CONTRACTS FINAL STUDY GUIDE

(A) interpretation against the drafter.

A corporation that is in the business of running restaurants purchases an insurance policy to protect itself from accidents that might arise in the course of its business. Included in the policy, which was written exclusively by the insurance company, is a definition of "Insured Party." The definition is clear that it covers the corporation itself, its employees, and customers, but ambiguous on whether other parties, such as delivery persons, are covered if they are on the corporation's premises in the course of business and have an accident. In fact, one day a delivery person does have an accident on the premises of one of the corporation's restaurants, but the insurance company refused to pay on the claim. If the corporation sues the insurance company for breach of contract and wins, it is probably because of the legal doctrine of: (A) interpretation against the drafter. (B) misrepresentation. (C) unilateral mistake. (D) the objective view of contracts.

(B) Yes, dealership breached an express warranty about the takeoff distance.

A customer visits a dealership that sells propeller aircraft. He examined several models and eventually settled on a particular aircraft. The sales agent gave him a one page "Model Information Sheet" that described the aircraft. The sheet claims that the "occupancy of the plane is 12-16" and the "takeoff distance is 1,800 ft." The customer was given the "Model Information Sheet" before he signed the agreement to purchase, and he read the entire sheet. Since the document listed the needed takeoff distance, he never asked the sales agent about it. Ther customer also needed a plane with the capacity of 16 people as he had plans to take a group that size on several outings. The contract he signed to buy the plane made no mention of any warranties and did not represent the capacity or takeoff distance. When he tried to take off from his local airport, they would not clear him to take off with that plane because they claimed he needed 2,055 feet to take off. After several calls to the aircraft manufacturer's engineers, he confirmed that this was indeed the minimum takeoff distance, and the Model Information Sheet was in error. Will the customer likely succeed in a breach of warranty action against the dealership? (A) Yes, the plane is not fit for the particular purpose of the customer (shorter takeoff distance) and dealership is therefore in breach of the warranty of fitness for a particular purpose. (B) Yes, dealership breached an express warranty about the takeoff distance. (C) No, the contract to purchase did not include any warranties and therefore no warranties, express or implied, were given. (D) No, the customer never communicated his particular purpose to the sales agent at dealership and therefore no warranty of fitness for a particular purpose was given.

(C) No, there is no intervening event that makes the driver's performance impractical and the purpose of the contract is not frustrated. It is not enough that the transaction has become less profitable for the affected party or even that he will sustain a loss." If a contract merely becoming economically unattractive were sufficient, every party that enters into a bad bargain would be able to avoid enforcement. the driver contracted to bear the risk of gasoline prices rising as they agreed to a fixed price contract for the term

A driver enters into a contract with a traveler who travels weekly for work to drive her to the airport on Monday morning and pick her up at the airport on Thursday evening. The contract is for two years, and the traveler agrees to pay the driver $50 a week for both trips. Eight months into the performance of the contract the price of gasoline rises to $15 a gallon, a price which was not expected by either party. Together with paying the tolls that the contract obligates the driver to pay, the cost of gasoline now results in the driver losing money each week as his cost to make the two trips is $55 and he is only paid $50 by the traveler. The driver informs the traveler that he will no longer perform since his whole purpose "was to make some extra money" and since it seems like the price of gas is not declining ,"I just cannot continue losing this money each week." Is it likely a court would find the driver has an excuse for his non-performance? (A) Yes, since both parties were mistaken about their predictions of the price of gasoline, the driver is excused due to mutual mistake. (B) Yes, since the driver's purpose in entering into the contract was to make some extra money and that purpose is entirely frustrated by the cost of gas, his performance is excused. (C) No, there is no intervening event that makes the driver's performance impractical and the purpose of the contract is not frustrated. (D) No, a contract's purpose must be frustrated at the time of making the contract for an excuse to exist and the price of gas changed after the contract was formed.

Here, the court will likely find that the "chicken litter" provision is unconscionable and will refuse to enforce the provision. Unconscionability generally requires a showing of both (1) procedural unconscionability and (2) substantive unconscionability at the time of contract formation. Procedural unconscionability: The chicken litter provision is procedurally unconscionable because the buyers were unable to read a complex contract and Seller—knowing they were illiterate—did not explain it to them. Therefore, there was unfair surprise. Substantive unconscionability: The chicken litter provision is also substantively unconscionable because of a great price disparity. The fair market value of the farm was $120,000, but the buyers were also transferring an additional $216,000 of value to Seller. This sort of great price disparity and inequality in bargaining power so "shocks the conscience".

A husband and wife from Laos immigrated to the USA because they were refugees from the Vietnam War. Neither spoke English well and could barely read. They entered into a contract with Seller to purchase a chicken farm for $120,000, which was the fair market value of the property at the time of the sale. The couple paid the purchase price, and title to the farm was transferred. Unknown to the couple, the contract also contained a provision that the couple had to give the Seller all of the chicken litter produced on the farm for 30 years after the sale. Seller was aware that the couple did not understand the complex language of the contract and did not explain it to them. The value of the chicken litter (which can be sold) for this period of time is $216,000. When Seller tries to enforce the chicken litter provision, the couple refuses to provide it. Seller sues the couple for breach of contract. How will a court rule if the couple pleads unconscionability as a defense?

(C) It was a basic assumption of the contract that it would not rain on June 1. Although rain might have been foreseeable, it would help the husband and wife most if it could be proven that a basic assumption of the contract was that it would not rain.

A husband and wife were planning a party to celebrate their 50th wedding anniversary on June 1. They decided to hold the party on the remote beach where they were married. The couple entered into a written contract with a band to play music at the party for five hours at the rate of $500 per hour, for a total of $2,500. On June 1, the day of the anniversary, a heavy rain started to fall after one hour. In the last 100 years, it has only rained once on June 1. The couple paid band only $500. Assume that the band sues the couple for the remaining $2,000. Which of the following arguments most helps the husband and the wife? (A) It was unforeseeable that it would rain on June 1. (B) Rain is an "Act of God." (C) It was a basic assumption of the contract that it would not rain on June 1. (D) The husband, wife, and the band made a mutual mistake about what the weather would be like on June 1.

(B) Ejusdem Generis. Ejusdem generis (Latin for "of the same kind") stands for the following principle: "Where specific terms describing persons or things are followed by general terms, then the general words should be interpreted as 'applying only to persons or things of the same kind or class as those expressly mentioned.'" The contract has specific terms related to the sale of the machine shop (all of the shop's wrenches and screwdrivers) followed by a general term (and other hand tools). Therefore, the ejusdem generis rule is invoked to determine whether the "antique wood working tools" fall into the category of "other hand tools" or are excluded from the sale

A machinist owns a metal machine shop and is in the process of selling of the assets to an artist. Both parties are of equal bargaining power. The written contract included the following language: "The sale of the machine shop will include all of the shop's wrenches, screwdrivers, and other hand tools." In the machine shop, the machinist has a display of antique wood working tools that his grandfather had given him. The antique wood working tools are not used to produce any products in the machine shop. The artist says that the term "and other hand tools" includes the antique woodworking tools. The machinist contends that it does not. If the disagreement went to litigation and a court found in the machinist's favor it is probably because of which of the following principles of contract interpretation? (A) Construction against the drafter. (B) Ejusdem Generis. (C) Consider the entire language of the contract. (D) Whether one of the parties ascribed a different meaning to the term.

(C) Yes, the evidence would be introduced to resolve the ambiguous term "watchdog."

A person enters into a contract with a dog breeder to purchase a watchdog for $1,000. When the breeder delivers a bulldog to perform the contract, the person objects claiming a Doberman was indicated by "watchdog." The court concludes after examining the contract that it is a fully integrated agreement. Will the person be able to introduce evidence that at the time of contracting they discussed a Doberman, not a bulldog, is a "watchdog?" (A) No, the parol evidence rule prohibits introduction of evidence of the contemporaneous or prior agreement because the court found their contract to be fully integrated. (B) No, the agreement about breed of dog is not a collateral agreement and therefore an exception to the parol evidence rule is not available. (C) Yes, the evidence would be introduced to resolve the ambiguous term "watchdog." (D) Yes, contracts for the sale of a dog are covered by the Uniform Commercial Code and it does not include a parol evidence rule.

(C) The evidence tends to show that the food importer intentionally misrepresented the origin and quality of the caviar being sold. Here, the food importer gave the restaurant owner samples and made oral representations about the origin of the caviar. This is evidence that the restaurant owner could use to prove that the food importer engaged in fraud in the inducement. Therefore, the court would likely allow the jury to hear it as an exception to the parol evidence rule.

A restaurant owner wishes to purchase the finest caviar imported from Russia. Before signing the written agreement, the restaurant owner asks the food importer, "Are you sure that you can get this quality of caviar in the quantity I need?" The food importer responds, "I guarantee that you are purchasing top quality caviar from Russia—the same quality caviar as you tasted here." The parties then sign a written agreement containing the essential terms as well as several boilerplate provisions including one that states, "the restaurant owner acknowledges that the food importer has not made any representations or warranties with respect to the goods. The restaurant owner will take the goods as is, with all faults, and the food importer hereby disclaims any and all warranties of merchantability and fitness for a particular purpose." The writing also includes a merger clause. The restaurant owner did not read these boilerplate provisions. The food importer ships to the restaurant owner caviar that is of only average quality and is not from Russia. When the restaurant owner objects to the shipment, the food importer refuses to replace the caviar and tells the restaurant owner to read the disclaimer of warranty in the written agreement. At trial, the restaurant owner seeks to testify about the oral representations and the sample caviar. The food importer objects citing the parol evidence rule. Why admit the evidence? (A) The evidence helps interpret an ambiguous term. (B) The evidence shows there was a collateral agreement with a separate consideration. (C) The evidence tends to show that the food importer intentionally misrepresented the origin and quality of the caviar being sold. (D) The evidence shows that the parties formed a subsequent agreement modifying the original contract.

(B) Yes, because the seller does not bear the risk of a mutual mistake since she relied on an expert's opinion If the seller had not consulted with an expert as to why the truck was not running, then the seller might have to bear the risk of the mistake. However, the seller did consult her mechanic—an expert—and did not rely on her own uninformed opinion. In fact, more than one mechanic thought the engine needed to be replaced. Since both mechanics made the same mistake, we can reasonably conclude that the seller did not bear the risk of the mistake

A seller owns a truck with an engine that won't start. Her mechanic advises her that the engine is broken and must be replaced. The seller then offers the truck for sale at a price of $1,000, whereas a usable truck of the same type, variety, and age would command a price of $15,000. On April 1, a buyer expresses interest in purchasing the truck and asks the seller why her asking price is so low. The seller explains that the truck's engine is inoperable and needs replacement. The buyer and his mechanic examine the truck. The mechanic advises the buyer, "the engine is no good, but the truck is otherwise in great condition. It's easily worth $1,000. Replace the engine for $8,000 and you'll have a good deal." By signed writing, the seller and the buyer form a contract under which the buyer is to pay the seller $1,000, with the seller to convey the truck to the buyer, the actual payment and transfer (the "closing") to occur on May 1. Then, on April 30, the seller discovers that the engine is easily repairable with the replacement of a single $2 part. The seller contacts the buyer: "It turns out this engine is fine. The truck is worth far more than $1,000. Our deal is off. I won't be at the closing tomorrow." The buyer objects and insists they go through with the transaction. Is the seller entitled to rescind the contract? (A) Yes, because under the defense of non-disclosure the buyer has a duty to disclose that the seller made a material mistake as to the worth of a good (B) Yes, because the seller does not bear the risk of a mutual mistake since she relied on an expert's opinion (C) No, because courts do not inquire into the adequacy of consideration (D) No, because sellers presumptively bear the risk, regardless of consulting experts

Yes. Even a mutual mistake will not be grounds for rescission if the mistake is one the risk of which is properly allocated to the party now seeking rescission. A mistake about the general state of market conditions will almost certainly fall into this category, since a contrary rule would give parties an incentive to remain ignorant of something they could easily check. Therefore, Daisy can enforce the contract as it is written.

After doing some spring cleaning in his wine cellar, Gatsby decides to sell several bottles of wine from the Magenta region of France. He enters into a contract with Daisy to sell the wine for $250. Both believe this to be the fair market value of the wine at the time. In actuality, wines from the Magenta region have gone up in value recently and the collection is really worth $500. Gatsby learns of this just before the sale is completed, and he seeks to avoid the sale. Can Daisy enforce the contract?

Ronaldo will win; the contract is enforceable. In general, there is no duty to disclose material facts about a transaction that the other party does not know about. The doctrines of caveat emptor ("buyer beware") and caveat vendor ("seller beware") place the responsibility of being informed on each party. If one party has superior knowledge, then merely acting on that knowledge to one's own benefit is perfectly acceptable and not fraudulent under the law. Caples v. Steel. There are exceptions to the rule that bare nondisclosure is just fine, but those exceptions do not apply here: Disclosure of wind capacity is not required by statute; Ronaldo did not conceal anything from the farmer; the parties were not in a relationship of trust or confidence, rather they were strangers dealing 'at arm's length'; and the farmer made no mistake, he was just uninformed.

After seven years of hard work, Ronaldo earned a Ph.D. in wind physics. Shortly after graduation, he decided to put his knowledge to work and build a wind farm that would efficiently harness energy from the wind using both giant turbines and smaller windmills. He analyzed terrain maps and took readings all over the state until he found the perfect place for a wind farm located between two large mountain ranges. The land he was interested in had long been a turnip farm and so he went to the farmer and asked to buy the land for $75,000. That was a fair price for turnip-growing land but, because the wind was so strong and reliable there, the land would be worth $1 million as the site of a wind farm. The farmer asked Ronaldo, "What do you plan to do with the land?" Ronaldo replied, "I would rather not say, but would you take $100,000 for the property?" Pleased with his negotiating skills, the farmer agreed to Ronaldo's offer and the two signed a written contract. Moments later, Ronaldo told the farmer his plans and how the land is worth $1 million. Understandably outraged, and believing that Ronaldo had tricked him, the farmer sues Ronaldo, seeking rescission of the contract. How is the court likely to rule?

B. course of performance. Then, under the May 1 contract, which called for multiple performances, the parties established a course of performance. For the first two installments tied to that contract, GlassCo delivered to PaneCo's factory and PaneCo did not object. Consequently, between these parties, as of July 1, usage of trade dictated delivery to the factory, course of dealing called for delivery to the executive offices, and course of performance called for delivery to the factory. Course of performance trumps course of dealing, which trumps usage of trade. PaneCo should cite that law and point out that in this case course of performance requires delivery to the factory, not to the executive offices. Consequently, B is right.

Among buyers and sellers of window glass, the phrase "my place" refers to one's factory headquarters. PaneCo has its factory headquarters on Main Street and its executive offices on High Street. On October 1, PaneCo contacts GlassCo by signed writing. Stating a price, he orders 100 panes of glass, to be delivered to "my place." GlassCo responds by signed writing with an acceptance. Thereafter, GlassCo's truck driver, Anne, delivers the 100 panes to PaneCo's executive offices on High Street and, for whatever reason, PaneCo makes no objection. It pays the purchase price and with its own trucks moves the panes to its factory on Main Street. On November 1, the parties form another contract for the purchase and sale of glass panes delivered to "my place." Again, Anne delivers to PaneCo's executive offices, and again PaneCo raises no objection. Six months later, on May 1, GlassCo and PaneCo form a new contract for the purchase and sale of 400 glass panes to be delivered to "my place," in four installments of 100 units each on June 1, July 1, August 1, and September 1. On June 1 and July 1, GlassCo's driver on duty is not Anne, but Derek. In both months, June and July, Derek delivers the window panes to PaneCo's factory headquarters. PaneCo accepts the delivery without objection. On August 1, Anne is once again on duty. As before, she brings the window panes to PaneCo's executive offices, but this time PaneCo refuses the delivery and proclaims that GlassCo is obliged to deliver to the factory headquarters, not to the executive offices. CONTINUED PaneCo would best support its position by observing that the appropriate place for delivery, in this case, is governed by A. usage of trade. B. course of performance. C. course of dealing. D. the parties' intentions.

As a minor, Bonna has the right to disaffirm her contract. The general rule is that she must restore any benefits that she still retains at the time of disaffirmance, but is not accountable for the value of property that has been consumed or dissipated. As she has consumed all the food, there is nothing left for her to restore. The general rule places the burden on Trés Cher to inquire about the age of its youthful-looking customers, and it bears the risk of failing to do so, even if Bonna looked older than she was. On the other hand, Bonna has behaved very badly, and the law should not encourage this kind of thing. There are a few possibilities for holding Bonna accountable for her conduct. CONTINUED

Bonna Petite, a precocious 17-year-old with an appetite for haute cuisine, decided to eat lunch at Trés Cher, the most elegant and expensive restaurant in town. She put on a business suit and groomed herself meticulously, succeeding in making herself look like a young executive of around 25 years of age. After eating a magnificent lunch, Bonna informed waiter that she was a minor. She disaffirmed the contract and refused to pay for the lunch. The age of majority in Bonna's state is 18. Can she get away with this?

D) The neighbor wins, because nephew was consciously ignorant of the true value. The nephew was "aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient." In other words, the nephew was consciously ignorant of the value of the hats. His aunt had told him the hats were valuable and he had an opportunity to hire an expert to value the collection, but did not do so

An elderly woman had a large collection of hats, numbering over 1,000. Sometimes, she sold a few of her hats to earn a little money; however, she mostly collected. The woman was famous locally for her collection and was an acknowledged expert on the subject of hats. She often told her nephew—the sole heir to her estate—that he should be sure to take care of the hats when she died, because the hats were quite valuable. However, the nephew thought his aunt was just sentimental about her collection. When the woman died, the nephew decided to sell the hats. He could have hired an expert to help him price the hats, but instead looked at some random receipts of hat purchases, which his aunt had made in the last year of her life, and based on those receipts, priced each of the hats in the range of $25 to $100. At the hat sale, a neighbor, who knew nothing about hats, came across a finely woven straw hat in pristine condition. He liked the hat, but found the price of $75 to be a little too expensive. He was able to negotiate the price down to $50. The neighbor later learned that the hat was a particular type of Panama hat that took three months to weave and was worth $25,000. When the nephew heard that the hat was worth $25,000, he tried to return the $50 to the neighbor in exchange for the return of the hat; however, the neighbor refused. The nephew sued the neighbor to rescind the agreement. Who will prevail in this lawsuit? (A) The nephew wins, because the neighbor had reason to know of the nephew's mistake. (B) The nephew wins, because the contract would be unconscionable if it were enforced. (C) The neighbor wins, because the widow would likely be considered a merchant and should have kept better records for her nephew. (D) The neighbor wins, because nephew was consciously ignorant of the true value.

Car Company's duty to pay $100,000 can only be discharged under the frustration of purpose defense. Why not impossibility and impracticability? It is true that holding the race is now arguably objectively impossible given the war and certainly impracticable given the extreme and unreasonable increase in the risk. However, the focus should be on the duties of the party seeking relief. Car Company's duties were to pay $100,000. Nothing in the facts suggests that it is either impossible or impracticable for Car Company to pay the $100,000.

An international car race, sponsored by Promoter, is going to be held in August. Publisher (who is not affiliated with Promoter) decides to print a souvenir program for the race and sell advertising. In January, Car Company contracts with Publisher to print an advertisement in a souvenir program. The cost of the advertisement is $100,000, which is to be paid in August. However, in April, Promoter cancels the race because of the sudden outbreak of a war in the country where the race was to be held. Publisher has already printed the programs, but Car Company refuses to pay the $100,000. Which of the changed circumstances defenses (impossibility, impracticability, or frustration of purpose) will help Car Company discharge its duty to pay Publisher?

(C) No, the parol evidence rule prevents introduction of this testimony of the oral agreement. The contract executed by the owner and the national company is a totally integrated agreement, which fact is confirmed by a merger clause. A total integration means that the parole evidence rule excludes all prior or contemporaneous evidence that would contradict or supplement the totally integrated agreement

An owner has owned and operated a pest control business for many years. He recently signed a contract with a large national pest control company to sell his business to them for $4 million. The sale is memorialized in a 220-page purchase and sale agreement that contains a merger clause that makes clear the agreement is the final integrated agreement of the parties with. Two days before they signed the agreement the owner said he was worried that the national company would terminate his employment as general manager shortly after the sale. The representative said, "We could include a provision that says if your employment is terminated within the first two years, we would pay additional consideration of $400,000." The owner said, "I agree to that approach. That would alleviate my concern." The representative said she would speak with her lawyers and try to include that provision. The lawyers never included this oral agreement in the contract and the owner's lawyer never objected before they signed. The national company fired the owner seven months after the purchase occurred. Will the owner be able to introduce evidence of the additional purchase price? (A) Yes, because there is a written memorandum of the contract the statute of frauds does not bar the introduction of evidence about oral agreements. (B) Yes, the testimony will resolve uncertainty about the amount of purchase price that the national company must pay as consideration. (C) No, the parol evidence rule prevents introduction of this testimony of the oral agreement. (D) No, the statute of frauds prohibits introduction of evidence of an oral agreement that might last more than one year.

(B) The court is likely to find that their mutual mistake results in there being no enforceable contract to buy a car. The problem presents a case of mutual mistake. Both of the owner and the friend are mistaken about what the other understands by the phrase "lighter car." It is not a unilateral mistake and therefore answer C is incorrect. Except as stated in this Section [when one party knows or has reason to know of the other's meaning], neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent

An owner owns two luxury cars of the same make and model. One is blue and the other is brown. The owner says to his friend "I offer to sell you my light-colored luxury car for $75,000." The friend accepted. The owner meant his blue car, but the friend thought they were referring to the brown one. They are both a light color, but the owner thought the blue one was lighter than the brown and the friend thought the brown was lighter. When they discover their mistake, the friend insists that he has a legal right to buy the brown one, but the owner does not want to sell the brown one at any price. What is a court likely to do? (A) The court is likely to rule that the owner as the seller bears the risk of any mistake and must sell the brown car. (B) The court is likely to find that their mutual mistake results in there being no enforceable contract to buy a car. (C) The court is likely to find that there is only a unilateral mistake on the friend's part (since the owner cannot be mistaken about his own offer as the master of the offer) but that it is not unconscionable to enforce the contract and therefore the unilateral mistake does not excuse performance. (D) The court is likely to find that the friend as the buyer bore the risk of the mistake because the buyer in a sale can always ask questions before accepting and will therefore require the friend to buy the blue car.

Yes, faithless Ava does have a point, because if Ann decides to sue on the basis of Ava's undertaking, she is confronted with two hurdles. She must first convince the judge to admit her evidence of the oral term that qualified the writing, and if she succeeds, she must then convince the jury that such a term was in fact agreed to. A written memorandum of agreement was executed, and Ann seeks to testify about a prior oral agreement. Ava may object to admission of the evidence under the parol evidence rule, and the judge must determine as a question of law whether the evidence is admissible. If not, it is excluded and the jury does not hear it, leaving Ann with no case. If Ann can jump this hurdle by satisfying the judge that the evidence is not barred by the rule and is admissible, she may then testify about the conversation before the jury. CONTINUED

Ann Cestral owned a house on a large central city lot that had been in her family for four generations. When she decided to move to a smaller condo, she agreed to sell the house to her cousin, Ava Rice. They settled on the price and Ann arranged for her attorney to draw up a contract of sale. When the document was ready for signature, Ann and Ava drove together to the attorney's office. On the way Ann said to Ava, "Our family has owned this house for a long time, and I sold it to you because I want it to remain in the family. Promise me that if you ever decide to sell the house, you will give members of our family the right of first refusal to buy it before you sell it to a stranger." Ava agreed. When Ann and Ava arrived at the attorney's office, the attorney gave them a sales agreement with terms conventionally included in such agreements and they both signed it. The agreement was several pages long and had lots of details. However, it did not include a merger clause. Neither Ann nor Ava told the attorney about their discussion on the way over, so the attorney did not incorporate their agreement on the family's right of first refusal into the written contract. Ava took transfer of the house and moved in. Over the next couple of years, large lots in the neighborhood became very valuable because of their central location. Developers were buying houses and demolishing them so the properties could be used for high-rise apartments. Two years after she bought the house from Ann, Ava accepted a developer's offer to buy the house for an extraordinarily high price. When Ann found out that Ava had sold the property to the developer, she confronted Ava angrily. In response, Ava handed their written contract to Ann and said, "Show me where this says I can't sell the property to anyone that I please!" Does Ava ha

B. As they formed their contract, the parties mutually acknowledged that the war might not endure for eleven months. Now consider B. It hypothesizes that WeapCo proves this fact: As these parties formed their contract, they manifested their mutual belief that by August 1 the war might or might not end. If that was their manifest belief, then certainly the war's continuation was not a basic assumption on which they contracted. Rather, it was a matter of uncertainty, with ArmCo, as buyer, assuming the risk that the war might end by the date. Hence, the frustration doctrine would offer no relief to Buyer, and for that reason B is right.

ArmCo is in the business of selling weapons to national governments. On September 1, 2019, the nation of Qarat is at war with Bohrein and, as is widely publicized, the nations are conducting peace negotiations even as they fight. Also on September 1, by signed writing, ArmCo as buyer contracts with WeapCo as seller for the purchase of 100 tanks at $200 million, delivery to be made eleven months later on August 1, 2020. ArmCo forms the contract in order that it be able to supply Qarat and Bohrein with additional tanks if and as the two nations seek to purchase them. ArmCo pays WeapCo $20 million on September 1 and promises to pay the remaining balance on August 15, 2020. On July 1, 2020, the warring nations reach a peace accord. The war ends. Consequently, ArmCo is unable to sell the tanks. It wants not to pay WeapCo any remaining purchase price. If ArmCo claims discharge by frustration of purpose, which of the following facts, if proven by WeapCo, would weaken ArmCo's claim? A. As they formed their contract, the parties manifested their mutual belief that the war was certain to endure for more than eleven months. B. As they formed their contract, the parties mutually acknowledged that the war might not endure for eleven months. C. After forming their contract, the parties manifested their mutual belief that the war was certain to endure for more than eleven months. D. After forming their contract, the parties mutually acknowledged that the war might not endure for eleven months.

No. It is not impossible or impracticable for Artist's estate to carry out the sale. Artist's personal services are not necessary to perform the contractual duties. When someone dies whose personal services are necessary to perform the contract, then the contract is discharged due to impossibility/impracticability. See Rest. 2d §262. DIFFERENT FACTS: However, there would be a different result if Artist had entered into a contract with Buyer to create and deliver a statue to Buyer. If the statue remains unmade when Artist dies, then that contract would have been discharged on his death, because in that situation "the existence of a particular person is necessary for the performance of a duty

Artist, a famous sculptor, contracts in writing to sell a statue that he created to Buyer for $100,000, delivery date March 21. On March 15, Artist dies. As a result of Artist's death, the value of sculpture that Artist created goes up significantly. The statue that was going to be sold is now worth at least double the contract price. Can the estate of Artist seek to have the contract discharged due to impossibility or impracticability?

A. win, pursuant to mutual mistake. A correctly states that Bidder 2 should win because all elements of the mutual mistake doctrine apply to his contract. Hence, A is right.

AuctionCorp conducts an auction in which it attempts to sell memorabilia. The auction is "with reserve," meaning that AuctionCorp is not obliged to sell any item unless the highest bid is, in its judgment, sufficiently high, in which case it will sell to the highest bidder. At the auction site, AuctionCorp posts a sign that reads: "All sales are final." Auctioneer: We have here lot 15, a scarf that belonged to Vice President Spiro Agnew, and lot 16, a scarf that belonged to President Abraham Lincoln. I put up first lot 15—the Spiro Agnew scarf. Do I hear $5,000? . . . $500? . . . $50? . . . $5? . . . $1? . . . 50 cents? . . . 1 cent? Bidder 1: Yes, 1 cent; I'll use it for wrapping fish. Auctioneer: Sold for 1 cent. Auctioneer: I show you now lot 16—a scarf that belonged to President Abraham Lincoln. Do I hear . . . Bidder 1: $50,000 Bidder 2: $500,000 Bidder 1: $5 million Bidder 2: $50 million Auctioneer: Do I hear $55 million? Going once, twice—sold for $50 million. Bidder 1 paid 1 cent and took the scarf labeled lot 15. Bidder 2 paid $50 million and took the scarf labeled lot 16. Three days later, all discover that the auctioneer had accidentally mislabeled the scarves. The lot 15 scarf had belonged to Lincoln and the lot 16 scarf to Agnew. On the ground of mutual mistake, Bidder 2 brings an action seeking rescission of his contract with AuctionCorp and a return of his $50 million. He should A. win, pursuant to mutual mistake. B. win, because the Agnew scarf has a fair market value substantially less than the $50 million Bidder 2 paid for it. C. lose, because AuctionCorp posted the sign reading "All sales are final." D. lose, because AuctionCorp acted in good faith throughout.

B. That AuctionCorp and Bidder 1 manifested their certain belief that the lot 15 scarf had belonged to Vice President Agnew The right answer to Question 3 is the one that reflects at least one of the doctrine's elements: (1) that each party manifested to the other his understanding—to the point of absolute fact—that the lot 15 scarf had belonged to Agnew and not Lincoln; (2) that the lot 16 scarf had, in fact, belonged to Lincoln, not Agnew; (3) that Bidder 1 should have understood that Auctioneer would not have accepted 1 cent for Lincoln's scarf.

AuctionCorp conducts an auction in which it attempts to sell memorabilia. The auction is "with reserve," meaning that AuctionCorp is not obliged to sell any item unless the highest bid is, in its judgment, sufficiently high, in which case it will sell to the highest bidder. At the auction site, AuctionCorp posts a sign that reads: "All sales are final." CONTINUED Bidder 1 paid 1 cent and took the scarf labeled lot 15. Bidder 2 paid $50 million and took the scarf labeled lot 16. Three days later, all discover that the auctioneer had accidentally mislabeled the scarves. The lot 15 scarf had belonged to Lincoln and the lot 16 scarf to Agnew. On the ground of mutual mistake, AuctionCorp brings an action against Bidder 1 seeking rescission of the contract and return of the Lincoln scarf. Which of the following facts should AuctionCorp prove and cite as a basis for its claim? A. That as for this contract Bidder 1 bore the risk that the scarf might have belonged to Abraham Lincoln B. That AuctionCorp and Bidder 1 manifested their certain belief that the lot 15 scarf had belonged to Vice President Agnew C. That the auctioneer put up first the scarf he thought had belonged to Vice President Agnew and second the one he thought had belonged to President Lincoln D. That between the two scarves, the difference in value pertains not to any inherent quality of each, but to their divergent histories

No. This illustrates one of the exceptions to the parol evidence rule. The parol evidence rule bars only extrinsic evidence of prior agreements or contemporaneous oral agreements that contradict, vary, or modify the contract; evidence of defects in formation are admissible. Thus, lack of consideration, fraud, and duress, as here, may be proven via extrinsic evidence. See Rest. 2d §214: "Agreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible in evidence to establish . . . (d) illegality, fraud, duress, mistake, lack of consideration, or other invalidating cause[.]"

Bandit holds Mother's daughter hostage until Mother agrees to sell Bandit a diamond that she owns for $20,000, a price that is far below its true value. Mother agrees in writing. The writing, of course, makes no mention of the daughter. Mother, however, refuses to honor the agreement as soon as her daughter is released. When Bandit sues Mother for breach, will the parol evidence rule bar evidence of the daughter's kidnapping?

No. The impracticability doctrine does not apply where the party seeking to use it implicitly bore the risk of the type of supervening event in question. Where a supplier contracts to deliver goods, and the contract does not specify the required source, the supplier will normally be held to have implicitly borne the risk that his anticipated source will unexpectedly fail; therefore, at least where substitute goods are available at a price not wholly disproportionate to the contract price, the supplier is expected to use that substitute supply, even if doing so means losing money on the contract. See Rest. 2d §261, Comment e: "[A] party generally assumes the risk of his own inability to perform his duty." See also Illustr. 12 to §261 (same basic facts as this hypo; no discharge for impracticability).

Buyer contracts to buy two horses from Seller for $500 each. Seller raises horses, and intends (as Buyer knows) to supply Buyer's two from its own herd. However, the contract does not expressly say that the horses must come from Seller's herd. Before the time of delivery, a rare disease wipes out Seller's entire herd. Seller could obtain horses from another farm (at a price of $550 each), but doesn't do so, claiming that the disease has rendered its performance impracticable. Will the court discharge Seller from the duty to perform?

D. cannot void the contract because, under the circumstances, C-Corp had no reason to believe that PlumbCo had made the error in addition. ANALYSIS. All authorities agree that if one enters a contract whose terms reflect a clerical error, he may void the contract if the other party, as a reasonable person, should have known of the error. In this situation, C-Corp received seven bids, all of them within the range of $15 million to $16 million. PlumbCo's bid fell squarely within that range, notwithstanding its error. Consequently, C-Corp had no reason to believe that PlumbCo, due to its own error, submitted a bid of $15.6 million instead of $15.75 million. For that reason, PlumbCo's mistake does not afford it the right to void the contract.

C-Corp, a construction company building a high-rise office building, invites bids from eight plumbing companies in relation to the plumbing for which the project calls. Seven plumbing companies respond with bids that range from $15 million to $16 million. The eighth company, PlumbCo, bids $15.6 million. But in calculating that bid it omits, by simple oversight, to account for a $150,000 expense it would have to bear in completing the project. If it had not made the error, therefore, its bid would have been $15,600,000 + $150,000 = $15,750,000 = $15.75 million, instead of $15.6 million. C-Corp receives Plumbco's $15.6 million bid and immediately accepts it. It does so even though other of the bids it receives are lower, because C-Corp's president has faith in PlumbCo. After C-Corp issues its acceptance, PlumbCo discover its $150,000 error and seeks to void the contract. In all likelihood, PlumbCo A. can void the contract because C-Corp received seven additional bids, any one of which it can accept or could have accepted. B. can void the contract because C-Corp had good reason to believe that PlumbCo had made a simple error in addition. C. cannot void the contract because such would subject C-Corp to a possible loss of profit. D. cannot void the contract because, under the circumstances, C-Corp had no reason to believe that PlumbCo had made the error in addition.

C. I and III only ANALYSIS. Option II makes an irrelevant statement. Again, the parol evidence rule is not a rule of evidence; it is a substantive rule of contract law. When two parties first form an oral (or written) agreement and then reduce it to a writing from which they omit one or more of its terms, the parol evidence rule provides this: Depending on whether the writing is a partial or total integration, the omitted terms are or are not enforceable. As to how and by what quantity of evidence the oral agreement, if enforceable, is to be proven, the parol evidence rule has nothing to say. (That, indeed, is a question of evidence law.) Options I and III belong to the right answer. Option II does not. C is right.

CONTINUED Eston Eaves and Falil Ford acknowledge, between them, an agreement under which (1) Eston Eaves will produce a fashion show at the Hazelton Arts Chamber on May 10 of this year and (2) Falil Ford will serve as announcer for a total compensation of $2,000, no less and no more. On April 9, Eston calls for the first rehearsal and Falil properly performs his part. At the rehearsal's end, Falil asks Eston for his first $1,000 payment. Eston refuses to pay, asserting that "according to our contract of March 12, I need pay you only $2,000, which I will pay after the show itself is complete." Falil counters, "Don't you remember that before signing that short writing we agreed that you would pay me $1,000 after the first rehearsal and $1,000 after completion of the show itself?" "Yes," says Eston, "but we didn't put it in the writing, so as far as I'm concerned I need not do it. But I'll ask my lawyer her opinion." Eston consults with his attorney, who knows how the parol evidence rule is traditionally conceived. She advises him, "You are probably obliged to pay in installments as you agreed, even though the writing recites no such obligation." Apparently, the attorney believes that the March 12 writing was a partial integration. there were several witnesses to the parties' March 12 conversations. payment in two installments would not contradict the March 12 writing. A. I and II only B. II and III only C. I and III only D. I, II, and III

C. Kant, because a handwritten term generally carries greater weight than a printed term. ANALYSIS. It's important to Kant's position that the heading to paragraph 29 be read with the word "Period" and without the word "Term." Important to JKLM's position is that the heading be read the other way 'round. By common law, a handwritten term carries greater weight than does a conflicting printed (or typewritten) term. Consequently, the fact that "Period" is handwritten favors Kant and works against JKLM.

CONTINUED Kant agrees that his initial term of employment was five years, but that according to paragraph 2, the five-year term comprised five separate periods of one year each. Each employment period, he says, was one year. The heading for paragraph 29, he argues, should be read with the word "Period," not the word "Term." Read that way, Kant reasons, it gives JKLM a right to hire him for one additional year only. In paragraph 29, the fact that "Period" is handwritten whereas "Term" is preprinted argues for A. JKLM, because a printed term generally carries greater weight than does a handwritten term. B. JKLM, because the printed term likely represents usage of trade. C. Kant, because a handwritten term generally carries greater weight than a printed term. D. Kant, because the addition of the handwritten term shows that the parties had a course of dealing.

D. No, because that component of the oral agreement is inconsistent with the writing ANALYSIS. Orally, these parties formed a contract providing that Eston should pay Falil $2,000 plus $50 per hour to the extent that he worked beyond twenty hours. They then created a writing that, we are told to assume, was a partial integration of their agreement. The writing expressly provides that Falil's "total compensation" will be $2,000, "no less and no more." The prior oral agreement that allows for the possibility of payment greater than $2,000 is inconsistent with the writing; the writing refers to $2,000 and "no more," whereas the oral agreement provides for $2,000 plus the possibility of more. The oral agreement thus contradicts the writing and so does not become a part of the contract.

CONTINUED The parties then agree on every other detail they can think of, including rehearsal dates and times, Falil's wardrobe, and music to accompany the show. After the parties agree on all details, Falil asks, "Shall we put all of this in writing?" Eaton answers, "I don't think we need to, do we?" "I guess not," Falil says, "but I would like to put in writing some general statement to the effect that I will serve as announcer and how much I will be paid." On March 12, the parties create and sign this writing, which they label "Contract": Eston Eaves and Falil Ford acknowledge, between them, an agreement under which (1) Eston Eaves will produce a fashion show at the Hazelton Arts Chamber on May 10 of this year and (2) Falil Ford will serve as announcer for a total compensation of $2,000, no less and no more. The parties conduct the fashion show on May 10 as planned. By the time it's over, Falil has devoted twenty-six hours to the whole effort. He reminds Eston of their oral agreement under which Eston would pay him, in addition to the $2,000, another $50 for each hour he worked beyond twenty hours. Falil claims that he is owed a total of $2,300. Eston acknowledges the oral agreement, but nonetheless refuses to pay the additional $300, noting that "our actual contract provides for total payment of $2,000, no less and no more." If the parties' writing is a partial integration of their agreement, is Eston obliged to pay the additional $300 as orally agreed? A. Yes, because the writing is not a total integration B. Yes, because Eston acknowledges that component of the oral agreement C. No, because the writing expressly voids all prior oral agreements D. No, because that component of the oral agreement is inconsistent with the writing

C. no, because Lucy could not and did not disaffirm her contract.

CONTINUED...On the next day, May 2, the state conducts its lottery and announces that ticket number 2321 has won $20 million. That's the ticket in Lucy's possession. Ticket number 2322 has won $10 million. That's the ticket in Victor's possession. Larry contacts Lucy: "I've changed my mind. Bring me the ticket, and I'll give back your $1,000." Lucy responds, "No way." Larry then contacts Victor: "I've changed my mind. Bring me the ticket, and I'll give back your $1,000." Victor responds, "Get lost." Larry visits a lawyer and tells him the whole story. He then asks, "Am I entitled to have back the two tickets?" As to the ticket in Lucy's possession(compulsive gambler), the correct answer is A. yes, because a mental disturbance caused Lucy to purchase the ticket. B. yes, because once Lucy disaffirmed the contract she could not reinstate it. C. no, because Lucy could not and did not disaffirm her contract. D. no, because it is Lucy's option, at her pleasure, to affirm, disaffirm, or reinstate her contract with Larry.

B. "Certainly you may take home a copy of the writing and read it. But if you wish to join Consumer's Club, we'll require that you sign this document as it is; we won't change it in any way." In B he expressly informs Bella that the terms are nonnegotiable—that to join the club, she'll have to sign the document as is. With that, certainly, Sidney presents the document as a take-it-or-leave it proposition, meaning that he proposes a "contract of adhesion." Among the choices, therefore, B touches most closely one of the four factors that create unfair bargaining and so, B is right.

CONTINUED> As Sidney reaches into Bella's grocery bag for another item, Bella says, "I don't think I'm interested." Sidney responds, "But you should be—it's good for you and your family. Think of all the money you'll save—money that you can put toward your family's other needs!" Bella asks, "What'd you say? I don't hear so well." Sidney repeats his pitch and again opens his catalog. "I'm not sure I understand how the club works," Bella says, "and I really have to go." "Well, just sign right here at the bottom of this page," answers Sidney, "and you can go with the happy knowledge that you belong to Consumer Club." Bella, worn down and running late, says, "All right, where do I sign?" Sidney points. After glancing at the document's tiny print, Bella signs. Sidney hurriedly gives Bella a copy of the writing, and departs. Unbeknownst to Bella, the writing's terms provide that Four years after Bella signs the document, Consumer's Club contacts her and demands payment of $2,000 in membership fees, $1,200 in penalties, and $4,000 in annual "failure to purchase charges," for a total of $7,200. Beyond the facts already described, Bella's assertion of unconscionability would be most strengthened if she were able to show (1) that she asked Sidney if she could have time to read the document, and (2) that Sidney responded, A. "No, but if you choose not to sign today we might contact you again if you'll provide me with your contact information." B. "Certainly you may take home a copy of the writing and read it. But if you wish to join Consumer's Club, we'll require that you sign this document as it is; we won't change it in any way." C. "Yes, but our offices have not yet approved any proposed changes to this writing." D. "Yes, but be aware tha

C. I, II, and IV only ANALYSIS. The rule of unconscionability requires first that the court find compelling evidence of an unfair bargaining process. So let's see about that: The writing was set forth in very small type, depriving Bella of a meaningful opportunity to read it, and hence to understand it, thus subjecting her to unfair surprise. Option II, therefore, describes evidence relevant to the matter of unfair bargaining process/procedural unconscionability. The correct answer should include II, meaning that A and B are wrong. As to this contract, Sidney's criminal record or other facets of his background are not relevant to unconscionability/unfairness, procedural or substantive. Options I, II, and IV make true statements; III does not. C is right.

CONTINUED> As Sidney reaches into Bella's grocery bag for another item, Bella says, "I don't think I'm interested." Sidney responds, "But you should be—it's good for you and your family. Think of all the money you'll save—money that you can put toward your family's other needs!" Bella asks, "What'd you say? I don't hear so well." Sidney repeats his pitch and again opens his catalog. "I'm not sure I understand how the club works," Bella says, "and I really have to go." "Well, just sign right here at the bottom of this page," answers Sidney, "and you can go with the happy knowledge that you belong to Consumer Club." Bella, worn down and running late, says, "All right, where do I sign?" Sidney points. After glancing at the document's tiny print, Bella signs. Sidney hurriedly gives Bella a copy of the writing, and departs. Unbeknownst to Bella, the writing's terms provide that Four years after Bella signs the document, Consumer's Club contacts her and demands payment of $2,000 in membership fees, $1,200 in penalties, and $4,000 in annual "failure to purchase charges," for a total of $7,200. Bella refuses to pay, Consumer's Club brings suit, and Bella's attorney asserts that the contract is unenforceable for the reason that its terms are unconscionable. In deciding the question of unconscionability, the court should consider evidence tending to show that I. Bella's hearing aid was visible to Sidney. II. The document's writing was printed in very small type. III Sidney had once been convicted of criminal mischief. IV The terms gave very little to Bella and took much from her. A. I only B. I and III only C. I, II, and IV only D. I, II, III, and IV

No. The facts tell you that the writing is a final integration, so this rule applies here. The writing specifically requires both parties to work 30 hours a week, and an oral clause that would reduce Lacey's time by 1/3 for 1/3 of the year certainly seems to be a contradiction of the agreement. Yes, probably. The parole evidence rule provides that a final integration may be supplemented by prior oral agreement if and only if the integration is partial rather than total. Here, the relatively short length of the writing, the fact that it was handwritten, and the fact that it was entirely drafted in one hour, all make it likely that the parties intended the integration to be merely partial. If so, the supplementary oral term will be admissible.

Cagney and Lacey enter into a written contract to open "Tried and True," a store specializing in used guns recovered from murder scenes. The writing is a 2-paragraph handwritten document, prepared during a 1-hour meeting. The writing states that each party will receive 50 percent of any net profits and that each will devote 30 hours a week to the venture. Both parties regard the writing as a final expression of their deal. A. Subsequently, Cagney sues Lacey for breach because Lacey has been working only 20 hours per week over the last few months, which are summer months. In defense, Lacey attempts to testify that just prior to the parties' signing of the writing, Cagney orally agreed that for the approximately four months a year when Lacey's young children were on vacation from school, Lacey could work only 20 hours a week. Is Lacey's testimony admissible? B. Assume that in the same lawsuit, Lacey counterclaims for lost profits due to certain small merchandise discounts that Cagney gave to her adult children. Cagney tries to testify that before the writing was signed, the parties orally agreed that each party could sell up to $500 per year in merchandise, at a 20% discount, to members of that party's immediate family. The writing says nothing about whether and when such merchandise discounts will be given. Is Cagney's testimony admissible?

B. Yes, because of the color difference between the product TronCo supplied to Channah and the one it showed her ANALYSIS. Reread UCC §2-313(1)(c) above. The TronCo salesperson showed Channah the model attached to the walls of the showroom. By doing so, TronCo made an express warranty that the shelves supplied to Channah would conform to the model, which, because of their color, it did not do. The answer therefore, is "yes," and the reason is that the contract included TronCo's express warranty that the shelves sold to Channah would be the same color as those she was shown. B correctly answers "yes" and correctly states the reason: The color of the shelves Channah took home was different from those shown to her. The shelves did not conform to the sample or model presented to her. Hence, B is right.

Channah visits TronCo to purchase a set of wall-mountable shelves on which to place her stereo equipment. The salesperson shows her a set of shelves mounted in its showroom and says, "How about this?" In color, the shelves happened to be black. Channah asks about the price, receives an answer of "$195," and then says, "I'll take it." The salesperson retrieves a large box from the back room. Channah pays $195 and receives a receipt that reads "$195 received for X23 Wall Unit." At home, Channah opens the box and finds shelves that resemble the ones shown to her at TronCo, except that they are white instead of black. Is TronCo in breach of an express warranty? A. Yes, because the receipt expressly identifies the product for which Channah paid B. Yes, because of the color difference between the product TronCo supplied to Channah and the one it showed her C. No, because TronCo made no expression or communication as to the color of the shelves it supplied Channah D. No, because Channah asked no questions and made no statements about color or preference as to color

No. The issue here is the effect of a contract to do an illegal act. The contract here is illegal because it obstructs justice. Its effect is that it's void; neither party can enforce it or seek recovery under it. There are exceptions to this "non-recovery" rule, but where, as here, the parties are equally at fault—they're in pari delicto—neither party can recover from the other. Notice that this results in a windfall for Chickee, but that's just how it is.

Chickee, roadside entrepreneur, sits near busy intersections waiting for car accidents to happen. When they do, he offers to testify on behalf of the driver who pays him the most, regardless of fault. Mr. Magoo gets into an accident at the intersection, and, even though he's at fault, $500 convinces Chickee to testify for him. Magoo pays Chickee, but Chickee backs out and refuses to testify. Magoo sues Chickee, seeking "restitution" — that is, the return of his consideration (the $500). Will Magoo get back the $500?

A court that accepts the looser motivational test of Restatement, Second, §15(1)(b) would allow Clark to avoid the booking if he can show that a mental illness or defect affected his ability to act in a reasonable manner in the transaction and that the other party had reason to know of his condition. Although bipolar disorder likely does affect his ability to approach the transaction rationally, Clark cannot satisfy the second element of the test because there is no basis for arguing that the resort knew or had reason to know of his mental condition. This aspect of the test is particularly difficult to satisfy in an Internet transaction in which the resort had no opportunity to observe behavior that may alert it to the possibility that Clark was not approaching the transaction rationally.

Clark, age 30, suffers from bipolar disorder, a psychiatric condition that causes extreme swings in mood, ranging from periods of depression to periods of abnormally elevated energy and enthusiasm. During these periods of elation, a person with bipolar disorder may feel energetic, excitable, and hyperactive, and may experience diminution of self-control and impaired judgment. During an elevated episode, Clark visited the website of an exclusive resort and booked an exorbitantly expensive and luxurious vacation. To complete and submit his online booking, Clark signified his agreement to the resort's standard terms by clicking on an "I agree" button on the website. Clark did not read the standard terms before clicking the button. One of the terms stated, "I understand that upon submission of my booking, my credit card will be debited with the full cost of the accommodation booked. This booking cannot be changed and if I cancel it I will not be entitled to a refund of this charge." A few days after booking the vacation, Clark's elevated episode ended. He regretted booking the expensive vacation. When the resort refused to cancel the booking and refund his payment, Clark sued to avoid the contract and recover his payment. What are his prospects of success?

No Duress. Here, Laura honestly believed that the threatened lawsuit was valid. So her threat was not made in bad faith. The fact that she would probably ultimately have lost on the interest amount doesn't change this. So her threat did not constitute duress.

Donatella Dynamic is running for mayor, and the election is next Monday. For the past year, she's been borrowing money from Laura Locke to buy pastries for her breakfast meetings with a promise of repayment "Tuesday." Donatella never in fact pays up, and over the course of the year she's run up a debt of $2,000. During this time, neither party mentions the topic of interest on the unpaid balance. Laura is fed up and tells Donatella, "If you don't pay me by Thursday the $2,000 principal, plus $300 in interest, I'll sue you for it." Laura believes that $300 is a reasonable rate of interest in the circumstances. (If such a suit were brought and proceeded to trial, a court would likely hold that the underlying $2,000 claim was valid, but that $300 in interest violated state usury limits.) Donatella realizes that a lawsuit branding her a deadbeat, filed just before the election, would torpedo her chances of getting elected. Donatella agrees to assign securities she owns over to Laura, which are worth $2,300. The following week Donatella seeks to revoke the assignment on grounds of duress. What result?

No. The parol evidence rule only operates when a contract is effective. This means that anything showing it's not effective — fraud, a lack of consideration, duress, mistake, or, as here, failure of a condition to the contract's effectiveness — is admissible. Here, the allegation is that the agreement is only binding if Howard approves the patent. If true, this would be a condition to the contract's effectiveness, so Einstein can introduce evidence to prove the condition was agreed upon.

Enrico Fermi patents a new invention: a solar-powered flashlight. He enters into a written agreement to sell the patent to Albert Einstein. The parties orally agree that the contract will not become effective until the patent is reviewed and approved by a patent expert, Moe Howard, of the patent law firm Larry, Moe, and Curly Joe, P.C. Howard reviews the patent and tells Einstein, "It's bogus. Only a stooge would buy this." Fermi sues Einstein, seeking to enforce the contract. Einstein wants to introduce evidence of the oral condition. Will the parol evidence rule prevent him from doing so? Times16px

More significantly, the preliminary information on trade usage strongly supports the meaning claimed by Fairest Fowls. (If the dispute goes to litigation, trade usage would have to be established by sworn expert testimony, but Gordon's informal survey is good enough for present purposes.) Gordon asked chefs and suppliers what they understood "regular" pheasants to mean. Although they were not unanimous in their response, there seems to be widespread recognition in the trade (defined here as the wholesale poultry market) that the word "regular" refers to pheasants that can be used only to make soup. To prove a trade usage, a party needs only establish it on the preponderance of the evidence. As a professional chef who buys poultry from suppliers, Gordon is surely a member of this trade. Even if he did not actually know what "regular" meant, he had reason to know the usage and is bound by it.

Fairest Fowls, Inc., is a poultry supplier. Gordon Bleu is a trained chef who owns and operates a restaurant. Gordon had often ordered duck and chicken from Fairest Fowls before. Although he had always ordered the cheaper quality "regular" birds, rather than the more expensive "gourmet" quality, he had always been well satisfied. Gordon decided to begin serving more exotic game birds at his restaurant. He found a recipe for pheasant and checked Fairest Fowls' price list to see what it cost. The list showed "regular" pheasant for $5.00 per pound, and "plump deluxe" pheasant for $12.50 per pound. Gordon ordered and received 50 pounds of the "regular" quality. He prepared the birds according to his recipe. When they were cooked, he tasted them and discovered that they were tough and uneatable. He called Fairest Fowls to complain. Fairest Fowls' representative expressed surprise that Gordon did not know what was "common knowledge" in the trade—that "regular" pheasants were old, scrawny birds, sold only for making soup. The more expensive "plump deluxe" variety were intended for eating. After being told this, Gordon asked some other chefs and wholesale poultry suppliers (eight people in all) if they knew about the distinction between "regular" and "plump deluxe" pheasants. Five of them were fully aware of it and used the same terminology in their businesses. Two did not know the terminology, but they knew that you could not buy eatable pheasant for $5.00 per pound. One had never heard the terminology and would have assumed that you could eat regular pheasant. In light of this, did Fairest Fowls breach the contract by delivering uneatable birds to Gordon?

D. I, II, or III The remedies for unconscionability are rescission, severance, and reformation, and a court has discretion in which to select. First, a court may rescind the entire agreement. Second, rather than rescinding the entire agreement, a court might choose to partially enforce an agreement by severing the offending terms but enforcing the rest of the contract, thereby preserving the contractual relationship between the parties while eliminating the unfairness. Third, a court might reform the contract by replacing the unconscionable provision with a fairer set of terms. Reformation is rarely granted, since courts are generally reluctant to rewrite terms, but it happens in unusual cases.

If a court finds a term in a contract to be unconscionable, which remedy or remedies may it impose? I. Refuse to enforce the agreement in its entirety. II. Sever the unconscionable provision and enforce the remainder. III. Reform the agreement by replacing the unconscionable term with a reasonable one. A. I only B. II only C. I or II but not III D. I, II, or III

A. No. A contract action for misrepresentation can be based on a negligent (or even non-negligent but incorrect) misrepresentation of a matter of material fact — unlike a tort action for fraud or deceit, there is no particular mental-state element in a contract misrepresentation action. B. That Bully never made any affirmative misrepresentation; he merely failed to make a disclosure. C. Probably not. On of those exceptions is that if there is a relation of "trust and confidence" between the plaintiff and the defendant, the defendant's failure to make disclosure will be treated as the equivalent of an assertion. Since the facts tell us that Gail has used Bully for a long time, and has come to him for advice, a court would probably hold that the requisite relation of trust and confidence existed between them.

Gail Ible meets with her long-time stockbroker, Bully Bear, for some investment advice. Bully advises Gail to invest $2,000 in a local biotechnology company. Bully knows, but carelessly fails to mention, that the president of the company was just indicted on fraud charges and that no successor has yet been picked. (The news is not yet public — Bully knows the info through his contacts at the company.) Gail signs a contract to buy the stock through Bully's firm. After the news becomes public, the stock price falls by 50%. Gail sues Bully for contract damages based on misrepresentation. A. Will the fact that Bully's misstatement was negligent rather than intentional make a difference in the outcome? B. If you're representing Bully's firm, what defense will represent your best shot at getting him off? C. Will the defense you asserted in part (B) work?

Yes. Even though the disclaimer states that Buyer assumed the risk of the car's condition and that Seller made no oral representations, Gary will be able to introduce evidence of his conversation with Sam during the negotiations for the sale. The parol evidence rule does not bar evidence designed to prove fraud, such as that the other party intentionally misrepresented an aspect of the deal otherwise covered by a disclaimer clause.

Gary Gullible enters into a contract with Sam Slick, owner of the "Better than New" used car lot, for the purchase of a used car. While examining the car, Gary asks Sam if it had ever been in any accidents. Sam says, "Absolutely not. This car is in the same condition it was in the day it left the assembly line." On the sales contract, Gary is required to initial a clause stating as follows: "Buyer has had an opportunity to inspect this vehicle and to satisfy himself of its condition prior to the purchase. Buyer accepts this vehicle in its current condition. Buyer is not relying in any way on any oral representations concerning the vehicle's condition that may have been made by Seller." A few months later, during a routine service, a mechanic points out some obvious repair work indicating the car has been in a major accident sometime in the past. Gary sues to have the contract rescinded. At trial, may Gary enter evidence that Sam knowingly lied about the accident issue?

D. deny recovery to both parties because they are in pari delicto. ANALYSIS. Follow the yellow brick road and you'll stop at step 3(b); the parties are in pari delicto. Neither can recover from the other. Why not? These parties formed an illegal contract, and neither, therefore, can recover under the law of contract; neither can recover for breach. Regarding then, the matter of restitution for unjust enrichment, some courts would write, "Pursuant to their contract, both parties were to commit equally poor behavior in serious violation of public policy. Hence, as for unjust enrichment, this court will make no award to either one." Other courts might reach the same result for the same reason, but state it thus: "The parties formed an illegal contract, and they are in pari delicto. Hence, as for unjust enrichment, neither is entitled to restitution from the other."

Gary and Charles agree that (a) Gary will steal two paintings X and Y from Museum, (b) Gary will deliver the paintings to Charles, (c) Charles will sell the paintings to Fence and share equally with Gary the moneys that Fence pays. Gary steals both paintings, but tells Charles that he was able to steal only painting X. He hands painting X to Charles, and Charles sells it to Fence. Charles then learns that Gary had in fact stolen painting Y and was "holding out" on him. Consequently, Charles refuses to share with Gary any of the monies that Fence paid him. Gary sues Charles demanding a judgment in the amount of one-half the monies Fence paid Charles, and Charles counterclaims demanding one half the fair market value of painting Y. If the court concludes that the parties have behaved with equal wrongfulness, it will A. award Gary the money he requests as damages for Charles's breach of contract. B. award Charles the amount of money he requests as restitution for Gary's unjust enrichment. C. award no recovery to either party because they are not in pari delicto. D. deny recovery to both parties because they are in pari delicto.

No. The issue here is whether an illegal purpose of only one of the parties—Princip—means the other, innocent party may not recover under the contract. The rule is that the innocent party may recover, even if he knew about the other party's illegal purpose, as long as (1) the purpose doesn't involve serious moral turpitude; and (2) the innocent party doesn't take special action to further the illegal purpose. Here, Princip's illegal conduct involves murder, obviously a crime of serious moral turpitude, so Al can't recover.

Gavrilo Princip walks into Al's Gun Shop and tells Al, "I want to purchase a gun that can hit a moving target at 50 feet." Al says, "Fine, I'll order it for you. It'll be $35. You can pick it up any time after tomorrow." Princip replies, "Good. I'll pick it up five minutes before that swine Archduke Ferdinand is due to drive through town in an open carriage, so I can give him what he deserves." Al assumes, correctly, that Princip intends to assassinate Ferdinand. Princip shows up, receives the gun (on credit), and shoots Ferdinand with it. He never pays Al. May Al sue to recover the $35?

It does not sound as if Gerry was so impaired as to satisfy the cognitive test. However, he might satisfy the motivational standard—that his mental defect impaired his ability to transact in a reasonable manner. The motivational test is satisfied by a much less serious degree of infirmity, but Restatement, Second, §15(1) more strongly protects the reasonable reliance interest of the other party by precluding avoidance for motivational disorders unless the other party had reason to know of the incapacitated person's inability to conduct the transaction rationally. This is an objective test, based on notice rather than actual knowledge. Although Holmes did not observe any conduct that might have alerted him to Gerry's possible mental incapacity, the fact that an elderly man was selling his house at a bargain price may be sufficient to place Holmes on notice that Gerry was suffering from some mental infirmity.

Gerry Atric, an 89-year-old man, had lived in his house for 45 years. CONTINUED> Gerry was confident that he knew exactly how much the house was worth, but he was wrong. His information about the market was years out of date and he did not do any research into current prices. He therefore priced the house at about 75 percent of its market value and advertised it for sale. Holmes Flipper, a property speculator, visited the house in response to the advertisement and realized that it was underpriced. Holmes therefore made an immediate offer to buy the house for its full asking price, which Gerry accepted. The parties' interactions during the transaction were quite minimal, consisting of a couple of short comments. The only impression that Holmes gained about Gerry was that he was a rather unfriendly elderly man of few words. After the contract of sale had been signed, Gerry told his daughter about it. She was appalled because she knew that he had let the house go for a patently inadequate price. She gathered data of recent sales of comparative properties, which she showed to him, finally convincing him that he had sold too cheaply. Gerry now wishes to rescind the sale. Does he have grounds to do so?

No. It's true that the possibility of a cap was well-known to the parties at the time the contract was signed, so it's hard to say that the cap was a "contingency the non-occurrence of which was a basic assumption on which the contract was made" (quoting from § 2-615(a)'s general language giving sellers the impracticability defense). But there's another clause in § 2-615(a): sellers also get to delay or cancel delivery if the agreed-upon performance is caused by "compliance in good faith with any applicable foreign or domestic governmental regulation or order [.]" That right is not dependent on the regulation or order being an event the non-occurrence of which was a "basic assumption" in the contract. So the fact that both parties may have foreseen the cap won't block Duke's from using § 2-615(a).

Gilda contracts to buy a hot foreign sports car, the Pronto Lescargo, from Duke's, a local dealership. Delivery is to take place in six weeks, and the price is fixed in the contract. The newspapers have been filled with speculation (of which both Gilda and Duke's are aware) that the government might place an annual cap on the number of foreign cars that may be imported into the U.S., but nothing has yet happened at the time of the contract. The week after the contract is signed, the government imposes such a cap. The cap has the effect of reducing the annual U.S. imports of the Pronto by 40%. Duke's own allocation of cars from the manufacturer is reduced by the same 40%. The shortfall means that Duke's has more signed contracts for cars than it can fulfill under the delivery times listed in the contracts. Duke's tells Gilda that she can either cancel, or else delay by up to 4 months, her receipt of the car (her choice). Duke's plans to make delivery to Gilda and its other contract customers in first-signed/first-delivered order. (Duke's could deliver on time to Gilda, but only by breaching a contract with at least one other customer.) If Duke's offers Gilda this choice, will Duke's be in breach?

Yes. The governmental action is an unforeseen, supervening event that was not caused by the fault of either party. Since these are goods, the effect of the government ban is covered by §2-615: "Delay in delivery or non-delivery . . . by a seller . . . is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by . . . compliance in good faith with any applicable foreign or domestic governmental regulation or order[.]" So both sides will be discharged from having to perform, by virtue of this variant of impracticability.

Health Clubs has a contract to purchase 200 cases of mineral water from the Water Bottling Company, bottled from the Company's well. Prior to delivery, the Food and Drug Administration discovers that the mineral water coming out of the Company's well contains dangerous levels of lithium, and bans all sales to the public. Is the contract with Health Clubs discharged by impossibility/impracticability?

Probably yes. Courts today are more lenient than they used to be, and tend to view strikes as a form of impossibility/impracticability if the strike makes performance either literally impossible or impracticable. Note that the impracticability is shown by extreme and unreasonable difficulty, expense, injury, or loss. The UCC is, like most modern courts in non-UCC cases, fairly quick to allow a seller faced with a strike to be discharged from his duty to perform due to impracticability. See UCC §2-615.

In January, Manufacturing Co. agrees to manufacture 100,000 customized widgets for Chain Store at a set price. Delivery must be by May 1. However, shortly after contract formation, all of the unionized workers at Manufacturing Co. go on strike and remain on strike through May. The contract is silent about what happens in the event of a labor strike. Will Manufacturing Co.'s duty to perform be discharged due to impossibility or impracticability?

No. This illustrates one of the exceptions to the parol evidence rule. The parol evidence rule operates only when a contract is effective. This means that any evidence showing it's not effective is admissible. Thus, failure of an orally-agreed-upon condition precedent to the effectiveness of the contract may be proved. See Rest. 2d §217: "Where the parties to a written agreement agree orally that performance of the agreement is subject to the occurrence of a stated condition, the agreement is not integrated with respect to the oral condition." (Since the written agreement is not "integrated" with respect to the oral condition, the oral condition may be proved, even if it's inconsistent with the agreement.) Since each parties' duty to perform is conditioned on the patent attorney's approval, either party is permitted to show that the condition was orally agreed upon.

Inventor patents a new invention — a solar-powered flashlight. He enters into a written agreement to sell the patent to Promoter. However, just prior to signing, they orally condition the sale on the review and approval of the patent by a patent attorney. The attorney reviews the patent and tells Promoter, "It's bogus. The patent will not be enforceable if litigated." Inventor sues Promoter, seeking to enforce the contract. At trial, Promoter wants to introduce evidence of the oral condition. Will the parol evidence rule prevent him from doing so?

A. No. A person receiving bids may not "snap up" an unduly low bid — that is, if the recipient either knows or has reason to know that the bid is likely to be an error, the bidder will be able to use the unilateral-mistake doctrine (assuming the other requirements for the doctrine, such as a mistake as to a "basic assumption," are met). B. Yes. Under these facts, the bid presented is not so out of whack with the others that it should have alerted Beardless to the problem. Therefore, Come-N-Get-It's only chance to avoid for mistake will be to show that enforcing the contract under the mistaken terms would be unconscionable. To do this,Come-N-Get-It would probably have to show that it would be severely harmed by enforcement of the contract; it's very unlikely that Come-N-Get-It will be able to do this.

James Beardless, Army chef, solicits bids for a custom-built food processor with a work bowl large enough to hold 500 lbs. of chipped beef. For this part, assume that Beardless receives bids on the project of $90, $600, $700, and $800. The $90 bid was from the Come-N-Get-It Food Supply House. Come-N-Get-It intended to bid $900, but made a careless clerical error in its bid. Beardless is impressed by Come-N-Get-It's very low bid. Beardless thinks that Come-N-Get-It must be a very efficient producer; he doesn't suspect that the bid's lowness may be due to clerical error, and he therefore doesn't re-confirm the price (though a reasonable person in Beardless' position would have done so). Soon after Beardless accepts, Come-N-Get-It tells Beardless that it made an error, and that its bid should have been for $900. Can Beardless enforce the $90 bid price? Say instead that the bids were for $500, $600, $700 and $800, with Come-N-Get-It's bid coming in at $500. Come-N-Get-It actually meant to bid $650, but made an error when adding up the figure for its estimate. Beard has no suspicion that there may have been an error (and a reasonable person would not have had such a suspicion). Beardless accepts the offer of $500 and now Come-N-Get-It wants out. Can Beardless enforce the $500 bid price

Yes. This is a unilateral mistake scenario. Here, (b) applies: even though Beardless did not in fact suspect a mistake, he should have: it's very unlikely that a bid that's 90% lower than the next-lowest bid is anything other than a clerical error. This sort of large difference is often referred to by the courts as a palpable error. The party seeking avoidance also has to show that he didn't expressly or implicitly bear the risk of such a mistake, but it's doubtful that a party would be held to bear the risk if the mistake was caused by a bug in the software used.

James Beardless, army chef, wants a custom-built food processor with a work bowl large enough to hold 500 lbs. of chipped beef. He receives bids on the project of $60, $600, $700, and $800. The $60 bid is from the Come-N-Get-It Food Supply House, which intends to bid $600, but the bid is incorrectly calculated because of a bug in the software used to calculate the amount. Beardless, thinking he's lucky to get such a low bid (and not in fact suspecting a clerical mistake) accepts the Come-N-Get-It bid. Can Come-N-Get-It void the contract on grounds of mistake?

Yes, probably. Courts have traditionally said that a party may recover for contractual misrepresentation only if the party's reliance on the misrepresentation was "reasonable." However, the modern trend is to hold that if the misrepresentation was intentional, and the party asserting misrepresentation honestly believed the misrepresentation, the fact that the reliance was "unreasonable" will not bar recovery. Therefore, a court following the majority approach will find in favor of Fozzie, and allow rescission.

Kermit takes his livestock to the county fair in hopes of selling it. Fozzie Bear shows a particular interest in one of Kermit's sows, "Miss Piggy." Kermit says the pig will cost Fozzie $10,000 because it is a special dancing pig. Fozzie asks for a demonstration, and he sees what he thinks is Miss Piggy dancing. In fact, Kermit has her pen electrified, and a few well-timed shocks are what create the appearance of "dancing." Fozzie buys Miss Piggy, and subsequently finds out she can't dance. He seeks his money back on grounds of misrepresentation. Assume that a person of ordinary credulity attending the fair would not have believed that Miss Piggy was dancing, but that Fozzie did believe that she was. May Fozzie have the contract rescinded?

Pete will probably lose. Where the buyer is a business or a businessperson, it's exceptionally rare for the court to find the contract unconscionable. Here, where there's been no affirmative misstatement of the contract's terms — and the only unfairness is the substantive one of an excessive price — the court is unlikely to depart from this general refusal to use unconscionablity in commercial disputes.

Krullen Heartless, the same appliance store featured in the prior question, offers the same "$19/month for 10 years" deal, on the same dishwasher, to Pete, owner of Pete's Tavern. (Pete's tired of having to wash glasses in his bar by hand all night.) Sam Shyster, Krullen's sales manager, doesn't make any factual statements about the provisions of the contract — he just hands it to Pete and says, "Look, you can buy for no money down." Pete glances at the contract, doesn't realize that he'll be paying triple the cash price, signs, and then soon goes into default. Krullen sues on the contract. If Pete defends on grounds of unconscionability, what result?

C. $1. ANALYSIS. The contract is illegal, wherefore it is void and hence unenforceable. Habel has no action for breach of contract. Arguably, Habel's participation in the contract violates public policy since he has knowingly purchased and intends to ingest food that is, legally, substandard. If the court should so conclude, then Habel will recover nothing. With its first few words, "If a court . . . ," the question hypothesizes that Habel does recover, and you're asked to identify the appropriate form of recovery. Because the court cannot enforce the contract, it will award restitution for unjust enrichment. Habel will be entitled to have the fair market value of any benefit he has conferred on Lafayette in money, property, labor, or service. In this case, Habel's payment of the $1

Lafayette operates a fruit stand, and Habel is his customer. When Habel asks to purchase a peach, Lafayette explains that he has but one peach, ten days old. "It looks all right and it's probably good," Lafayette says, "but the state law against distribution of potentially poisonous foods prevents me from selling you any fruit that is more than three days old, unless it is refrigerated, which this peach is not. And, who knows—maybe it's not safe." Habel responds, "I'll take my chances," and the parties contract for the sale of the peach, at a price of $1. Assume that Habel pays Lafayette $1. Lafayette then refuses to hand him the peach and refuses, also, to return the dollar. Habel brings an action against Lafayette. If a court allows Habel to recover, it will award him A. the fair market value of the time devoted to forming the contract with Habel. B. the fair market value of the peach. C. $1. D. the customary charge in the community for a peach.

A. None ANALYSIS. Follow the yellow brick road and you'll stop at 4(b), but you'll recognize that Lafayette has not enjoyed any unjust enrichment. So, Habel recovers nothing. A food safety regulation, certainly, reflects public policy. The contract is illegal, wherefore it is void and unenforceable. Habel has no action for breach of contract. Further, he has not performed under the contract. He has parted with no value in money, property, labor, or service, meaning that Lafayette has enjoyed no unjust enrichment. He is entitled to no recovery at all. He recovers nothing—nada, rien, nusquam, zilch—which means A is right.

Lafayette operates a fruit stand, and Habel is his customer. When Habel asks to purchase a peach, Lafayette explains that he has but one peach, ten days old. "It looks all right and it's probably good," Lafayette says, "but the state law against distribution of potentially poisonous foods prevents me from selling you any fruit that is more than three days old, unless it is refrigerated, which this peach is not. And, who knows—maybe it's not safe." Habel responds, "I'll take my chances," and the parties contract for the sale of the peach, at a price of $1. Immediately after forming the contract, before either party has performed, Lafayette decides not to sell Habel the peach and refuses to do so. To what recovery is Habel entitled? A. None B. The fair market value of the peach C. $1 D. The customary charge in the community for a peach

No. A minor can disaffirm a contract any time during his minority or for a reasonable period after he reaches the age of majority. Here, Leroy disaffirmed within a week of his 18th birthday; that's clearly within a reasonable period. However, because Leroy still possessed the house when he disaffirmed the contract, he will have to return it to Fields.

Leroy, a 15-year-old, buys a beach house from an adult, Fields. He puts $10,000 down and promises to pay off the $40,000 remaining at $200/month. The week after he turns 18, Leroy decides he no longer wants the house and disaffirms the contract. May Fields enforce the agreement?

C. No, because the difference between a four-year-old and a five-year-old bicycle is immaterial. Linda's falsehood was innocent, not fraudulent, Shoshana may only void the contract if the misrepresentation was material, meaning it was significant. Here, the mechanic told Shoshana that the five-year-old bicycle she received is worth about the same as the four-year-old bicycle she was promised; this shows that the misrepresentation was immaterial from an objective standpoint. Also, Linda had no reason to know that Shoshana, unlike most people, would perceive a material difference between a four-year-old and a five-year-old bicycle. Hence, the contract is not voidable by Shoshana and Linda can keep the money

Linda posted an advertisement proposing to sell her "four-year-old, ten-speed, medium-sized bicycle" for $250 on TradeMe.com, a website where buyers and sellers of such things regularly post items for sale. In fact, the bicycle was five years old, but Linda had recently received the bicycle as a gift from her aunt who mistakenly told her it was only four years old. Shoshana, who was on the lookout for a relatively new bicycle, saw Linda's posting on TradeMe and sent her an email offering $250 for the bicycle and Linda agreed. The next day, Linda delivered the bicycle, Shoshana paid her the $250, and the two went their separate ways. A few days later, while having the bicycle tuned up, the mechanic used a special computer to look up the serial number etched into the frame and discovered that the bicycle was actually five years old. The mechanic told her not to worry about it, since the value of a four-year-old bicycle and a five-year-old one is roughly the same. Even so, Shoshana asked Linda return her $250 and take the bicycle back. Is Linda legally obligated to return the money and take back the bicycle? A. Yes, because Linda intentionally concealed the age of the bicycle from Shoshana. B. Yes, because Linda made a fraudulent misrepresentation in the TradeMe advertisement and Shoshana was justified in relying on it. C. No, because the difference between a four-year-old and a five-year-old bicycle is immaterial. D. No, because Linda was not in a relationship of trust and confidence with Shoshana.

B. Yes, because Linda made a fraudulent misrepresentation in the TradeMe advertisement and Shoshana was justified in relying on it. "If a party's manifestation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient." Here, Linda made a misrepresentation (false statement of fact) in the advertisement, namely that the bicycle was four years old, and she knew that it was false since she had bought the bicycle herself five years ago. The misrepresentation induced Shoshana to buy the bicycle based on the age because she was looking for a "relatively new bicycle." Finally, her reliance on the misrepresentation was justified because one needed a special computer to look up the serial number and determine the age of the bicycle. Therefore, the contract is voidable by Shoshana.

Linda posted an advertisement proposing to sell her "four-year-old, ten-speed, medium-sized bicycle" for $250 on TradeMe.com, a website where buyers and sellers of such things regularly post items for sale. Shoshana, who was on the lookout for a relatively new bicycle, saw Linda's posting on TradeMe and sent her an email offering $250 for the bicycle and Linda agreed. The next day, Linda delivered the bicycle, Shoshana paid her the $250, and the two went their separate ways. A few days later, while having the bicycle tuned up, the mechanic used a special computer to look up the serial number etched into the frame and discovered that the bicycle was actually five years old (as Linda well knew, since she had bought it new five years ago). The mechanic told her not to worry about it, since the value of a four-year-old bicycle and a five-year-old one is roughly the same. Even so, Shoshana asked Linda to return her $250 and take the bicycle back. Is Linda legally obligated to return the money and take back the bicycle? A. Yes, because Linda intentionally concealed the age of the bicycle from Shoshana. B. Yes, because Linda made a fraudulent misrepresentation in the TradeMe advertisement and Shoshana was justified in relying on it. C. No, because the difference between a four-year-old and a five-year-old bicycle is immaterial. D. No, because Linda was not in a relationship of trust and confidence with Shoshana.

No. Lizzie's initial promise was voidable at her option due to her infant status. However, once she reached the age of majority, she had the right to reaffirm the contract. Once she exercised that right of reaffirmation, the contract became fully enforceable as if she had been an adult at the time the contract was made.

Lizzie Borden axe murders her parents when she is sixteen years old. She is acquitted of the crime on a technicality. While still a minor, she contracts with Shyster & Shyster Publishers to write her memoirs for $500,000. When she turns eighteen, she writes to Shyster & Shyster, reaffirming her acceptance of the contract terms. Shortly thereafter, Lizzie gets religious and decides she doesn't want to relive the horror of her past. Can she avoid the contract on the grounds that she was a minor when she made it?

A. No, because Michelangelo's estate can carry out the sale — his personal contribution is not necessary to fulfilling the contract at this point. B. Yes, probably. If no truly equivalent sculptor is available to finish the work, Michelangelo's unavailability would be found to be an event the non-occurrence of which was a basic assumption on which the contract was made. If so, then since Michelangelo's death was not his "fault" (see the conditions for discharge, described in Part (A) to the prior question), and since there is no indication that the parties intended to allocate the risk of Michelangelo's death to him rather than to the buyer, the death would discharge Michelangelo and his estate.

Michelangelo contracts to create and sell a statue of David to Allota Piazza. The statute is to be delivered on March 21. A. For this part, assume that on March 15, several days after Michelangelo finishes the sculpture, he dies. Is the contract discharged due to Michelangelo's death? B. For this part, assume that Michelangelo dies one month before he is due to finish the sculpture. At the moment of his death, 1/4 of the work (including the carving of a lot of details of David's lower anatomy) remains to be done. Is the contract discharged due to Michelangelo's death?

Mike. The issue here is the effect of unilateral mistake. The facts here satisfy the rule. First, a court would likely hold that Mike, as an amateur card collector dealing with a professional, did not "bear the risk of the mistake." Next, even though Dave didn't actually know the particular mistake Mike was making, he certainly had "reason to know" that there was some sort of mistake, because Mike was offering $500 for a card that Dave's scanner said was worth $1. And it's clear that the mistake was "as to a basic assumption [having] a material effect on the agreed exchange of performances." So Mike can avoid the transaction and get back his money in return for giving Dave back the card. NOTE: It's important that Mike sued promptly. Courts are much more willing to allow avoidance for unilateral mistakes where the non-mistaken party has not yet acted in reliance and can easily be restored to the pr

Mike Angelo, newly arrived in the United States from Italy, develops an immediate fascination with baseball. He visits Dugout Dave's Discount Memorabilia to check out some baseball cards. The owner, Dave Vinci, has a slogan, "I love to dicker" — so he doesn't put a price tag on anything. Mike spots an old card from 1929, which he thinks is of Babe Ruth, and offers Dave $500 for it. The card is in fact of Babe Roof, of the 1929 New York Spankies (a minor league team), and is worth at most $1. Dave, without looking at the card, puts it through his computerized scanner, and sees that its projected selling price is $1. Dave immediately accepts Mike's offer. If the card had been for Babe Ruth, it would have been worth $1,000. Mike writes out a check for $500 and takes the card home. Then his friend tells him that he's made a big mistake. The next day, Mike sues to have the transaction voided and to recover his $500. Who wins?

Here, Ming knew about the rusty spot but Paul did not. "Concealment," is not the same as bare nondisclosure but rather is equivalent to a misrepresentation. If one party takes specific action that would likely prevent the other party from learning the truth of a matter, then that action of concealment paired with nondisclosure is in effect "an assertion that the fact does not exist." This is what happened here. Although Paul was given the chance to test drive the car, Ming actively concealed the rust by placing the "for sale" sign right on top of it. On balance, however, it seems more likely that a court would hold the rust to be material, since rust can spread and Ming went out of her way to hide this patch, indicating that she thought it might reduce the price she could get for the car. Likely rescind on concealment

Ming decided to sell her car and accordingly affixed a "for sale" sign on the passenger door, strategically placing the sign right on top of the only rusty part of the car. Paul saw the car parked on the street and Ming lent him the keys so he could take a test drive. He drove all over town, on the highway and even off-road, and loved how it drove. When he returned, he readily agreed to Ming's purchase price and the two signed a written contract of sale. She then pulled the "for sale" sign off the car, revealing the rusty spot. Now that he has seen the rust, Paul wants to back out of the deal. May he?

D. In using the phrase "who knows?," the parties mutually manifested their uncertainty as to the value of the home's contents. ANALYSIS. To finish the argument that D starts, we would say that the contract, properly interpreted, allocated (a) to Nancy the risk that the home harbored items of significant value and (b) to Oliver the risk that it did not. If as to some circumstance in place at the time they form their contract, two parties manifest their uncertainty, then they allocate the relevant risk between them. They make no "mistake," and the mutual mistake doctrine does not apply.

Nancy's great uncle dies, leaving his home and its contents to Nancy. Nancy decides to sell the home, and commissions Oliver to empty it for that purpose. Nancy: I'll pay you $20 per hour if you'll empty the house. Oliver: I normally charge $35 per hour. Nancy: What if we agree that you can keep anything you find in the house? Oliver: Well, what's in the house? Nancy: As far as I know—junk. But who knows? Sometimes old junk is valuable. Oliver: You're right. Who knows? Nancy: Do we have a deal—$20 per hour and you keep the junk? Oliver: Yes. Oliver empties the house. Buried among items in its attic he seizes on a cluster of 1910 stock certificates, which upon his research reveal a value of $20 million. Nancy learns of the find and insists on having the certificates herself. She engages a lawyer who, on the ground of mutual mistake, brings an action seeking rescission and a return to Nancy of the stock certificates. Oliver contends that mutual mistake does not apply. Which of the following most weakens Nancy's position? A. Nancy deliberately persuaded Oliver to accept less than $35 per hour for his work. B. In making her offer, Nancy believed the house contained nothing of value. C. In using the word "junk," the parties manifested their assumption that the home contained nothing of great value. D. In using the phrase "who knows?," the parties mutually manifested their uncertainty as to the value of the home's contents.

No. Although there was an extreme change in price, thereby suggesting impracticability, Buyer's duty will not be discharged because he assumed the risk of price fluctuations. It is well known that stocks fluctuate wildly in price due to news. Therefore, such fluctuations are deemed to be allocated to the party who takes on the risk of being injured by that fluctuation (i.e., the risk of a downward move is on the buyer, and the risk of an upward move is on the seller). As a result, such fluctuations aren't covered by the impracticability doctrine, which requires that the risk in question not have been borne by the party seeking to avoid the contract.

On April 25, Buyer agrees to buy 500 shares of a certain company's stock from Seller at $300/share, transaction to take place April 30. On April 29, the president of the company has a nervous breakdown, and the stock price plummets to $200/share. Is Buyer's duty to buy discharged due to impracticability given the extreme fluctuation in price?

A. I ANALYSIS. The law seldom, if ever, allows a contracting party to void a contract because she (and not the other) enters it through some mistaken belief or assumption. That's because a reasonable person normally understands (even if she does not think in these words) that her agreement allocates to her the risk that she, alone, through no fault of the other party, is misinformed or otherwise acting under a misapprehension. EmCo's error is its own. The contract implicitly allocates to EmCo the risk that it is misinformed or otherwise operating under a misapprehension. Option II states an irrelevancy. The contract does fall within the Statute of Frauds because it provides for the sale of realty (Chapter 15, section A). That, however, has no bearing on mistake. Option I states the relevant truth, and so A is right.

On September 20, EmCo, owner of a property known as the Wrightworth Estate, by signed writing, offers to sell it to ZeCo for $50 million. The Wrightworth Estate has no house on it, but in the same vicinity is a property also owned by EmCo known as the Wentworth Estate, which includes an enormous mansion. Misreading EmCo's offer, ZeCo thinks that it pertains to the Wentworth Estate. Wanting property only with a mansion, ZeCo accepts EmCo's offer, also by signed writing. When ZeCo learns that it has confused "Wentworth" with "Wrightworth," it seeks to void the contract. If the court does not permit ZeCo to void the contract, it might state among its reasons that I. the contract implicitly allocated to ZeCo the risk that it had misunderstood EmCo's offer. II. the contract falls within the Statute of Frauds. A. I B. II C. Both I and II D. Neither I nor II

D. Neither I nor II ANALYSIS. Peter, an adult, forms a contract with Paul, a minor. Peter performs under the contract, but Paul does not. Paul then disaffirms the contract and thus puts it to an end. Because Paul didn't perform, Peter received nothing from him. Consequently, Peter need make no restitution to Paul. Paul retains the value of his painted car, but that represents a service. Because Paul is a minor, he need make no restitution for it. Fair or unfair, right or wrong, Paul has a newly painted car, and he need pay nothing for it. D is right.

Peter, age twenty-two, is a skilled auto body worker. Paul, age seventeen, is skilled in piano repair. Peter and Paul agree that Peter will paint Paul's car and Paul will repair Peter's piano. Peter then paints Paul's car, but Paul does not repair Peter's piano. Peter sues Paul for breach, whereupon Paul disaffirms the contract. The legal result will be that I. Paul must pay Peter the fair market value of the paint job with which Peter provided him. II. Peter must pay Paul the fair market value of the piano repair Paul failed to provide him. A. I only B. II only C. I and II D. Neither I nor II

No. Player's initial promise was voidable at his option due to his minor status, but once he reached the age of majority and a reasonable time had passed, he affirmed the contract, and it became enforceable as written. This affirmation is called "ratifying" the contract.

Player is a famous high school basketball player who is 17 years old. Player is good enough that he is going to go straight to playing professional basketball instead of going to college. Knowing this, Sport Memorabilia Company enters into a written contract with Player that requires Player to sign 15,000 autographs in return for $10,000, which was to be paid immediately. Player had five years to sign the autographs. Sport Memorabilia Company paid the $10,000. Player performed under the contract for three years until he was 20 years old. At that point, Player attempted to disaffirm the contract on that grounds that he entered it when he was a minor. Will Player be successful?

Yes. In impossibility and impracticability cases, discharge will occur only when three main conditions are satisfied: (1) the event relied on was one whose non-occurrence was a "basic assumption" on which the contract was made; (2) the event was not the fault of the party seeking discharge; and (3) the language or circumstances don't indicate that the parties allocated the risk to the party now seeking discharge. It's very unlikely that the unavailability of Fountain of Youth water would be held to be an event the non-occurrence of which was a basic assumption on which the contract was based. No. The fact that the contract specifically mentions Fountain of Youth as the source of supply indicates that the unavailability of Fountain water was an event the non-occurrence of which was a basic assumption on which the parties based their deal.

Polly Plastiskin contracts to buy 50 gallons of mineral water from the Pisarro Water Supply Co. The contract merely specifies that the water will be "pure mineral water." Pisarro gets its mineral water from several sources, but it primarily relies on the Fountain of Youth, and plans to fill Polly's order with Fountain of Youth water. (Polly doesn't know this — she's never heard of the Fountain of Youth.) Before Pisarro fills Polly's order, the Fountain of Youth is destroyed in an earthquake. A. May Polly recover damages from Pisarro for breach of contract? B. Same basic facts. Now, however, assume that the contract provides that Pisarro will deliver "pure mineral water from the Fountain of Youth." May Polly recover damages from Pisarro for breach of contract?

Probably not. The issue here is whether President's unilateral mistake is grounds for avoiding the contract. Here, the additional elements needed to prove unilateral mistake are not satisfied. There's nothing "unconscionable" about requiring President to pay $10,000 for a machine worth $10,000 (especially when President had the full opportunity to investigate in advance whether the machine met his special requirements). And it's clear that Builder had no reason to know of the mistake, since she didn't know that President planned to cut marble. (Also, a court would likely hold that in any event, President implicitly bore the risk of this sort of mistake, because the mistake arose out of his own special requirements not disclosed to the other party.) As a result, the contract will be enforced.

President is building himself a monument and needs a rock-cutting machine. He finds one for sale by Builder for $10,000. President goes to Builder's house to inspect the machine and offers her $10,000 for it, which she accepts. The market value for such a machine is approximately $10,000. Before the transaction takes place, President finds out the rock cutter will not cut marble, which is the type of stone President is using (unbeknownst to Builder). May President avoid the contract due to his mistake?

The facts indicate that all aspects of this transaction—removing the figurine from the tomb, smuggling it, and selling it—are illegal. (In fact, these actions are surely criminal offenses as well. However, the question of whether the parties face criminal prosecution is not the concern here.) The facts also suggest that both parties were aware that they were entering into an illegal sale. Ann would have no chance of successfully suing Rob for enforcement of the contract. It is inconceivable that a court would abet a seriously illegal transaction by enforcing it, either by an order of specific performance or by the award of expectation damages to compensate for the loss of the bargain.

Rob Graves plundered a 3,000-year-old bronze figurine from the tomb of an ancient king. He smuggled it into the United States for the purpose of selling it. He contacted Ann Teek, a well-known collector of antiquities, to see whether she would be interested in buying the figurine. Ann did not ask Rob how he acquired the figurine, but she suspected that he had stolen it and brought it into the country illegally. She also knew that it is illegal to deal in stolen antiquities. Nevertheless, her desire to own the figurine overpowered her scruples. She entered into a contract with Rob to buy it for $50 million. In terms of the contract, Ann had to pay a deposit of $10 million in cash to Rob on signing the written agreement and would pay the balance in cash on delivery of the figurine a few days later. Ann paid the deposit to Rob, but he never delivered the figurine. What would Ann's prospects of success be if she decided to sue Rob to enforce the contract? What would her prospects of success be if she decided not to sue Rob for enforcement but instead sued him for return of the $10 million?

No. A party seeking to avoid a contract that he entered into when drunk must show both (1) that he was so intoxicated that he couldn't understand the nature of his transaction, and (2) that the other party knew, or had reason to know, that this was the case. Here, the airline had no reason to know that Roger was drunk, so the second requirement isn't met.

Roger Thornhill, teetotaler, is at a party one night. He's delighted that there's a big punch bowl full of fruit punch. He drinks a lot of it, not realizing that it's Electric Kool Aid, a very potent brew indeed. He gets completely intoxicated, and in a drunken state calls Windshear Airlines and puts a plane ticket to South Dakota on a credit card. (The ticket agent thinks Roger sounds a bit weird, but doesn't realize he's dead drunk.) The ticket is not refundable. Before Roger's due to leave, he sobers up and wants to get out of the purchase. Can he disaffirm the purchase? Times16px

D. Probably not, because it does not conflict with public policy ANALYSIS. A contract is not illegal simply because it contravenes some legislative statute or administrative regulation. A is wrong. A contract is illegal only if it conflicts significantly with public policy. Public policy, in turn, refers to moral values that are conventionally "good" ones and, in general, values consistent with notions of a stable, free, and ordered society as a court understands them. The zoning ordinance at issue here bespeaks no such concerns. Certainly it does not conflict with traditional notions of good moral values as stated in B. Neither is it relevant, as stated in C, that the parties knew of the zoning ordinance. A, B, and C are plainly wrong. D is right.

Rory owns a suburban home where zoning regulations forbid him to build a yard fence higher than five feet without first obtaining permission (a "variance") from the local zoning board. He wishes to build a yard fence six feet high and offers to pay Ben $1,000 for building it. Ben asks Rory whether he has obtained the necessary zoning variance, and Rory answers, truthfully, "no." Nonetheless, Ben accepts the offer and builds the fence. Thereafter, Rory refuses to pay. Is the contract illegal? A. Probably, because it conflicts with a lawfully enacted governmental regulation B. Probably, because it conflicts with traditional notions of sound morals C. Probably, because both parties knew of the zoning ordinance when they formed their contract D. Probably not, because it does not conflict with public policy

No. This illustrates one of the exceptions to the parol evidence rule. The parol evidence rule doesn't deal with subsequent modifications to written contracts. It covers only prior or contemporaneous oral agreements (and prior written agreements) supplementing or contradicting the main written agreement. So as long as the writing itself doesn't ban subsequent oral modifications, either party will be allowed to prove that such an oral modification occurred (even if the modification is, as here, a direct contradiction of the original writing).

Seller and Buyer enter into a contract for Seller to sell 1,000 place-mats to Buyer. They have a written contract with a merger clause that says the agreement is intended to be a final, complete expression of their agreement. The contract says that the price per placemat will be 20 cents. The written document says nothing about the effect of subsequent oral modifications. One month after the signing, Seller orally asks for an increase to 25 cents. Buyer orally agrees. After delivery, Buyer pays only 20 cents per mat, and Seller sues for the extra nickel. Will Seller be barred from introducing evidence of the oral agreement to raise the price?

Yes. The parol evidence rule forbids only the introduction of prior agreements or contemporaneous oral agreements that vary, modify, or contradict a fully integrated writing, i.e., a writing intended to be the final and complete expression of agreement. But a party is always permitted to put in evidence that the writing was not intended to be fully integrated. That's the type of evidence that Seller is offering here. Then, if the court believes Seller's testimony that the contract was not intended to be a full integration, it will allow into evidence his additional testimony about the interest clause (since that is a consistent, not contradictory, additional term, and can therefore come in to supplement the partially integrated agreement).

Seller and Buyer have a written contract for Seller to sell Buyer a set of antique candy dishes for $1,000, with Buyer to receive 30 days to pay. The document is silent about whether interest is to be owed after 30 days and if so, at what rate. Seller ships, and Buyer does not pay until 90 days later. Seller sues Buyer for 6% interest for the 60-day period of lateness, claiming that prior to the signing of the written document, the parties orally agreed to this interest rate for late payments. Buyer claims that the written agreement was intended to be a complete (and final) integration, so that it cannot be supplemented by evidence of even consistent prior orally-agreed-upon terms. Seller offers to testify that just before they signed the writing, Buyer said to him, "I recognize that the writing doesn't cover all the points of our deal, like our oral agreement that I'll pay you 6% interest on overdue invoices." Should the court permit Seller to give this testimony?

Probably not. The rule for the defense of misrepresentation is as follows: A contract is voidable by the deceived party for misrepresentation if the following four elements are proven: (1) misrepresentation, (2) fraud or material misrepresentation, (3) inducement, and (4) justifiable reliance. The issue here is whether or not the innocent party's reliance on the misrepresentation was justified. The standard in most courts for justified reliance is low. If the party actually knew or should have known that a statement was false, then there was no justifiable reliance. Here, while it may be absurd to think that a cow can dance, nothing in the facts suggests that Buyer actually knew this was false. As a policy matter, courts do not want to relieve a party of liability when they intentionally committed fraud. While Buyer should have known better, Buyer will win and be able to rescind the contract.

Seller takes his livestock to the county fair in hopes of selling it. Buyer shows a particular interest in one of Seller's cows, "Divine." Buyer asks the price and Seller says, "$10,000." That's a very high price for a cow, and Seller defends the price on grounds that this is no ordinary cow—this cow can dance. Buyer asks for a demonstration and he sees what he thinks is Divine dancing. In fact, Seller has her pen electrified and a few well-timed shocks are what create the appearance of "dancing." Buyer buys Divine and subsequently finds out she can't dance. He seeks his money back on grounds of fraud. Seller defends on grounds that no reasonable person would be justified in believing that cows can dance. Would Seller win?

D. in her opinion, the parties intended the writing as a final statement as to some of what each would do for the other, but they did not intend it fully to state all on which they had agreed. ANALYSIS. The question tests only the superficial definition of "partial integration" as we describe it above. A partial integration (whatever its significance, to be discussed in section G below) refers to two parties who first form an oral contract and then reduce it to a writing which, in a judge's opinion, they "intended" as a final expression of those terms that do appear in the writing, but not as a complete expression of all terms on which they agreed. D very plainly and simply restates that definition, and that's why D is right.

Shayna and Chris agree orally that Chris will act as supervisor and manager of Shayna's commercial ice skating rink, Monday through Friday from 9:00 A.M. to 5:00 P.M. Shayna is to pay Chris an annual salary of $150,000, in twelve monthly installments of $12,500 each, on the first day of each month. While negotiating, the parties exchange a number of notes and conduct a number of conversations. Ultimately, they agree, orally and by handshake, to the terms described above, and to an additional fifty terms as well. Thereafter, in cursive, they sign their first names only to this short writing, labeled "Employment Contract": The undersigned Shayna Signorelli ("Employer") and Chris Matus ("Employee") hereby agree, finally and unconditionally, that Employee will serve as Employer's general manager, on an ordinary full-time basis and that he will be paid for his service an amount satisfactory to him. Employee acknowledges that the skating rink operates from 8:00 A.M. to 10:00 P.M. seven days per week. If a judge concludes that the writing is a partial integration and not a total integration, her reason will most likely be that A. the writing names itself an "Employment Contract" and therefore must represent, in part, terms on which the parties have finally reached agreement. B. the writing is dated and signed by both parties, each setting forth his or her cursive signature. C. the writing specifies the number of days per week and hours during which the skating rink operates. D. in her opinion, the parties intended the writing as a final statement as to some of what each would do for the other, but they did not intend it fully to state all on which they had agreed.

B. in her opinion, the parties did not "intend" the writing to be final even as to the terms it states. ANALYSIS. This question requires that you know the definition of "integration." An integration is a document that, as to the terms it does set forth, the parties "intend" to be a final expression of their agreement either (a) as for the provisions it embodies (partial integration) or (b) absolutely and completely (total integration). If in a judge's opinion the parties did not intend the writing to be final as to anything, then the writing is no integration at all. B restates that simple rule, and that's why B is right.

Shayna and Chris agree orally that Chris will act as supervisor and manager of Shayna's commercial ice skating rink, Monday through Friday from 9:00 A.M. to 5:00 P.M. Shayna is to pay Chris an annual salary of $150,000, in twelve monthly installments of $12,500 each, on the first day of each month. While negotiating, the parties exchange a number of notes and conduct a number of conversations. Ultimately, they agree, orally and by handshake, to the terms described above, and to an additional fifty terms as well. Thereafter, in cursive, they sign their first names only to this short writing, labeled "Employment Contract": The undersigned Shayna Signorelli ("Employer") and Chris Matus ("Employee") hereby agree, finally and unconditionally, that Employee will serve as Employer's general manager, on an ordinary full-time basis and that he will be paid for his service an amount satisfactory to him. Employee acknowledges that the skating rink operates from 8:00 A.M. to 10:00 P.M. seven days per week. If the judge were to conclude that the writing constitutes no integration at all, she would most likely do so because A. in her opinion, it fails to state some of the terms on which the parties actually agreed. B. in her opinion, the parties did not "intend" the writing to be final even as to the terms it states. C. each of the parties signed with a first name, but not a last name. D. it does not refer to itself as an integration of the parties' agreement.

Yes, but she'll be liable for the reasonable value of the apartment for the period in which she resided there. What's at issue here is a minor's liability for "necessaries"—that is, things like food, shelter, clothing, and medical services. The rule with necessaries is that minors can disaffirm contracts for necessaries, but they'll be liable for the reasonable value of any necessaries already furnished to them. Here, Shirley has received at least two months of shelter. As a result, she'll be liable for the reasonable value of the apartment for that time. In other words, if the market value of the apartments is less than $500, then Shirley will only to pay that amount. NOTE: The nature of "necessaries" depends on the circumstances. For instance, legal services for criminal defense would be a necessary; legal services to protect a property interest wouldn't be.

Shirley, age 16, is living on her own since her parents are unable to provide for her. She rents an apartment in the Apartment Complex, signing a two-year lease at $500 a month. Her first two rent checks bounce, and when the landlord starts to chase her down, Shirley wants to disaffirm the lease and move out. May she do so? If so, will she be liable for any part of the rent?

B. On August 1, Morton Green died. B describes an event that occurs after the parties form their contract whose effect is to render it impossible for ShowCo to perform. With Morton Green dead, ShowCo can't secure him for its cast. Hence, B is right.

ShowCo, located in Pottsfield, produces shows for theater owners. StageCo, located in Cincotti, owns and operates a theater. On July 1, 2019, ShowCo and StageCo form a contract including these terms: Whereas StageCo plans to sell seats in its theater for $100 each on such dates and for such performances as are described below, and whereas Morton Green is a world-renowned baritone revered, moreover, for his portrayal of the part of Ko-Ko in the opera hereinafter mentioned, the parties do agree that: ShowCo will produce, at StageCo's facility, on the dates October 1 to October 15, 2019, inclusive, the comic opera Mikado, for which ShowCo will hire, furnish, and pay the entire cast and orchestra, the leading baritone role of Ko-Ko to be played by the celebrity Morton Green; and StageCo will, on November 1, pay ShowCo $500,000 for such service. Which of the following facts, if proven, would most likely discharge ShowCo's duty to perform on the theory of impracticability? A. On July 1, unbeknownst to either party, Morton Green was dead. B. On August 1, Morton Green died. C. On July 1, just before forming their contract, the parties mutually acknowledge their understanding that Mikado might not be appealing to a Cincotti audience. D. On August 1, through no fault of StageCo, the Daily-Carta opera company obtains a court order against StageCo forbidding it to present Mikado to any audience, whether or not the audience pays for the presentation.

D. On August 1, through no fault of StageCo, the Daily-Carta opera company obtains a court order against StageCo forbidding it to present Mikado to any paying audience, but allows StageCo, still, to present it to a non-paying audience. D describes an event that occurs after the parties form their contract, whose effect is to prevent StageCo from charging a price to its audience, thus frustrating StageCo's essential contractual purpose. Hence, D is right.

ShowCo, located in Pottsfield, produces shows for theater owners. StageCo, located in Cincotti, owns and operates a theater. On July 1, 2019, ShowCo and StageCo form a contract including these terms: Whereas StageCo plans to sell seats in its theater for $100 each on such dates and for such performances as are described below, and whereas Morton Green is a world-renowned baritone revered, moreover, for his portrayal of the part of Ko-Ko in the opera hereinafter mentioned, the parties do agree that: ShowCo will produce, at StageCo's facility, on the dates October 1 to October 15, 2019, inclusive, the comic opera Mikado, for which ShowCo will hire, furnish, and pay the entire cast and orchestra, the leading baritone role of Ko-Ko to be played by the celebrity Morton Green; and StageCo will, on November 1, pay ShowCo $500,000 for such service. Which of the following facts, if proven, would most likely discharge StageCo's duty to perform on the theory of frustration of purpose? A. On July 1, unbeknownst to either party, Morton Green was dead. B. On August 1, Morton Green died. C. On July 1, just before forming their contract, the parties mutually acknowledge their understanding that Mikado might not be appealing to a Cincotti audience. D. On August 1, through no fault of StageCo, the Daily-Carta opera company obtains a court order against StageCo forbidding it to present Mikado to any paying audience, but allows StageCo, still, to present it to a non-paying audience.

(A) The doctrine of frustration of purpose. (B) No. Here, these conditions are satisfied. As to (1), the Hotel obviously knew that Fann was probably planning on attending the Superbowl (the Hotel's double room rates show it knew that that was the purpose of most guests booking for that week), so both parties knew that the playing of the game was a "basic assumption" behind the contract. As to (2), there is no evidence that the parties intended Fann, as opposed to the Hotel, to bear the risk that something would happen to prevent the game. Also, the relative unforeseeability of the event (continued labor peace was expected at the time the contract was signed) makes it even more likely that a strike was not an event the risk of which the parties thought about imposing on the party whose purpose would be thwarted by that event. CONTINUED

Superbowl XXXIX is to be held in New Orleans on January 20, 2002. In April, 2001, Rabb Id Fann signs a contract for 3 large suites at the Swank Hotel, for the week that ends on Superbowl day. The price is twice as high as the hotel usually charges for those suites for that week in a non-Superbowl year. At the time of booking, there has been labor peace in pro football for several years, and few observers expect that to change. In December, 2001, the NFL Players Association goes on strike, and the 2002 Superbowl is cancelled. The Hotel demands that Fann pay for the suites anyway. A. If you represent Fann, what doctrine will you assert in his behalf? B. If you assert the doctrine listed in your answer to (A), will Fann be required to pay for the suites?

D. formed a contract voidable at Thaddeus's option. ANALYSIS. The doctrine of duress provides that when an offeree accepts an offer in response to an offeror's improper threat, the parties form a contract that is voidable at the offeree's (victim's) option. One generally has a right to report another's misconduct to whomever she pleases (unless she is bound, for example, by a professional confidence). But one commits a legal wrong (blackmail) when she offers not to exercise that right and to "keep quiet," demanding value in exchange for her silence. The abuse of such a right constitutes an improper threat, which in turn means the resulting agreement between blackmailer and victim is voidable for duress.

Thaddeus, Vore's employee, steals $10,000 from Vore's safe. Vore knows nothing of the theft, but unbeknownst to Thaddeus, Banya witnesses it and shortly thereafter creates, dates, and signs this writing titled "Agreement": Agreement: March 12, 2019; 8:00 a.m. Banya Banes, "Payee," hereby agrees not to report to Vore Volee or to any other person or authority the activities and conduct she witnessed on the part of Thaddeus Thames on the evening of March 11, 2019 between the hours of 6:00 P.M. and 7:00 P.M., in exchange for which the said Thaddeus Thames agrees to pay her $5,000 within 24 hours. Banya approaches Thaddeus, presents him with the writing, and says, "Sign or I'll report you to Vore and to the police. You know very well what I'm talking about." Thaddeus reads the writing and signs it. The parties A. formed no contract, because Banya did not make her offer in good faith. B. formed no contract because Thaddeus manifested no assent to Banya's offer. C. formed no contract because Banya made only a gratuitous promise. D. formed a contract voidable at Thaddeus's option.

Yes, probably. The majority view is that when a contractor is to build a structure from the ground up, the contractor will normally not be excused from performing even if the partially completed building is destroyed by no fault of the contractor. Therefore, Colossus must start over for no additional compensation, or be declared in breach. No, Colossus may not recover anything. Where a party contracts to repair or remodel an existing building owned by another, each party will normally be discharged from its duty to perform by the doctrine of impossibility if the building is destroyed throughout fault of either. That is, in a repair or renovation contract, the destruction of the structure is normally deemed to be an event the non-occurrence of which is a basic assumption on which the contract was based. They'll both be discharged.

The Colossus Construction Company contracts to build a palace in Rome, on land owned by Emperor Nero. The job is to be paid for in full at the end of construction. Six months into the construction, during a terrible lightning storm, the building catches fire and is destroyed. A. Suppose that Colossus is now unwilling to start the work from scratch, unless Nero pays extra. Nero refuses, and tells Colossus that he expects it to do the work for the original contract amount, which Nero promises to pay on completion. May Nero recover against Colossus for breach? B. Assume instead that the palace was already in existence at the time of the Colossus-Nero contract. Assume further that Colossus had contracted to do an extensive remodeling job. The half-renovated palace is destroyed by a fire caused by lightning. Colossus has been paid the pro-rata contract amount for all work completed as of the moment of the fire, on which it earned half the total profit it would have made had the contract been completed. Nero rebuilds the palace from scratch, but has a different contractor (one specializing in palaces-from-scratch) do the rebuilding. Colossus therefore loses the chance to do the second half of the renovation project, and loses the profit it would have made ($100,000) on that second half. May Colossus recover any damages from Nero, and if so, what amount?

B. Yes, because of the gross inequality of bargaining power between Heavenly and The Frontstreet Boys and the great disparity between a 1% and 10% royalty. Unconscionability requires both (1) procedural unconscionability, and (2) substantive unconscionability. In other words, the inquiry is not only into whether the terms are unfair but also into whether the process of entering into the contract puts one party at a serious disadvantage. Here, procedural unconscionability might be shown by the gross inequality of bargaining power between an eager and inexperienced singing group on one hand, and a major record label on the other. Substantive unconscionability might be shown by the great disparity between the 1% contractual royalty and the industry standard, which is ten times higher.

The Frontstreet Boys, a singing group comprising five young men in their mid-twenties, were eager to record their songs and, hopefully, get famous. They entered into a contract with Heavenly Records, a major record label, which called for The Frontstreet Boys to record a full album that would become the sole property of Heavenly. In return, the singers would collectively receive a 1% royalty on the profits Heavenly made from selling records, licensing the songs for movies, or any other use. If the standard royalty in the music industry is 10%, is it possible that a court might find the Heavenly/Frontstreet Boys royalty agreement to be unconscionable? A. Yes, because of the great disparity between a 1% and 10% royalty. B. Yes, because of the gross inequality of bargaining power between Heavenly and The Frontstreet Boys and the great disparity between a 1% and 10% royalty. C. No, because unconscionability is only recognized under the UCC. D. No, because all members of The Frontstreet Boys were adults with full capacity to contract.

(A) That the contract is unconscionable. (B) Yes. A consumer contract will be held voidable for unconscionability under UCC § 2-302 if it is unduly one-sided under the circumstances existing at the time of signing. The fact that the party opposing a finding of unconscionability concealed the true nature of the contract from the other party will strongly militate towards a finding of unconscionability. So will the weaker party's lack of sophistication or education, as will the extreme substantive unfairness of the terms. Here, all of these factors work in favor of a finding of unconscionability, so that's what the court will probably do. As a remedy, the court will then probably either order the contract rescinded , or will "rewrite" the contract so that the payments due will approximate the dishwasher's fair value.

The Krullen Heartless Appliance Store is located in a poor neighborhood. Sam Shyster is the sales manager. He puts a sign in the window reading, "New Dishwashers — only $19." Fred Farkus, fourth-grade dropout, sees the sign and asks, "Is it really $19?" Sam says, "Yeah — take a look at this contract. See? $19!" What Sam doesn't point out is that it's $19 a month for ten years, chargeable to a credit card. This is in small print buried toward the bottom of a 10-page contract. Sam tells Fred to sign, and he does, although he doesn't really understand the contract since it's all words and no pictures. The actual cost of the dishwasher under the contract, expressed as a present value, is $1,900; the same model is on sale nearby at an all-cash price of $600. Fred soon goes into default, and Sam not only seeks to repossess the dishwasher but also to collect the balance owed. A. If you represent Fred, what defense should you assert on his behalf? B. Will the defense you assert in (A) be successful.

Yes, probably. Normally, neither party to an illegal contract may recover. But where only one of the parties has an illegal purpose, the other party may be able to enforce the contract, under the "pari delicto" doctrine. Under that doctrine, the "innocent" party can recover, even if it knew about the other party's illegal purpose, as long as: (1) the innocent party is not guilty of moral turpitude; and (2) the innocent party is less blameworthy than the party with the illegal purpose. That's probably the case here: Snakeoil's behavior probably isn't deeply blameworthy (since it involves medicine), and Snakeoil is clearly less blameworthy than Hussein, who's the one who's doing the smuggling.

The U.S. has a ban on trade with Iraq. The Snakeoil Pharmaceuticals Company gets an unsolicited order for $100,000 worth of medicine from Abdul Hussein. It ships the medicine on credit to Hussein in New Jersey, knowing Hussein intends to smuggle it into Iraq. Hussein doesn't pay. Can Snakeoil recover the $100,000 due under the contract?

Countess can avoid the contract due to duress. Duress makes a contract voidable when one party's assent is induced by any wrongful act or threat, such that her assent wasn't a matter of free will. Here, the threat of violence to her puppy is enough to taint Countess's assent. As a result, she can avoid the contract if she wants to. NOTE: Here, the contract is voidable only at the wronged party's option. The wrongdoer—here, Thief—may not avoid the contract on grounds of duress if Countess wants to go through with it. Although Thief threated to kill the dog, this is not a case of physical duress, which would make the contract void as a matter of public policy. Pets are considered personal property under the law, so this is a type of economic duress. To be physical duress, it must be a threat of bodily injury to a person.

Thief sees Countess and her prized puppy in the corner of a public library. Thief snatches the puppy and says to Countess, "Sign this contract promising to sell me your designer diamond-studded pumps for $10 or you'll never see the little dog alive again." Thief's fingers close ominously around the puppy's throat as he says this. The puppy whimpers. Countess signs the agreement. Countess later refuses to honor the agreement, and Thief sues to enforce the contract. What result?

D. Neither I nor II The contract is illegal—not because it happens to violate a legislative enactment but because, as we said, the operation of such unsafe machinery contravenes public policy. That means the contract is void; it doesn't exist. Option I is false. Tollins is a "bad guy"; Santos is not. Because Tollins dishonored his promise, Santos worked for no pay. Tollins has been enriched at Santos's expense. Santos is entitled to recover not for breach of contract but for unjust enrichment. According to option II, Santos recovers $2,400 because such is the amount to which the contract entitles him. Wrong, wrong, wrong. For unjust enrichment, the court will award Santos restitution in an amount based not on the terms of the illegal contract, but according to the "benefit conferred" on Tollins,

Tollins operates a construction business. Santos approaches him and asks for employment. "Can you operate a back hoe?" asks Tollins. Santos says yes, and Tollins continues: "My one remaining back hoe failed the legal safety inspection, but if you're willing to take your chances, you're hired—$30 per hour, 40 hours per week, Monday to Friday, 9:00 A.M. to 5:00 P.M. You'll be paid every two weeks, on Friday at 5:00 P.M.; twenty weeks of work guaranteed if you'll guarantee me that you'll remain for those twenty weeks." Santos agrees: "It's a deal." Let's assume this: Because Tollins authorizes Santos to operate an instrument that is, by law, unsafe, his participation in the agreement violates public policy. Santos performs his work for two weeks, and the back hoe functions well. When he requests his pay of $2,400 ($30/hour × 80 hours), Tollins refuses to pay, asserting that he is short of funds. He further advises Santos that he must "let him go" for that same reason. Alleging Tollins's failure to honor his agreement, Santos sues Tollins. The court should I. rule that the contract is enforceable against Tollins. II. award Santos $2,400 because that is the amount to which the contract entitles him. A. I only B. II only C. I and II D. Neither I nor II

Yes. Contracts that minors enter into are voidable at their option only. The other party doesn't have the option of voiding the contract.

Tutankhamen, aged 12, contracts to purchase a burial plot from Valley of the Kings Cemetery for $10,000. Real estate becomes much more valuable in the next two years and Valley of the Kings wants to get out of the contract with Tut so it can sell the plot to someone else for a lot more money. May Tut enforce the contract?

(C) No, because the parties agreed that the obligation of the person who wanted her lawyer to approve the writing was subject to a condition precedent Here, the exception of an oral condition precedent applies since both parties agreed that the agreement would not be effective unless the person's lawyer approved it. Notwithstanding the parol evidence rule, the law honors the condition. The person's lawyer did not approve the agreement and for that reason the writing is ineffective

Two people orally agree to become partners in the ownership and operation of a retail pharmacy. They prepare a writing, exhaustively detailed in all respects, providing at its end: "Merger: This writing constitutes the complete and final expression of the parties' agreement." Prior to signing the document, one of them says to the other, "Before I'm bound by all of this, I'd like to have my lawyer approve it. So, let's sign now, with the understanding that I'm not bound unless and until my lawyer gives me the o.k." The other person responds, "That's fine." Both parties sign the writing. The person who wanted her lawyer to approve it has her lawyer read the writing. The lawyer disapproves of several of its provisions. Is the person whose lawyer reviewed the writing bound by the writing? (A) Yes, because the writing embodies a merger clause (B) Yes, because the writing constitutes a total integration (C) No, because the parties agreed that the obligation of the person who wanted her lawyer to approve the writing was subject to a condition precedent (D) No, because a contractual writing is generally unenforceable if it omits a term that the parties by prior oral agreement expressly intended to include in their agreement

Yes, but only because he can make restitution (i.e., return the goods). The issue here is the voidability of contracts by incompetents when the other party has already performed. The rule is that if the other party didn't take advantage of the incompetent and had no reason to know of the incompetence, the contract is only voidable if the incompetent can make restitution. Because Van Gogh can make restitution, he can void the contract. RELATED ISSUE: If the incompetency was obvious—say Van Gogh had hacked off his ear in the store with an artist's blade—restitution need not be made if the goods have been used up (which would apply here if Van Gogh had used up the art supplies). RELATED ISSUE: Say Van Gogh had ordered the art supplies and signed a contract to purchase them, but they hadn't arrived yet, Art hadn't performed yet. That would make the contract "executory," the incompetent is free to void th

Van Gogh is mentally ill, but has not been adjudged mentally incompetent. He enters into a contract to purchase $1,000 worth of art supplies from Art-C-Tartsy Art Supplies, Inc. He pays, and the supplies are delivered. Before he's touched the supplies, he disaffirms the contract and demands his money back. Assuming Van Gogh appeared normal when he entered the contract, is his disaffirmance valid?

C. in his opinion, VentCo did not reach its professional decisions with the same care as would a professional in the same field with the ordinary degree of skill. ANALYSIS. Under the contract, VentCo made no express warranty as to the quality of its work. Consequently, any breach by VentCo of a warranty must relate to an implied warranty—a warranty that the law imposes on it. The only warranty that the law imposes on providers of a service (and it does not impose one on all of them; some states impose it only as to construction work) is that of "good and workmanlike" performance, which relates not to the outcome of one's work but to the way in which one performs it (which, of course, does affect the outcome). Most relevant to BuildCo's claim in breach of warranty is evidence not as to how the various systems function, but as to how VentCo actually performed its work.

VentCo installs and repairs heating, air conditioning, and ventilation equipment. BuildCo is a builder. BuildCo, by signed writing, forms a contract with VentCo under which VentCo, for $700,000, is to "perform all services relating to the installation, placement, connection, and adjustment of all vents and related conductors appurtenant to the heating, air conditioning, and ventilation systems in the said building." Although the written agreement comprises thirty-five pages, it nowhere expressly describes the quality of VentCo's work or service. When VentCo announces completion of its work, BuildCo inspects it and finds it unsatisfactory. BuildCo brings an action alleging that VentCo is in breach of warranty. At trial, BuildCo calls as witnesses various VentCo personnel, who describe in detail the way in which they think about their work, make their judgments, and perform their installations. Separately, BuildCo introduces evidence of the way in which the heating, ventilation, and air conditioning systems, as installed, do and do not function. Thereafter, BuildCo calls as a witness a professional expert in the field of heating, ventilation, and air conditioning systems. That witness will most directly support BuildCo's claim if he testifies that A. in his opinion, VentCo's work product would not suit the ordinary and reasonable needs of the residents who occupy BuildCo's building. B. he himself would have performed the work differently from the way in which VentCo performed it. C. in his opinion, VentCo did not reach its professional decisions with the same care as would a professional in the same field with the ordinary degree of skill. D. having examined the building's heating, air conditioning, and ventilation systems after VentCo installed them, he would not hire VentCo to do the sort of work

B. Yes, if Fern had a basis on which to know the substance of Diana's conversation with Vincent ANALYSIS. In order that the contract be declared voidable, it takes only the single showing (a) that Fern knew or should have known what Diana did to render the contract voidable, or (b) that Fern did not rely on the contract to her detriment. Conversely, it takes two showings to render the contract fully enforceable: (1) that Fern did not know or have reason to know what Diana did, and (2) that Fern reasonably relied on the contract to her detriment.

Vincent, a married man, owns Blackacre. Fern makes a signed written offer to buy it for $1 million, and Vincent rejects the offer, both parties acting honestly in all respects. Diana is Fern's daughter. She badly wishes that her mother own Blackacre. Without Fern's knowledge, Diana approaches Vincent and says, "If my mother makes another offer for Blackacre, you'll accept it. If you don't, I'll tell your wife about the affair we had." Fern again presents Vincent with her written offer to buy Blackacre for $1 million. Because of Diana's threat, Vincent accepts and signs the writing. Is the resulting contract voidable at Vincent's option? A. Yes, because Vincent's assent followed from Diana's improper threat B. Yes, if Fern had a basis on which to know the substance of Diana's conversation with Vincent C. Yes, if Fern knew of Diana's affair with Vincent D. No, if after forming the contract Fern acted in reasonable reliance on it, to her detriment

C. Each party led the other to understand that he or she took the cow's infertility for a fact. ANALYSIS. Apply the rule to the facts. Walker can avoid this contract on the ground of mutual mistake if she proves that (1) when the parties formed the contract, each manifested a belief to the point of fact that the cow was infertile; and (2) under the circumstances, each should have understood that Walker, had she known the cow to be fertile, would not have agreed to sell it for so little as $1,000; and (3) that the cow was in fact fertile at the time the parties formed the contract. C recites an element critical to the mutual mistake doctrine, to wit, that each of these parties manifested his or her belief to the point of absolute fact that the cow was infertile.

Walker owns a cow that she cannot breed. A veterinarian thoroughly examines the animal and advises Walker that the cow is infertile. Walker then offers the cow for sale at a price of $1,000, whereas a fertile cow of the same type, variety, and age would command a price of $15,000. On April 1, Sharewood expresses interest in purchasing the cow and asks Walker why her asking price is so low. Walker explains that the cow is infertile. Manifesting his understanding that the cow is indeed infertile and that such is the reason for the low price, Sharewood accepts the offer and thus agrees to purchase the cow. The parties create and sign a writing by which they agree to the purchase and sale of the cow for $1,000. The contract provides that Sharewood will pay the purchase price and that Walker will deliver the cow on May 1. On April 15, Walker, still possessing the cow, thinks it might be pregnant. Surprised at what she thinks to be so, she calls her veterinarian again. On May 1, Sharewood tenders the $1,000 purchase price. Walker explains that the cow is fertile and, indeed, pregnant. She refuses the payment, and declines to convey the cow. Sharewood sues Walker for breach. Referring to the cow's fertility and citing mutual mistake, Walker attempts to void the contract. Which of the following facts is legally relevant to Walker's claim of mutual mistake? A. Walker had a reasonable basis on which to believe the cow was infertile. B. The parties formed their contract before they were to complete the sale itself. C. Each party led the other to understand that he or she took the cow's infertility for a fact. D. Sharewood believed the cow was infertile only because Walker had so represented it.

Yes. The parol evidence rule would prevent Washington from showing an oral agreement that occurred prior to or contemporaneously with the writing, and that either contradicted or supplemented the writing. But the parol evidence rule doesn't prevent (or even deal with) subsequent oral modifications to contracts. Since the writing has no No Oral Modification clause, the oral modification may be proved (and will be enforced).

Washington and Adams agree for Adams to sell Washington 1000 Declaration of Independence Commemorative Placemats, which Washington intends to re-sell. They sign a written contract, which both parties intend to represent all aspects of their agreement, and which both parties intend to be final. One day after the writing is signed, the parties orally agree that the price to Washington will be adjusted from $ .40 per mat to $ .30. The writing says nothing about subsequent oral agreements. Adams ships the mats, and bills at the $ .40 price. If Washington refuses to pay more than $ .30 and Adams sues, may Washington prove in court that the oral modification occurred?

A. Great disparity in values exchanged Procedural unconscionability is a finding that the procedures used in forming the contract were so unreasonably unfair as to shock the conscience. It may be demonstrated in many ways, including gross inequality in bargaining power, complex and hidden terms in a complicated document, and (at least sometimes) the use of a contract of adhesion. A is wrong because that is an indicator of substantive unconscionability.

Which of the following is NOT an indicator of procedural unconscionability? A. Great disparity in values exchanged B. Gross inequality in bargaining power C. Use of a contract of adhesion D. Complex and hidden terms in a complicated document

The answer is D. Neither A nor B would allow the buyer to void the contract because misrepresentation must pertain to an existing fact. A is wrong because an opinion is not a fact that can be true or false; it is just a matter of individual taste. (If a party misrepresents her true opinion, that could be a misrepresentation, but here it was a "heartfelt" opinion.) B is wrong because a prediction is not a fact that can be true or false; even if things turn out differently than predicted, the predictor did not lie because the future is inherently unpredictable. C also would not allow the buyer to void the contract because, in general, there is no duty to disclose material facts about a transaction that the other party does not know about. Caples v. Steel. The buyer is bound.

Which of the following would allow the buyer to void a contract to buy a concert ticket to see punk-rock band Blink-83 for $100? A. During negotiations, the seller shares her heartfelt opinion that Blink-83 is "the best band in the world" but the buyer thinks they are nowhere near that good. B. The seller predicts that the concert is likely to sell out, so the buyer had better act fast, but seats remain unsold even on the day of the event. C. The seller fails to advise the buyer that the seat has an obstructed view of the stage. D. None of the above.

No. The contract will be discharged due to the doctrine of impossibility. Here, the essential subject matter of the contract, Hoof Hearted, was destroyed through no fault of either party. Therefore, the contract cannot possibly be performed, and both parties are discharged from their obligation to perform.

Whinney sells Hoof Hearted, her prizewinning horse, to Grunt for $50,000. Before Hoof Hearted changes hands, it dies from eating a bad batch of Purella Horsey Chow. Grunt tenders the $50,000 and then sues Whinney for breach. Will Grunt recover?

A. Dorothy can avoid the contract due to duress. The defense of duress is available whenever the other party makes a threat or wrongful act that overcomes the free will of the defendant. When the defense is available, the party asserting it is discharged from the contract. B. A contract entered into under duress is voidable only at the option of the wronged party, not at the option of the wrongdoer.

Wicked Witch corners Dorothy and her little dog, Toto, behind the stacks in the public library. Witch snatches Toto and says to Dorothy, "Sign this contract promising to sell me the ruby slippers for $100, or you'll never see Toto alive again." Witch's fingers close ominously around Toto's throat as she says this. Toto whimpers. Dorothy signs. A. Dorothy reneges, and Witch sues to enforce the contract. What result? B. Before Dorothy hands over the slippers, Witch changes her mind, says, "Forget it," and hands Toto back to Dorothy. Dorothy would actually rather have the $100 than the slippers. Will a court enforce the contract on her behalf? (Ignore the issue of whether the appropriate remedy is an order of specific performance or a damages award.)

C. No, because the July 5 delivery conformed to the contract, as properly interpreted ANALYSIS. When a conflict arises as to the three phrases we've discussed, the law provides this ranking: course of performance ranks first, course of dealing ranks second, and usage of trade ranks third. In this case, as already noted, the parties established a course of performance (which, once again, is possible only for a contract that calls for multiple occasions of performance). According to their course of performance "two hits" means 20 woodgets. That meaning trumps both their course of dealing, in which "two hits" means 200 woodgets, and usage of trade, by which "two hits" means 2,000 woodgets.

Within the woodget industry, "two hits" means 2,000 woodgets. Between 1997 and 2018, Bana and Soo have formed many contracts for the purchase and sale of woodgets. With respect to their contracts, they have developed a private language by which "two hits" means only 200 woodgets. On January 2, 2019, Bana and Soo form a contract under which Soo is to deliver to Bana "two hits" of woodgets on the fifth day of every month, January through December. Bana is to pay $10 for each woodget that Soo delivers. For the months January through June, Soo delivers only 20 woodgets and for each such month, Bana accepts and pays for them without objection. July 5 arrives. Soo delivers to Bana 20 woodgets. Bana protests: "You should be providing me with 2,000 units. That's what 'two hits' means in our industry. And certainly you should be providing me with no fewer than 200 units because that's what you've always provided in the past when our contract called for 'two hits.' I won't accept this shipment, you're in breach." Is Bana correct in alleging that Soo has breached with respect to the July 5 delivery? A. Yes, because the July 5 delivery does not conform to usage of trade B. Yes, because the July 5 delivery does not conform to the parties' course of dealing C. No, because the July 5 delivery conformed to the contract, as properly interpreted D. No, because Soo cannot be charged with knowing a usage of trade once she and Bana have established a course of dealing

D. I, II, and III only ANALYSIS. You're asked only to know the meaning of three phrases: "usage of trade," "course of dealing," and "course of performance." The parties to this contract are two persons in the business of buying and selling woodgets. In that industry, "two hits" means 2,000 woodgets, and such, therefore, is the usage of trade. Option I is true, so A is wrong. We're told also that as to their previous contracts, these two parties have established a "code" whereunder "two hits" means only 200 widgets. Hence, option II is true. If option III is true, then D is right. If it's false, B is right.

Within the woodget industry, "two hits" means 2,000 woodgets. Between 1997 and 2018, Bana and Soo have formed many contracts for the purchase and sale of woodgets. With respect to their contracts, they have developed a private language by which "two hits" means only 200 woodgets. On January 2, 2019, Bana and Soo form a contract under which Soo is to deliver to Bana "two hits" of woodgets on the fifth day of every month, January through December. Bana is to pay $10 for each woodget that Soo delivers. For the months January through June, Soo delivers only 20 woodgets and for each such month, Bana accepts and pays for them without objection. With respect to this most recent contract, I by usage of trade, "two hits" means 2,000 woodgets. II by course of dealing, "two hits" means 200 woodgets. III by course of performance, "two hits" means 20 woodgets. A. I only B. I and II only C. II and III only D. I, II, and III only