BLAW 3201 Exam 2 Fry

This is an agreement in violation of public policy that will not be enforced by the courts.

Carl and Rob are both engaged in road construction work. They know that several jobs are going to be up for public bids, and agree between themselves that Carl will bid on one job and Rob will bid on the other, so that they both have work for the summer. When the bids are opened, Carl realizes that Rob has bid on both jobs. Rob is awarded both contracts. Carl now wants to sue Rob for breach of contract. a. Carl would probably win on the basis of promissory estoppel since he has detrimentally relied upon Rob's representation that he would not bid. b. Since Carl is less at fault than Rob, the court will likely award Carl damages. c. This is an agreement in violation of public policy that will not be enforced by the courts. d. This is an agreement obstructing the administration of justice that will not be enforced by the courts.

Miles has made a counteroffer; hence there is no contract.

Chad has offered to take Miles into his accounting firm as a partner upon payment of $5,000 cash. In response, Miles says, "I'll give you $3,000 cash now and I will pay you the remainder in two months after I see whether things are working out as a partnership." a. Miles has made a counteroffer; hence there is no contract. b. Miles has rejected the terms of the original offer, but there is still a contract. c. Chad is a merchant making a firm offer under Article 2 of the UCC. Hence there is a contract. d. Any indefinite provisions in the contract between Chad and Miles will be supplied by Article 2 of the UCC.

3 Parts of an Offer

Communication Intent Definiteness

criminal prosecution

Contracts induced by threats of ____ are voidable, regardless of whether the coerced party has committed an unlawful act. a. civil prosecution b. criminal prosecution c. tortious conduct d. physical force

The offeree must have knowledge of the offer.

For an offer to be valid, which of the following elements must be present? a. The offeree must have knowledge of the offer. b. The offeree must have first-hand knowledge of the offer. c. The offer must be communicated by the offeror. d. The offer must be communicated by words.

be sufficiently definite and certain. (This is one of the elements of an offer under general contract law.)

For purposes of general contract law (common law), an offer must: a. be sufficiently definite and certain. b. be made to only to one person. c. be intended by the offeror to be an offer. d. All of these are correct.

The sale is voidable by the purchaser for mutual mistake.

Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time. He buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius. He later learns the violin is an imitation, although it is such a good imitation that even the dealer thought it was authentic. a. Fred has made a unilateral mistake and cannot avoid the contract. b. The dealer has committed fraud in the inducement. c. The sale is voidable by the purchaser for mutual mistake. d. The sale is voidable, because the dealer has made a fraudulent misrepresentation.

the intended jest is so successful that Mike as a reasonable person under the circumstances believes the joke is an offer and he accepts.

Hannah, as a joke, offers to sell her violin to Mike. Her statement would have legal effect if: A. the intended jest is so successful that Mike as a reasonable person under the circumstances believes the joke is an offer and he accepts. B. Hannah's intent, determined subjectively, is to enter a contract. C. Hannah's intent, determined objectively, is not to enter a contract. D. Mike did not, but should have realized that Hannah was not serious. E. Both (c) and (d).

manifest their agreement objectively.

In order to form a contract, the parties must: a. manifest their agreement subjectively. b. manifest their agreement objectively. c. indicate solely through written word their intent. d. create a formal document called a contract.

All of the above are grounds for rescission.

In which of the following circumstances would the remedy of rescission be used? a. One party to the contract is a minor who wishes to disaffirm the contract. b. The contract was based on fraud c. The contract was based on a mistake by the parties d. All of the above are grounds for rescission.

Lefkowitz vs. Great Minneapolis Surplus Store

Invitations seeking offers Store published ads offering goods first come first serve for $1. Lefkowitz showed up first they wouldn't sell because they are girls' clothes. Did ad constitute an offer? Supreme Court said ad was clear and left nothing open for negotiation Affirmed

New England Rock Services, Inc. v. Empire Paving, Co.

Issue is whether an agreement made by the parties modified an earlier contract executed by them on. Trial court concluded yes, was a valid and enforceable; determined that the later agreement was supported by sufficient consideration. Defendants (Empire Paving, Co.) appeals. Empire's failure to control or remove the water on the site constituted a new circumstance that Rock Services did not anticipate at the time the original contract was signed. Affirmed.

Janet's promise is legally sufficient unless Janet knew at the time she made the promise that she could not inherit the $1 million.

Janet promises Eli $4,000 for one of his original paintings on the condition that she receive $1 million from her mother's will. A. Janet has made an illusory promise. B. Janet's promise is legally sufficient unless Janet knew at the time she made the promise that she could not inherit the $1 million. C. Janet has made a conditional promise which is not sufficient to form consideration. D. Janet's promise is legally inadequate and the courts will therefore not enforce it.

Jill cannot void the contract.

Jill contracts to purchase Kevin's automobile under the belief that she can sell it at a profit to Linda, but after Jill has bought the car, she finds out that Linda isn't interested in buying it. a. Jill cannot void the contract. b. Jill can rescind the agreement. c. Jill could rescind the agreement if she was mistaken in her estimate of the value of the auto. d. Jill can sue Linda for detrimental reliance.

substantive unconscionability.

John operates a small repair business and is in desperate need of a certain type of building material. He obtains the material from a large corporation, but is charged a grossly unreasonable price and is forced to buy other material he does not need. In view of the buyer's unequal bargaining power and unreasonable terms of the contract, this may be a case of: A. in para delicto. B. partial illegality. C. substantive unconscionability. D. procedural unconscionability.

The advertiser must permit Marilyn the opportunity to finish her attempt to swim the 500 laps, or pay damages if he interferes with the completion of the laps.

Marilyn read an ad in the school newspaper offering a thousand dollar swimming scholarship to anyone who could swim 500 laps in the school pool. Marilyn called the advertiser and began swimming. She has reached lap number 460; she feels great and is sure she can make it all the way. A. The advertiser may revoke the offer since there has not yet been an acceptance. B. The advertiser may not revoke the offer since Marilyn has already accepted it. C. The advertiser must permit Marilyn the opportunity to finish her attempt to swim the 500 laps, or pay damages if he interferes with the completion of the laps. D. The advertiser must pay Marilyn $920, because she has performed 92% of the offer.

The ad in the newspaper is a solicitation seeking offers, but is not an offer to sell; therefore, Irene will not be able to successfully sue for breach of contract.

Michelle's Boutique places an ad in the Sunday paper for beautiful, top-of-the-line designer suits for $3.00. Irene sees the ad in the paper and goes to the store to stock up on business suits for her new job. Michelle apologizes for the misprint. Irene has just finished a class in contract law and insists that the store sell her 5 suits for $15.00. Irene threatens to sue Michelle for breach of contract. a. This is a valid contract, and Irene will win if she sues. b. The ad in the newspaper is an offer to sell. c. The ad in the newspaper is a solicitation seeking offers, but is not an offer to sell; therefore, Irene will not be able to successfully sue for breach of contract. d. None of the above.

If a person, without knowing of an advertised reward for information leading to the return of a lost dog, gives information that leads to its return, is she entitled to the reward?

No. The finder's act was not an acceptance of the offer because she could not accept something of which she had no knowledge.

Catamount Slate Products vs. Sheldon

Objective Standard Reeds own Catamount Slate on 122 acres. Sheldons are their neighbors. Sheldons claim Reeds should pay to use their access road Mediation held to settle: Resolution was for Reeds to pay $250/month to use road. Sheldons attorney sent letter to Reed's attorney but contract was never signed Turned out road was government's Supreme court of vermont concluded that parties didn't intend to be bound until the execution of the final document Held that parties never entered into binding agreement

Both (a) and (c).

Ralph sold a motel to Steve by stating that he had paid $250,000 for it and that his net average annual profit from the business has been $40,000. In reality he paid $100,000 for the motel and has earned a net average annual profit of only $30,000. Steve made no attempt to verify the statements until after the transaction was completed. a. Ralph has committed fraudulent misrepresentation. b. Steve is bound by the contract, because he failed to verify the statements which were made to him. c. The contract is voidable at Steve's option. d. Both (a) and (c).

Silence as Acceptance

Silence or inaction does not indicate acceptance of an offer unless by custom, usage or course of dealing, such silence does operate as acceptance, due to previous dealings or stated policy to accept all offers unless notice is given.

Silence as Acceptance of an Offer

Silence or inaction does not ordinarily indicate acceptance of an offer because an offeree is generally under no legal duty to reply to an offer. In some cases, by custom, usage, or course of dealing, the offeree's silence or inaction may operate as an acceptance. If an offeror sends unordered or unsolicited merchandise to a person and states that the goods may be purchased at a specified price and that the offer will be deemed to have been accepted unless the goods are returned within a stated period, the federal government and most states have enacted statutes providing that the recipient of the goods may keep them as a gift and is under no obligation to return or pay for them.

If Isaac agrees to accept $600 to settle the dispute and Stan agrees to pay that amount, the substitute agreement is enforceable.

Stan purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the gloves were defective, and a dispute arose as to the amount due and owing under the contract. Stan refuses to pay the $800, and Isaac is threatening to sue. Which of the following is correct with regard to this transaction? A. If Isaac agrees to accept $600 to settle the dispute and Stan agrees to pay that amount, the substitute agreement is enforceable. B. If Isaac agrees to accept $600 to settle the dispute and Stan pays that amount, Isaac can still sue for the balance of $200 and will win the lawsuit. C. Stan is under a pre-existing legal obligation to pay the $800. D. Both (b) and (c).

Lefkowitz v. Great Minneapolis Surplus Store, Inc.

The case in which the court held that a newspaper advertisement was an offer because it contained a promise of performance in definite terms in return for a requested act was: A. Catamount Slate Products, Inc. v. Sheldon. B. Newman v. Schiff. C. Lefkowitz v. Great Minneapolis Surplus Store, Inc. D. Osprey L.L.C. v. Kelly-Moore Paint Co., Inc.

The acceptance.

The mirror image rule relates to which required element of a contract? a. The offer. b. The acceptance. c. Both the offer and the acceptance. d. Only to acceptances in contracts subject to UCC.

Acknowledge that a right has been violated even though no monetary loss. resulted

The purposes of nominal damages is to a. Compensate the non-breaching party for the loss of the benefit of the bargain. b. Punish and make an example of the breaching party. c. Determine beforehand the damages to be paid if there is a breach of the contract, d. Acknowledge that a right has been violated even though no monetary loss. resulted

Denney v. Reppert

The sole question presented in this case is which of several claimants is entitled to an award for information leading to the apprehension and conviction of certain bank robbers. Multiple people wanted reward. Employees of bank -> performed a duty to the bank and the public, for which they cannot claim a reward. Certain random witnesses who did not comply with terms -> a claimant of a reward must comply with the terms and conditions of the offer of reward. Police Officers -> it was the duty of the state policemen to apprehend the criminals. Under the law they cannot claim or share in the reward and they are interposing no claim to it Tilford Reppert -> the only claimant qualified and eligible to receive the reward. (off duty police for another county) Judgment of the circuit court = he is entitled to receive payment of the $1,500.00 reward. The judgment is affirmed.

if no trade secrets are involved, and she has no dominion over customers, a court would rule the restrictions to be invalid.

Theresa is a travel agent at the Fly Away Travel Agency. She has signed an agreement with her employer which prohibits her from working in any similar business in any town within a 100-mile radius of where she works. If she wants to quit her job and go to work for another travel agency, it is likely that: a. a court would uphold these restrictions. b. if no trade secrets are involved, and she has no dominion over customers, a court would rule the restrictions to be invalid. c. if the period of time of the agreement is under five years, it will be upheld by the court. d. Both (a) and (c).

True

True or False: "Consideration" does not require an actual benefit to both sides of an agreement.

True

True or False: A basic element of fraud is a false representation or a misrepresentation.

True

True or False: A counteroffer terminates the offer and creates a new offer.

True

True or False: A new promise to perform a voidable obligation that has not been avoided previously is enforceable without new consideration.

True

True or False: A seller's promise to service a sewing machine free for the next 90 days when she has no intention of doing so is actionable as a false representation of a fact if the other elements of fraud are present

True

True or False: A valid offer may be in the form of an act for a promise, which is an offer to enter into an inverted unilateral contract.

False

True or False: Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers Al $160,000 for it. Al accepts and sells the farm to Betty. Al later realizes that the land was worth more than $160,000. Al can have the contract avoided based upon fraud.

True

True or False: Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers Al $160,000 for it. Al is suspicious and asks her why she wants to buy the place. She says she would like to live in the country. Al then asks her if she thinks there might be valuable minerals under the land. Betty laughs and says she doubts that very much, so Al sells her the farm for $160,000. Al later realizes that the land was worth more than he was paid. Betty's statement to Al was a misrepresentation requisite for fraud.

True

True or False: Although wagering is generally illegal, some states permit certain kinds of regulated gambling, especially wagering conducted by governmental agencies.

False

True or False: An advertisement is usually an offer to sell.

False

True or False: An auctioneer is the offeror and each bid is a counteroffer until a final bid is accepted.

False

True or False: An offer is an indefinite proposal made by one person to another.

False

True or False: An offer is effective as soon as it is dispatched.

False

True or False: An offer made to one person can be accepted by another

True

True or False: An offer must be communicated to the offeree in order for the offer to be effective.

False

True or False: An offer must be in one particular form to have legal effect.

True

True or False: At the marriage of her daughter, Lorna is given papers to sign which the catering company says are the invoices for the food, service, and decorations. Underneath the invoices are a carbon and a contract of sale for a portion of the failing catering business. Lorna signs the papers; her signature is transferred to the sales contract. This is a void contract because it was entered by fraud in the execution.

False

True or False: Bargains are illegal if they involve a crime or tort but not if they are merely against public policy

False

True or False: Bill is currently enrolled in law school. He expects to graduate and take the bar exam in order to be able to practice law. Before Bill becomes a lawyer, he promises to represent his friend, Tom, in a breach of contract action if Tom will pay him 25% of the settlement. Bill negotiates and the case settles for $50,000. Tom refuses to pay Bill. Bill then graduates and attempts to sue Tom. Bill has a legal right to enforce the agreement.

True

True or False: Commercial reasonableness is a standard determined in terms of the business judgment of reasonable persons familiar with the practices customary in the type of transaction involved.

True

True or False: Consideration exchanged for a promise does not require both legal detriment to the promisee and legal benefit to the promisor.

True

True or False: Contract law generally places more importance on the intent of the parties to form a contract than on the inclusion of certain terms in the contract.

False

True or False: Courts require that for a contract to unenforceable based on unconscionability, both substantive and procedural unconscionability must be equally present.

False

True or False: Dana gives care to Marnie's dog when Dana finds Marnie's dog ill on the side of the road. After Marnie locates her dog, Marnie promises to reimburse Dana for the cost of treating the dog. Marnie's promise is binding, because there is a bargained-for-exchange.

True

True or False: Deanna, an attorney, has a personal injury case which is set for trial next week. She needs a good doctor to testify on behalf of her client, so she contacts Dr. Dogood who agrees to testify on behalf of Deanna's client at the trial. In return for Dr. Dogood's testimony, Deanna agrees to pay Dr. Dogood $10,000 if they win the case, and $5,000 if they lose. Dr. Dogood agrees. The agreement between Deanna and Dr. Dogood is unenforceable

True

True or False: Death or insanity of either the offeror or the offeree ordinarily terminates the offer.

False

True or False: For a misrepresentation to be actionable as fraud in the inducement, it must be a misrepresentation of opinion

False

True or False: Fraud in the inducement will render an agreement void.

False

True or False: Generally, whether or not the parties deal at arm's length does not affect whether silence alone amounts to fraud.

True

True or False: If Sam agrees to sell to Thomas all of the tomatoes he wants at $25 a bushel, there is no contract for lack of consideration.

False

True or False: If Thomas seemingly offers to sell to Raquel his Toro lawnmower but he intends to offer and believes he is offering her his Murray mower, and she accepts the offer, reasonably believing it was for the Toro, no contract has been formed because there is no mutual assent.

True

True or False: If a confidential relationship exists between parties to a contract, the law presumes that undue influence exists if it appears that the dominant party has gained at the other party's expense, but the presumption can be rebutted by evidence that it was not exercised

True

True or False: If a promise is illusory, mutuality of obligation is lacking.

True

True or False: If an agreement is not voluntary and knowing, it will be either void or voidable.

False

True or False: If an offer states that a reply must be received by a certain date, the contract is formed at the time the offeree sends or dispatches the acceptance.

True

True or False: If an offeror makes an offer to an offeree by letter and it is lost in the mail, no legally sufficient offer has been made.

True

True or False: In most, if not all, cases where there is a legal detriment to the promisee, there is also a legal benefit to the promisor.

True

True or False: In some states a promise under seal is binding without consideration.

False

True or False: Marjorie has been cared for by her family physician for 35 years. She decides to assume the mortgage on his new clinic. The contract is automatically invalid because of undue influence.

False

True or False: Matt sells bikes at a local discount store. To encourage Bob to buy a more expensive model than he originally contemplated, Matt tells Bob, "This is the most awesome bike money can buy at this price. You can expect lots of riding pleasure." Based on this statement Bob buys the bike. A week later, before his bike is fully paid for, Bob sees a far superior bike for a lower price at another store. Bob can avoid his contract with Matt because of fraudulent misrepresentation.

False

True or False: Maximum rates of interest that are permitted under usury statutes are uniform from state to state.

True

True or False: Nonfraudulent representation is made without scienter.

True

True or False: On Tuesday morning John sends a letter to Arlene rejecting her offer, but later the same day John changes his mind and sends a letter of acceptance to Arlene. The letter of acceptance will be effective only if it is received by Arlene before she receives the rejection.

False

True or False: Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon. When Pat decides to sell and one these friends decides to buy the car, Pat is under no duty to tell the correct figure unless asked.

True

True or False: Physical compulsion and improper threats are the two basic types of duress.

True

True or False: Rescission is usually permitted where the parties to a contract are both mistaken about a material fact.

False

True or False: Ron offers to sell Pete his stamp collection. Pete gives Ron $10 to induce him to keep his offer open for a week. If Ron decides on day four of the week that he really does not want to sell to Pete, he can revoke his offer without fear of a breach of contract lawsuit being filed against him.

False

True or False: Silence can never be an acceptance.

False

True or False: The UCC and the Restatement make no provision for supplying terms omitted by the parties' contract.

True

True or False: The destruction of the subject matter of an offer terminates the offer if it occurs prior to the offers acceptance.

False

True or False: The difference between fraud and misrepresentation is that fraud involves malice while nonfraudulent misrepresentation is always innocent.

False

True or False: The mirror image rule requires that the terms in the acceptance must be close to the terms contained in the offer

False

True or False: The term "public policy" is precisely and narrowly defined in the Restatement and by state statutes.

True

True or False: Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship.

True

True or False: When a bid is made at an auction, it can be revoked if the auctioneer has not yet accepted the bid because the auctioneer has the power of acceptance.

That one party explicitly made an economic threat.

Which of the following need NOT be proved in order to establish the defense of economic duress? a. That one side involuntarily accepted the terms of another. b. That circumstances permitted no other alternative. c. That one party explicitly made an economic threat. d. That the circumstances leading up to the contract were the result of coercive threats or acts of the opposite party.

All of the above would be merchants.

Which of the following would most likely be a merchant with respect to the goods in question under the UCC definition? a] Amy is an authorized IBM computer dealer. b] Brian employs two salesmen to sell his homemade furniture. c] Clarence has a store in which he sells used lawn mowers. d] All of the above would be merchants.

Agreement

an essential element for contract formation; a meeting of two or more minds in regard to the terms of a contract. there are 2 parts

Offer

indication of willingness to enter into a contract

2 Parts to an Agreement

offer and acceptance

Communication

offeree must have knowledge of the offer, and the offer must be made by the offeror to the offeree

Receiving End

offeree, now have power you didn't have before, by accepting offer offeror has no choice by to perform o No one can come up and steal offer from someone, if they want someone's offer, they don't accept they make a new offer and become the offeror

Acceptance

the drawee's signed engagement to honor the draft as presented. It becomes operative when completed by delivery or notification.

Offer

A manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

Al is in violation of the sales agreement.

Al has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sales contract, he agrees that he will refrain from practicing accounting anywhere within a 20-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home. a. Al is in violation of the sales agreement. b. The agreement is invalid, because it is an illegal restraint of trade. c. The agreement is illegal, because it is a violation of public policy. d. The two-year provision is likely to be held invalid, because it is too long a period of time.

Both (b) and (c).

Alex wants to submit a bid on a city sewer project. He computes the cost, but mistakenly omits the cost of one item. Accordingly, he submits a bid of $430,000 to the city. The next highest bid is $675,000, and the rest of the bids are even higher. The city is happy to have such a low bid, so it accepts Alex's bid and awards him the contract for the job, even though the city engineer is of the opinion the job cannot be done for less than $650,000. a. Alex must perform for the agreed upon price because he has made a unilateral mistake. b. The city was aware of or should have been aware of Alex's mistake. When it accepted the bid with knowledge of Alex's mistake, the city sought to take an unconscionable advantage of Alex's error. c. This case is an example of a palpable unilateral mistake. d. Both (b) and (c).

Offer

Although each of the requirements for forming a contract is essential to its existence, mutual assent is so basic that frequently a contract is referred to as the agreement between the parties.

be communicated to the offeree.

An offer need not take any particular form to have legal validity. To be effective, however, it must: a. be spoken directly to the offeree. b. always contain the price of the product or service offered. c. always contain the place of delivery. d. be communicated to the offeree.

Both (b) and (c).

Andrew owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Betty and, as part of the transaction, agrees not to engage in the same business anywhere within the state for a period of three years. A. The agreement is reasonable. B. The agreement is unreasonable. C. The agreement unduly interferes with the interests of the public. D. Both (b) and (c).

At 11 a.m. on Tuesday

Bart sends Carla an offer by express mail. Carla receives it at 10 a.m. on Tuesday. At 11 a.m. on Tuesday, Carla delivers an acceptance to Federal Express, but due to an error, the letter is not sent out by the company until Wednesday at 8 a.m. At what time does the law consider the acceptance to be effective? A. At 10 a.m. on Tuesday B. At 11 a.m. on Tuesday C. At 8 a.m. on Wednesday D. At the time Bart receives the letter

This is an illegal wagering agreement.

Bill bets his friend $100 that the Patriots will win the next Super Bowl. a. This is an unconscionable contract and therefore illegal. b. This is an illegal wagering agreement. c. This is an agreement to obstruct justice and therefore illegal. d. This is an illegal restraint of trade.