Business Law Sections 37-45

3. Which of the following is a true statement regarding assignments?

A donative assignment is usually revocable.

3. Trevor took a job at an aeronautical company. This is the only company with the formula to build shuttles to Mars. Trevor will learn the trade secret when he starts the job. What will the company put in his employment contract?

A liquidated damages clause in case he decided to sell or gift the trade secret.

3. Shelly wants to open a smoothie shop in her neighborhood. She hires Wayne to do market research for her. Wayne is obligated to research the need for a smoothie shop in that neighborhood. Wayne conducts the research and delivers his report to Shelly, along with a bill for $1000. Shelly reviews the research and discovers that Wayne accidentally researched the wrong neighborhood. Shelly sues Wayne for breach of contract. The court should enforce a remedy suitable for which type of contract breach?

A material breach

1. Ron contracts with an online bill pay service to pay his personal bills. Ron uses the service to pay his car payment every month. According to the auto finance company, any payment made after the specified due date results in a $50 late fee. This month, the bill pay service experienced a bug in their software system. They delivered Ron's car payment, but not by the due date. Ron was charged the $50 late fee. Ron sued the bill pay service. For what type of contract breach will the court likely order a remedy in this case?

A partial breach

4. Melba contracted Fiona's Fencing Company to have a fence installed. When Fiona arrived to start the digging, she realized that the job was much tougher than she expected because the fence needed to be installed into rock, not dirt and decided to stop the work. Melba took Fiona to court. If you are the judge on the case, what will you most likely order?

A specfiic performance

2. Sometimes a contracting party reasonably believes the other party will breach the contract. What is this known as?

Anticipatory repudiation

2. Jim's Lawn Mowing eagerly accepts the contract rights to complete the mowing sessions for Silver Cliff's clients. In this agreement, Jim's Lawn Mowing would be considered which party?

Assignee

4. When one party to a contract extends only the benefits of the contract to another party it is called:

Assignment of rights

3. Which is better for the assignee, an assignment of contract or an assignment of rights?

Assignment of rights; the assignee receives only the benefits of the contract.

3. Silver Cliff Landscaping provides contract rights to Jim's Lawn Mowing to complete scheduled mowing sessions for their clients. In this situation, Silver Cliff Landscaping is acting in what capacity?

Assignor

4. I agree to mow Brown's lawn for $25 each week. After three weeks, I hurt my back and am now unable to mow lawns. I ask White to mow my lawns for me. I tell White that he can keep the money he earns. Brown agrees to let White mow his lawn for me. In this scenario, I am the:

Assignor

4. A pharmaceutical company has signed a contract with the government for a new flu vaccine in return for financial payment. They have let a small PR company handle the marketing strategy of their vaccine, but have otherwise executed the contract themselves. Why is this an example of delegation?

Because they have only delegated a small task while otherwise executing the contract themselves

5. I agree to mow Brown's lawn for $25 each week. After three weeks, I hurt my back and am now unable to mow lawns. I ask White to mow my lawns for me. I tell White that he can keep the money he earns. Brown agrees to let White mow his lawn for me. In this scenario, White is the:

Both the assignee and the obligee

5. Sometimes a contracting party has a right to request that the repudiating party provide evidence that he or she will fulfill the obligations due under the contract. What is this known as?

Demand for assurances

5. A writer has made a deal with a publishing company which has delegated the proofing and spelling check to an outside company. The proofing company has not completed its job by the deadline and has thus cost both the writer and the publishing company a large amount of money. Who can be held legally liable in such a scenario?

Either the writer or the publishing company can sue the proofing company

1. Stern wanted some quick cash so he removed the real diamond from his wife's engagement ring, replaced it with a fake diamond, and posted the ring for sale on an popular online marketplace. He received an offer and sold the ring to Damon. Damon took the ring to be appraised and found out he'd been duped. What might the judge do?

Impose punitive damages on Stern for selling a phony diamond.

3. What is a party who intends to complete a contract commonly called?

Innocent party

1. Which of the following are the rights/duties of a third party beneficiary?

Is not obligated to the terms of the contract

2. What effect does the death or bankruptcy of the assignor have on the assignment?

It will automatically revoke the assignment.

4. Callie buys her husband James a motorcycle from ABC Automotive. ABC Automotive delivers James a different motorcycle than the one Callie purchased for him. What is James and what power does he have in this situation?

James is the third party beneficiary and he has the power to sue.

3. Which of the following are the rights/duties of a promisor?

Makes a promise to perform in a contract

2. Which of the following are the rights/duties of a promisee?

May sue the Promisor for non-performance of the contract terms

1. Jeremy wrote a letter promising a donative assignment of his car to Susie. Jeremy has now decided he would like to revoke this assignment. Will he be able to do so?

No; donative assignments cannot be revoked if they are in writing.

5. When no real injury exists or it is of an insignificant amount, which remedy would a judge impose?

Nominal Damages

5. Which type of assignment generally cannot be transferred from one company to another?

Non-compete agreement

5. An assignor can revoke a donative assignment by:

Notifying the assignee of the revocation

1. I agree to mow Brown's lawn for $25 each week. After three weeks, I hurt my back and am now unable to mow lawns. I ask White to mow my lawns for me. I tell White that he can keep the money he earns. Brown agrees to let White mow his lawn for me. In this scenario, Brown is the:

Obligor

1. Sue's Cleaning Service is under contract to clean the offices of Park Motors. Sue owes Bill's Janitorial Supply for some specialty cleaners. Sue assigns only the rights to her contract with Park Motors to Bill's Janitorial Supply to pay what she owes. Park Motors is now obligated to pay Bill's Janitorial Supply. In this agreement, Park Motors becomes the

Obligor

1. Which is a type of legal repudiation?

One party clearly tells the other party that he can't, or won't, fulfill the obligations due under the contract.

1. Simone was walking down the street when suddenly her heel became lodged in a sidewalk crack. She fell and broke her leg, but a man rushed over and quickly tied a tree limb to her leg and began treating an open cut. He then wrote her a bill for $150.00 for serviced rendered. What type of contract allows for this?

Quasi-contract

4. John orders 25 blue custom tee shirts for a family reunion. Just before they are to be delivered, the tee shirt company calls to say they have run out of blue tee shirts and cannot fulfill the order. What is this action by the tee shirt company called?

Repudiation

5. What kind of equitable remedy happens when a previously existing contract is breached, then rewritten to the satisfaction of both parties?

Rescission

2. I agree to mow Brown's lawn for $25 each week. After three weeks, I hurt my back and am now unable to mow lawns. I ask White to mow my lawns for me. I tell White that he can keep the money he earns. Brown agrees to let White mow his lawn for me. White mows Brown's lawn two weeks in a row but Brown refuses to pay White. White can:

Sue Brown for breach of contract

3. In which of the following cases will delegation generally be prohibited?

The contract concerns a unique or personal performance

4. What happens when a party relies on a gratuitous promise to their substantial detriment?

The promise can be enforced under the doctrine of promissory estoppel.

5. What duties does a Third Party Beneficiary have to a contract?

This party has no legal duties, only benefits from a contract.

1. Thomson Pharmaceuticals has commissioned New Wave to design their new marketing strategy for $200,000. New Wave always uses the services of the legal firm Reuters and Sons and delegated creating part of the website to an IT company called Professional Industries. Identify the original obligor from the above scenario:

Thomson Pharmaceuticals

5. Contracts are usually made in an effort to formalize an agreement and to protect the parties in the agreement. A contract will place an obligation on each of the contracting parties. In contract law, what is the definition of obligation?

a legal duty to do something or to refrain from doing something

3. Bubba is the BBQ King of the Community. He recently purchased a smoker and leased a piece of land in the community to smoke his world famous ribs. The landlord had no idea what Bubba planned for the space and neighbors began complaining about smoke coming through their windows and doors. The landlord asked Bubba to stop smoking meats to which Bubba refused. The landlord took Bubba to court to get _____.

an injunction

2. Bianca purchased a home from Howard. She made the purchase because Howard told her that her favorite opera singer, Paulo Orvietto, once slept in the home. After the contract was signed, Bianca found out that Orvietto actually slept three houses down, not at the house she purchased. She sued Howard for _____.

misrepresentation

2. Delegation occurs when a party to the contract transfers _____.

responsibility and authority for a particular contractual duty

2. The reason for compensatory damage is to _____.

restore an injured party back to where they would have been if a breach had not occurred

4. A total breach of contract occurs when a party wholly fails to fulfill his or her obligations under a contract. Which of these examples demonstrates a total breach of contract? For each example, Rick has hired Mitch to build a tree house in the large oak tree in his backyard. The tree house is for his grandchildren. It should have three windows and be completed in time for them to enjoy during their visit for Spring Break.

On the last day of the grandchildren's visit, Mitch calls Rick to ask him when he should start on the tree house.

4. Brenda purchased all of the supplies to sew Mary's wedding dress. A few weeks before the wedding, Mary called to inform Brenda that her future husband ran o with her sister. Although Brenda was sympathetic to her heartbreak, she wanted to be paid for the stuff she purchased. So, she took Mary to court. Since the fabric wasn't cut yet, what might the judge recommend?

The judge may recommend that Brenda sell the fabric to another seamstress or return the fabric to the supplier in order to reduce the amount of remedy.

2. Jorge hires Glenn to cater his parent's anniversary party. They agree that Glenn will provide barbecue pork ribs, smoked chicken, coleslaw, baked beans and a cake that will serve 60 people. Jorge will pay Glenn $500. Glenn provides the food for the party. However, the meats were partially raw, he forgot the side dishes and the cake was decorated with Happy Birthday. Jorge had to go to the grocery at the last minute to buy a new cake and he also found enough fried chicken to serve all the guests, the cost was significantly higher: $850. Of the remedies ordered below, which would be the appropriate enforcement for this type of contract breach?

This is a material breach, and significant failure to fulfill the contract. Jorge will be excused from paying Glenn for the food he brought because it could not be served. He will also be awarded damages of $350, the difference in cost of the food from the grocery.