Contracts and Sales - Kinsler Fall 2024

How does one distinguish between a "legal detriment" and a "condition of a gift"?

"It is often difficult to determine whether words of condition in a promise indicate a request for consideration or state a mere condition in a gratuitous promise. An aid, though not a conclusive test in determining which construction of the promise is more reasonable[,] is an inquiry whether the happening of the condition will be a benefit to the promisor. If so, it is a fair inference that the happening was requested as a consideration.

A, an infant, promises B to pay him $100 in consideration of a bicycle which B transfers to him. On his 18th birthday, A again promises to pay B $100 for the bicycle. B sues A for money damages. How much may B recover? Same facts except that on his 18th birthday A promises to pay B $80 for the bicycle. B sues A for money damages. How much may B recover?

$100 $80

What is an offer to enter into a unilateral contract

(1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance (i.e., an offer to enter into a unilateral contract), an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. (2) The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.

The Mailbox Rule (i.e., dispatch rule) does not apply where:

(1) the offeror stipulates that acceptance is not effective until received; (2) the offeror unambiguously mandates a method of acceptance (e.g., by fax only) different than that used by the offeree; or (3) the offeree's method of acceptance is not reasonable under the circumstances (e.g., offeree uses U.S. mail to accept an email offer to purchase ripe bananas). (4) the offeree seriously misaddresses the letter or fails to include the proper postage (in which case the acceptance is not effective until received by the offeror).

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.

(A) is incorrect b/c there is no detrimental reliance (D) is wrong b/c there was no consideration and that it is revoking the offer that is still good for a year but only revokable for 90 days. (C) No consideration given by both sides, but he could not revoke the offer between 90 days between merchants. (B) is correct

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 as you order during the next calendar year. We assure you that this offer and prices in the catalog will remain firm throughout the coming year." No other correspondence passed between them until the following April 15, 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 ? A. Yes, b/c Stationer had not revoked its offer before April 15. B. Yes, b/c a one-year option contract had been created by Stationer's offer. C. No, b/c under applicable law the irrevocability of Stationer's offer was limited to a period of three months. D. No, b/c Lawyer did not accept Stationer's offer within a reasonable time.

(B) they did not pay for it or put money down to secure the offer (D) reasonable time is not needed for the length of a contract b/c that's only if there is no end date. (C) irrevocable after 3 months and there is no attempt to revoke the offer; the only thing that happens after 90 days is irrevocable but not the expiration of the deal (A) Is correct

Rob, an auto retailer, had a daughter, Betsy, who needed a car but had only $3K with which to buy one. Rob wrote to her, "Give me $3K and I'll give you the car that we have been using as a demonstrator." Betsy thanked her father and paid him the $3K. The car was reasonably worth $10K. After Betsy had paid the $3K, but before the car had been delivered, one of Rob's sales staff sold and delivered it to a customer for $10K. 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, b/c Rob's promise was supported by bargained-for consideration B. Yes, b/c Rob's promise was supported by the moral obligation a father owes his child as to the necessities of life C. No, b/c the payment of $3K 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

(IDK - GUESSING C

When is an acceptance effective (the "Mailbox" or "Dispatch" Rule)?

(a) an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but (b) an acceptance under an option contract is not operative until received by the offeror.

How many offerees may accept?

1 person

What does NOT constitute consideration:

1. Illusory Promises 2. Past Consideration Exceptions: A. Statute of Limitation cases B. Infancy cases C. Restatement (Second) of Contracts § 86 3. Preexisting Legal Duty Exceptions: A. Restatement (Second) of Contracts § 89(a) ("modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made") (majority view—according to the National Conference of Bar Examiners) B. UCC § 2-209 C. Restatement (Second) of Contracts § 73 (third-party exception) D. Accord and Satisfaction

Examples of insufficient consideration:

1. Love and affection 2. Performing a service (e.g., a voodoo curse) the law believes does not exist 3. Nominal (Sham) consideration Exception: nominal consideration is sufficient for option contracts; indeed, the Restatement (Second) of Contracts states that the mere recital of nominal consideration is sufficient for option contracts 1464-Eight, Ltd. v. Joppich 4. A promise to forbear pursuing a claim the promisor knows is frivolous

A gambler owed his uncle $9,000, which was due on January 1. On January 15, the gambler offered to pay the uncle $8,000 if he would agree to accept the amount in full satisfaction of the $9,000 debt. The uncle agreed and the gambler paid him the $8,000. If the uncle then sues the gambler for $1,000, the uncle will: A. Win, because the gambler had an obligation to pay $9,000 on January 1. B. Lose, because of the uncle's agreement to accept $8,000. C. Lose, because there was an accord and satisfaction. D. Lose, because the uncle agreed to the $8,000 after the January 1 due date.

A

Dealer had a contract with City to supply them with 5 computers a month for 7 months. At the start of 4th month, Dealer realized that his supply of computers had dwindled to 1. Dealer immediately sent a fax to Supplier asking for a quote for 20 computers to be delivered before the first of next month. Supplier responded by fax: "I can deliver 20 computers from my stock at a cost of $1,000 per computer." Dealer responded the next day: "I will buy 20 computers at a cost of $1,000 per computer." Assuming no further communications, has a contract been formed? A. Yes, b/c dealer's fax ordering computers was an acceptance of supplier's offer B. Yes, b/c supplier's fax was an acceptance of the offer in dealer's first fax C. No, b/c the second fax sent by dealer was an offer that was never accepted by supplier D. No, b/c none of the communications was worded in such a way as to be definite and certain enough to be offers

A

The owner of a classic car wrote a letter to his trusted car mechanic offering to sell him the auto for $45K if he bought it before April 15. The mechanic researched the value of the car and discovered vehicles were being sold for $48K. On April 1, he left his home to drive to the car owner's when he received a fax stating that he had changed his mind and the auto was no longer for sale. The mechanic drove to the owner's house anyway, where the auto was parked with a "for sale" sign in its window. The mechanic knocked, tendered the $45K check and demanded the car. The car owner refused. The mechanic brings an action for breach of contract. He will recover: A) Nothing, b/c the offer to sell was withdrawn before he accepted B) $45K, b/c the owner failed to perform under the contract of sale C) $3K, b/c tender of the purchase price was an acceptance of the offer D) $3K, b/c owner's letter created an enforceable option

A

A offers to deliver to B at $2 a bushel as many bushels of wheat, not exceeding 5,000, as B may choose to order within the next 30 days. B accepts, agreeing to buy at that price as much as he shall order from A within that time. What did A promise to do that, but for the contract, A was not obligated to do? What did B promise to do that, but for the contract, B was not obligated to do? So is there consideration?

A agreed to sell B wheat at $2 per bushel for the next 30 days. B agreed to Nothing No. B's acceptance involves no promise by him and thus is not consideration.

(A) they had a preexisting legal duty second best is (B) want to argue there is no contract before you argue there was a contract but its not enforceable; in order to plead economic duress there needs to be no other alternative

A dairy farmer hired a local company to assemble milking machines that the farmer had purchased. The written contract between the parties provides that the company would assemble and install the milking machines in the farmer's dairy barn within 30 days, in time for the arrival of additional cows, and the farmer agreed to pay the company $10,000. Three weeks into the job, the company realized that it would lose $2,500 on the job, due to a new wage agreement forced on the company by its employees' union after the contract was executed. The company approached the farmer and told him that the job could not be completed for less than $12,500. After some discussion, the farmer and the company executed an agreement obligating the farmer to pay an additional $2,500 upon completion of the job. The company completed the work on time, but the farmer now refuses to pay the additional $2,500. In a suit by the company against the farmer, which of the following would be the farmer's strongest position? A. He has no duty to pay the company more than $10,000, because this was a contract for services and the modification was not supported by consideration. B. The modification is voidable because the company knew that the farmer needed the machines up and running in 30 days and took advantage of his duress. C. The company's mistake regarding the cost of providing its services is not grounds for voiding the original contract. D. During initial contract negotiations, the company assured the farmer that the milking machines would be assembled and installed for no more than $10,000.

On June 1, 2018, Parent and Child, encountered T. Child said to T, "lend me $1K to buy a used car? I'll pay you back with interest one year from today." Parent added, " if she doesn't pay, I will." T handed to Child a check for $1K and Child subsequently used the funds to buy a used car. When the debt became due, both Child and Parent refused to repay. 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 SOF as a defense if the actual purpose of the loan was to buy a car for Parent (instead of Child)?

A is Wrong. In exchange for Parent's promise, T made the loan to Child which T was not otherwise obligated to do. B is 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 is 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 is a no. If the primary purpose of Parent's promise was to benefit Parent, Parent's oral promise would be enforceable.

Laura wanted to pull a prank on Billy. She told her friends that she would pretend to offer Billy $300 for his old laptop . She knew that Billy needed money and his computer had a value of $50. When Laura offered Billy $300 for his computer, she explained by saying, "I think there's a collector's item underneath all those dents and scuffs." Billy replied, "I accept your offer and will deliver it tomorrow." Laura said, "Thanks." When Billy presented Laura with the computer the next day, Laura laughed. Laura said, "Nobody wants your junky laptop! I was pulling a prank." It is most likely that: A) A contract exists because he presented his computer to her the next day B) A contract exists if he reasonably believed that she made a serious offer, which he accepted C) No contract exists b/c she didn't intend to make an offer D) No contract exists b/c she told her friends that the offer was made in jest

A is wrong because this is an offer to enter into a bilateral contract. B is correct b/c from his perspective it was a serious offer and he accepted. C is wrong and D is wrong because of Lucy v. Zehmer.

When does negotiation rise to the level of an "offer"?

A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.

What is the legal effect of an acceptance?

A party cannot unilaterally change the terms of a contract Exception: unless it was agreed upon that a party could unilaterally change the contract. Does not constitute an acceptance If the seller timely notifies the buyer that the shipment is offered only as an accommodation to the buyer. Have to do before or with the shipping. And then person may accept the accommodation or send it back.

A, knowing that B is going to college, promises B that A will give him $5,000 on completion of his course. B goes to college and borrows and spends more than $5,000 for college expenses. When he has nearly completed his course, A notifies him of an intention to revoke the promise. Is A's promise binding?

A's promise is binding, and B is entitled to payment on completion of the course without regard to whether his performance was "bargained for" consideration.

Six types of contracts are subject to the Statute of Frauds:

A. Executor/Administrator Contracts B. Suretyship Contracts C. Contracts Made in Consideration of Marriage D. Land Transactions E. Contracts with a Term of More than One Year F. Contracts for the Sale of Goods for $500 or More

O makes the following statement to W: "If you agree not to drink alcoholic beverages for the next three years, I will pay you $25,000." W responds: "I accept." At the time of the agreement W is age 17 and the jurisdiction's drinking age is 21. Is the agreement supported by consideration? A. O's legal detriment? B. W's legal detriment? C. Bargained-for exchange?

A. O's legal detriment? Pay 25K B. W's legal detriment? Nothing, because he's not legally allowed to drink C. Bargained-for exchange? No

O makes the following statement to W: "If you agree not to drink alcoholic beverages, use tobacco, play cards for money, or swear for the next two years, I will pay you $25,000." W responds: "I accept." At the time of the agreement W is age 18. It is legal for an 18-year-old to use tobacco, play cards for money, and swear, but the jurisdiction's drinking age is 21. Is the agreement supported by consideration? A. O's legal detriment? B. W's legal detriment? C. Bargained-for exchange?

A. O's legal detriment? To Pay B. W's legal detriment? To not do things he was legally allowed to do C. Bargained-for exchange? 3/4 legal/1 illegal does it make it no consideration? There IS consideration! He still promised not to do something he was legally entitled to do.

O makes the following statement to W: "If you wash my car, I will pay you $25." In response, W immediately (and completely) washes O's car. Is the agreement supported by consideration? A. O's legal detriment? B. W's legal detriment? C. Bargained-for exchange?

A. O's legal detriment? To pay B. W's Legal detriment? To wash the car and consideration was completed by the ACTION of completing the wash C. Bargained-for exchange? Yes

O makes the following statement to W: "If you wash my car, I will pay you $25." W responds: "I accept." Is the agreement supported by consideration? A. O's legal detriment? B. W's legal detriment? C. Bargained-for exchange?

A. O's legal detriment? To pay $25 B. W's legal detriment? To wash the car C. Bargained-for exchange? Yes

O makes the following statement to W: "If you agree not to drink alcoholic beverages for the next three years, I will pay you $25,000." W responds: "I accept." At the time of the agreement W is age 22 and the jurisdiction's drinking age is 21. Is the agreement supported by consideration? A. O's legal detriment? B. W's legal detriment? C. Bargained-for exchange?

A. O's legal detriment? to pay B. W's legal detriment? avoid drinking which he was legally allowed to do C. Bargained-for exchange? yes

What is a merchant's firm offer

An offer by a merchant to buy or sell goods in a signed record which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months.....

What is an option contract

An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer.

A publishes an offer of reward seeking the identity of the person who committed a particular crime. Although the offer is to the general public, how many offerees may accept?

Any person learning of the offer has power to accept...but the giving of the information by one terminates the power of every other person.

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

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 payment. The contractor claims that he is not responsible b/c the form he sent says that inspection must be completed within 20 days after construction, and the company did not timely inspect. However, company's form indicates it has 30 days to inspect. Who is responsible? A. The owner, b/c the contractor's form governs B. The contractor, b/c the company's form governs C. Neither, b/c there is no agreement on this term D. Both terms are knocked out and the party who is responsible is supplied by trade usage or by a court

B

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

B is wrong C is wrong because you have to promise to hold it open; never an irrevocable offer b/c they did not promise "please ship" acceptance could be by (1) conforming goods (2) nonconforming goods (3) spoken correspondence D. yes because the order was an offer that seller effectively accepted before buyer attempted to revoke it

A; she did not reasonably rely on it

Becky, age 92, has only $25,000 to her name and is fearful that she will outlive her financial resources. On August 10, 2012, Becky explains her concern to her wealthy grand-nephew Logan. On that same day, by signed writing, Logan makes her this promise: "When you exhaust the 25,000 you now have, I will provide you, as a gift, any amount of money you request, up to a maximum of $50,000 per year for the remainder of your life." In September 2012, Becky's grandson Thane asks Becky for $25,000. Unable to resist, and believing that she can turn to Logan for any money she may need, Becky gives Thane the $25,000 in her bank account—all that she has in the world. Becky then contacts Logan. Explaining what she has done, she asks him for $25,000. Logan responds, "I did not make my promise to you so that you could give the money away to Thane. I'm not going to keep the promise." To what extent does the doctrine of promissory estoppel require that Logan keep his promise of August 10, 2012? A. Not at all, because Becky did not reasonably rely on it. B. To the extent of $25,000, because that is the extent to which Becky relied on it. C. To the extent of $25,000, because that is less than amount he promised to pay per year. D. Fully, because Becky believed that Logan would honor his promise.

Bi-lateral vs. Unilateral

Bilateral - accepted in modern law by commencement of action or by promise; Rewards, prices, and bonuses and those that clearly state only you can claim by _____ are unilateral - 2nd restatement of contracts presumes bilateral contracts

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 $50K, payable ten days after delivery. Encountering unexpected expenses in the purchase of steel required for the dies, Mako advised Buyem that production costs would exceed contract price; and on July 1 Buyem and Mako signed a modification to the June 1 agreement increasing the contract price to $60K. After timely receipt of 12 sets of conforming dies, Buyem paid Mako $50K but refused to pay more. Is Mako entitled to $10K for breach of Buyem's July 1 promise? A. No, b/c Mako provided no new consideration for the July 1 agreement B. No, b/c Mako had a pre-existing duty to perform C. Yes, if Mako was acting in good faith D. Yes, but only if Mako agreed to deliver the dies prior to August 1

C

Which of the following transactions is most likely covered by Article 2? (A) Blood injected into a patient as part of an operation. (B) A product put on a person's hair as part of a haircut. (C) The sale of the unborn young of animals. (D) A lease of a rental car by an agency.

C

B - it was a good faith dispute and the amount is disputed

Client consulted Lawyer about 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 would cost about $5,000. 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. 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 $5K payable to Lawyer marked, "Payment in full for legal services." Despite reading the "Payment in full..." language, Lawyer, without any notation of protest or reservation of rights, endorsed and deposited the check. 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.

A burglar stole Collecta's painting valued at $400K. Collecta, had insured the painting for $300K with Artistic Insur. Co., and promised to pay $25K to Snoop, investigator for Artistic, if he returned the painting to her in good condition. Artistic permits investigators to accept and retain rewards from policyholders for the recovery of insured property. Snoop recovered the picture and returned it. If Collecta refuses to pay Snoop, and he sues for $25K, what is the probable result? (A) Collecta wins, b/c Snoop owed Artistic a preexisting duty to recover the picture if possible (B) Collecta wins, b/c Artistic, Snoop's employer, has a preexisting duty to return the recovered painting (C) Snoop wins, b/c Collecta will benefit more from return of the $400K painting than from receiving the $300K policy (D) Snoop wins, b/c the preexisting duty rule does not apply if the promisee's duty was owed to a third person.

D

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

A debtor owed a lender $1,000. The statute of limitations barred recovery on the claim. The debtor wrote to the lender, stating, "I promise to pay you $500 if you will extinguish the debt." The lender agreed. Is the debtor's promise to pay the lender $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

In a contract for the sale of goods, a merchant offeror's form states, "This contract is governed by the law of Texas." The merchant offeree's form states, "This contract is governed by the law of Vermont." In a jurisdiction that employs the knockout rule, which jurisdiction supplies the governing law? A. Texas, because the offeror should be able to choose the applicable law. B. Texas, because Vermont is materially different. C. Vermont, because it is not materially different from Texas. D. Whichever state prevails when the UCC choice of law rules are applied.

D

Owner's dog has run away from home. On June 1, Finder finds Owner's dog. On June 2, Owner posts a reward in the local newspaper. On June 3, Finder returns the dog to Owner but does not receive a reward. On June 4, Finder learns (for the first time) of the reward and telephones Owner stating, "I accept." Do the parties have a contract and, if so, when was it formed? A. The parties have a contract and it was formed on June 1. B. The parties have a contract and it was formed on June 3. C. The parties have a contract and it was formed on June 4. D. The parties do not have a contract.

D

Walmart purchases a full-page ad in the weekly newspaper. In this week's ad, Walmart lists a Samsung DVD player for $75. The newspaper, however, made a mistake. The advertisement should have listed the DVD player at $475. Upon seeing the ad, Buyer goes to the nearest Walmart, walks up to the electronics department, shows the advertisement to the clerk, and before the clerk can say a word, Buyer says, "I accept." At this point in time, do the parties have a contract? A. Yes, because Buyer accepted before Walmart revoked the offer. B. No, if Walmart attempted to retract the advertisement within a reasonable time after its publication. C. No, because such contracts must be in writing. D. No, because Buyer's attempted acceptance was nothing but an offer, which Walmart has yet to accept.

D

In a state where gaming is legal, a professional gambler ran up a tab of $50K. A longstanding agreement between the gambler and the casino, once the gambler's tab reached $50K he was required to repay the debt in 5 monthly installments of $10K before putting any additional charges on his tab. After making 3 repayments, the gambler approached the casino owner and offered an immediate payoff of $15K in cash as payment in full. The casino owner needed money, so he agreed. The gambler made the cash payment of $15K that same day. A few days later, the casino owner demanded $5K from the gambler. Does the casino owner have a right to collect $5K from the gambler? A. Yes, b/c the gambler had a preexisting duty to pay the full $50,000. B. Yes, b/c the casino owner acted under duress when he accepted the $15K as payment in full. C. No, b/c there was a discharge by release D. No, b/c there was accord and satisfaction

D Gambler paid earlier; can only pay a lesser amount when both parties give up something. He agreed to pay early or if the amount was undisputed and that would be an accord

Bobby, age 17, enters into an oral agreement to purchase Sally's 1974 Ford Pinto for $500. Prior to either party performing, Sally (age 21) repudiates. Bobby brings suit for breach of contract. If Sally wins, it will be because of: A. Bobby's age. B. Sally's age. C. Lack of consideration. D. The Statute of Frauds.

D (sale of goods $500 or more)

Company contracted with Builder to construct a new headquarter for a fixed price of $100 million. At the time of the contract, structural steel was widely available and included in the contract at $6 million. Before work began, a tornado shut down the biggest structural steel supplier, and the price increased by 20%. The parties 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. If the builder sues the company for $1 million, is the builder likely to prevail? (A) No, b/c the modification was never put in writing signed by the party to be charged (B) No, b/c there was no consideration for the modification (C) Yes, b/c the company's promise was supported by consideration. (D) Yes, b/c the modification was fair in view of the unanticipated increase in price

D yes because it was fair and equitable in view of the unanticipated increase in the price of the steel

idk

Dominique obtained a bid of $10K to tear down an old building and another bid of $90K to replace it in which she planned to operate a sporting goods store. Dominque asked Hardcash for a $100K loan. After reviewing the plans, Hardcash in a signed writing promised to lend $100K and repayable over ten years in equal monthly installments at 10% annual interest. Dominique promptly accepted the demo bid, but Hardcash thereafter refused to make the loan. Despite efforts, Dominique was unable to obtain another loan. Does Dominique have a cause of action against Hardcash? (A) Yes, b/c by having the building demoed, she accepted Hardcash's offer to make the loan. (B) Yes, b/c her reliance on Hardcash's promise was substantial, reasonable, and foreseeable. (C) No, b/c there was no bargained-for exchange of consideration for Hardcash's promise to make the loan. (D) No, b/c Dominique's inability to obtain a loan from any other source demonstrated that the project lacked the financial soundness that was a constructive condition to Hardcash's performance.

A publishes the following ad in the newspaper: "I will pay $100 for every 1860 Peace Dollar I can find." B, C, and D all come forward with 1860 Peace Dollars and each wants $100. What result?

Each has made a contract independent of the others, and is entitled to the $100 if he later contracts the disease. This is due to the language of the statements. He says he will pay for any he can get his hands on where the other individual was looking to identify an individual and there is no expectation of reward once an individual has been identified.

B

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 damages, 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.

S, executor of D's estate, promises C, a creditor of D at the time of D's death, that he (S) will personally guarantee payment of D's debt to C.

Is this promise within the SOF? Yes, S's promise is within (i.e., subject to) the executor provision.

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?

It is an "accord," which suspends Sally's duty to pay the $1,000. It is a "satisfaction," which excuses Sally's duty to pay the $1,000. 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).

D

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.

On December 1, 2020, A and B contract orally for A's employment by B at a stated salary for a year beginning on December 15, 2020. Is the contract within the SOF?

Majority: The contract is within the one-year provision, since it has a term of more than one year from the date of the agreement.

When are the parties bound by an oral agreement when a later writing is contemplated?

Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations

Is the offeree's motive relevant in determining whether the offeree has accepted the offer?

Motive is irrelevant, as long as s/he is aware of the offer. "The fact that a promise does not of itself induce a performance or return promise does not prevent the performance or return promise from being consideration for the promise"

S, executor of D's estate, contracts with C for funeral services, promising orally "I will make sure that D's estate pays you." Is this promise within the SOF?

No, S's promise is not within the executor provision.

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? Would B's promise be enforceable under the Material Benefit Rule

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

A places an ad in the local newspaper offering a reward of $50 for return of his lost wallet. Without knowledge of the reward, B finds the wallet and returns it to A. One day later, B learns of the reward and demands $50 from A. Is B legally entitled to the $50? What if B learned of the reward after she found the wallet but before she returned it to A? If A wishes to revoke the offer (before anyone has accepted), how could A do so?

No, because B was unaware of the reward at the time she finished the acts necessary to accept the offer. NOTE: Knowledge of the offer is not necessary to collect a standing offer of reward made by a governmental body (e.g., A city ordinance provides that a standing reward of $1,000 will be paid for information leading to the arrest and conviction of anyone guilty of arson within the city limits. A furnishes such information. A is entitled to the reward whether or not he knew of the reward.) B would be entitled to the reward because she knew of the reward before finishing the acts necessary to collect it. Substantially Same Publicity Rule: A must give equal publicity (e.g., same newspaper, same number of days, etc.) to the retraction as he did to the offer.

B offers to marry A. A orally accepts the offer. Are these promises subject to the Statute of Frauds?

No, the Statute of Frauds does not apply. In fact, pure breach of promise actions have been abolished in most states. Tennessee, however, still recognizes pure breach of promise actions. In Tennessee, a breach of promise action may be proved only by (1) a writing signed by the party against whom the action is brought or (2) the testimony of at least two disinterested witnesses. Tenn. Code § 36-3-401.

A offers to lend B $1,000 for one year at 10% interest. After making the offer but before its acceptance a usury law is enacted, prohibiting future loans bearing interest at more than 8%. Is the offer still valid?

No, the offer is terminated by illegality.

A offers to sell his Rembrandt painting to B for $1,000,000. Before B accepts, the painting is destroyed in a fire that was not the fault of A or B. Is the offer still valid?

No, the offer is terminated by intervening destruction of the subject matter.

A writes B, "I am eager to sell my house. I would consider $20,000 for it." B promptly answers, "I will buy your house for $20,000 cash." Is there mutual assent?

No. A's letter is a request or suggestion that an offer be made to him. B has made an offer.

Buyer sends a letter to Seller offering to buy Blackacre for $100,000. Coincidentally, on the same day Seller sends a letter to Buyer offering to sell Blackacre for $100,000. Is there mutual assent?

No. Under the common law, two offers that cross in the mail that have identical terms do not create a contract because neither party was aware of the other's offer. The UCC has a more flexible rule.

Does mutual assent have to be established by written or oral terms (i.e., "express" terms)?

No; The manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act.

Seller orally offers to sell a copy machine to Buyer for $400. Buyer accepts. Is this contract within the Statute of Frauds?

No; not subject to SOF (under $500)

By what methods may the offeree manifest assent to the offer?

Not that UCC requires specific way to accept, but that the offeror can make any terms of acceptance that they want.

A because it follows UCC § 2-207 (1) and (2)

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.

B because it is unknown if W has consented to the conditional terms and the contract is not enforceable until W expressly assents to the new conditions.

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 disclaimed the implied warranty of merchantability. 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 warranty disclaimer clause in T's form is a material alteration of W's offer. B. There is no contract unless W thereafter consents to the warranty disclaimer clause in T's form. C. There is an enforceable contract whose terms include the warranty disclaimer clause in T's form because such clause is not a material alteration of W's offer. D. There is an enforceable contract whose terms do not include the warranty disclaimer clause in T's form because such clause is a material alteration of W's offer.

D because it follows UCC § 2-207 (1) and (2)

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 disclaimed the implied warranty of merchantability. 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 warranty disclaimer 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 warranty disclaimer clause in Topline's form. C. There is an enforceable contract whose terms include the warranty disclaimer clause in Topline's form because warranty disclaimers are expressly authorized by the UCC. D. There is an enforceable contract whose terms do not include the warranty disclaimer clause in Topline's form.

D

On September 15, a highlighter manufacturer faxed a large office supply company offering to sell the supply company 50K highlighters for $25K. The supply company faxed back the following communication: "We accept your offer. Please box 125 highlighters per case in post-consumer cardboard shipping boxes." Assuming the existence of a valid contract, its terms would include: A. Only those terms set forth in the manufacturer's fax of September 15, b/c the manufacturer did not assent to any enlargement of the shipping terms. B. All terms set forth in the manufacturer's offer plus consistent additional terms proposed in the office supply company's acceptance. C. All terms set forth in the manufacturer's offer plus those in the office supply company's attempted acceptance that did not amount to a material alteration of the manufacturer's offer. D. All terms set forth in the manufacturer's offer plus all those in the office supply company's purported acceptance that did not amount to a material alteration of the manufacturer's offer and to which the manufacturer did not object within a reasonable time.

Can silence be an acceptance?

Silence DOES NOT mean an automatic acceptance

B

Tenant rented a building from Landlord and operated a business in it. The building's front window was smashed 6 months before expiration of the lease. Tenant, was obligated to pay for repairs, and promptly contracted with Glazier to replace the window for $2K due 30 days after satisfactory completion of the work. Glazier then replaced the window in full satisfaction of the contract. 60 days later, Tenant mailed a $1K check to Glazier stating "This check is in full and final satisfaction of your $2k window replacement bill." Without noticing, Glazier cashed the check and sues Tenant for the rest. If Tenant's only defense is accord and satisfaction, is Tenant likely to prevail? A. No, b/c Glazier failed to notice Tenant's notation B. No, b/c the amount owed was liquidated and undisputed. C. Yes, b/c by cashing the check Glazier impliedly agreed to accept the $1,000 as full payment D. Yes, b/c Glazier failed to write a reservation-of-rights notation on the check before cashing it

Would this problem with Laura, Billy, and the computer be governed by the UCC or common law?

The UCC because it involves the sale of goods.

A orally promises B to sell him five crops of potatoes to be grown on a specified farm in Minnesota, and B promises to pay a stated price on delivery. Is this contract within the SOF?

The contract is within the Statute of Frauds. It is impossible in Minnesota for five crops of potatoes to mature in one year.

C offer, counteroffer with accommodation, and could accept or deny; did he notify the buyer that there was an accommodation before or after the shipment

The owner of an apparel store faxed an order to her regular supplier for 100 pairs of wool gloves at $10 a pair, the supplier's list price. The supplier checked his inventory and discovered that he had only 90 pairs of wool gloves, which he shipped to the store owner along with 10 pairs of wool blend gloves that also had a list price of $10 a pair. The supplier also enclosed a note to the store owner explaining that he did not have enough stock of wool gloves to fill her order, and that, in the hopes she could use them, he was sending wool blend gloves at the same list price to make up the balance of the shipment. On receipt of the shipment and note, what are the store owner's options? A. The store owner may accept the shipment, in which case she must pay the supplier $1,000 less any damages sustained because of the nonconforming shipment, or she may reject the shipment, in which case she has no further remedy against the supplier. B. The store owner may accept the shipment, in which case she must pay the supplier $1,000, or she may reject the shipment, in which case she may recover against the supplier for breach of contract. C. The store owner may accept the shipment, in which case she must pay the supplier $1,000, or she may reject the shipment, in which case she has no further remedy against the supplier. D. The store owner may accept the conforming part of the shipment and reject the nonconforming part, in which case she must pay the supplier $900 less any damages sustained because of the nonconforming part of the shipment, or she may reject the entire shipment, in which case she may recover against the supplier for breach of contract.

A orally promises to work for B, and B promises to employ A for five years at a stated salary. Are the promises within the SOF? Same facts, except the agreement provides that either party may terminate the contract by giving 30 days notice at any time. Is the agreement within the SOF?

The promises are within the Statute of Frauds. Majority: The agreement is one of uncertain duration and is not within the one-year provision of the Statute.

What modes of acceptance (i.e., promise or performance) are proper

Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance (i.e., an offer to enter into a bilateral contract), the tender or beginning of the invited performance . . . is an acceptance by performance.

Seller orally offers to sell a copy machine to Buyer for $500. Buyer accepts. Is this contract within the Statute of Frauds?

Yes

A loans money to B, and B gives A a mortgage on B's real property to secure the loan. Is the mortgage subject to the SOF?

Yes, a mortgage is an "interest in land"

A orally promises to convey an easement to B for consideration. Is this agreement within the SOF?

Yes, an easement is an "interest in land"

B offers to marry A. To induce A to accept the offer, B orally promises to transfer property to A. A accepts the offer. Are these promises subject to the Statute of Frauds?

Yes, both B's promise to marry and B's promise to transfer property are within the Statute of Frauds.

Seller orally offers to sell a copy machine to Buyer for $400. One week before the delivery date, Seller tells Buyer that he will need $550 for the copy machine because the wholesale price has increased. Buyer agrees to the modification. Is this contract within the Statute of Frauds?

Yes; UCC contract so no consideration needed; UCC § 2-209(3) modification is subject to SOF

Must the offeree have knowledge of the offer to accept it?

Yes; have to know offer exists. Must have mutual assent and cannot consent to offer if you do not know it exists.

There are four situations in which an offer is deemed irrevocable for a period of time:

a. Option Contracts b. Offer to enter into a Unilateral Contract c. Merchant's Firm Offer d. Detrimental Reliance

Seller orally offers to sell a copy machine to Buyer for $550. One week before the delivery date, Buyer tells Seller that she has been unable to raise $550, but she is willing to pay $475. Seller agrees to the modification. Is this contract within the Statute of Frauds?

enforceable but idk if under statute of frauds

B takes his car to S, a licensed mechanic at a service station, to have his transmission serviced. The transmission needs to be replaced, so S sells B a new transmission and installs it in B's car. The total charge is $7,500 ($3,500 for the new transmission and $4,000 for installation). What law governs the transaction?

governed by CL

B loses a filling in one of her teeth, so B makes an appointment to see S, a dentist. S installs a new gold crown on B's tooth. The gold crown costs $800 and the installation costs $200. What law governs the transaction?

governed by CL because dentist is normally not in the business of selling goods and normally performs a service. - A warranty is under the sale of goods

Assume the same facts as the last question. For this question only, assume that Dominique has a cause of action against Hardcash. If she sues him for monetary relief, what is the probable measure of her recovery? (A) Expectancy damages, measured by the difference between the value of the new building and the old building, less the amount of the proposed loan ($100,000). (B) Expectancy damages, measured by the estimated profits from operating the proposed sporting goods store for ten years, less the cost of repaying a $100,000 loan at 10% interest over ten years. (C) Reliance damages, measured by the $10,000 expense of removing the old building, adjusted by the decrease or increase in the market value of Dominique's land immediately thereafter. (D) Nominal damages only, because both expectancy and reliance damages are speculative, and there is no legal or equitable basis for awarding restitution.

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What is Detrimental Reliance

o an offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice o Normally only used in contractor/subcontractor

When is a revocation effective?

upon receipt by the offeree

When is an offer effective?

upon receipt by the offeree

When is a counteroffer effective?

upon receipt by the offeror

When is a rejection effective?

upon receipt by the offeror

An offeree's power of acceptance is terminated?

when the offeree receives from the offeror a manifestation of an intention not to enter into the proposed contract. when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect. When either party dies