Homework 5

Having more than one reasonable interpretation.

ambiguous

Statute, that in order to prevent fraud through the use of perjured testimony, requires that certain kinds of transactions be evidenced in writing in order to be binding or enforceable.

statute of frauds

Undertaking to pay the debt or be liable for the default of another.

suretyship

Which of the following statements is true with regard to the statute of frauds?

the contract terms may be stated in more than one document.

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

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

_____________ is what each party to a contract will give something up in exchange for something. It may be viewed as a _________ ___ _________ or a _______ _________. There are three exceptions to the consideration requirement. The exceptions are: _______ _________ , __________ ______________ ____ , and __________ ________ .

- Consideration - bargained for exchange - benefit detriment - charitable subscriptions - uniform commercial code - promissory estoppel

Pip and Estelle entered into a written contract for the purchase of a house by Estelle. The contract was carefully drafted to set forth the agreement of the parties. It was signed by both parties. Estelle subsequently claimed that the contract did not cover all the terms included in the written and oral agreements that the parties had made during their prior negotiations. Pip claimed that the parol evidence rule barred proof of all of the prior agreements. Some of the most common exceptions to the parol evidence rule are _________ , _____ , and ____________ __ ________.

- ambiguity - fraud - modification of contract

Promise or performance that the promisor demands as the price of the promise.

consideration

Contract offered by a dominant party to a party with inferior bargaining pwer on a take-it-or-leave-it basis.

contract of adhesion

With regard to an agreement for the sale of real estate, the statute of frauds:

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

A state law required builders of homes to be licensed and declared that an unlicensed contractor could not recover compensation under a contract made for the construction of a residence. Although Annex Construction, Inc., did not have a license, it built a home for French. When he failed to pay what was owed, Annex sued him. He raised the defense that the unlicensed contractor could not recover for the contract price. Annex claimed that the lack of a license was not a bar because the president of the corporation was a licensed builder and the only shareholder of the corporation, and the construction company had properly performed. Annex is entitled to recover.

false

Daredevil purchased a quantity of fireworks from Blast Them High, Inc. The sale was illegal, however, because Daredevil did not have a license to make the purchase, which the seller knew because it had been so informed by the attorney general of the state. Daredevil did not pay for the fireworks, and Blast Them High sued him. He defended on the ground that the contract could not be enforced because it was illegal. Daredevil will prevail against Blast Them High.

false

Kennedy signed an agreement to sell 150 acres of land to Smith. Kennedy owned 200 acres and was apparently intending to keep for himself the acre on which his home was located. The written agreement also stated that "Smith shall have the option to buy on property __________," but nothing was stated in the blank space. Smith sued to enforce the agreement. Kennedy will be liable to Smith to sell the land.

false

Refraining from doing an act.

forbearance

Absence of knowledge of any defects or problems.

good faith

Promise that in fact does not impose any obligation on the promisor.

illusory promise

Equally guilty; used in reference to a transaction as to which relief will not be granted to either party because both are equally guilty of wrongdoing.

in pari delicto

Contract consisting of both the original or skeleton document and the detailed statement that is incorporated in it.

incorporation by reference

Any plan by which a consideration is given for a chance to win a prize; it consists of three elements.

lottery

Paul Bunyan worked for the Lumberjack, Inc., for six years . One day Babe the Blue Ox, who was a director and major shareholder of the company, promised Paul that the company would give him 8 percent of the company's stock. This promise was never kept, and Paul sued Lumberjack for breach of contract. Will Lumberjack be liable to Paul?

no because Paul already worked for the company and there was no detriment on her part in exchange for the promise of the stock.

In June, Cindy's Cake and Bake orally agreed to hire Sammie as management consultant from September 1 of that year to August 30 of the next year for a present value fee of $250,000. Was the agreement binding?

no because even though there was a valid contract, the contract needed to be in writing..

Larry Lender loaned money in the amount of $5,000 to Dan Decedent, who died without repaying the loan. Larry claimed that when he mentioned the matter to Dan's widow, she promised to pay the debt. She did not pay it, and Larry sued her on her promise. Will Dan's widow be liable for payment of the debt?

no because her promise to pay the debt of another needed to be in writing.

Sarah's house caught on fire. Through the prompt assistance of her neighbor Odessa, the fire was quickly extinguished. In gratitude, Sarah promised to pay Odessa $1,000. Can Odessa enforce this promise?

no because this was a moral obligation.

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

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

Rule of law that prohibits altering a final, complete written contract by proving evidence of oral statements that were made prior to or at the same time the written contract was made.

parol evidence rule

Something that has been performed in the past, which, therefore, cannot be consideration for a promise made in the present.

past consideration

Doctrine that a promise will be enforced although it is not supported by consideration when the promisor should have reasonably expected that the promise would induce action or forbearance of a definite and substantial character on the part of the promised and injustice can be avoided only by enforcement of the promise.

promissory estoppel

Freddie loaned money to High Roller at a contract interest rate of 50%. State law prohibits one from lending money for a contract rate that is above 30%. Freddie committed [loan].

usury

In negotiations with Andrews for the lease of Kemp's warehouse, Kemp orally agreed to pay one-half of the cost of the utilities. The written lease, later prepared by Kemp's attorney, provided that Andrews pay all of the utilities. Andrews failed to carefully read the lease and signed it. When Kemp demanded that Andrews pay all of the utilities, Andrews refused, claiming that the lease did not accurately reflect the oral agreement. Andrews also learned that Kemp intentionally misrepresented the condition of the structure of the warehouse during the negotiations between the parties. Andrews sued to rescind the lease and intends to introduce evidence of the parties' oral agreement about sharing the utilities and the fraudulent statements made by Kemp. Will the parol evidence rule prevent the admission of evidence concerning each of the following?

yes for oral agreement regarding who pays the utilities; no for fraudulent statements by Kemp.