Legal environment: hypothetical questions (chapters 10-14)

Danny hires Evelyn to install a swimming pool at Danny's home for $40,000, to be completed by June 1. Evelyn completes the job on time. When Danny inspects the pool, he discovers that Evelyn used a vinyl lining, and the contract called for a fiberglass lining. Danny refuses to pay Evelyn, stating that Evelyn breached the contract because the contract was not completed according to the specifications stated in the contract. If Evelyn sues Danny for the contract price: a. Evelyn will probably receive the contract price less the cost to replace the pool liner with a fiberglass liner. b. Evelyn will probably receive the full contract price. c. Evelyn will probably receive restitution for any expenses she has incurred. d. Evelyn will receive nothing because performance under the contract was not complete.

a. Evelyn will probably receive the contract price less the cost to replace the pool liner with a fiberglass liner.

Wilton World is a huge hotel chain. The Wilton World Hotel in San Francisco wants to hire a local artist to paint some landscapes of the Bay area to display in its hotel. Carl contacts the San Francisco Wilton World manager and shows them samples of his paintings. The manager is very pleased with Carl's work and offers Carl $5,000 to paint six landscape paintings. Carl eagerly accepts, so they begin to discuss who should draft the contract. The contract will probably be drafted by: a. Wilton World's attorney. b. no one; there is no need for a written contract for such a small transaction. c. Wilton World and Carl working together to come up with the first draft of the contract. d. Carl's attorney.

a. Wilton World's attorney.

Angelo owns Computer Hut, where he sells computers, printers, scanners and copiers. Basil visits Angelo's store and purchases a computer and printer. While Basil is completing the purchase, he notices a mountain bike chained up in the corner of the store with a for-sale sign on it and inquires about the bike. Angelo explains to Basil that this is Angelo's personal mountain bike, and he has decided to sell it because he never has time to go biking. Basil agrees to buy the mountain bike for $300. If a dispute later arises between Angelo and Basil, Angelo would be held to the stricter standards of a merchant for: a. the sale of the computer, the printer, and the mountain bike. b. the sale of the computer and printer only. c. none of the sales. d. the sale of the mountain bike only.

b. the sale of the computer and printer only.

Nadia needs help running her bakery. Nadia contacts her friend Zoey, who has baking experience but lives in another state, and offers Zoey a job. Nadia orally promises Zoey that she will employ Zoey for at least two years. Zoey quits her job in the other state, moves her family, and begins to work for Nadia. After three months, Nadia terminates Zoey's employment. Zoey sues Nadia, claiming they had a contract for two years. If Nadia defends the lawsuit by claiming the contract could not be enforced because it violates the statute of frauds, the court will likely hold in favor of: a. Zoey, under the theory of promissory estoppel. b. Zoey, because the agreement violated the statute of frauds. c. Nadia, under the theory of promissory estoppel. d. Nadia, because enforcement of the promise is necessary to avoid injustice.

a. Zoey, under the theory of promissory estoppel.

Geraldo is the owner/manager of Geraldo's Cleaning Service, a firm that cleans office building. Geraldo has a team of seven employees who do a fantastic job. To encourage them to keep up the good work, Geraldo tells his employees that if they continue to work hard until the end of the quarter and if he is pleased with his profits at the end of the quarter, he will give them each a $100 bonus. At the end of the quarter, the company's profits were extremely high. Will Geraldo have to make good on his promise of a $100 bonus for each employee? a. Yes, Geraldo will have to award the bonuses because profits were extremely high. b. No, Geraldo will not have to award the bonuses because his offer of a $100 bonus if he is pleased with his profits was an illusory promise. c. No, Geraldo will not have to award the bonuses because the work of the employees is not valid consideration. d. Yes, Geraldo will have to award the bonuses because the work of the employees is valid consideration.

b. No, Geraldo will not have to award the bonuses because his offer of a $100 bonus if he is pleased with his profits was an illusory promise.

Hyster Material Handling sells 300 order pickers to Amazon. The order pickers cost $25,000 each, and each comes with a maintenance contract that costs $2,000 per year. After six months, a dispute arises between the parties when Hyster fails to perform all the monthly maintenance required under the contract, and Hyster decides to sue. Because the contract covers both goods and services, to determine what law applies to this contract the court will: a. apply the merchant test and determine that UCC Article 2 applies. b. apply the predominant-factor test and determine that UCC Article 2 applies. c. apply the predominant-factor test and determine that the common law applies. d. apply the merchant test and determine that the common law applies.

b. apply the predominant-factor test and determine that UCC Article 2 applies.

Lydia promises to sell ten designer evening gowns to Beth, owner of Beth's Prom Shop, for $5,000. Each gown is a one-of-a-kind original that Beth specifically picked out from Lydia's inventory. Lydia decides she can get more money for the gowns if she takes them to New York to sell, so Lydia notifies Beth's Prom Shop that she is canceling the deal. If Beth sues Lydia for breach of contract, the court will likely: a. award Beth $5,000 in compensatory damages. b. require Lydia to honor the contract and sell the evening gowns to Beth. c. award Beth the difference between $5,000 and the amount she will spend purchasing the evening gowns elsewhere. d. not grant Beth any kind of relief, because she can purchase evening gowns elsewhere.

b. require Lydia to honor the contract and sell the evening gowns to Beth.

Adina owns Yogi's Yogurt in Fort Smith, Arkansas. Adina sells the yogurt shop to Dagmar. The contract for the sale of the business includes a clause that prohibits Adina from owning or working in any restaurant in Arkansas for two years from the date of the sale. One year after the sale is completed, Adina opens a steakhouse in West Memphis, Arkansas, which is 300 miles from Fort Smith. If Dagmar sues Adina for breaching the terms of the contract: a. Dagmar will probably win because covenants not to compete are always enforceable. b. Dagmar will probably win because Adina opened a new restaurant in Arkansas within two years of the sale of Yogi's Yogurt and this was directly prohibited by the contract. c. Dagmar will probably lose because the covenant not to compete is too restrictive. d. Dagmar will probably lose because covenants not to compete are never enforceable.

c. Dagmar will probably lose because the covenant not to compete is too restrictive.

Lorenzo and Antonio agree that Antonio will buy Lorenzo's Go Cart Fun Park for $300,000. Lorenzo asks his lawyer to draft the contract. Lorenzo is surprised when the contract that the attorney drafts contains more than the description of the property, the price, and the payment terms. The contract also contains paragraphs that describe the choice of law and forum, how the contract can be modified, terms for assigning rights and delegating duties under the contract, and an arbitration clause. Lorenzo's lawyer explains to Lorenzo that these are boilerplate, and that they are important because: a. boilerplate replaces the specific details of the agreement between the parties. b. no contract is legal unless it contains certain boilerplate clauses. c. boilerplate creates a private law that governs disputes between the parties. d. all contracts must include arbitration clauses, which is accomplished using boilerplate.

c. boilerplate creates a private law that governs disputes between the parties.

Arvitz and Siri have been friends for thirty years. Arvitz agrees to sell Siri a fifty percent ownership in his bait and tackle shop for $50,000. Because they are such good friends, Arvitz thinks they do not need to contact a lawyer to draw up an agreement; after all, a partnership can be created without a formal written agreement. Siri thinks it would probably be a good idea to have a lawyer draft an agreement, so he contacts Attorney Frost about drawing up the contract. What is Attorney Frost's primary goal in drafting the contract? a. Attorney Frost's primary goal in drafting this contract is to protect both parties from litigation. b. Attorney Frost's primary goal in drafting this contract is to protect Arvitz from litigation, or, if litigation does occur, making sure the contract has been drafted in such a way that Arvitz wins. c. Attorney Frost's primary goal in drafting this contract is to obtain the best possible price for the fifty percent ownership for Siri. d. Attorney Frost's primary goal in drafting this contract is to protect Siri from litigation, or, if litigation does occur, making sure the contract has been drafted in such a way that Siri wins.

d. Attorney Frost's primary goal in drafting this contract is to protect Siri from litigation, or, if litigation does occur, making sure the contract has been drafted in such a way that Siri wins.

Otto orally agrees to install three wells for Green Space Energy over the next eighteen months. When the three wells are completed, Green Space Energy will pay Otto $10,000. After the first well is completed, Green Space Energy tells Otto that it does not want any more wells. Green Space Energy refuses to pay Otto for the first well, claiming that the contract was not in writing and, therefore, not enforceable. If Otto sues Green Space Energy to enforce the contract: a. Green Space Energy will not have to pay Otto anything, because the contract could not be completed within one year. b. Green Space Energy will not have to pay Otto anything because the contract was for real estate. c. Green Space Energy will have to pay Otto the full contract price because Green Space Energy breached the contract. d. Green Space Energy will have to pay Otto a reasonable price for the one well that was installed.

d. Green Space Energy will have to pay Otto a reasonable price for the one well that was installed.

Milo is the owner of a sporting goods store that has only been open for three months. The holiday season is coming up, and Milo realizes that he will need extra help. Milo asks his friend Jess to help him out at the store. Milo and Jess agree that Jess will work during the months of November and December. However, because Milo is unsure how much help he will need and how much he will be able to pay, they agree to decide each week on the hours that Jess will work for the following week, and to decide the hourly rate after Jess has worked two weeks before she receives her first paycheck. Just before November 1, Jess takes a job at another store. If Milo tries to sue Jess for breach of contract, the court will probably decide: a. that the parties had no contract because the terms of the offer were not definite. b. that the parties had a contract, and Jess breached the contract. c. that the parties had a contract, but the damages could not be ascertained because the hourly rate and number of hours had not been determined. d. that the parties had no contract because the terms were not in writing.

a. that the parties had no contract because the terms of the offer were not definite.

Homers Frozen Foods has a two-year contract with Johnson Farms to purchase all the russet potatoes that Johnson can produce for two dollars per kilogram. When the price of potatoes goes up during the second year of the contract, Johnson Farms breaches its contract with Homers and sells its potatoes to Land of Lakes Foods. Homers purchases the potatoes it needs from Homegrown Farms at a price of three dollars per kilogram. If Homers sues Johnson Farms for breach of contract, the likely result will be: a. Johnson Farms will have to pay Homers one dollar per kilogram for all potatoes purchased during the entire term of the contract. b. Johnson Farms will be ordered to specifically perform the contract. c. Johnson Farms will have to pay Homers one dollar per kilogram for the potatoes that Homers purchases from Homegrown Farms during the remainder of the contract. d. Johnson Farms will have to pay nothing, because a spike in market prices is a sufficient reason to terminate the contract.

c. Johnson Farms will have to pay Homers one dollar per kilogram for the potatoes that Homers purchases from Homegrown Farms during the remainder of the contract.

Midwest Life Insurance sells a life insurance policy to Thiago. Under the terms of the contract between Thiago and Midwest Life, Thiago will pay $75 per month for the policy, and, upon Thiago's death, Midwest Life will pay $100,000 to Laurelei. Four years later, Thiago dies, and Midwest refuses to pay under the terms of the policy. The party entitled to sue Midwest for its failure to honor the terms of the contract is: a. Thiago's executor, because the only party to the contract with Midwest is Thiago, and Thiago is deceased. b. Laurelei, because she is an incidental beneficiary. c. Laurelei, because she is a donee beneficiary. d. Laurelei, because she is a creditor beneficiary.

c. Laurelei, because she is a donee beneficiary.

Selma wants to buy Matilda's house. Selma has been admiring the house for a long time and has asked Matilda repeatedly to sell the house to her, but Matilda has always refused. Finally, Selma tells Matilda that if Matilda does not sell Selma the house, Selma will kill Matilda's daughter. Afraid for her daughter's life, Matilda signs the contract to sell the house to Selma. If Matilda later tries to rescind the contract: a. Matilda may not rescind the contract because it has all the elements of a valid contract. b. Matilda may rescind the contract on the grounds of unconscionability. c. Matilda may rescind the contract on the grounds that she signed the contract under duress. d. Matilda may rescind the contract on the grounds of undue influence.

c. Matilda may rescind the contract on the grounds that she signed the contract under duress.

Jane decides to terminate her position with Roseworld Flowers after six years of employment. When Jane was hired, she signed Rosewood's standard employee agreement. In the agreement, Jane agreed not to work for a competitor in the same county for three years. Three months after Jane terminates her employment, she begins work for Tipton Florist, a florist in the same county as Roseworld. Roseworld sues Jane for violating the terms of her employee agreement because she went to work for a competitor less than three years after her termination with Roseworld. Jane defends by stating that the agreement prohibited her from working for a competitor in the same county for three years from the date of the agreement, which was six years ago. Will Roseworld be successful in its lawsuit against Jane? a. Yes, Roseworld will be successful in its lawsuit against Jane because the contract is clearly stated. b. Yes, Roseworld will be successful in its lawsuit against Jane because the contract is ambiguous. c. No, Roseworld will not be successful in its lawsuit against Jane because the contract is ambiguous. d. No, Roseworld will not be successful in its lawsuit against Jane because the contract is clearly stated.

c. No, Roseworld will not be successful in its lawsuit against Jane because the contract is ambiguous.

Owen offers to sell his motorcycle to Julian for $5,000. After he makes the offer, Owen has second thoughts. Owen can revoke the offer to sell his motorcycle to Julian: a. anytime, whether or not Julian has accepted the offer. b. at no time, because offers to sell merchandise are irrevocable. c. as long as Julian has not yet accepted the offer. d. even after Julian has accepted but before Julian has delivered the money to Owen.

c. as long as Julian has not yet accepted the offer.

Reginald hires Sophia to deliver pizzas for his restaurant. All goes well at first. But one night, Sophia decides to go to a concert instead of delivering pizzas. She delegates her delivery tasks to Rosemary, who accepts the delegation and agrees to deliver the pizzas. However, instead of delivering the pizzas, Rosemary takes the pizzas home to her family. At the end of the evening, Reginald has many unhappy customers, and wants to sue for breach of contract to recover the income he lost for the evening. Reginald should be able to sue: a. Sophia only. b. neither Sophia nor Rosemary. c. both Sophia and Rosemary. d. Rosemary only.

c. both Sophia and Rosemary.

Mia contracted with Greencare Lawn Service for a pest treatment on Mia's lawn for $1,000. Pat lives next door to Mia. Greencare mistakenly treats Pat's lawn instead of Mia's. When Greencare seeks payment from Pat, Greencare can probably receive: a. nothing, because Greencare's contract was with Mia, not Pat. b. $1,000 from Pat. c. from Pat an amount less than the contract amount that will reimburse Greencare for expenses incurred. d. $1,000 from Mia.

c. from Pat an amount less than the contract amount that will reimburse Greencare for expenses incurred.

Arnold, a contractor, enters into an agreement with Oswald to build a house for Oswald. In the agreement, Arnold promises to build the house to Oswald's specifications. Oswald agrees to pay for the work on completion according to the terms set out in the agreement. Arnold states that he is licensed by the state contractors licensing board. Which of these statements are covenants? a. Oswald agrees to pay for the work on completion according to the terms set out in the agreement. b. Arnold states that he is licensed by the state contractors licensing board. c. Arnold promises to build the house to Oswald's specifications. d. Arnold promises to build the house to Oswald's specifications. Oswald agrees to pay for the work on completion according to the terms set out in the agreement.

d. Arnold promises to build the house to Oswald's specifications. Oswald agrees to pay for the work on completion according to the terms set out in the agreement.

Ruby, a seventeen-year-old, purchases a car from Smitz Used Auto Sales and agrees to pay for it over a period of twenty-four months. Ruby makes the payments for four months but then decides the car payment is too much for her limited budget. Ruby tells Smitz that she wants to stop making payments and that she wants out of the contract completely. The contract between Ruby and Smitz can be canceled by: a. Smitz, because Ruby is a minor, but Smitz must allow Ruby to keep the car. b. Smitz or Ruby, because Ruby is a minor, and Ruby may keep the car. c. Ruby, because she is a minor, and Ruby may keep the car. d. Ruby, because she is a minor, but Ruby must return the car.

d. Ruby, because she is a minor, but Ruby must return the car.

Maryanne offers to sell her 2015 Mustang convertible to April for $15,000, and April agrees to those terms. April brings the $15,000 to Maryanne, and Maryanne promises to deliver the Mustang to April the next day after she has it detailed. At this point, Maryanne and April have: a. a unilateral contract. b. an executed contract. c. no contract. d. an executory contract.

d. an executory contract.

Jones Construction Company is building a series of new subdivisions in Newtown over the next two years. Jones enters into a verbal agreement with Harley Concrete Inc. to construct all the driveways and sidewalks in the subdivisions that Jones will be building. Jones and Harley agree on a price of $130 per cubic yard and that Jones will pay Harley at the end of each project. Harley completes the first project, which is four sidewalks and sixteen driveways, and bills Jones for the project. Jones decides that the price is too high and refuses to pay, claiming that they have no obligation to pay because the parties did not have a valid contract. If Harley sues Jones for payment the court would probably: a. apply quasi contract theory and award $130 per cubic feet, the contract price, to Harley. b. hold that Harley is entitled to nothing because the contract violates the Statute of Frauds. c. hold that Harley is entitled to nothing because parties are free to terminate contracts if they so choose. d. apply quasi contract theory and award the fair market value of the work that Harley completed.

d. apply quasi contract theory and award the fair market value of the work that Harley completed.

Harold offers to sell Emma his farmland in Bryson County. After discussing the sale at length in front of their friends Nicole and Jackson, Harold and Emma orally agree on a price of $120,000 for the land. The next day, Emma goes to the bank and withdraws $120,000 to pay Harold for the land. When Emma presents the $120,000 to Harold, Harold tells Emma he was just joking and does not wish to sell the land. Emma tries to enforce the deal, and Harold continues to refuse by saying that the deal was not in writing, and, therefore, it is unenforceable. The contract between Harold and Emma for the sale of the land: a. is not enforceable because of the theory of promissory estoppel. b. is enforceable, because there are witnesses to the deal. c. is enforceable because it complies with the statute of frauds. d. is not enforceable because it violates the statute of frauds.

d. is not enforceable because it violates the statute of frauds.

Best Dollar Store publishes an advertisement in the local newspaper promoting its new baby diapers that are good for the environment. The advertisement states that the diapers are made from entirely biodegradable materials and that each diaper will completely biodegrade within two months and become a natural part of the soil. Leon is very concerned about the environment and has created a compost heap in the pasture behind his home. Leon purchases a package of the diapers for his child, and, as they are soiled, he adds them to the compost heap. Six months later, the diapers have not even begun to degrade. Best Dollar Store has violated: a. nothing, because the statement about the diapers biodegrading within two months is an opinion. b. its implied warranty that the diapers will biodegrade within two months. c. nothing, because an advertisement is not a warranty. d. its express warranty that the diapers will biodegrade within two months.

d. its express warranty that the diapers will biodegrade within two months.