Legal Environment Test 2

Mrs. Martin tells some neighborhood kids that she will pay $100 if any of them mows her lawn. Jake goes to a hardware store, purchases a lawnmower for $60, and then mows Mrs. Martin's lawn. Jake has entered into what types of contract?

Jake has made a unilateral contract with Mrs. Martin and a bilateral contract with the hardware store.

One provision in a contract states "Ulysses vows he is a board certified physician" and another states "Emma promises not to eat red meat for six months from the date of this agreement." Which of the following best describes these contract terms?

a. Ulysses has made a warranty and representation; Emma has made a covenant.

The Hoffmans owned and operated a successful small bakery. Lukowitz, an agent of Red Owl Stores, told them that for $18,000 Red Owl would build a store and fully stock it for them to operate. The Hoffmans sold their bakery and purchased a lot on which Red Owl was to build the store. Lukowitz then told the Hoffmans that the price had gone up to $26,000. The Hoffmans borrowed the extra money from relatives, but then Lukowitz informed them that the cost would be $34,000. Negotiations broke off and the Hoffmans sued. The court determined that there was no contract. Can the Hoffmans recover any money?

a. Yes. They can most likely recover damages based on promissory estoppel.

Sam and Elias agree in writing that Sam will give Elias needlepoint lessons once a week for five weeks in exchange for $1,000 per lesson. The contract stipulates that if either party is going to cancel a lesson, it must provide 48 hours notice. On the morning of the second lesson, Elias calls Sam and says he cannot make it because earthquake damage has closed all roads leading out of his town. Will Elias owe Sam for the missed lesson?

b. Elias will not be liable if the contract contains a clause discharging the obligation if there is a force majeure provision.

Chef Jacquie is scheduled to teach a cooking class to three students. The class tuition is $1,100 per student. In the class, each student cooks a French meal under Jacquie's expert supervision and receives a cookbook (worth $30) and a cooking pan (worth $150). Tory, one of the students, tells Jacquie the day before the class that she will be unable to attend and requests a refund. Jacquie denies the refund and Tory sues. Tory claims that the UCC should govern the contract, and Jacquie argues that it should be covered by the common law. Who is right?

b. Jacquie, because the class is primarily a service.

In exchange for Dalton's car - which is worth approximately $20,000 - Ramona signs a document assigning Dalton her claim against a drunk driver who crashed into Ramona's car several months earlier. Ramona has not yet filed a lawsuit against the drunk driver and the total value of her claim could be as much as $100,000. Will the court allow Dalton to file suit against the drunk driver for the claim assigned to him by Ramona?

b. No, because assignments of this type are not prohibited by public policy.

Olivia agrees that she will bring Desiree a cherry pie every Monday for a month in exchange for $15 per week. Olivia delivers a pie to Desiree for four weeks, and Desiree pays her each time. Olivia continues to deliver Desiree pies every Monday, and Desiree continues to pay for another five weeks. On the tenth week, Olivia brings a pie and Desiree refuses to pay. Olivia sues for payment. What result?

b. Olivia will win. The court will rule that they had an implied contract.

Over her objections, Carlene's husband Silvio borrows $10,000 from his friend Evan so that he can achieve his dream of swimming with great white sharks in South Africa. Carlene knows Silvio has a reputation for being reckless, but she still finds it pretty alarming that Evan and Silvio's friend Constantine and Silvio's business partner Persephone each take out a life insurance policy on Silvio a month before his trip. Who can legally have an insurance policy on Silvio?

c. Evan, Persephone and Carlene

Mindy sends Luciano a note signed by Mindy that reads, "This is in acknowledgement of our agreement. I will buy 5 ornate box turtles from you on September 25." Luciano never responds. Can Mindy or Luciano, both nonmerchants, enforce this agreement?

c. Luciano may enforce the contract, but not Mindy.

Trinity Trucking signs a contract with Olsen Oil to purchase all of the fuel for its fleet of trucks for the next year from Olsen at a price of $3.00 per gallon. At the time Trinity and Olsen sign the contract, the market price for gasoline was $3.25 per gallon, and Trinity had an expert report predicting that the price would rise to at least $4.25 per gallon in the upcoming six months. Instead, the price dropped to $2.00 per gallon. May Trinity rescind the contract with Olsen due to its mistaken belief about the future of the price of gasoline?

c. No, because Olsen had no way of knowing of Trinity's mistake.

Guyan Machinery, a North Carolina manufacturing corporation, hired Albert Voorhees as a salesman and required him to sign a contract stating that if he left Guyan he would not work for a competing corporation anywhere within 250 miles of North Carolina for a two-year period. Later, Voorhees left Guyan and began working at Polydeck Corp., another North Carolina manufacturer. The only product Polydeck made was urethane screens, which comprised half of 1 percent of Guyan's business. Is Guyan entitled to enforce its noncompete clause?

c. No, because it is not necessary to protect trade secrets, confidential information, or customer lists developed over an extended period.

Nina, who owns a used car lot, signs and sends a fax to Seth, a used car wholesaler, that says, "Confirming our agrmt—I pick any 15 cars fr yr lot—30% below blue book." Seth reads the fax, laughs, and throws it away. Two weeks later, Nina arrives and demands to purchase 15 of Seth's cars at a 30% discount. Is he obligated to sell?

c. Probably, if Seth and Nina had previously made this agreement orally.

While George travels for two months, Mary agrees to housesit and care for George's three horses at her stables. The parties agree that Mary will pick up the horses on the first day of George's trip and George will pay Mary when he returns. George returns home from his travels and finds that Mary never picked up the horses. George sues. What result?

c. The court will apply common law and Mary will lose.

Rafferty, a caterer, and Maya, an opera singer, are pleased to be hired to provide their respective services at the same wedding. Unlike Maya's contract, Rafferty's contains a non-delegation clause. Two days before the wedding, Rafferty and Maya decide to go on vacation, so they delegate their wedding obligations to friends they know and trust. The bride and groom object. Is delegation permissible?

d. No. Neither Rafferty nor Maya can delegate their obligations.

Custom Cashmere sends Ultrasound, a maternity clothing boutique, a sales agreement for 200 sweaters. Before signing and returning the agreement, Ultrasound crosses out the provision that reads "for delivery to the Ultrasound boutique" and writes in "for delivery to the Ultrasound warehouse." The warehouse is 400 miles away from the Ultrasound boutique. Do Cashmere and Ultrasound have an enforceable contract?

d. Yes, the agreement is enforceable. The court will supply gap-fillers for the terms of delivery.

Slimline and Distributor signed a contract that provided that Distributor would use reasonable efforts to promote and sell Slimline Diet Soda, which was already being sold at Warehouse Club. After the contract was signed, Distributor stopped conducting the in-store demos of Slimline it had previously been doing at Warehouse and it did not repackage the product as Slimline and Warehouse requested. Sales of Slimline continued to increase during the term of the contract. Slimline sued Distributor, alleging a violation of the agreement. Who is likely to win?

d. Slimline, because Distributer's conduct is a material breach.

Envirotex owes Simla Inc. $1,200 for services rendered. An Envirotex corporate officer calls Simla's Chief Operating Officer (COO) and offers to settle the debt by assigning to Simla the right to payment of a $1,500 debt that Riann Corp. owes to Envirotex for its purchase of Envirotex merchandise. Simla's COO agrees to the deal and cancels Envirotex's debt. Riann never pays anyone, and Simla sues Riann. What result?

d. The assignment is not valid because it was not in writing.

Woodson Walker and Associates leased computer equipment from Park Ryan Leasing. The lease said nothing about assignment. Park Ryan assigned the lease to TCB. When Walker failed to make several payments on the lease, TCB sued. Was the assignment valid if the original lease made no mention of assignment rights?

d. Yes, because the contract did not preclude the assignment.

Fritz's Pet Shop has a contract with PlanetLazy Pet Products that states: a) PlanetLazy will deliver to Fritz 25 pet beds on the second Saturday of every month for one year; b) Fritz will pay PlanetLazy $2,500 on the first day of each month for one year. If Fritz does not pay PlanetLazy on a given month, is PlanetLazy still obligated to continue delivering pet beds?

d. Yes, because the terms are reciprocal promises.

Monty buys a big screen television from Martha and agrees to pay her back with interest over the next three years. A year later, Monty decides to stop watching TV and gives the TV to his friend Bo, assigning all his rights and delegating all his duties to Bo. Bo pays Martha for a few months and then stops, so she sues both Monty and Bo. Monty will be able to avoid liability if he can prove

none of these