delivered the project on time. The company paid the builder $100 million but refused to pay the additional $1 million. If the builder sues the company for $1 million, is the builder likely to prevail? (A) No, because the modification was never reduced to a writing signed by the party to be charged. (B) No, because there was no consideration for the modification of the contract. (C) Yes, because the company's promise was supported by consideration. (D) Yes, because the modification was fair and equitable in view of the unanticipated increase in the price of structural steel.

(D) Yes, because the modification was fair and equitable in view of the unanticipated increase in the price of structural steel.

A contractor sends a company its bid on a construction job. The bid consists of specifications and prices, followed by a number of boilerplate provisions. The company responds by writing up the price and specifications on its own form, which it sends to the contractor. The contractor completes the project and the company inspects it after 25 days. The company finds some unfinished work and demands that the contractor finish the work. The contractor claims that he is not responsible for the unfinished work because the form he sent says that inspection must be completed within 20 days after construction, and the company did not timely inspect. However, the company's form indicates that it has 30 days after completion to inspect. Who is responsible for the unfinished work? A. The owner, because the contractor's form governs. B. The contractor, because the company's form governs. C. Neither, because there is no agreement on this term. D. Both terms are knocked out and the party who would be responsible is supplied by trade usage or by a court.

B. The contractor, because the company's form governs.

A buyer purchases some equipment that costs $20,000. As part of the same contract, the seller, a parts retailer, agrees to install this equipment for an additional $2,000. After the buyer begins using the equipment, problems develop. Some of the problems relate to how the equipment was installed, while others relate to the equipment itself. Which of the following is probably true in most states? A. The sales portion of the contract is covered by the UCC, but the installation services are covered under common law. B. The entire contract is covered under the UCC. C. The entire contract is covered under common law. D. The entire contract is covered under either the UCC or the entire contract is covered under common law; which one covers it depends on whether more of the problems relate to the equipment itself or to the installation.

B. The entire contract is covered under the UCC.

Sally agreed to sell Blackacre to Betty for $200,000. The parties executed a standard real estate sales contract that contained the following clause: Financial Contingency-Loan(s) To Be Obtained. This Agreement is conditioned upon Buyer's ability to obtain a loan in the principal amount of 95% of the Purchase Price listed above to be secured by a mortgage on the Property. In the event Buyer, having acted in good faith, is unable to obtain such financing, Buyer may terminate this Agreement by providing written notice and a copy of Lender's loan denial letter within 15 days of the date of this Agreement. Upon termination, Buyer is entitled to a refund of the down payment. Betty used her best efforts to obtain a 95% loan but the most any lender would loan Betty was 90% of the purchase price. Betty timely sends the proper written notification to Sally and demands return of her down payment. Sally refuses to return the money and sues Betty for breach of contract. 1. Who will prevail? 2. What was Betty's consideration? 3. Would your answer to No. 1 change if Betty made no attempt to secure a loan? 4. Assume Betty wishes to proceed with the closing using the 90% loan, but Sally refuses to perform. If Betty sues Sally, who will prevail?

1. Betty because the 95% loan was a condition precedent to Betty's performance; strictly construed, 90% is not 95%. 2. Betty was required to use her best efforts to obtain a 95% loan. 3. Yes, Betty would be in breach of her obligation to use her best efforts to obtain a 95% loan, making Betty's obligation to purchase Blackacre unconditional. 4. Betty. The financing condition was designed to protect Betty, not Sally. Thus, Betty has the power to waive the condition.

On April 1, Owner offered to sell Greenacre to Buyer for $100,000. Buyer told Owner he would like some time to consider the offer, so Owner said, "I promise to hold the offer open for 30 days." On April 20, Owner, having received no communication from Buyer, sold and conveyed Greenacre to Citizen for $120,000. On April 22, Owner received a letter from Buyer stating, "I hereby accept your offer to sell Greenacre for $100,000." Buyer did not learn of the sale to Citizen until April 25. 1. Was Owner's offer irrevocable? 2. Did Owner revoke the offer to Buyer before it was accepted by Buyer? 3. Is there a contract between Owner and Buyer?

1. No, Owner could have revoked the offer at any time. 2. No, although the offer was revocable, a revocation must be communicated to the offeree to become effective. 3. Yes. Buyer would be entitled to monetary damages.

1. A finds B's escaped bull and feeds and cares for it. B subsequently agrees to reimburse A for all of A's expenses. Is B's promise enforceable in most jurisdictions? 2. Would B's promise be enforceable under the Material Benefit Rule?

1. No, because A's services are "past consideration." 2. B's subsequent promise to pay A's expenses is probably binding under Restatement (Second) of Contracts § 86.

1. Fruitko ordered from Orchard 500 bushels of No. 1 Royal Fuzz peaches at a specified price "for prompt shipment." Orchard promptly shipped No. 2 Royal Fuzz peaches instead of No. 1. The error in shipment was caused by the negligence of Orchard's shipping clerk. Do the parties have a contract and, if so, is Orchard in breach? 2. Would your answer change if Orchard's shipping clerk included a letter with the shipment of the peaches which stated: "We are out of No. 1 Royal Fuzz peaches, so we're shipping No. 2 peaches, which we hope will fill your needs. Please let us know."

1. There is a contract and Orchard is in breach. 2. There is no contract and thus no breach. The shipment is an accommodation and functions as a counteroffer.

On June 1, Buyem, Inc., a widget manufacturer, entered into a written agreement with Mako, Inc., a tool maker, in which Mako agreed to produce and sell to Buyem 12 sets of newly designed dies to be delivered August 1 for the price of $50,000, payable ten days after delivery. Encountering unexpected expenses in the purchase of special alloy steel required for the dies, Mako advised Buyem that production costs would exceed the contract price; and on July 1 Buyem and Mako signed a modification to the June 1 agreement increasing the contract price to $60,000. After timely receipt of 12 sets of dies conforming to the contract specifications, Buyem paid Mako $50,000 but refused to pay more. 1. What law governs this transaction? 2. Which of the following concepts are at issue in this problem? Mutual Assent Promissory Estoppel Unilateral Mistake Statute of Frauds Parol Evidence Rule Unconscionability Preexisting Duty Rule 3. Is Mako entitled to $10,000 for breach of Buyem's July 1 promise?

1. UCC 2. Preexisting Duty Rule 3. Yes, because a contract for the sale of goods may be modified without consideration as long as the parties acted in good faith.

A customer orders a tailor-made suit from a particular tailor. The tailor informs the customer that he would like the customer to make payment to the doctor next door, to whom the tailor owes a substantial sum of money. The customer fails to pay. Does the doctor have a claim against the customer? A) Yes, because there was an effective assignment to the doctor. B) Yes, because the duty to pay was effectively delegated to the doctor. C) No, because the assignment materially changed the duty of the customer. D) No, because the assignment is for a personal purpose rather than a business purpose.

A) Yes, because there was an effective assignment to the doctor.

Sally and Bill have done business together for 10 years. In six of the last 10 Aprils, Sally has entered into contracts to sell jersey red tomatoes to Bill for delivery in July. The quantity of the tomatoes in those six contracts ranged from 500 pounds to 2,000 pounds. In four of the last ten years, Bill bought no tomatoes from Sally. On April 1, 2014, Sally agreed, in a writing signed by Sally and Bill, to sell Bill "jersey red tomatoes for $.50/pound with delivery no later than July 15, 2014." On April 1, 2014, the market price of jersey red tomatoes was actually $.75/pound. Sally failed to deliver and on July 15, 2014, the market price for jersey red tomatoes was $1/pound. In a breach of contract action, how much is Bill likely to recover? A. $0 B. $1,000 C. $2,000 D. $4,000

A. $0

The owner of a mint-condition classic automobile wrote a letter to his trusted car mechanic offering to sell him the auto for $45,000, if he bought it before April 15. The mechanic researched the current market value of the car online and discovered that comparable vehicles were being sold for $48,000. On April 1, he was just leaving his home to drive to the car owner's house to give him a check for $45,000 when he received a fax from the owner stating that he had changed his mind and the auto was no longer for sale. The mechanic drove to the auto owner's house anyway, where the auto was parked out front with a "for sale" sign in its window. The mechanic knocked on the owner's door and, when he answered, tendered the $45,000 certified check and demanded the auto. The car owner refused. The mechanic brings an action for damages for breach of contract against the car owner. He will recover: A. Nothing, because the offer to sell the auto was withdrawn before he accepted. B. $45,000, because the auto owner has failed to perform under the contract of sale. C. $3,000, because his tender of the purchase price was an acceptance of the auto owner's offer. D. $3,000, because the auto owner's letter created an enforceable option.

A. Nothing, because the offer to sell the auto was withdrawn before he accepted.

Ven owned Goldacre, a tract of land, in fee simple. Ven and Pur entered into a written agreement under which Pur agreed to buy Goldacre for $100,000, its fair market value. The agreement contained all the essential terms of a real estate contract to sell and buy, including a date for closing. The required $50,000 down payment was made. The contract provided that in the event of Pur's breach, Ven could retain the $50,000 deposit as liquidated damages. Before the date set for the closing on the contract, Pur died. On the day that Addy was duly qualified as administrator of the estate of Pur, which was after the closing date, Addy made demand for return of the $50,000 deposit. Ven responded by stating that he took such demand to be a declaration that Addy did not intend to complete the contract and that Ven considered the contract at an end. Ven further asserted that Ven was entitled to retain, as liquidated damages, the $50,000. The reasonable market value of Goldacre had increased to $110,000 at that time. Addy brought an appropriate action against Ven to recover the $50,000. In answer, Ven made no affirmative claim but asserted that he was entitled to retain the $50,000 as liquidated damages as provided in the contract. In such lawsuit, judgment should be for A. Addy, because the provision relied upon by Ven is unenforceable. B. Addy, because the death of Pur terminated the contract as a matter of law. C. Ven, because the court should enforce the express agreement of the contracting parties. D. Ven, because the doctrine of equitable conversion prevents termination of the contract upon the death of a party.

A. Addy, because the provision relied upon by Ven is unenforceable.

Seisin and Vendee, standing on Greenacre, orally agreed to its sale and purchase for $5,000, and orally marked its bounds as "that line of trees down there, the ditch that intersects them, the fence on the other side, and that street on the fourth side." In which of the following is the remedy of reformation most appropriate? A. As later reduced to writing, the agreement by clerical mistake included two acres that are actually beyond the fence. B. Vendee reasonably thought that two acres beyond the fence were included in the oral agreement but Seisin did not. As later reduced to writing, the agreement included the two acres. C. Vendee reasonably thought that the price orally agreed upon was $4,500, but Seisin did not. As later reduced to writing, the agreement said $5,000. D. Vendee reasonably thought that a dilapidated shed backed up against the fence was to be torn down and removed as part of the agreement, but Seisin did not. As later reduced to writing, the agreement said nothing about the shed.

A. As later reduced to writing, the agreement by clerical mistake included two acres that are actually beyond the fence.

Chad owned a house and lot that he orally agreed to sell to Lynn for $230,000. Lynn paid Chad a deposit of $25,000. After several weeks of unsuccessfully trying to find a lender who would loan her the balance of the money to buy the house, Lynn finally called Chad and said: "The deal is off. Send my deposit back." Chad refused to do so. Based upon the foregoing, if Lynn sued Chad to recover her $25,000 deposit, the most likely result will be that A. Chad must repay the $25,000. B. Lynn will not be able to compel Chad to return the $25,000 since there was an enforceable agreement. C. Lynn will not be able to compel the return of the $25,000 since the agreement is enforceable because of part performance (i.e., her down payment to Chad). D. Lynn cannot compel the return of the $25,000, but can recover her actual damages.

A. Chad must repay the $25,000.

In March, a homeowner contracted with a buyer to sell his house for $280,000, with the purchase price to be paid and the deed to be delivered on July 1. On May 1, the buyer wrote the homeowner a letter, stating that she has had second thoughts about buying the house, and she "won't pay the amount of money unless you repaint the house and fix up the yard." If the homeowner wishes to treat the contract as breached: A. He may sue the buyer upon receipt of the letter. B. He must wait until July 1 to sue the buyer, the date on which the purchase price is to be paid. C. He must make a written demand to the buyer seeking adequate assurance of performance and wait a reasonable time for a response prior to filing suit. D. He cannot sue the buyer because the parties' promises are executory at this stage.

A. He may sue the buyer upon receipt of the letter.

Bob loans Sally $1,000 that is due on June 1. On that day, Sally has no cash but she promises to transfer her car to Bob in satisfaction of the loan. Bob agrees to accept the car in satisfaction. A. What is the legal effect of such an agreement? B. If Sally timely transfers her car to Bob, what is the legal effect of such transfer? C. If Sally fails to transfer her car to Bob, what are Bob's options?

A. It is an "accord," which suspends Sally's duty to pay the $1,000. B. It is a "satisfaction," which excuses Sally's duty to pay the $1,000. C. Bob may sue Sally for breach of the original agreement (i.e., the $1,000) or for breach of the accord (i.e., the car). Of course, Bob may recover only one satisfaction (i.e., either the $1,000 or the car).

On April 10, the owner of a small farm mailed a letter to a new resident of the area who had expressed an interest in buying the farm. In his letter, the farm owner offered to sell the farm to the resident for $100,000. The offer expressly stated that the offer expires on June 1, "if acceptance by the offeree has not been received by the offeror on or before that date." On the morning of June 1, the resident sent a written acceptance to the farm owner by messenger. However, through negligence of the messenger company, the acceptance was not delivered to the farm owner until June 2. On June 4, the owner entered into a contract to sell the farm to another buyer for more money but did not inform the resident of the transaction. When the resident followed up by phone on June 10, the farm owner told him that he had sold the farm to another buyer. Which of the following is the most correct statement? A. No contract between the farm owner and the resident arose on June 2. B. An enforceable contract arose on June 1. C. The farm owner's silence constituted an acceptance of the resident's message on June 2. D. A voidable contract arose on June 1. -Which answer would be correct if the italicized sentence simply provided, "The offer expires on June 1"?

A. No contract between the farm owner and the resident arose on June 2. -(B)—because the mailbox rule would apply

A consumer buys a candy bar (Almond Joy) from a grocery store, bites into it, and breaks a tooth on a piece of metal imbedded in the candy bar. Does the consumer have a claim for breach of warranty against the store? A. Yes, because a candy bar that breaks a tooth is probably not merchantable. B. No, because the consumer assumed the risk of such injury. C. No, because if anyone is to blame, it is the manufacturer and not the seller. D. No, because no promises were made about the candy bar.

A. Yes, because a candy bar that breaks a tooth is probably not merchantable.

On July 26, a manufacturer of computer accessories received a purchase order form from a retailer who ordered 2,000 ergonomic mouse pads for delivery no later than September 1 for a total price of $10,000, as quoted in the manufacturer's current catalog. Two days later, the manufacturer faxed its own purchase order acceptance form to the retailer, who was a first-time customer. This form stated that it was an acceptance of the specified order, was signed by the manufacturer's shipping manager, and contained all of the terms of the retailer's form, but it also contained an additional printed clause stating that all disagreements under this sale are subject to arbitration by the American Arbitration Association. Assuming no further communication between the parties, which of the following is an accurate statement of the legal relationship between the manufacturer and the retailer? A. There is an enforceable contract between the parties whose terms probably do not include the arbitration clause in the manufacturer's form. B. There is an enforceable contract between the parties whose terms include the arbitration clause in the manufacturer's form. C. There is no enforceable contract between the parties because the manufacturer's form constituted a rejection of the retailer's offer and a counteroffer by the manufacturer. D. There is no enforceable contract between the parties because the manufacturer's form added an additional term that materially altered the terms of the retailer's offer.

A. There is an enforceable contract between the parties whose terms probably do not include the arbitration clause in the manufacturer's form.

On June 1, 2018, Parent and his adult daughter, Child, encountered T, an old family friend, on the street. Child said to T, "How about lending me $1,000 to buy a used car? I'll pay you back with interest one year from today." Parent added, "And if she doesn't pay it back as promised, I will." T thereupon wrote out and handed to Child his personal check, payable to her, for $1,000, and Child subsequently used the funds to buy a used car. When the debt became due, both Child and Parent refused to repay it. In an action by T against Parent, which of the following defenses would be most successful for Parent? A. Parent received no consideration for his conditional promise to T. B. His oral promise to T was not capable of performance within one year from the date it was made; thus, it is unenforceable under the Statute of Frauds. C. His conditional promise to T was an oral suretyship contract that is unenforceable under the Statute of Frauds. D. Could Parent use the Statute of Frauds as a defense if the actual purpose of the loan was to buy a car for Parent (instead of Child)?

A. Wrong. In exchange for Parent's promise, T made the loan to Child which T was not otherwise obligated to do. B. Wrong. The loan was made on June 1, 2018 and was due "one year from today." One year from June 1, 2018 would be June 1, 2019, which is exactly one year from the date of the agreement. C. Correct. Parent's oral promise to pay the loan if Child failed to pay it is a suretyship contract that is subject to (and unenforceable under) the SOF. D. No. If the primary purpose of Parent's promise was to benefit Parent, Parent's oral promise would be enforceable.

A. Yes, because Buyer's promise to buy, bargained for and made in exchange for Shareholder's promise to sell, was good consideration even though it was expressly conditioned on an event that was not certain to occur.

Rob, an auto retailer, had an adult daughter, Betsy, who needed a car in her employment but had only $3,000 with which to buy one. Rob wrote to her, "Give me $3,000 and I'll give you the car on the lot that we have been using as a demonstrator." Betsy thanked her father and paid him the $3,000. As both Rob and Betsy knew, the demonstrator was reasonably worth $10,000. After Betsy had paid the $3,000, but before the car had been delivered to her, one of Rob's sales staff sold and delivered the same car to a customer for $10,000. Neither the salesperson nor the customer was aware of the transaction between Rob and Betsy. Does Betsy have an action for breach of contract? A. Yes, because Rob's promise was supported by bargained-for consideration. B. Yes, because Rob's promise was supported by the moral obligation a father owes his child as to the necessities of life. C. No, because the payment of $3,000 was inadequate consideration to support Rob's promise. D. No, because the salesperson's delivery of the car to the customer revoked Rob's offer.

A. Yes, because Rob's promise was supported by bargained-for consideration.

A. Yes, because Stationer had not revoked its offer before April 15.

On March 1, Mechanic contracted to repair Textiles' knitting machine and to complete the job by March 6. On March 2, Textiles contracted to manufacture and deliver specified cloth to Knitwear on March 15. Textiles knew that it would have to use the machine then under repair to perform this contract. Because the Knitwear order was for a rush job, Knitwear and Textiles included in their contract a liquidated damages clause, providing that Textiles would pay $5,000 for each day's delay in delivery after March 15. Mechanic was inexcusably five days late in repairing the machine, and, as a result, Textiles was five days late in delivering the cloth to Knitwear. Textiles paid $25,000 to Knitwear as liquidated damages and now sues Mechanic for $25,000. Both Mechanic and Textiles knew when making their contract on March 1 that under ordinary circumstances Textiles would sustain little or no damages of any kind as a result of a five-day delay in the machine repair. Assuming that the $5,000 liquidated damages clause in the Knitwear-Textiles contract is valid, which of the following arguments will serve as Mechanic's best defense to Textiles' action? A. Time was not of the essence in the Mechanic-Textiles contract. B. Mechanic had no reason to foresee on March 1 that Knitwear would suffer consequential damages in the amount of $25,000. C. By entering into the Knitwear contract while knowing that its knitting machine was being repaired, Textiles assumed the risk of any delay loss to Knitwear. D. In all probability, the liquidated damages paid by Textiles to Knitwear are not the same amount as the actual damages sustained by Knitwear in consequence of Textiles' late delivery of the cloth.

B. Mechanic had no reason to foresee on March 1 that Knitwear would suffer consequential damages in the amount of $25,000.

On Dec. 15, Lawyer received from Stationer, Inc., a retailer of office supplies, an offer consisting of its catalog and a signed letter stating, "We will supply you with as many of the items in the enclosed catalog as you order during the next calendar year. We assure you that this offer and the prices in the catalog will remain firm throughout the coming year." No other correspondence passed between Stationer and Lawyer until the following April 15 (4 months later), when Stationer received from Lawyer a faxed order for "100 reams of your paper, catalog item # 101." Did Lawyer's April 15 fax constitute an effective acceptance of Stationer's offer at the prices specified in the catalog? Same facts as the prior slide, but for this question only assume that on January 15, having at that time received no reply from Lawyer, Stationer notified Lawyer that effective February 1, it was increasing the prices of certain specified items in its catalog. Is the price increase effective with respect to catalog orders Stationer receives from Lawyer during the month of February? A. No, because Stationer's original offer, including the price term, became irrevocable under the doctrine of promissory estoppel. B. No, because Stationer is a merchant with respect to office supplies; and its original offer, including the price term, was irrevocable throughout the month of February. C. Yes, because Stationer received no consideration to support its assurance that it would not increase prices. D. Yes, because the period for which Stationer gave assurance that it would not raise prices was longer than three months.

B. No, because Stationer is a merchant with respect to office supplies; and its original offer, including the price term, was irrevocable throughout the month of February.

A buyer of goods (Retailer) sends a purchase order to a seller (Manufacturer) on its form. The seller responds with an acknowledgment form that has additional and different terms. In addition, the seller's form states, "Acceptance is expressly made conditional on assent to the additional or different terms in this acknowledgment." When it receives the form, the buyer refuses to go through with the deal. Is the buyer in breach? A. No, because under the common law there was a counteroffer that was not accepted. B. No, because the UCC says there was no acceptance and therefore no contract. C. Yes, because the UCC says there is an acceptance and therefore a contract. D. Yes, because there was acceptance by conduct.

B. No, because the UCC says there was no acceptance and therefore no contract.

Tenant rented a commercial building from Landlord, and operated a business in it. The building's large front window was smashed by vandals six months before expiration of the Tenant-Landlord lease. Tenant, who was obligated thereunder to effect and pay for repairs in such cases, promptly contracted with Glazier to replace the window for $2,000, due 30 days after satisfactory completion of the work. Sixty days later, Tenant mailed a $1,000 check to Glazier bearing on its face the following conspicuous notation: "This check is in full and final satisfaction of your $2,000 window replacement bill." Without noticing this notation, Glazier cashed the check and now sues Tenant for the $1,000 difference. If Tenant's only defense is accord and satisfaction, is Tenant likely to prevail? A. No, because Glazier failed to notice Tenant's notation on the check. B. No, because the amount owed by Tenant to Glazier was liquidated and undisputed. C. Yes, because by cashing the check Glazier impliedly agreed to accept the $1,000 as full payment of its claim. D. Yes, because Glazier failed to write a reservation-of-rights notation on the check before cashing it.

B. No, because the amount owed by Tenant to Glazier was liquidated and undisputed.

A distributor of electric toy trains and a hobby shop owner entered into a written contract providing that the distributor will tender to the shop owner four dozen of a popular electric train set at a price of $100 apiece, to be delivered no later than October 31, to take advantage of the holiday shopping season. The shop owner chose to order from this distributor because its price for the train set was lower than that of other distributors. Shortly after the shop owner placed his order, the distributor raised its prices due to a sudden surge in popularity of that train set. Because the distributor did not have enough train sets to accommodate everyone due to the surge of orders, it decided to deliver train sets only to those buyers who had ordered them at the increased price. The distributor notified the shop owner that it would not deliver the train sets it ordered. The shop owner filed an action to force the distributor to deliver the train sets at the agreed-upon price. Will the court compel the distributor to deliver the train sets to the shop owner? A. No, because a contract for the sale of goods is not subject to specific performance. B. No, because the shop owner can buy them from another distributor. C. Yes, because the shop owner will not be able to buy them from another source at the contract price. D. Yes, because time is of the essence.

B. No, because the shop owner can buy them from another distributor.

Abel owned Blackacre in fee simple. Three years ago, Abel and Betty agreed to a month-to-month tenancy with Betty paying Abel rent each month. After six months of Betty's occupancy, Abel suggested to Betty that she could buy Blackacre for a monthly payment of no more than her rent. Abel and Betty orally agreed that Betty would pay $25,000 in cash, the annual real estate taxes, the annual fire insurance premiums, and the costs of maintaining Blackacre, plus the monthly mortgage payments that Abel owed on Blackacre. They further orally agreed that within six years Betty could pay whatever mortgage balances were then due and Abel would give her a warranty deed to the property. Betty's average monthly payments did turn out to be about the same as her monthly rent. Betty fully complied with all of the obligations she had undertaken. She made some structural modifications to Blackacre. Blackacre is now worth 50% more than it was when Abel and Betty made their oral agreement. Betty made her financing arrangements and was ready to complete the purchase of Blackacre, but Abel refused to close. Betty brought an appropriate action for specific performance against Abel to enforce the agreement. The court should rule for A. Abel, because the agreements were oral and violated the statute of frauds. B. Abel, subject to the return of the $25,000, because the arrangement was still a tenancy. C. Betty, because the doctrine of part performance applies. D. Betty, because the statute of frauds does not apply to oral purchases and sale agreements between landlords and tenants in possession.

C. Betty, because the doctrine of part performance applies.

A licensed doctor saw an unconscious pedestrian bleeding and lying on the shoulder of a highway. Two years earlier, she had witnessed a similar scene and failed to stop. The earlier pedestrian wound up dying, and the doctor promised that victim's wife that if she ever came upon a similar victim, she would stop to help. True to her word, the doctor stopped her car, dashed to the pedestrian's side, and frantically (yet competently) rendered emergency medical care. The pedestrian was stabilized because of the doctor's quick actions and survived. He eventually made a full recovery. The best argument for the doctor recovering the reasonable cost of her medical care from the pedestrian is: A. Express contract. B. Implied-in-fact contract. C. Implied-in-law contract. D. Promissory estoppel.

C. Implied-in-law contract.

Kontractor agreed to build a power plant for a public utility. Subbo agreed with Kontractor to lay the foundation for $200,000. Subbo supplied goods and services worth $150,000, for which Kontractor made progress payments aggregating $100,000 as required by the subcontract. Subbo then breached by refusing unjustifiably to perform further. Kontractor reasonably spent $120,000 to have the work completed by another subcontractor. Subbo sues Kontractor for the reasonable value of benefits conferred, and Kontractor counterclaims for breach of contract. Which of the following should be the court's decision? A. Subbo recovers $50,000, the benefit conferred on Kontractor for which Subbo has not been paid. B. Subbo recovers $30,000, the benefit Subbo conferred on Kontractor minus the $20,000 in damages incurred by Kontractor. C. Kontractor recovers $20,000, the excess over the contract price that was paid by Kontractor for the performance it had bargained to receive from Subbo. D. Neither party recovers anything, because Subbo committed a material, unexcused breach and Kontractor received a $50,000 benefit from Subbo for which Subbo has not been paid. -If Kontractor reasonably spent only $75,000 to have the work completed by another subcontractor, how much could Subbo recover as restitution?

C. Kontractor recovers $20,000, the excess over the contract price that was paid by Kontractor for the performance it had bargained to receive from Subbo. -$25,000 (because Kontractor was enriched in the amount of $125,000 for Subbo's work but paid Subbo only $100,000)

Jenny, a general contractor, advertised in a trade publication that she planned to bid on the construction of a new building to be located in the Civic Mall. The advertisement welcomed bids from subcontractors to perform various functions, such as plumbing, electrical work, and masonry. The lowest plumbing bid was from Plunger, who bid $10,000. Jenny used Plunger's bid in preparing her general bid. At 2 p.m. on June 22, Jenny submitted her general bid. At 3 p.m. Plunger called her and said, "I'm sorry, Jenny, but I made a mistake on that bid I submitted to you; I can't possibly do that plumbing work for a dime less than $12,000." Jenny told him, "Look, you've done a lot of good work for me in the past and we all make mistakes. I'll just forget you ever made that $10,000 bid." Plunger effusively thanked Jenny. Jenny then hired Flusher to do the plumbing work for $12,000. She then sued Plunger for damages. Jenny will: A. Win, because there was no additional consideration to support a release. B. Win, because the Statute of Frauds applies to the agreement. C. Lose, because a mutual rescission has taken place. D. Lose, because Plunger detrimentally relied on the release. -Could Plunger have legally revoked his offer at 3 p.m. on June 22?

C. Lose, because a mutual rescission has taken place. -No. If a general contractor (Jenny) relies on the bid of a subcontractor (Plunger) in preparing the general contractor's bid, the subcontractor's bid is irrevocable until the owner/architect awards the contract to a general contractor.

Debtor's $1,000 contractual obligation to Aunt was due on July 1. On the preceding June 15, Aunt called Niece and said, "As my birthday gift to you, you may collect on July 1 the $1,000 Debtor owes to me." Aunt also called Debtor and told him to pay the $1,000 to Niece on July 1. On July 1, Debtor, saying that he did not like Niece and would not pay anything to her, paid the $1,000 to Aunt, who accepted it without objection. Will Niece succeed in an action for $1,000 against Debtor? A. Yes, because Aunt had effectively assigned the $1,000 debt to her. B. Yes, because Aunt's calls to Niece and Debtor effected a novation. C. No, because Aunt's acceptance of the $1,000, without objection, was in effect the revocation of a gratuitous assignment. D. No, because Debtor cannot be compelled to render performance to an assignee whom he finds personally objectionable.

C. No, because Aunt's acceptance of the $1,000, without objection, was in effect the revocation of a gratuitous assignment.

On March 1, the purchasing agent for a suburban school district faxed a "quotation request form" to a supplier of school furniture requesting an offer for the sale of 20 student chairs. The form was on school district letterhead and signed by the purchasing agent. It specified that the offer must be held open for four months and that the price term must be no higher than $30 per chair. The supplier telephoned the purchasing agent and told him that he would sell the school district 20 chairs at $20 per chair. He also agreed to hold the offer open for four months. The purchasing agent thanked the supplier for the offer and indicated that he would get back to him within that time period. On May 1, before the purchasing agent had responded to the supplier's offer or taken any action in reliance on it, the supplier faxed a letter to the purchasing agent stating that demand for student chairs had been higher than expected and that the offer was terminated. On May 2, the purchasing agent called the supplier, told him that the school district was treating his offer as still being open, and accepted it on its terms. Did the purchasing agent's call on May 2 create a legally enforceable contract with the supplier? A. Yes, because the contract is for the sale of goods valued at less than $500. B. Yes, because the school district accepted the offer within three months. C. No, because the supplier did not sign a writing specifying the length of time that the offer would be held open. D. No, because a firm offer under the U.C.C. is not effective if its term is more than three months.

C. No, because the supplier did not sign a writing specifying the length of time that the offer would be held open.

Breeder bought a two-month-old registered boar at auction from Pigstyle for $800. No express warranty was made. Fifteen months later, tests by experts proved conclusively that the boar had been born incurably sterile. If this had been known at the time of the sale, the boar would have been worth no more than $100. In an action by Breeder against Pigstyle to avoid the contract and recover the price paid, the parties stipulate that, as both were and had been aware, the minimum age at which the fertility of a boar can be determined is about 12 months. Which of the following will the court probably decide? A. Breeder wins, because the parties were mutually mistaken as to the boar's fertility when they made the agreement. B. Breeder wins, because Pigstyle impliedly warranted that the boar was fit for breeding. C. Pigstyle wins, because Breeder assumed the risk of the boar's sterility. D. Pigstyle wins, because any mistake involved was unilateral, not mutual.

C. Pigstyle wins, because Breeder assumed the risk of the boar's sterility.

T, the manager of a state fair, contracted with S, a renowned hog breeder, to exhibit S's world champion animal, Megahawg, for three weeks of the annual fair, at the conclusion of which S would receive an honorarium of $300. Two days before the opening of the fair, Megahawg took sick with boarsitus, a communicable disease among swine and, under applicable state quarantine laws, could not be exhibited for at least a month. Upon learning this, T can legally pursue which of the following courses of action with respect to his contract with S? A. Suspend his own performance, demand assurances from S, and treat a failure by S to give them as an actionable repudiation. B. Suspend his own performance and recover damages from S for breach of contract unless S at once supplies an undiseased hog as a substitute for Megahawg. C. Terminate his own performance and treat Megahawg's illness as discharging all remaining duties under the contract. D. Terminate the contract, but only if he (T) seeks promptly to obtain for the exhibit a suitable substitute for Megahawg from another hog owner.

C. Terminate his own performance and treat Megahawg's illness as discharging all remaining duties under the contract.

The owner of a summer house entered into a written agreement with a plumber. The contract contained a clause requiring all plumbing work to be completed by noon on June 1 and provided that the homeowner would pay the plumber $1,200 for his work. The plumber began working on the job on May 28. When he quit working for the day on the afternoon of May 29, half of the job was completed. Later that evening, the house was swept away in a flash flood. Which of the following best describes the obligations of the plumber and the homeowner after the flood? A. Neither the plumber nor the homeowner is discharged from their obligations under the contract. B. The homeowner is obliged to pay the plumber $1,200. C. The plumber is discharged from his obligation but is entitled to recover from the homeowner the fair value of the work he performed prior to the flood. D. Neither the plumber nor the homeowner has any further obligations.

C. The plumber is discharged from his obligation but is entitled to recover from the homeowner the fair value of the work he performed prior to the flood.

In a single writing, Painter contracted with Farmer to paint three identical barns on her rural estate for $2,000 each. The contract expressly provided for Farmer's payment of $6,000 upon Painter's completion of the work on all three barns. Painter did not ask for any payment when the first barn was completely painted, but she demanded $4,000 after painting the second barn. Assume that Farmer rightfully refused Painter's demand for payment. If Painter immediately terminates the contract without painting the third barn, what is Painter entitled to recover from Farmer? A. Nothing, because payment was expressly conditioned on completion of all three barns. B. Painter's expenditures plus anticipated "profit" in painting the first two barns, up to a maximum recovery of $4,000. C. The reasonable value of Painter's services in painting the two barns, less Farmer's damages, if any, for Painter's failure to paint the third barn. D. The amount that the combined value of the two painted barns has been increased by Painter's work.

C. The reasonable value of Painter's services in painting the two barns, less Farmer's damages, if any, for Painter's failure to paint the third barn. Which answer would be correct if the italicized sentence was omitted from the contract? (B)

A successful stockbroker and his best friend, a land developer, were pleased that their only children were about to marry each other. The stockbroker and the developer wanted to get the marriage off to a good start. Thus, on July 1, the two agreed in writing that, on July 15, the stockbroker would deliver to the land developer a check for one-half of the market value of a two-bedroom condominium owned by the developer, and the developer would simultaneously deed the condominium to the bride and groom. On July 10, the newlyweds learned of the agreement but neither assented to it nor changed their position in reliance on it. On July 12, the stockbroker and the developer mutually agreed to cancel their agreement. If the newlyweds were to sue the developer and the stockbroker for breach of contract: A. The newlyweds would prevail because their rights as intended beneficiaries vested when the contract was made on July 1 and a later revision was ineffective in affecting their rights. B. The newlyweds would prevail because they received notice of the contract on July 10, and the rescission thereafter was ineffective. C. The stockbroker and developer would prevail because they had the right to mutually rescind their agreement. D. The stockbroker and developer would prevail because the newlyweds were incidental beneficiaries and had no right to enforce the contract.

C. The stockbroker and developer would prevail because they had the right to mutually rescind their agreement.

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

C. Unconscionability.

For an agreed price of $20 million, Bildko, Inc., contracted with Venture to design and build on Venture's commercial plot a 15-story office building. In excavating for the foundation and underground utilities, Bildko encountered a massive layer of granite at a depth of 15 feet. By reasonable safety criteria, the building's foundation required a minimum excavation of 25 feet. When the contract was made, neither Venture nor Bildko was aware of the subsurface granite, for the presence of which neither party had hired a qualified expert to test. Claiming accurately that removal of enough granite to permit the construction as planned would cost him an additional $3 million and a probable net loss on the contract of $2 million, Bildko refused to proceed with the work unless Venture would promise to pay an additional $2.5 million for the completed building. If Venture refuses and sues Bildko for breach of contract, which of the following will the court probably decide? A. Bildko is excused under the modern doctrine of supervening impossibility, which includes severe impracticability. B. Bildko is excused, because the contract is voidable on account of the parties' mutual mistake concerning an essential underlying fact. C. Venture prevails, because Bildko assumed the risk of encountering subsurface granite that was unknown to Venture. D. Venture prevails, unless subsurface granite was previously unknown anywhere in the vicinity of Venture's construction site.

C. Venture prevails, because Bildko assumed the risk of encountering subsurface granite that was unknown to Venture.

In early July, the owner of a toy store entered into a contract with a craftsman for the purchase of 25 hand-carved wooden rocking horses for the holiday sales season. The agreement failed to state a delivery date for the horses. After several months went by without any word from the craftsman, the owner forgot about the agreement. On October 15, the owner ordered a quantity of mass-produced resin-based rocking horses to sell in his store for the upcoming holiday season. One week later, the craftsman arrived at the toy store with a truck carrying the horses and demanded payment, but the toy store owner refused, stating that he already had more than enough rocking horses to sell. The craftsman sued the owner for breach of contract. May the craftsman enforce the contract? A. No, because the contract was missing an essential term, the delivery date, at the time of formation. B. No, because so much time had passed without word from the craftsman that the toy store owner had reasonable grounds for insecurity and was entitled to cancel the contract and mitigate his damages. C. Yes, because the delivery date was reasonable given the nature of the goods. D. Yes, because the craftsman accepted the contract by completing the hand-carved horses.

C. Yes, because the delivery date was reasonable given the nature of the goods.

Best Music, Inc. offers to buy from Sound Products Corporation (SPC) 100,000 blank Sony CDs. Without notifying Best, SPC timely ships 100,000 RCA CDs. This shipment is: A. an acceptance of Best's offer. B. a breach of the parties' contract. C. both (a) and (b). D. a counteroffer.

C. both (a) and (b).

On June 1, Seller and Buyer contracted in writing for the sale and purchase of Seller's cattle ranch, and to close the transaction on December 1. For this question only, assume the following facts. On October 1, Buyer told Seller, "I'm increasingly unhappy about our June 1 contract because of the current cattle market, and do not intend to buy your ranch unless I'm legally obligated to do so." Same facts as the prior slide, but for this question only, assume the following facts. Buyer unequivocally repudiated the contract on August 1. On August 15, Seller urged Buyer to change her mind and proceed with the scheduled closing on December 1. On October 1, having heard nothing further from Buyer, Seller sold and conveyed his ranch to Rancher without notice to Buyer. On December 1, Buyer attempted to close under the June 1 contract by tendering the full purchase price to Seller. Seller rejected the tender. If Buyer sues Seller for breach of contract, Buyer will probably A. win, because Seller failed seasonably to notify Buyer of any pending sale to Rancher. B. win, because Seller waived Buyer's August 1 repudiation by urging her to retract it on August 15. C. lose, because Buyer did not retract her repudiation before Seller materially changed his position in reliance thereon by selling the ranch to Rancher. D. lose, because acceptance of the purchase price by Seller was a concurrent condition to Seller's obligation to convey the ranch to Buyer on December 1.

C. lose, because Buyer did not retract her repudiation before Seller materially changed his position in reliance thereon by selling the ranch to Rancher.

In a state where gaming is legal, a professional gambler ran up a tab of $50,000 at his favorite casino. Pursuant to a longstanding agreement between the gambler and the casino, once the gambler's tab reached $50,000 he was required to repay the debt in five monthly installments of $10,000 before putting any additional charges on his tab. After making three repayments, the gambler approached the casino owner and offered an immediate payoff of $15,000 in cash as payment in full. The casino owner had a cash flow problem and needed the money, so he agreed. The gambler made the cash payment of $15,000 that same day. A few days later, the casino owner demanded $5,000 from the gambler. Does the casino owner have a right to collect $5,000 from the gambler? A. Yes, because the gambler had a preexisting duty to pay the full $50,000. B. Yes, because the casino owner acted under duress when he accepted the immediate payoff of $15,000 in cash as payment in full for the gambler's debt. C. No, because there was a discharge by release. D. No, because there was an accord and satisfaction.

D. No, because there was an accord and satisfaction.

Fixtures, Inc., in a signed writing, contracted with Apartments for the sale to Apartments of 50 identical sets of specified bathroom fixtures, 25 sets to be delivered on March 1, and the remaining 25 sets on April 1. The agreement did not specify the place of delivery, or the time or place of payment. Which of the following statements is correct? Same facts as the prior slide, but for this question only, make the following assumptions. On March 1, Fixtures tendered 24 sets to Apartments and explained, "One of the 25 sets was damaged in transit from the manufacturer to us, but we will deliver a replacement within 5 days." Which of the following statements is correct? A. Apartments is entitled to accept any number of the 24 sets, reject the rest, and cancel the contract both as to any rejected sets and the lot due on April 1. B. Apartments is entitled to accept any number of the 24 sets and to reject the rest, but is not entitled to cancel the contract as to any rejected sets or the lot due on April 1. C. Apartments must accept the 24 sets but is entitled to cancel the rest of the contract. D. Apartments must accept the 24 sets and is not entitled to cancel the rest of the contract.

D. Apartments must accept the 24 sets and is not entitled to cancel the rest of the contract.

Computers, Inc. contracted in writing with Bank to sell and deliver to Bank a mainframe computer using a new type of magnetic memory, then under development but not perfected by Computers, at a price substantially lower than that of a similar computer using current technology. The contract's delivery term was "F.O.B. Bank, on or before July 31." After making the contract with Bank, Computers discovered that the new technology it intended to use was unreliable and that no computer manufacturer could yet build a reliable computer using that technology. Computers thereupon notified Bank that it was impossible for Computers or anyone else to build the contracted-for computer "in the present state of the art." If Bank sues Computers for failure to perform its computer contract, the court will probably decide the case in favor of A. Computers, because its performance of the contract was objectively impossible. B. Computers, because a contract to build a machine using technology under development imposes only a duty on the builder to use its best efforts to achieve the result contracted for. C. Bank, because the law of impossibility does not apply to merchants under the applicable law. D. Bank, because Computers assumed the risk, in the given circumstances, that the projected new technology would not work reliably.

D. Bank, because Computers assumed the risk, in the given circumstances, that the projected new technology would not work reliably.

Gourmet, a famous chef, entered into a written agreement with his friend Deligor, a well-known interior decorator respected for his unique designs, in which Deligor agreed, for a fixed fee, to design the interior of Gourmet's new restaurant, and, upon Gourmet's approval of the design plan, to decorate and furnish the restaurant accordingly. The agreement was silent as to assignment or delegation by either party. Before beginning the work, Deligor sold his decorating business to Newman under an agreement in which Deligor assigned to Newman, and Newman agreed to complete, the Gourmet-Deligor contract. Newman, also an experienced decorator of excellent repute, advised Gourmet of the assignment, and supplied him with information confirming both Newman's financial responsibility and past commercial success. Is Gourmet obligated to permit Newman to perform the Gourmet-Deligor agreement? Same facts as the prior slide. If Gourmet allows Newman to perform and approves his design plan, but Newman fails without legal excuse to complete the decorating as agreed, against whom does Gourmet have an enforceable claim for breach of contract? A. Deligor only, because Deligor's agreement with Newman did not discharge his duty to Gourmet, and Newman made no express promise to Gourmet. B. Newman only, because Deligor's duty to Gourmet was discharged when Deligor obtained a skilled decorator (Newman) to perform the Gourmet-Deligor contract. C. Newman only, because Gourmet was an intended beneficiary of the Deligor-Newman agreement, and Deligor's duty to Gourmet was discharged when Gourmet permitted Newman to do the work and approved Newman's design. D. Either Deligor, because his agreement with Newman did not discharge his duty to Gourmet; or Newman, because Gourmet was an intended beneficiary of the Deligor-Newman agreement. -If Deligor pays Gourmet damages for breach of contract, may Deligor recover such damages from Newman?

D. Either Deligor, because his agreement with Newman did not discharge his duty to Gourmet; or Newman, because Gourmet was an intended beneficiary of the Deligor-Newman agreement. -Yes, because Newman has primary liability and Deligor has secondary liability as a surety.

A widget seller negotiates with a buyer for the purchase of 100 widgets for $10,000, with delivery 30 days from the signing of the agreement. After the parties sign the agreement, which contains a merger clause, the buyer asks the seller if delivery could be in 20 days and the seller says, "Yes, I promise we will do that." The seller does not deliver until 30 days from signing. The buyer sues the seller and the seller seeks to bar the evidence that the seller promised delivery in 20 days. Will the evidence be excluded under the parol evidence rule? A. Yes, because it contradicts a term of the written agreement. B. Yes, because it supplements a written agreement that is complete and exclusive. C. No, because it is offered for the purpose of interpreting the writing. D. No, because it is offered on an issue of modification.

D. No, because it is offered on an issue of modification.

Swatter, a baseball star, contracted with the Municipal Symphony Orchestra, Inc., to perform for $5,000 at a children's concert as narrator of "Peter and the Wolf." Shortly before the concert, Swatter became embroiled in a highly publicized controversy over whether he had cursed and assaulted a baseball fan. The orchestra canceled the contract out of concern that attendance might be adversely affected by Swatter's appearance. Swatter sued the orchestra for breach of contract. His business agent testified without contradiction that the cancellation had resulted in Swatter's not getting other contracts for performances and endorsements. The trial court instructed the jury, in part, as follows: "If you find for the plaintiff, you may award damages for losses which at the time of contracting could reasonably have been foreseen by the defendant as a probable result of its breach. However, the law does not permit recovery for the loss of prospective profits of a new business caused by breach of contract." On Swatter's appeal from a jury verdict for Swatter, and judgment thereon, awarding damages only for the $5,000 fee promised by the orchestra, the judgment will probably be A. affirmed, because the trial court stated the law correctly. B. affirmed, because the issue of damages for breach of contract was solely a jury question. C. reversed, because the test for limiting damages is what the breaching party could reasonably have foreseen at the time of the breach. D. reversed, because under the prevailing modern view, lost profits of a new business are recoverable if they are established with reasonable certainty.

D. reversed, because under the prevailing modern view, lost profits of a new business are recoverable if they are established with reasonable certainty.

A written construction contract, under which Contractor agreed to build a new house for Owner at a fixed price of $200,000, contained the following provision: Prior to construction or during the course thereof, this contract may be modified by mutual agreement of the parties as to "extras" or other departures from the plans and specifications provided by Owner and attached hereto. Such modifications, however, may be authorized only in writing, signed by both parties. During construction, Contractor incorporated into the structure overhanging gargoyles and other "extras" orally requested by Owner for orally agreed prices in addition to the contract price. Owner subsequently refused to pay anything for such extras, aggregating $30,000 at the agreed prices, solely on the ground that no written, signed authorization for them was ever effected. If Contractor sues Owner on account of the "extras," which, if any, of the following will effectively support Owner's defense? I. The parol evidence rule. II. The preexisting duty rule. III. Failure of an express condition. IV. The statute of frauds. V. None of the above

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