bus law midterm 3
To which of the following contracts is Article 2 of the UCC least likely to apply?
A contract for the sale of an office building., because an office building is not considered a "good" under the UCC
Which of the following is an inaccurate statement about contract law?
A contract for the sale of goods is not governed by Article 2 of the UCC unless the contract is between two merchants.
Which of the following parties will normally be classified as an offeror who is making an offer?
A person who makes a public announcement of a reward he will give for the performance of a particular act.
Under the common law, a so-called "grumbling acceptance" is nonetheless an acceptance.
true, [A grumbling acceptance ("alright, you are way too aggressive and drive an impossible bargain, but I will take you up on your offer") is still an acceptance!!]
Gus Griese and Sortafast, Inc. had negotiated for some time over the possibility of Griese's acquiring a franchise for a Sortafast oil change shop. If he obtained a Sortafast franchise, Griese intended to open the business in Gnaw Bone, Indiana. Although the details of any agreement between Sortafast and Griese had not yet worked out, Sortafast executives promised Griese on various occasions that he would be awarded a Sortafast franchise which he could operate in Gnaw Bone, and that the terms of the agreement would be arrived at later. In response to Sortafast's statement that it liked its franchisees to have had experience in the oil change business, Griese quit his job as a high-fashion model in Indianapolis and went to work on a temporary basis as an oil changer for another Gnaw Bone shop. He also moved himself and his family (at his own expense) from Indianapolis to Gnaw Bone. As it turned out, the details of an agreement between Sortafast were never arrived at/agreed upon by Sortafast and Griese, and Sortafast later refused to award Griese a franchise. Which of the following is an accurate statement about the facts?
. Griese's best chance of success in a suit against Sortafast would be on a promissory estoppel theory, under which a court could award him damages based on out-of-pocket losses that he incurred in relying on Sortafast's promises.[This question is testing your ability to spot and apply a promissory estoppel doctrine and issue.]
Stan Short owed Brutish Finance Co. $3,000 on a loan whose repayment date was past due. When Short received a $3,300 check from Leviathan Insurance Co. in settlement of a claim he had made, Short telephoned the Brutish collections manager and stated that he would stop by within the next few days to pay off the $3,000 debt with part of the money he had received from the insurance company. On the following evening, Short's house was burglarized by Nick Nasty. Among the items stolen by Nasty was the $3,300 check Short had received from Leviathan. Nasty later forged Short's endorsement on the check, succeeded in getting it cashed, and spent all of the money. After Nasty was apprehended by the police, Brutish learned what had happened. Brutish has filed a quasi-contract suit against Nasty, on the theory that Nasty pocketed the money which had been promised by Short to Brutish. Should Brutish win its case? Explain your reasoning.
Brutish should lose its quasi-contract claim against Nasty even though Nasty acted unlawfully in stealing the insurance check. Nasty was unjustly enriched in that he had no entitlement to the money he stole and spent, but he was not unjustly enriched by Brutish. Brutish's quasi-contract claim suffers from a fatal defect: the fact that Brutish never conferred any benefit on Nasty. In order to succeed on a quasi-contract claim, a plaintiff must show that he, she, or it conferred a benefit on the defendant, that the defendant knowingly accepted and retained the benefit, and that under the circumstances, it would be unjust not to allow the plaintiff to collect the reasonable value of the benefit from the defendant. Brutish's claim fails on the first basic element because no reasonable characterization of the facts would allow Brutish to establish that it benefited Nasty. Instead, Short is the proper party to proceed against Nasty!
Vic Ditale telephoned his pal, Hugh Lenson, to discuss Ditale's plan for a possible business venture involving the two of them. Ditale stated the following to Lenson: "Hugh, babbbyyyy, I've decided to do something I've always had a secret desire to do—open a hairstyling salon. With your flair for hair, I know you'd be a great drawing card in terms of attracting customers. What I want to do is to employ you as a chief hairstylist and to call the shop, 'The Hugh-Do.' We would call you 'Mr. Hugh.' I'd own the business, but I can assure you I'd pay you top dollar for your incomparable services." Ditale went on to describe numerous other details of the planned business venture, including the sorts of "specials" that would be offered to customers and the notion that the salon would have a sports oriented theme. Ditale then asked Lenson whether he would be interested in pursuing the outlined plan. Lenson said he would think about it. A month later, Lenson resigned his position as head tiddly winks coach at a major university and opened a hairstyling salon called "The Hugh-Do." Lenson, who served as chief hairstylist began calling himself "Mr. Hugh." Lenson's salon featured a sportsoriented theme and the same sorts of specials Ditale had described to Lenson. Various other details of "The Hugh-Do" corresponded to those previously mentioned by Ditale. Ditale recently sued Lenson for breach of contract. Which of the following is an accurate observation?
Ditale's chances of success on a breach of contract theory will be helped if, in his telephone call to Lenson, Ditale had stated that he was disclosing the details of his plan to Lenson for the sole and exclusive purpose of offering it for sale to Lenson.
If the maker of an offer (i.e., the offeror) for an employment position promised to hold the offer open for a certain length of time, the general rule on revocations of offers—that an offer may be revoked at any time prior to acceptance—does not apply
False
Under the "mailbox rule", an acceptance communicated through an expressly authorized means is effective on dispatch but an acceptance communicated through an impliedly authorized means is effective on receipt.
False
UCC section 2-207 sets forth the "mirror image" test for whether an offeree's response is an acceptance
False, [No — the "mirror image" test is a common law test and creation! ` It's not a creation of the UCC!! And remember/note that the common law rule mirror image rule is different than the UCC rule
To accept an offer for a unilateral contract, the offeree must make the promise requested by the offeror.
False, [No — the offeree must render the requested performance. Remember that a unilateral contract is a promise in return for a performance; a bilateral contract is a promise in return for a promise.]
Although a rejection of an offer by an offeree terminates the offer, a mere counteroffer to that offer by the offeree does not have such an effect on the offer.
False, a counteroffer does the same thing as rejection
Whenever a promise is unenforceable on contract grounds, the promise will be enforceable on promissory estoppel grounds.
False, not if all elements of the promissory estoppel are not satisfied.
Ned Dorfman took his green 1985 AMC Gremlin automobile to Auto Hospital, Inc. (AH) and informed an AH employee that he wanted a new set of rear breaks put on the car. Dorfman left the premises, stating that he would return late in the day to pick up the car. As it happened, there was another 1985 Gremlin at AH that day. That Gremlin's owner had brought his car there in order to have AH personnel paint it red, at an agreed cost of $700. Nearly all other reputable car painters in the area would have charged no more than $350 for such a paint job. Confused AH employees mistakenly painted Dorfman's Gremlin red and installed the new rear breaks on the other Gremlin. AH discovered the mistake when the owner of the other Gremlin that was to have been painted refused to pay for a job he did not get. When Dorfman returned to pick up his car, he learned of the mixup. AH demanded that Dorfman pay $700 for the paint job from which he had benefited. Dorfman refused, even though the paint job made his gremlin look far better than it had ever looked. On these facts, AH:
Has neither a meritorious quasi-contract claim nor a meritorious implied contract claim against Dorfman. [Quasi-contract theory requires that the benefit be knowingly accepted. Here, it was not (read the facts/the problem closely). An implied contract is based on conduct, and, has no applicability here (after all, what did Ned do/not do via conduct to signal that he agreed to the above? Nothing!). Again see the "Basic Concepts" section in the Introduction to Contracts study/master outline in your University Readers book.]
Orville and Maxine Portly live in Gnaw Bone, Indiana. Their son, Junior, is a sophomore at Quicksand Tech, a college located in Snakebite, New Mexico. Junior needed a car for basic transportation in and around Snakebite. Orville concluded that in view of the distance between Gnaw Bone and Snakebite, it would make sense to locate a reputable used car dealer in Snakebite and work out a deal by phone and through the mail. A fellow Gnaw Bonian knew Dub Ulknit, a used car dealer in Snakebite, and recommended Ulknit to Orville. Orville telephoned Ulknit, explained Junior's needs, and stated that he (Orville) wanted to buy a car for Junior. Orville also explained that he did not want to spend more than $750. Ulknit said he has a car that was "just the ticket, Orv — a real creampuff." Ulknit then proceeded to describe the car. Orville stated that the description sounded good, and that he would immediately forward a check for $749.99 (the agreed purchase price). One fact Ulknit did not mention to Orville was that the tires on the car were completely bald, and that for safety reasons, better tires were a necessity. Ulknit received Orville's check a few days later. When Junior arrived, as agreed, to pick up the car, he noticed the baldness of the tires. He immediately telephoned his father. An angry Orville then demanded that Ulknit refund his money, because neither he nor Junior wanted a car with bald tires. Ulknit refused to refund the purchase price. Which of the following is an accurate statement about Orville's demand for relief?
He is entitled to the relief he seeks if he proves that Ulknit's failure to disclose the condition of the tires was a fraud.[Re: 'C', this would be a "non-disclosure" — the failure to disclose a material fact to the other side that you should disclose under the circumstances.]
In a transaction conducted primarily by mail, phone, and fax, Earl Hefty bought — sight unseen — a tract of land from Debbie Dullard. Before the sale, Dullard told Hefty that a two-lane highway ran near the land, when in fact the nearest road was five miles away. Hefty however, paid no attention to this statement because his only reason for buying the land was the fact that country western legend Tammy Hairnet once owned it. Which of the following is a legally accurate analysis of the facts?
Hefty cannot obtain rescission of the sale because he did not rely on Dullard's incorrect statement.[To cancel a contract based on fraud requires "justifiable reliance" on the statement/nondisclosure at issue by the plaintiff; and here, there was none by Hefty.]
The following statements pertain in some sense to the consideration element of a contract. Which statement(s) is/are legally accurate?
If Dorkman promises Technonerd that "I will pay you $75 if you install the latest version of the Nerdperfect word-processing program on my computer," and if Technonerd responds by saying that "I'll get the ding-dang job done for you just as soon as I can," there is no consideration to support Dorkman's promise.
For several years, famous Tycoon Donald Chump has owned the professional basketball team known as the Indiana Pacemakers. (The Pacemakers posted a 9- 73 record — their best ever — last season.) In a recent (and surprising) announcement, Chump revealed that he and Dr. Jerque Kedorkian had entered into a contract under which Kedorkian would acquire a 49% ownership interest in the Pacemakers. Under which of the following alternative scenarios would a court be least likely to allow Kedorkian to be relieved of his contractual obligations?
If Kedorkian entered into the contract while mistaken about a matter of importance to the contract, and Chump neither was mistaken about that same matter nor knew that Kedorkian was mistaken.
Austin Tatious was considering purchasing a 1998 Cadillac from Glen Plaid, a used car dealer. Tatious asked Plaid whether the 49,700 mileage figure showing on the Cadillac's odometer was accurate. He asked this question because it was important to him to acquire a car with no more than 60,000 miles on it, not because he had any reason to suspect the 49,700 figure was inaccurate. Plaid responded by saying that the 49,700 figure was "right as rain" and "the real McCoy." Plaid added that "it'd be a sweet-smelling day in Terre Haute before I'd hoodwink a customer," and that Cadillac "ain't one them rollbacks an unethical dealer might try to unload on you." After the conclusion of his conversation with Plaid, Tatious began to notice that the Cadillac was not performing satisfactorily and to suspect that it had traveled more than 49,700 miles before he had purchased it. After checking motor vehicle records at the local Department of Motor Vehicles office and after obtaining copies of pertinent records from another state, Tatious correctly concluded that a previous owner of the Cadillac (prior to Plaid) must have "rolled back" the odometer so that it would register a mileage figure lower than the actual number of miles traveled. Tatious also accurately concluded that the car had nearly 100,000 miles on it at the time her purchased it from Plaid. Claiming that genuine consent was lacking when he agreed to purchase the Cadillac, Tatious sued Plaid. Which of the following statements is accurate?
If Plaid had reason to believe, and did believe in good faith, that he was telling the truth during their conversation about the Cadillac, Tatious will not be allowed to recover damages from Plaid or cancel the contract.[Here, there would have been no "intent to deceive" Tatious on the part of Plaid, which is one of the required elements of fraud — see the study/master outline discussion on fraud in your University Readers book.
4. In which of the following situations is there a contract that is unilateral in nature? (remember that unilateral contract means a promise in return for performance)
Jo Stalin promises to pay her nephew, Lee Ontrotsky, $500 if Ontrotsky drives her to the town of Siberia, Montana. Ontrotsky gives Aunt Jo the requested ride to Siberia
Ernie Prestwick is a wholesale dealer of "Elvis on black velvet" (EOBV) portraits. Wanda King owns a shop at which she sells memorabilia associated with the late Elvis Presley. All of the events about to be described occurred in 2002. Prestwick wrote, signed, and mailed to King a June 16 letter in which he offered to sell her five EOBV portraits for the special price of $799 per portrait. (He normally would charge $999 a piece.) Prestwick's letter stated that "this incredible offer will remain open until June 30." King received the letter on June 18. On June 20, not having heard anything from King, Prestwick telephoned King and informed her that "the EOBV deal I proposed in my June 16 letter is more dead than Elvis himself is rumored to be, because I hereby revoke my offer. Thank you very much." On June 23, King arrived at Prestwick's office and presented him with a written acceptance of his June 16 offer and a check for the full purchase price. Prestwick, however, denied that the parties had a contract and refused King's check. When Prestwick continued to refuse to sell her the EOBV portraits on the terms set forth in his June 16 offer, King sued him for breach of contract. Which party should win the case, and why?
King, because Prestwick made a firm offer that she accepted within the offer's duration
Penny Lane sent Abbey Road a letter containing an offer which stated that "your acceptance will be effective when I receive it." Road mailed Lane a letter of acceptance promptly after receiving the offer. Road then received a telephone call from Lane, who stated that she was revoking the offer she had made to Road. Road protested, noting that she had already mailed Lane a letter of acceptance. Lane, however, denied that she and Road had a contract and asserted that Road should simply "let it be." The day after this conversation, Lane received Road's letter. On these facts, do Lane and Road have a contract? Why or why not?
Lane and Road do not have a contract even though Road sent her acceptance by an impliedly authorized means (mail) and even though acceptances communicated by an authorized means are normally effective on dispatch. The effective on dispatch rule (i.e., the mailbox rule) does not apply if the offer states that an acceptance will be effective only on receipt by the offeror. Such language appeared in Lane's offer. Therefore, in view of the terms of the offer, Road's acceptance could not have been effective until Lane received it. Lane properly revoked her offer — thus terminating it — before any acceptance by Road could have taken effect. Hence, the parties do not have a contract.
If agreed upon in good faith, modifications of contracts for the sale of goods are enforceable even if no new consideration exists/is exchanged between the parties.
True
Under a bilateral contract, the contracting parties have made mutual promises.
True
Dewey Cheatem Used Cars, Inc. (Cheatem) mailed Lorraine Lemon a letter offering her the job of sales manager for a minimum term of one year. Cheatem's letter, dated August 11, 2001, informed Lemon that "if you decided to accept, you must accept by August 18, 2001 because my offer expires on that date." Cheatam's properly addressed letter was mailed (with sufficient postage) on August 11, but because of a postal worker's error; it did not reach Lemon until August 21, 2001. Lemon contacted Cheatem the same day (August 21) and stated that she wished to accept the offer. Which of the following contains the best legal analysis of the facts?
Lemon has made an offer that Cheatem is free to accept or reject. [The answer is C because Cheatem's offer expired; and, Lemon's untimely attempt to accept is therefore her own offer/counteroffer back to Cheatam!!]
Ruth Less owns a store at which she sells televisions and stereo equipment. Because her store was overstocked on Couch Potato brand large-screen televisions, Less decided to take special action to get them sold. Therefore, Less telephoned television news anchor Reed Verbatim on July 7, 2002 and offered (during the course of the telephone conversation) to sell him a Couch Potato brand large-screen TV for the special price of $799. Less also stated, during the same conversation, that the offer would be held open until July 21, 2002. On July 11, 2002, Less telephoned Verbatim and stated that the offer was revoked. Later that same day, Verbatim hand-delivered to Less a signed note indicating that he wished to accept the offer she had made to him during their July 7 conversation. Less, however, refused to sell Verbatim the large-screen TV for $799. Verbatim has sued Less for breach of contract. Should Verbatim win? Why or why not?
Less should win the case because she properly revoked her offer before Verbatim's attempt to accept the offer. Even though she promised to hold her offer open until July 21, Less was entitled, under the applicable general rule, to revoke the offer at any time prior to acceptance. If less had made a firm offer (and see the details in the study/master outline in your University Readers book for how/the requirements for creating a firm offer) she would have been obligated to hold the offer open until July 21. There was no firm offer here, however, despite Less's status as a merchant. The fact that Less's offer was made over the telephone —rather than in signed writing — means that a firm offer was not created.
Advertising agency owner Les Dupem mailed 2002 Average State University graduate Dee Ceptive a letter containing a detailed offer to employ her as an account executive for a minimum of two years. Besides setting forth all of the terms of his offer, Dupem's letter (dated June 13 and received by Ceptive on June 16) stated that "your acceptance will be effective when I receive it." Ceptive mailed Dupem a properly addressed letter of acceptance on June 17. On June 18, Dupem telephoned Ceptive and told her that the offer contained in his June 13 letter was revoked. Dupem received Ceptive's letter of acceptance on June 19, but refused to employ her. The still unemployed Ceptive has sued Dupem for breach of contract. Ceptive should:
Lose the case because Dupem properly and timely revoked his offer. [This can be done — an offeror who makes an acceptance by the offerree effective upon receipt by the offeror and thereby avoids the applicability of the mailbox rule! This is an example of the offeror being in control of his/her own ship so to speak (or terms of his/her offer)!!]
On August 1, 2000, Ariel Oldbag made a written offer to sell Marginal State University her palatial estate, Oldbag Manor, for $500,000. On that same date, Oldbag also extended Marginal State a written option to buy the property at the offered price until July 1, 2001. Marginal State paid Oldbag $4,000 (the amount specified by her) for the option. Which of the following is an accurate statement? [Folks, this is an example of an option contract. See the study/master outline in your University Readers book for details.]
Marginal State has no legal obligation to purchase the property from Oldbag.{ Marginal State can do this if it wants to, but it Agreement (Offer & Acceptance) Practice Problems 13 doesn't have to exercise the option to buy}
Which of the following is an accurate statement about mistake?
Mistakes resulting from poor judgment or inexperience may not enable one to avoid contractual liability.
Ned, a retired teacher, thinks that a table he has for sale is worth $200, when in fact, it is a valuable antique worth $15,000. Francine, who knows the table's true value and that Ned has mistaken about it, buys the table from Ned for $200 at Ned's garage sale. Later, Ned discovers the table's true value and seeks to rescind/cancel the contract on the basis of mistake. What should be the result?
Ned may rescind even though he was the only mistaken party.this is an example of a unilateral mistake
Haney owns a retail appliance sales business. He recently made the promises referred to in sets of facts A and B below. Each set of facts is followed by an italicized sentence that purports to state their legal effect. For each italicized sentence, state whether it is a legally accurate analysis of the facts preceding it. Explain your reasoning.
Neither italicized sentence is an accurate analysis of the facts preceding it. Haney's promise to Lisa (set of facts A) is enforceable against him. There was consideration for his promise to employ her for a minimum six-month term, because Lisa made the promise he requested in his offer (a promise that she would work for him pursuant to the offered terms). The fact that she had not yet begun to work for him as of his June 29 letter does not mean that there was no consideration for the promise set forth in his June 16 offer. Haney's promise to Oliver (set of facts B), however, is not enforceable. Oliver's past legal advice — given prior to Haney's promise of $20,000 — could not have been furnished in exchange for Haney's promise. This is therefore a case of "past consideration," which is not a valid consideration under the law. The fact that Henry's promise was in writing does not eliminate the need for consideration.
Appliance dealer Frosty Burns was attempting to convince Norma Nimrod to purchase a used freezer. He therefore told her that the freezer she was admiring was only six months old and had "worked like a dream, with no problem whatsoever" for the previous owner. Burns also represented that the previous owner had "traded this unit in solely because she wanted a larger model." Nimrod purchased the freezer. The next day, her cousin Irene came to visit. Irene immediately recognized the freezer when Nimrod showed it to her. Irene informed a shocked Nimrod that the freezer Nimrod had bought had been Irene's, that she (Irene) had had persistent serious problems with the freezer's compressor during the five years she had owned it, and that, in exasperation, she had traded it in a few days earlier to Burns so that she could purchase a different brand of freezer. That same day, the freezer's compressor ceased working. Nimrod wishes to rescind her purchase of the freezer (i.e., cancel the contract and get her money back). Which of the following is accurate?
Nimrod will not be able to rescind/cancel the contract unless she proves that her reliance on Burn's statement was reasonable. b. If Nimrod proves that her reliance was reasonable, the contract is voidable and she may rescind. c. If Nimrod proves that her reliance was reasonable, she may also be able to obtain tort damages from Burns in addition to canceling the contract. d. All of the above are accurate. Answer: D [Remember that fraud is also a tort! Remember our discussion of Intentional Torts earlier in the class??!! In a contractual fraud case, you can sue to cancel the contract, and, sue in tort for money damages as well.]
As a general rule, a newspaper ad stating the price of the advertised goods is not an offer to sell the goods at the stated price.
True, [As a general rule it is only an invitation to deal—which is not an offer.]
. On Thursday, Graham made Bell an offer in which she stated that "if you choose to accept, you must communicate that decision by means of a telephone call to me at my office prior to 2:00 p.m. tomorrow." Bell, never one to rely on the telephone as a means of communicating important information, had a telegram of acceptance (i.e., he did not use the telephone) dispatched before 2:00 on Friday. The telegram was delivered to Graham's office at 2:15 p.m. Do Graham and Bell have a contract?
No, because Bell's supposed acceptance was both untimely and in improper form. [Remember that the offeror is the "master of his/her own offer" and here the offeror said the offeree "must" call using a telephone by a certain time to accept. And choice D is wrong because "substantially complied" is not sufficient under the law. This question and the issue it is testing you on is similar to No. 13 above
Sound Corp., a manufacture, and Hifi, a retailer, entered into a contract for the sale of designated quantity of stereo speakers. According to the contract, Sound was to deliver the speakers not later than August 1. In early July, Sound realized that because of a large number of orders from wholesalers and retailers throughout the country, Able would not be able to deliver the speakers to Hifi until September 15. Sound therefore contacted Hifi in early July, explained the circumstances, and asked Hifi to agree to September 15. Sound therefore contacted Hifi to agree to September 15 as revised delivery deadline. Hifi agreed. Sound delivered the speakers to Hifi on September 14. Hifi later sued Sound for breach of contract, alleging that Sound's failure to deliver the speakers on August 1 caused Hifi to lose sales that he could have made to his retail customers during the August 1 - September 14 time period if he had had the Sound speakers. Assuming that Hifi did in fact lose sales that he could have made if he had had the speakers as of August 1, does Hifi have a valid breach of contract claim?
No, because Sound complied with its obligation, as set forth in the modified version of the contract. [Again, this is an example of the UCC (sale of goods) contract modification rule - see your study/master outline in your University Readers book for details.]
On September 8, Corpco, Inc. made Todd Technonerd an offer for a three-month position as a computer technician. The Corpco official who communicated the offer to Technonerd told him to "let us know as soon as you can, but no later than September 15." After considering the offer, Technonerd telephoned the Corpco official with a counteroffer on the morning of September 10. The counter offer called for a minimum employment term of six months. The Corpco official said he would think the matter over. Later that same day (September 10), Technonerd had second thoughts about having made a counteroffer, so he telephoned the Corpco official again (still on September 10) and stated that he was "delighted to take your September 8 offer." The Corpco official responded by telling Technonerd that Corpco did not intend to employ him. Technonerd has filed a breach of contract lawsuit against Corpco. Should he win his case?
No, because Technonerd's first September 10 telephone call to the Corpco official had the legal effect of terminating Corpco's offer.
The following statements pertain in some sense to the consideration element of a contract. Which statement is legally accurate?
None of the above. ['a' is an example of an illusory promise (where you are not really binding yourself to do anything!), 'b' is an example of moral consideration, 'c' is not the correct because the doctrine of promissory estoppel may apply in such a situation to make the promise enforceable.] If Renoir promises Picasso that "I will pay you $300 if you paint my living room" and if Picasso responds by saying "I'll do the work for you as soon as I can get to it," there is consideration to support Renoir's promise. b. If Garth promises to pay Wayne $999 because (to quote Garth) "as far as friends go, you're out of this world, Wayne," the fact that Garth holds this opinion about Wayne constitutes adequate consideration for Garth's promise. c. If Lady Madonna Church member Eleanor Rigby fails to live up to her 2002 promise to donate $10,000 to the church, the fact that there was no consideration to support Rigby's promise will prevent the church from having a valid legal claim against her for collection of the unpaid amount.
After Bill and Ted returned from a lengthy trip, their elderly friend, Joan Ofarc, promised the teenage lads that she would pay each of them $2,500 if they would refrain from any further traveling until their respective 21st birthdays, which they promptly promised to do. Ofarc then told them that she had changed her mind and would not be paying them the money after all. Which of the following is true?
Ofarc must pay Bill and Ted because she received legal consideration from them in exchange for her promise to pay
On June 1, 2001, wealthy octogenarian Ann Oldcodger promised her nephew, Abner Mality, that no later than July 15, 2001, she would give Mality full ownership of one of the five Rolls Royce automobiles she owned. Oldcodger did not ask Mality to do or promise anything in return. During the period from June1 to July 15 Mality daydreamed about what things would be like once he owned the Rolls Royce and, in general, counted on the notion that Oldcodger would live up to the terms of her promise. When July 15 rolled around, however, Oldcodger informed Mality that she had reconsidered and that she would not be giving him a Rolls Royce after all. Both disappointed and angry, Mality has sued Oldcodger on a promissory estoppel theory. In view of the facts, who should win the case? Why that party?
Oldcodger should win the case because Mality will not be able to establish the necessary elements of promissory estoppel. In merely daydreaming about what the future would be like and in counting on the idea that Oldcodger's promise would be fulfilled, Mality did not demonstrate the type and/or degree of reliance necessary under the law to enable him to invoke successfully invoke the promissory estoppel doctrine. The requisite reliance must take the form of either action (actually doing something in reliance on the promise, such as incurring expenses, etc.) or forbearance (giving up an opportunity in reliance on the promise). Mality's mere thoughts and assumptions were neither action nor forbearance. Despite his disappointment and anger, he cannot obtain enforcement of Oldcodger's promise. (Later contract chapters we will study make apparent the reasons why Mality would also lose a breach of contract claim if he were to bring one -- e.g., lack of/failure of consideration)
A voidable contract is one in which at least one party has the legal right to cancel his or her obligations under the contract.
True, [For example, where one of the parties has committed a fraud in entering into the contract
The death of the offeror terminates the offer regardless of whether the offeree knows of the death.
True, this is a matter of law
Compuco, Inc. produces personal computers. Ann Onymous operates a wholesale computer sales business. Compuco and Onymous entered into a written contract under which Compuco was to provide Onymous with four installment deliveries of personal computers at three-month intervals. Each installment delivery was to be of 200 personal computers of a certain model designated in the contract. The contract also called for Onymous to pay $600 per computer, with payment for an installment being due upon each delivery of that installment. Compuco delivered the first three installments and Onymous made the required payments. Three weeks before the delivery of the final installment of the final installment was to occur, Onymous wrote to Compuco. Onymous explained that her business was in the midst of a sales lull and that she was experiencing a serious cash flow problem. Onymous explained that her payment obligation would be modified so that the final installment delivery would be of only 75 computers and that the final installment delivery would be reduced to $500 per computer. An appropriate Compuco official agreed in writing to Onymous' request. Later, claiming that rules regarding what is and is not consideration made the supposed modification of the contract unenforceable, Compuco shipped Onymous 200 computers and demanded payment of $600 per computer. Is Onymous obligated to accept all 200 computers and pay $600 apiece for them? Why or why not?
Onymous is not obligated to accept all 200 computers and pay $600 apiece. Instead, her obligation is to accept 75 computers and to pay $500 apiece, in accordance with the modification of the contract. Compuco's argument effectively is that there was no consideration to support the modification. That argument is irrelevant because the parties' contract was for the sale of goods. Unlike the common law and common law contract rules, the UCC dispenses with the need for new/different consideration to support a modification of a contract for the sale of goods. [Always remember that the UCC is more "forgiving"/flexible than the common law rule (the pre-existing legal duty rule) regarding the modification of an existing contract! -- see the discussion in your study/master outline in your University Readers book on the modification of contracts and the UCC contract modification rule.]
Tuesday owned a vacant commercial building in downtown Honky Tonk, Alaska. On March 1, 2001, she promised her friend, Flash, that on August 1, 2001, she would give Flash legal ownership of the building. She did not ask Flash to promise or do anything in return. Flash decided that he would like to use the building, once it became his, to fulfill his longstanding dream: the operation of a retail business featuring the sale of records, tapes, and CDs. He therefore began making preparations to engage in that business. Flash spent $800 to have the buildings red doors painted his favorite color - black - and obligated himself on contracts for the purchase of $15,000 worth of albums, tapes, and CDs, so that he would have suitable inventory from which customers could make choices. He also contracted to purchase $4,000 - worth of shelves and racks to hold his inventory. When August 1, 2001 arrived, Tuesday refused to deed the property to Flash because she had to decided to use it for another purpose. After realizing that he could get no satisfaction out of trying to reason with Tuesday, Flash sued her in an attempt to recover the amounts referred to above. The following statements purport to state the "best" legal theory for Flash to use in his suit. Which statement is accurate?
Promissory estoppel would be the best theory for Flash to use because Flash took action in detrimental reliance on a promise that Tuesday should have foreseen as likely to induce such reasonable reliance
Offerees who accept an offeror's performance knowing what the offeror expects in return are treated as having impliedly accepted the offeror's terms.
True, this is called implied contract
Under traditional contract principles, an acceptance of an offer by an offeree using a nonauthorized means is not effective as an acceptance even on receipt by the offeror.
True,[It does not work/operate as a valid acceptance. But it would be it's own offer/counteroffer that the original offeror would then be free to accept or reject
Scarborough Fair Restaurant owner Parsley Sage wrote noted restaurant critic Rosemary Thyme and stated that he would pay Thyme "$1500 per day if you come to my restaurant on Monday, August 4, 2002, observe my chefs all day on Monday, August 4 through Friday, August 8, and tell them what they're doing right and what they're doing wrong." Thyme received the letter on Wednesday, Agreement (Offer & Acceptance) Practice Problems 14 July 30, 2002. She decided that she would go to Sage's restaurant on August 4 and provide the advice referred to in his letter. On July 31, Sage telephone Thyme. He told Thyme that he had changed his mind and that he did not intend to follow through on the offer made in the letter she received the preceding day. Thyme told Sage that she wished to accept the offer set forth in his letter, but Sage was unrelenting. Thyme nonetheless arrived at Sage's restaurant on Monday, August 4 in order to observe and advise Sage's chefs, but Sage instructed her to leave the premises. After Sage repeatedly ignored further attempts by Thyme to discuss the matter, Thyme sued Sage for breach of contract. Which of the following is an accurate analysis?
Sage should win the case because he revoked his offer prior to any acceptance by Thyme.[Thyme could only accept by performing — i.e., this was an offer for a unilateral contract - and the requested act set forth in that offer for a unilateral contract had been/was timely revoked!]
Jaques Strappe owns a new sporting goods store. To announce the grand opening of his business, Strappe placed an advertisement in the local newspaper. The ad quoted prices on various items, including a Timewaster brand exercise bicycle. The grand opening was more successful than Strappe had imagined it would be. He was unable to satisfy all the consumer demand for certain items. After Strappe had sold all of the Timewaster exercise bicycles he had in stock, customer Earl Portly demanded that he be sold a Timewaster exercise bicycle at the advertise price. When Strappe did not comply, Portly sued him (in small claims court) for breach of contract. How should the court rule?
That no contract was formed because Strappe did not accept Portly's offer.A [Remember that advertisements, as a general rule, are not offers. They are only invitations to deal/negotiate! Legally, Portly's demand to be sold the bicycle in question was probably an offer by HIM to Strappe that Strappe was in turn free to accept or reject!!]
Oliver Douglas and Monroe Brothers Construction Co. (Monroe) entered into a contract under which Monroe was to construct a house for Douglas. As a part of its contractual obligations, Monroe was to furnish certain building materials that would be incorporated into the house. A dispute later arose between the parties, who are now before the court in connection with Douglas's breach of contract lawsuit against Monroe. A fundamental issue is whether the parties' contract is governed by UCC Article 2 (what Douglas argues) or by the common law (what Monroe argues). How will the court go about resolving this issue? Which party is probably correct in his or its argument on this issue? Briefly explain.
The court will resolve this issue by determining which aspect of the contract—the services aspect or the goods aspect—predominates. If the services aspect predominates, the common law will control the entire contract. If the goods aspect predominates, UCC Article 2 will control the entire contract. Although the facts set forth in the question are minimal, Monroe is probably correct in his argument that the common law will control. In a construction contract, the parties presumably would be placing greater importance on the construction services aspect of the transaction than on the furnishing of goods (building materials) aspect of the transaction. In contracting with a particular builder, it would seem that the (hopefully) skilled services of the builder would be what the other party is primarily seeking. The building materials will not do the prospective homeowner much good if he does not have a builder to construct the house. In addition, from the builder's standpoint, construction services would be the builder's primary business emphasis, with the furnishing of materials being a secondary (though of course still important) matter. This question is testing your ability to spot and apply the "hybrid transaction" test discussed in the study/master outline in your University Readers book
Thelma Jean sent Johnny Bob a letter stating that "I have me a good-running Ford half-ton pickup, which I will sell you for $1500 in cold cash. If I ain't heard from you before Sunday, I'll assume that you want my pickup and that you'll pay me bright and early Monday." Johnny Bob received the letter but did not answer it. He refused to pay Thelma Jean anything and would not accept delivery of the truck when she attempted to deliver it on Monday. Which of the following is an accurate statement?
Thelma Jean and Johnny Bob do not have a contract. [This question is testing you over the issue of when/whether an offeree's silence can operate as an acceptance. Remember that as a general rule, silence by the offeree cannot be deemed to be an acceptance; and, none of the exceptions to that general rule (discussed in the study/master outline in your University Readers book) apply to the above problem -- as stated in your study/master outline in your University Readers book ... silence by the offeree can operate as a valid acceptance when/if: (1) the offeree indicates that his/her silence can/will operate as an acceptance; (2) the prior dealings/past relationship between the parties are such that silence can, has or will operate as an acceptance; (3) custom in the industry dictates that silence can be/is an acceptance; and/or (4) where, for example, the offeree signs an agreement stating that future shipments will be accepted until further notice to the offeror.]
Kyle sent Tara a letter offering to sell Tara his car. Tara left the letter on her desk, where her roommate, Maggie, saw it. After reading the letter, Maggie wrote to Kyle and stated that she (Maggie) wanted to accept Kyle's offer. Which of the following statement(s) is/are accurate?
There is no contract between Kyle and Maggie because Kyle did not communicate his offer to Maggie. [His offer was to Tara, not Maggie!!]
A contract resulting from one party's use of fraud upon the other party is voidable.
True
A offeree's valid and timely mailed acceptance is legally effective even if the offeror never receives it.
True
A's promise to perform a "preexisting duty" will not constitute consideration for B's promise even if such a promise by A was what B wanted from A.
True
Although classical/traditional contract law did not recognize economic duress as a basis for avoiding one's contractual obligation, modern/current contract law allows for its possible use in that way.
True
As a matter of law an offer that contains no duration term is open for a reasonable period of time.
True
Courts generally allow a person who rescinds/cancels an illegal contract before any illegal act has been performed to recover any consideration that he has given to the other party.
True
If a contract calls for a party to provide goods and perform services, the presence of the "sale of goods" component in the contract does not automatically mean that the contract is governed by Article 2 of the Uniform Commercial Code.
True
Looking for every possible opportunity to improve his team's sagging fortunes, New Orleans Faints head coach and general manager, Mike Zitka, sent former All-Pro offensive tackle Les Holden (who last played pro football in 1999) a letter offering him a no-cut $1 million contract if he would come out of retirement and agree to play for the Faints. The letter, dated July 9, 2001 stated that "you can have until July 23 to decide" and that "your acceptance may be by mail." Holden mailed Zitka a counteroffer (requesting $1.5 million) on July 14, but then reconsidered. Not wanting to appear greedy, Holden mailed Zitka another properly addressed and postmarked letter on July 15. In that letter, he stated that he agreed to accept the Faint's offer. Zitka never received Holden's July 14 counteroffer (it got lost in the mail). On July 17, Zitka received Holden's letter of acceptance. On July 16, Zitka mailed Holden this note: "Don't bother reporting to training camp, Holden. We have too many over-the-hill players as it is." Holden received Zitka's July 16 letter on July 20. Holden believes that he and the Faints have a contract. Do they?
Yes, because Holden's acceptance letter was effective on dispatch.[To answer this question correctly, you need to be familiar with and be able to apply the following concepts: revocation of an offer, rejection of an offer, and acceptance of an offer. You ALSO need to be familiar with and be able to apply the timing rules that go with each (e.g., WHEN is the revocation of an offer effective? What about the rejection of an offer? What about the acceptance of an offer? See the Offer and Acceptance sections of the study/master outline in your University Readers book
Ex-deputy sheriff Barney Fife owns the "Nip It in the Bud" flower shop. Fife recently promised to pay all tuition for his friend and trusted employee, Howard Sprague, to attend Mount Pilot Technical Institute (MPTI) if Sprague would promise to complete MPTI's two-year program in cosmetology. Fife made his promise knowing that Sprague would be happier working as a cosmetologist than as a flower shop employee. Sprague promised to complete the cosmetology training program. Is there consideration given by Sprague for Fife's promise?
Yes, even though Fife would not personally be benefiting from Sprague's promise.[Howard Sprague agreed to do something that he had no legal obligation to do - attend MPTI!! This is an example of forbearance sufficing as adequate consideration given by one of the parties under contract law; see also True - False Questions 5 and 6 above!!]
If X entered into a contract as the result of Y's exercise of overreaching economic duress upon X, the flagrant nature of Y's conduct would make an award of money damages the proper remedy for X.
false[Damages would not be the remedy; unwinding/canceling the contract would be the remedy
On August 15, George tells Elaine that on August 29, he will sell her a portrait of him (painted several months earlier) if she agrees to now pay him $475 on August 29. Elaine agrees to buy the portrait on George's terms. The contract between George and Elaine is:
bilateral and express
All such exculpatory clauses seeking to relieve a person from tort liability are unlawful on public policy grounds.
false
Although courts will allow a party to be relieved from his contractual obligation when he was unilaterally mistaken about an important matter, courts normally will not allow either party to get out of the contract in cases of mutual mistake.
false
The general rule is that all professional contracts made by a person who lacks the necessary license needed to practice the profession are unenforceable.
false [No, you have to make a distinction between licensing statutes designed to protect the public vs. ones primarily designed to raise revenue -- see the study/master outline in your University Readers book on this issue. Also, note the use of the word "all" in the question - again, you MUST read the question closely!!]
As a general rule, an adult's contract with a minor is voidable at the option of either party
false only at the minors options
Promises cannot serve as consideration because they are intangible and have no legal value.
false,
Although revocations of offers by offerors are effective when received by the offeree, rejections of offers by offerees are effective when mailed to the offeror.
false, The general rule is that rejections of offers by the offeree are effective upon receipt by the offeror.]
A binding contract cannot exist if the parties did not subjectively intend to contract with each other.
false, [No, the test is an objective one - which asks ...what would a reasonably prudent objective person have thought or concluded in witnessing this transaction??]
One who entered into a contract while intoxicated need not later disaffirm the contract in order to avoid being bound by it.
false,To disaffirm/cancel it; one obviously has to act affirmatively on it/to do so!]
A plaintiff may recover damages under a quasi-contract theory only if both parties have shown an intent to enter into a binding contract.
false,[Intent has nothing to do with the applicability of quasi-contract theory/doctrine.]
A memorandum must be signed by both parties to the contract in order to satisfy the writing requirement of the statute of frauds.
false,[It only needs to be signed by the party that you seek to enforce the contract at issue against!!]
A person who entered into a contract while a minor cannot disaffirm it after reaching adulthood/the age of majority; if the minor intends to disaffirm the contract, she must do so while still a minor
false,[No. The minor can disaffirm the contract within a "reasonable time" after reaching the age of majority.]
. A minor's ratification of a contract is effective only if the ratification occurs before the minor reaches the age of majority (i.e., adulthood).
false,[Note the word "only" in the question. The minor also has a reasonable time to ratify/affirm the contract after reaching the age of majority/adulthood - see the study/master outline in your University Readers book.]
When an auction is advertised as being "without reserve," the auctioneer may withdraw the goods at any time prior to the acceptance of a bid on them.
false,only in an auction with reserve can an auctioneer do this
. The statute of frauds says that all contracts induced by fraud are voidable.
false. [Again, note the use of the word "all"!! Also, the statute of frauds really has nothing to do with fraud per se - it addresses which contracts must be written/in writing to be enforceable!!; i.e., its name is a bit of a misnomer.]
Influential State University (ISU) sent country western legend Conroy Ditty a detailed letter in which ISU offered to engage Ditty to perform a concert as part of ISU's Homecoming extravaganza. ISU's letter stated that acceptance "must be by certified mail and must be received by ISU before noon on September 6." A delighted Ditty sent a telegram of acceptance immediately after reading ISU's letter. The telegram was delivered on September 4 to the same ISU official who had signed the earlier letter received by Ditty. When Ditty contacted the ISU official on September 9 to discuss concert-related details, she informed Ditty that another internationally known star would be performing the concert instead. Ditty later sued ISU for breach of contract. The court should rule:
in ISU's favor because there was no valid acceptance by Ditty.[He did not satisfy/comply with the rules for accepting the offer laid down by the offeror! Again, this is an example of the offeror being in charge of the terms of his/her own offer and how it can be accepted!!]
. For 33 years, 65-year old Eleanor Rigby had been dedicated employee of Lady Madonna Church. On the day before her official retirement, Rigby was picking up rice from the steps of the church, where a wedding had just taken place. She was observed while doing this by Father McKenzie, the church's priest and chief administrative officer, who had authority to make all decisions regarding the use of the church's funds. Touched by what he had observed and mindful of Rigby's loyalty and service to the church over the years, Father McKenzie verbally promised Rigby that in recognition of all she had done for the church, the church would pay her the sum of $10,000 at the expiration of one week following her retirement. Rigby retired as planned, and a week went by. Father McKenzie declined to pay the $10,000, however, explaining that even though he would like to pay her the money, doing so would be an improper use of the church funds. Rigby then sued the church for the $10,000. She should:
lose the case because there was no consideration for Father McKenzie's promise. [The recognition for all she had done for the church is an example of past and/or moral consideration, which, according to class lecture and the study/master outline in your University Readers book, is NOT legally sufficient or recognizable consideration to form a contract!!]
On June 10, Margaret Rich went to the Los Angeles offices of the Nasty, Brutish & Short accounting firm in order to visit her nephew, Norman Gieke, who was employed as an accountant at that firm. When she arrived there, Rich told Gieke that she intended to give him $1,000,000 on August 15 of that same year. Gieke, who had always felt he did not have enough personality to be an accountant, was elated because he saw this as an opportunity to fulfill two longstanding desires: to take a cross-country trip to Connecticut for a coin collectors' convention; and to begin pursuing a PhD in economics. Gieke therefore quit his job at Nasty, Brutish & Short, sold his house at a loss, and use the proceeds to buy a Winnebago (which he intended to drive to the coin collectors' convention). He also incurred expenses in moving to Pardnerville, Texas so that he could begin his studies at Southwest Central Texas State University. When August 15 came and went without Rich's paying Gieke the $1,000,000, Gieke contacted his aunt to see when he could expect payment. Rich then stated that she would not be paying him. Gieke has sued his aunt. On these facts,
promissory estoppel is a better theory for Gieke to employ than breach of contract would be. [The items I underline above are all evidence of reasonable reliance by Gieke, which is a critical part of the promissory estoppel doctrine and its applicability. Again, see the discussion on promissory estoppel in the study/master outline in your University Readers book.]
A person who lacked the necessary legal capacity to enter into a contract may nonetheless be compelled to pay reasonable value of "necessaries" furnished to him by another party
true
A threat to sue someone if he does not enter into an agreement with the party making the threat will not necessarily/automatically make the agreement voidable on the ground of duress.
true
A unilateral contract that cannot be performed within a year after it is formed must be evidenced by a writing to be enforceable.
true
All contracts for an amount equaling or exceeding $500 involving the sale of goods must be in writing to be enforceable.
true
An adult who contracts with a minor has no power to disaffirm/cancel the contract.
true
As a general rule, under the "mutual mistake" doctrine/defense, a party who entered into a contract because he was mistaken about a matter important to the transaction cannot avoid his contractual obligation on the basis of a mistake unless the other party was also mistaken about the same matter.
true
Consideration may consist of one's agreeing not to do something she otherwise had a legal right to do.
true
Forbearance (promising to not do something you have a legal right to do) by the promisee may be sufficient to constitute consideration for the promisor's promise.
true
If a person who entered into a contract while lacking mental capacity later regains his/her capacity and fails to disaffirm the contract within a reasonable time thereafter, he may be deemed to have ratified the contract.
true
If one party induces another party to enter into a contract by using unfair persuasion, the contract can be cancelled on the ground of undue influence.
true
In cases involving disputes over contracts, courts normally do not inspect the contracts to ensure that the consideration exchanged was adequate.
true
In general, illegal agreements entered into between two parties are voidable.
true
In order to be enforceable, a noncompetition clause in a contract must, among other things, serve a legitimate business purpose.
true
In some states, a minor may disaffirm (i.e., cancel) a contract even if he/she is unable to return the consideration he/she received from the adult.
true
Most contracts made by persons whose consent was not real (i.e., legitimate) are voidable.
true
Some courts use promissory estoppel to allow parties to enforce contracts that otherwise would be unenforceable under the statute of frauds
true
Some promises to donate money to a charitable organization may be enforceable even in the absence of consideration
true
The party who proves that undue influence caused him to enter into a contract is not entitled to recover damages from the party who exercised the undue influence.
true( He/She can only "unwind"/cancel the contract; not seek monetary damages.]
As a result of a fraudulent misrepresentation by Kaelin, Inc., Lancito Corp. is induced to enter into a contract with Kaelin. The contract between Lancito and Kaelin is:
voidable. [i.e., meaning the defrauded party, not the party who committed the fraud, can cancel the contract.]
Polly Ester owns a shop at which she sells memorabilia associated with the late — Elvis fans prefer presumably late — Elvis Presley. On August 1, Earl "Teddy Bear" Portly (a merchant) sent Ester a letter in which he offered to sell her a rare "Elvis on black velvet" portrait for $14,999. Portly's letter stated that Ester "should feel free to respond, pretty mama, by letter mailed to my office, if mail is your thing." Portly's letter also stated that "this offer will remain open until August 15." Portly also signed the bottom of the letter. [Prof. Carr editorial note -- this is an example of a "firm offer" under the UCC being created - note that this is a contract for the sale of goods.] On August 8, Ester mailed a letter to Portly at his office address. In the letter, Ester stated her decision to accept his offer. On August 9, Portly mailed Ester a letter stating that his offer was revoked. Ester received this letter on August 11. Through no fault on Ester's part, her August 8 letter did not arrive at Portly's office until September 9. Portly refused to sell Ester the portrait on the offered terms, so Ester has sued him for breach of contract. Ester should:
win the case because her acceptance became effective within the duration of the offer
XYZ Co. and PDQ, Inc. entered into a written contract under which XYZ was to pay PDQ $98,000 in return for the obligation PDQ was to perform. Before the arrival of the date on which the parties were to perform their respective contractual duties, PDQ officials persuaded XYZ officials to agree to modify the payment term so that XYZ would pay $113,000 PDQ would perform the obligation called for under the original version of the contract. When the agreed date of performance arrived, PDQ performed its obligation, but XYZ refused to pay anything more than $98,000. PDQ has sued XYZ, claiming that XYZ breached the modified version of their contract. PDQ should:
win the case only if the parties' contract was for the sale of goods.
