Business Law Questions

Egan, a minor, contracted with Baker to purchase Baker's used computer for 400. The computer was purchased for Egan's personal use. The agreement provided that Egan would pay 200 down on delivery and 200 30 days later. Egan took delivery and paid the 200 down payment. Twenty days later, the computer was damaged as a result of Egan's negligence. Five days after the damage occurred and one day after Egan reached the age of majority, Egan attempted to disaffirm the contract with Baker. Egan will:

Be able to disaffirm despite the fact that Egan was not a minor at the time of the disaffirmance. No contractual capacity - for personal use.

A made a contract for a house with B. Subsequently, B sued A for breach of contract. A raised the defense that the contract was not binding because it was not sealed. Is that a valid defense?

If all elements are present, then it is a contract because sealing it isn't a big deal anymore. Both parties had clear intent, communication, and acceptance of the offer.

Lawrence loaned money to Moore, who died without repaying the loan. Lawrence claimed that he mentioned the matter to Moore's widow, she promised to pay the debt. She did not pay it and Lawrence sued her on her promise. Does she have any defense?

Moore's widow has a defense because the claim was not in writing and therefore is not enforceable.

Nelson wanted to sell his home, Baker sent him a written offer to purchase the home. Nelson made some changes to Baker's offer and wrote him that he was accepting the offer as amended. Baker notified Nelson that he was dropping out of the transaction. Nelson sued him for breach of contract. Decide

Nelson made changes to Baker's offer, meaning a counteroffer was provided to Baker. Due to the counteroffer, there was no contract made it was nearly a negotiation made. He rejects the counteroffer, therefore there is no contract and nothing has been breached.

Zehmer discussed selling a farm to Lucy. After a 40 min discussion, the first draft of a contract, Zehmer signed a second draft stating, "We hereby agree to sell to W.O. Lucy the Ferguson farm complete for $50,000 title satisfactory to buyer". Lucy agreed to purchase the farm on these terms. Thereafter, the Zehmers refused to transfer the title to Lucy and claimed that the contract for sale was a joke. Lucy brought an action to compel the performance of the contract. Lucy claimed that there was no contract. Were they correct?

No they made a contract and offered it to Lucy. Did not seem like the contract was a joke because there were several draft and everyone wanted to get out of a contract, they would just say they were joking. Had clear intent, communication, and had signed the contract so they must be held liable for it.

When Harriet went away for the summer, Landry, a house painter, painted her house. He had a contract to paint a neighbor's house but painted Harriet's instead by mistake. When Harriet returned, Landry billed her $3000. She refused to pay, Landry claimed that she had a quasi-contractual liability for the amount. Was he correct?

No, Harriet had no knowledge of the painting for her house, while there was an added benefit. There is no quasi-contract at all.

On September 27, Summer sent Fox a letter offering to sell Fox a vacation home for 150,000. On October 2, Fox replied by mail agreeing to buy the home for 145,000. Summer did not reply to Fox. Do Summer and Fox have a binding contract?

No, because Fox failed to sign and return Summer's letter. (Counteroffer)

kelly made a written contract to sell certain land to Brown and gave Brown a deed to the land. Thereafter, Kelly sued Brown to get back a 20-ft strip of land. Kelly claimed that before making the written contract, it was agreed that Kelly would sell all of his land to Brown to make it easier for Brown to get a building permit, but after it was done, the 20 ft strip would be reconvened to Kelly. Was Kelly entitled to the strip?

No, the 20ft strip is not in the final, written contract. According to the four corners rule, the original contract which does not include this, only matters. Would have to use parol evidence based on ambiguity or fraud.

While Clara Novak was sick, her daughter helped her in many ways. Clara died, and Janie then claimed that she was entitled to be paid for the services that she had done for her mother. The claim was opposed by her 3 siblings who had also rendered services to the mother. They claimed that Janie was barred because of the presumption that services rendered between family members are gratuitous. Janie claimed that this was not applicable because she had lived with her mother, but had her own house. Was Janie correct?

No, there is no written/oral expressed contract evident. There is no quasi or implied contract, and therefore the law sees the relationship and the services rendered as a gratuitous service.

Willis Music Co. advertised a television set at $22.50 in the Sunday news. Ehrlich ordered a set but the company refused to deliver it on the grounds that the price was a mistake. Ehrlich sued the company, was it liable? Why or why not?

Not liable because ads are not offers and invitations to negotiate. Ads are preliminary negotiations

A building subcontractor submitted a bid for construction of portion of a high rise office building. The bid contained material computation errors.

Not liable because the contractor knew of the errors. Unilateral mistake.

West, an Indiana Real estate broker, misrepresented to Zimmer that West was licensed in Kansas under the Kansas statute that regulates that real estate brokers and requires all brokers to be licensed. Zimmer signed a contract that would pay West a 5% commission for selling Zimmer's home in Kansas. West did not sign the contract. West sold Zimmer's home. If west sued Zimmer for nonpayment of commission, Zimmer would be

Not liable to West for any amount because West violated the Kansas licensing requirements.

On June 15th, Peter orally offered to sell a used lawn mower to Mason for 125. Peter specified that Mason had until June 20th to accept the offer. On June 16th, Peters received an offer to purchase the lawn mower for 150 from Bronson, Mason's neighbor. Peter accepted Bronson's offer. On June 17th, Mason saw Bronson using the lawn mower and was told the mower had been sold to Bronson. Mason immediately wrote Peter to accept the offer.

Peter's offer had been revoked and Mason's acceptance was ineffective.

Helen, age 17, wanted to buy a motorcycle. She didn't have the funds to pay cash, but persuaded the dealer to sell the cycle to her on credit. The dealer did so partly because she said she was 22 and showed the dealer an id card that falsely stated her age at 22. Helen drove the motorcycle away. A few days later, she damaged it and then returned it to the dealer and stated that she disaffirmed the contract because she was a minor. The dealer said that she could not because she misrepresented her age and the motorcycle was damaged.

She can avoid the contract because she is a minor and is disaffirming it before 18. Despite the damage, she is liable to return it.

Kelsoe worked for international Wood Products, for a number of years. One day Hernandez, a director and majority stockholder of the company, promised Kelsoe that the corporation would give her 5% of the company stock. The promise was never kept, and Kelsoe sued International for breach of contract. Had the company broken its promise?

The company had not broken its contract because consideration is not evident here. The pre-existing duty rule applies here because Kelsoe had a contract already that established the terms of her employment. There was no modification available because nothing has changed.

Martin made an oral contract with Creisham Garage to work as its manager for two years. Creisham wrote Martin a letter stating that the oral contract had been made and setting forth all its terms. Creisham later refused to recognize the contract. Martin sued for breach of contract and offered Creisham a letter in evidence as proof of the contract. Creisham claimed that the oral contract was not a contract but a letter. Was it binding?

The contract is binding despite the lack of signatures. The minimum that the court requires is a memo with intent, material terms. The defendant is liable because of the intent of the letter. Signed letter is enough.

Which of the statements is true with regard to the statue of frauds: all contracts involving consideration of more than 500 must be in writing, the written contract must be signed by all parties, the statute of frauds applies to contracts that can be fully performed within one year from the date they are made, and the contract terms may be stated in more than one document.

The contract terms may be stated in more than one document

On the death of their mother, the children of Jane Smith gave their interests in the mother's estate to their father in consideration of his $1 payment to each of them and his promise to leave them the property on his death. The father died without leaving them the property. The children sued their father's second wife to obtain the property in accordance with the agreement. The second wife claimed that because the amount of $1 and future gifts given for the children's interest were so trivial and uncertain. Decide.

The court of law does not care for the amount of money for consideration. Contracts made for $1 are a free market decision, and this is binding.

Kate mailed Paul an offer with definite and certain terms and that was legal in all respects stating that it was good for 10 days. 2 days later she sent Paul a letter by certified mail (timestamped by PS at 1:14 PM) stating that the original offer was revoked. That evening, Paul emailed acceptance of the offer to Kate. She immediately phoned him to tell him that she revoked the offer that afternoon, and that he would surely receive it in the mail tomorrow. Was the offer revoked by Kate?

The offer was not revoked by Kate because the mail box rule does not apply to revoking. Unless Paul saw the letter or knew of the cancelled offer the offer is still open.

Radio Station KSCS broadcasts a popular music program. It announced that it would pay 25000 to any listener who detected that it did not play 3 consecutive songs. Steve listened to it and heard a program in which two songs were followed by a commercial. He claimed the 25000. The station refused to pay on the ground that there was no consideration for its promise to pay the amount. Was the station liable.

The station was liable for the 25000 payment because they announced to their listeners that they would pay (detriment on their behalf). This benefit was claimed by the listener (time was a detriment). There was both a benefit and detriment.

Blue purchased a travel agency business from Drye. The purchase price included payment for Dyre's goodwill. The agreement contained a covenant prohibiting Drye from competing with Blue in the travel agency business. Which of the following regarding the covenant is not correct?

The value to be assigned to it is the excess of the price paid over the seller's cost of all tangible assets.

Lester purchased a used car from Motors. He asked the seller if it had ever been in a wreck. The salesperson had never seen the car before that morning and knew nothing of its history but quickly answered Lester's question by stating, "No." In fact, the auto had been seriously damaged and although repaired, was worth much less than the value it would have been if there had been no wreck. When Lester learned the truth, he sued Motors and the salesperson for damages They raised the defense that the statement was false and had not intended to deceive Lester. Did the conduct of the salesperson constitute fraud?

There was no lie, but there was a reckless indifference to truth which constitutes fraud. The salesperson did therefore constitute fraud. Lester has a voidable contract or he can keep it and sue for the difference in price.

Able Sofa sent Noll a letter offering to sell Noll a custom made sofa for $5,000. Noll immediately sent a telegram purporting to accept the offer. However, the telegram company erroneously delivered the telegram to Abel Sofa. Three days later, Able mailed a letter of revocation to Noll and refused to sell Noll the sofa. Noll sued Able for breach of contract.

Will be held liable for breach of contract due to mailbox rule.

Dozier, and his wife, daughter, and grandson lived in a house that Dozier owned. At the request of the daughter and grandson, Paschal made some improvements to the house. Dozier didn't authorize these, but he knew of the improvements, but Dozier argued that he had not made any contract for such improvements. Was he obligated to pay for such improvements?

Yes, there is a quasi contract. A benefit was received, Dozier knew of it, would be unjust if Paschal didn't receive any payment.

With regard to an agreement for sale of real estate, the statute of frauds: requiring that the entire agreement can be in a single writing, requires that the purchase price be fair and adequate in relation to the value of the real estate, does not require that the agreement be signed by all parties, does not apply if the value is less than 500

does not require that the agreement is signed by all parties.

Sarah's home caught on fire. Through the prompt assistance of her neighbor Odessa the fire was quickly put out. In gratitude, Sarah promised to pay Odessa 1000. Can Odessa enforce this promise?

A moral obligation is not an unenforceable promise. The benefit also has to be in the present or in the future. Past benefits do not count, bargain of exchange rule.