Contracts Missed Qs

A wholesaler of bicycle chains sent a retailer the following fax on December 1: "Because of your continued loyalty as a customer, I am prepared to sell you up to 1,000 units of Bicycle Chain Model D at $7.50 per unit, a 25% discount off our original $10.00 price. This offer will remain open for 7 days." The fax lacked a full, handwritten signature, but was on the wholesaler's letterhead and had been initialed by the wholesaler's head of sales. On December 4, the wholesaler's head of sales called the retailer and informed the retailer that he had decided to revoke his December 1 offer. On December 5, the retailer placed an order for 1,000 bicycle chains, stating that he would pay the discounted price of $7.50 per unit. What is the correct value of the order placed by the retailer?

$7,500 because he had to keep the offer open for the 7 days (He's a merchant so has to keep it open for the promised 7 days. No consideration needed. It was in writing.) Firm offer rule: must be written, signed by offeror, and contain explicit promise not to revoke CANNOT EXCEED 90 DAYS

A retailer received a written firm offer signed by a supplier. The offer committed the supplier to providing the retailer with up to 10,000 tubes of toothpaste over the next 45 days at $1 a tube. Thirty days later, the supplier informed the retailer that the price per tube of toothpaste would be $1.10. The next day the retailer ordered 6,000 tubes of toothpaste from the supplier, which the supplier promptly shipped. Sixty days after the receipt of the offer, the retailer ordered another 4,000 tubes of toothpaste, which the supplier also promptly shipped. What price is the supplier permitted to charge the retailer for the toothpaste?

$10,400 ((6,000 * $1) + (4,000 * $1.10)), because the supplier's firm offer was effective for only 45 days. (a merchant gave a signed writing to keep it open for 45 days so had to, but after 45 days it could change) Firm offer rule: must be written, signed by offeror, and contain explicit promise not to revoke CANNOT EXCEED 90 DAYS

A collector agreed to sell his collection of authentic extras' costumes from a cult classic 80's show to a costume store for $10,000, payable one month after the collection was delivered to the store via a third-party carrier. Due to the time and expense that went into accumulating and repairing the costumes, the collector expected a $2,000 profit. The costumes suffered minor water damage in transit, and the store immediately notified the collector that it was rejecting the collection and would hold the collection until the collector picked them up. The collector told the store that he would look for a new buyer and would pick up the collection in a few weeks. The collector quickly found another buyer willing to pay the original contract price. However, before the collector retrieved the costume collection, the store sold and delivered the costumes to a theater company who knowingly accepted the costumes despite the water damage. The theater company paid the store $15,000 for the collection, which the store retained. If the store's sale of the costume was NOT an acceptance, what is highest value remedy available to the collector?

$15,000, damages for conversion. (they properly rejected the goods so they belonged to the collector.) perfect tender rule: requires perfect goods and perfect delivery for merchants

A butcher and a seller entered into a written contract for the purchase and sale of a building to be used as a butchery. The closing was scheduled for June 1. On May 25, the seller was notified by the city that the building, which had previously been used as a butchery, had a number of significant city code violations. The seller immediately contracted with an electrician and others to correct the issues. Despite his best efforts, the seller realized the building would not be brought up to code until at least June 10. The seller promptly sent written notification of this issue to the butcher and informed him that he would be unable to take possession of the building until June 10. Based on his agreement with the seller, the butcher had declined to renew his lease at his current location and was forced to remove his equipment and inventory from his current location by the end of May. Between June 1 and June 10, to prevent spoilage of his inventory due to the delay, the butcher had to rent space to store his equipment and inventory. He moved his freezer to the rented space to store his meat at a cost of $200 per day, plus the cost of electricity to run the freezer. On June 10, the building was up to code. The butcher paid the seller the agreed-upon purchase price of $300,000 and took possession of the property. What damages, if any, may the butcher recover from the seller?

$2,000, the rental cost he had to pay from June 1 to June 10. (he would have paid for the electricity no matter what) expectation damages: intended to put the nonbreaching party in the same position as if the contract had been performed as agreed.

Due to recent financial difficulties, a man asked his brother if he would be willing to loan him $3,000. The brother agreed to make the $3,000 loan to the man. Under the terms of their agreement entered into on December 31, the man would be responsible for making monthly payments of $125 plus interest for the next two years at the beginning of each month, starting January 1. Pursuant to the agreement with his brother, the man made payments each month for the first six months. However, he failed to make the agreed-upon payments for July and August. On August 30, the man told his brother that he could no longer afford to repay him. The brother filed suit against the man on August 31 for breach of contract. What amount, if any, will the brother be able to recover on August 31?

$250 plus interest, the amount owed for July and August. (when he sued that was all that was due) b/k: at the time of a breach the only remaining duties of performance are (1) those of the party in breach; and (2) for the payment of money in installments not related to one another, then breach by nonperformance as to less than the whole, whether or not accompanied or followed by a repudiation, does not give rise to a claim for damages for total breach and is a partial breach of contract only.

A grocery chain whose main customer base was families with young children contacted a cereal manufacturer. After various discussions regarding the cereal and the box, the two parties entered into a written contract whereby the grocery chain would purchase 10,000 boxes of children's cereal on a monthly basis for $5,000, due upon delivery. The contract further stated that the cereal would be shaped like donuts, and each piece of cereal would be one of the seven colors of the rainbow. Finally, in listing the primary ingredients, the contract stated that the cereal would contain high fructose corn syrup. When the first shipment arrived, the grocery chain refused to pay the $5,000 and repudiated the contract. The cereal manufacturer sued the grocery chain for damages, and admitted the contract between the two parties into evidence. The grocery chain then attempted to offer evidence regarding the discussions that occurred between the two parties prior to the execution of the contract. It claimed that the cereal manufacturer had orally agreed to use evaporated cane juice as a sweetener, not high fructose corn syrup, and that the cereal manufacturer would also include a small prize in each cereal box at a cost of a penny a box. In deciding whether to admit evidence of the oral agreement, the court will most likely

Admit only the evidence regarding the small prize in each cereal box. (because it does not contradict the writing) parol evidence rule: oral or written evidence before a contract is finalized that contradicts the writing is inadmissible, but if it is partially integrated the evidence is admissible if it does not contradict the terms.

An amateur bodybuilder entered into a contract with a personal trainer to help the bodybuilder prepare for his first bodybuilding competition. The written agreement stated that the bodybuilder would pay the personal trainer $4,000 to do daily weight-lifting sessions, and teach him about competition musculature and proper nutrition. Per the contract, the training would occur over a period of eight weeks leading up to the competition, and the bodybuilder would pay the personal trainer at the end of the eight weeks. Three weeks before the competition, the bodybuilder was lifting weights with the guidance of the personal trainer, when suddenly a beam fell from the gym's ceiling and onto the bodybuilder while he was lifting weights. The bodybuilder suffered severe head trauma, and was put into a medically induced coma for more than a month. With regard to the contractual duties of each party, which of the following is a correct statement?

Each party's duty to perform is dismissed, but the personal trainer can recover under a theory of quasi-contract for the weeks that he did train the bodybuilder. (due to impracticability, no party had to perform, but quasi-contract applied) impracticability: excuses contractual duties at the occurrence of an unforeseeable event. quasi-contract: equitable doctrine of restitution to prevent unjust enrichment for the benefit conferred by one party on the other.

A computer retail outlet contracted to service a bank's computer equipment for one year at a fixed monthly fee under a contract that was silent as to assignment or delegation by either party. Three months later, the retail outlet sold the service portion of its business to an experienced and well-financed computer service company. The only provision in the agreement between the retail outlet and the computer service company relating to the outlet's contract with the bank stated that the outlet "hereby assigns all of its computer service contracts to [the computer service company]." The computer service company performed the monthly maintenance required under the service contract. Its performance was defective, however, and caused damage to the bank's operations. Whom can the bank sue for damages arising from the computer service company's defective performance?

Either the retail outlet or the computer service company, because the bank has not released the outlet and the bank is an intended beneficiary of the outlet's agreement with the computer service company. delegation: without consent from the other party, duties attach to the delegator. An intended beneficiary of one is the intended beneficiary of another, and both are liable.

A buyer contracted with an owner of commercial property located in a strip mall to purchase the property for $750,000. The contract called for closing and delivery of possession to occur on March 1. At the time of contracting, the owner informed the buyer that the current tenants were wrongfully refusing to vacate the premises, and would not do so until March 31. The owner notified the current tenants, who ran a call center on the premises, that they would need to vacate the premises before April 1. Although the current tenants stopped operating the call center before April 1, they were not able to empty the space completely because they had attached numerous cubicles to the floor, and the cubicles occupied the entire space of the property. Shortly after entering the contract, the buyer, who unbeknownst to the owner, planned on using the property as a gymnastics studio, ordered gymnastic equipment that was to be delivered on March 2. Due to the delay, the buyer was forced to rent a storage unit for this equipment for $1,000. By April 1, the fair market value of the property had risen to $755,000. In addition, the monthly fair market rental value of the property was $3,000. If the buyer files an action against the owner for damages, what will she likely recover?

Expectation damages of $3,000 for the fair rental value of the property for the month of March. (the owner breached, so owes for not giving possession ($3K), but not the money for storage because they knew it would not be available so shouldn't have scheduled the drop off) consequential damages: unique to the injured party incidental damages: includes cost of storing, not available if injured party causes these damages

At the auction of construction equipment owned by a contractor, several lots were offered for bidding and the highest bids for each were accepted by the auctioneer. The auctioneer then announced that a lot that consisted of a backhoe was being auctioned off. Several bids for the backhoe were acknowledged by the auctioneer. Just before the auctioneer brought down her gavel, she glanced at the contractor. The contractor gave the auctioneer a prearranged signal. Acting in accord with the signal, the auctioneer stated that the backhoe was being removed from the auction. There had been no indication as to whether the auction was being held with or without reserve. The highest bidder on the backhoe, contending that he is now its owner, has brought suit against the contractor. How should the court rule?

For the contractor, because the auctioneer had not brought down the gavel, announcing the completion of the sale of the backhoe. auction with reserve: default; meaning that the seller has the right to withdraw an item from sale at any time before the auctioneer announces the completion of the sale.

A new florist placed a written order with a wholesaler for $15,000 worth of fresh flowers. Delivery was to be made to the florist via a national delivery service. Because the florist was a new customer, the wholesaler accepted the order on the condition that he pay $5,000 in advance, and the remaining $10,000 within 20 days of delivery. There was no discussion as to who bore the risk of loss. The wholesaler arranged with a national delivery service to pick up and deliver the flowers to the florist. The delivery service picked up the flowers, but, due to malfunction of the temperature controls on the transporting plane, the flowers were worthless upon arrival. The florist rejected the flowers and notified the wholesaler, who refused to ship other flowers. The wholesaler filed a claim against the florist for the remaining $10,000. The florist counterclaimed for the return of its $5,000 payment to the wholesaler. How should the court rule on these claims?

Grant the florist's claim for $5,000 and deny the wholesaler's claim for $10,000 because the risk of loss remained with the wholesaler. (this is a destination k and the risk of loss doesn't pass to the buyer until the goods are tendered.) destination contract: delivery to be made "to the buyer's POB" and risk stays with seller until they get to buyer.

An independent trucker promised to deliver a farming implement from a manufacturer to a farmer. The manufacturer promised to pay the trucker if the trucker delivered the implement directly to the farmer after picking it up. The trucker picked up the implement, but instead of driving directly to the farmer, drove 100 miles out of his way to pick up another item from a third party before delivering the implement to the farmer. The manufacturer, unaware that the trucker failed to directly deliver the implement to the farmer, refused to pay the trucker. Who has breached this contract?

Neither the trucker nor the manufacturer (the trucker didn't satisfy the condition and cannot, so manufacturer doesn't have to pay. the trucker promised only to deliver the implement, and he did) condition: performance of a duty that is subject to a condition precedent is not required unless the condition occurs or its non-occurrence is excused, and it excuses a duty to perform if it cannot occur.

A math tutor entered into an agreement with a father to provide one month of tutoring for the father's son. The agreement stated that the math tutor would provide lessons for the son twice a week during the month for eight lessons at a total cost of $1,000. The cost included the materials valued at $350 that the math tutor intended to purchase from a particular educational services provider. The father knew a salesman for the educational services provider and notified him that his company should expect a sale in the next week. As the educational services provider was a new company without many sales, the salesman was excited at the prospect. A week after the agreement between the math tutor and the father was executed, the math tutor informed the father that he would not tutor the son unless the father provided an additional $250. The father refused. The educational services provider subsequently brought an action against the math tutor for breach of the agreement between the math tutor and the father. Will the educational services provider prevail?

No, because it was only an incidental beneficiary of the agreement. incidental beneficiary: does not have right to sue because the counterparties did not intend to convey enforcement rights to person in the event of a breach

A man and a woman entered into a valid contract with each other to provide transportation services for their neighbor, who recently had major surgery on her hip. The contract provided that the man and woman would each pay $100 each month for a period of one year to a local black car service. The man and woman selected the particular black car service based on recommendations that indicated it was very professional and always punctual. After one month of performance under the contract, the man refused to pay the black car service under the contract and the black car service stopped providing service to the neighbor. The woman brought an action seeking specific performance by the man pursuant to the terms of the contract. Will the woman be successful?

No, because monetary damages are sufficient to compensate the woman. specific performance: can be ordered for personal services, but unlikely. money damages always preferred.

On April 1, a buyer and a seller contracted in writing for the sale of an antique car for $20,000. The parties met on April 15, the scheduled date of the sale under the contract, and exchanged the car and a check. The check bore the following conspicuous notation: "This check is in full and final satisfaction of your payment under our April 1 contract." When the seller got to the bank to deposit the buyer's payment, the seller noticed the notation and also realized that the check was only for $15,000. Needing the money, the seller deposited the check anyway. The seller then sued the buyer for the $5,000 difference between the amount paid and the contract price. If the buyer's only defense is accord and satisfaction, is the buyer likely to succeed?

No, because the amount the buyer owed the seller was liquidated and undisputed. consideration: must exist when a party agrees to accept a lesser amount in full satisfaction of its monetary claim NOTE: this is unlike the other problem because it was an accord, and there was a difference in both parties performance, not just one side.

Upon the completion of an interview, an attorney offered an assistant $3,000 each month to perform administrative tasks at his office; he emailed her an offer confirming these terms. She responded via email, stating that she accepted the offer but inquired as to whether she would have to work in the office or could work remotely, expressing that the option to work from home was essential to her. The parties had discussed in the interview that the assistant would likely work in the office but that the attorney would be open to her working remotely at some point. The emailed offer did not address this issue. The attorney did not respond that day but went out and bought the assistant a laptop conforming to her preferences and many office supplies that she had requested. The next day, the attorney emailed her to confirm that he might allow her to work remotely after she demonstrated success within an office environment. She emailed him back that she no longer wished to work with him because she preferred to work from home right away. The attorney threatened to sue her for breach of contract. Under common-law principles, have the attorney and assistant entered into an enforceable contract?

No, because the assistant suggested additional terms in her response. (it was not an inquiry because she said it was essential) acceptance (C/L): acceptance must mirror terms of the offer. Suggestions or inquiries are not a counteroffer, but if it is essential it could constitute a counteroffer.

A bank that held a security interest in a delivery van conducted a forced sale of the van at an auction after the owner of the van defaulted on its loan from the bank. The proceeds of the loan had been used to purchase the van, which the owner had used in his floral business. At the auction, which was held in accordance with statutory requirements, the owner, without disclosing his ownership interest, made a good faith bid on the van. Twelve days after the auction, the highest bidder filed an action to void the sale after learning that one of the bidders had been the owner of the van. Can the sale be voided?

No, because the auction was a forced sale of the van. auctions: usually, when an auctioneer knowingly accepts a bid by the seller or on her behalf, or procures such a bid to drive up the price of the goods, the winning bidder may avoid the sale or, at her option, take the goods at the price of the last good-faith bid prior to the end of the auction. EXCEPTIONS: (1) a seller can bid at a forced sale; and (2) a seller can bid if she gives notice that she reserved a right to bid.

Prior to her death, a celebrity commissioned an artist to paint a portrait of her. The celebrity hired this particular artist because he only painted using an old-fashioned and rarely used style that required two months of daily appointments during which the subject would sit for the painting over a few hours each day. The contract between the parties specified that this live-model method be used, and that the celebrity would deliver increasing payments throughout the process, with the first payment occurring after two weeks of painting. One week into the process, after the painting had begun, the celebrity died. Her family demanded that the artist continue with the painting, using photographs as a substitute for the daily sessions. Is the artist required to complete a painting of the celebrity?

No, because the celebrity died after only one week. (her death wasn't the problem, it was that she couldn't sit for it) impracticability: something that hinders the ability to perform, excusing performance

A chemistry professor offered to sell her colleague an autographed first edition novel for $1,000. The professor provided her colleague with a signed written statement specifying the terms of the offer, and stating that the offer would remain open for one week. Two days later, the colleague learned that the professor had sold the book to someone else in their department. The next day, the colleague showed up at the professor's office with $1,000, asking to purchase the book. The professor apologized, saying that the book had already been sold. Is the colleague likely to succeed in an action for breach of contract?

No, because the colleague learned that the book had been sold before accepting the offer. (Since he knew it had been sold, it was a constructive revocation.) constructive revocation: when offeror has taken an action that is absolutely inconsistent with a continuing ability to contract

A wheat farmer contacted an agricultural services company in May to inquire about hiring workers for a five-day period toward the beginning of the summer-long harvest season to assist the farmer in harvesting his wheat crop. After some negotiations, the farmer entered into a written contract with the company to provide five workers for a five-day period starting in the first week of June for a cost of $5,000. On June 5, the company's workers went on strike. On June 9, the strike ended and the company's workers began harvesting wheat on the farmer's farm, and did so for five days. The farmer subsequently refused to pay the company, claiming the company's delay in performance excused his obligation to pay. Is the farmer's obligation to pay excused?

No, because the contract did not contain a "time is of the essence" clause. (the time was not perfectly set and there was no harm due to the delay so the breach was not material) time is of the essence clause: one party must perform on a specific date and time. if not, that is a material breach of contract

The owner of a fur coat stored it with the furrier from whom she bought the coat during the warm months of the year. While the coat was at the furrier, a salesperson, mistakenly thinking that the coat was for sale, sold it to a customer. The customer was allowed to reduce the purchase price by the amount of an outstanding debt owed by owner of the furrier to the customer; the customer paid the remainder in cash. In the process of purchasing the coat, the customer was told by the salesperson about the furrier's storage service, but, like the salesperson, was unaware that the coat was not part of the store's merchandise. After the sale, the owner learned of the transaction between the furrier and the customer. Since the coat had significant sentimental value to the owner, the owner sought its return from the customer. When the customer refused, the owner filed an action to recover the coat from the customer. Will the owner prevail?

No, because the customer was a good faith purchaser of the coat that had been entrusted to the furrier. (she purchased in good faith-- can transfer good title without title to goods) NOTE: the owner could have gone after the furrier but chose to go after customer, which is within owner's legal right, but probably not best judgment

In January, a local farmer contracted with a chef to sell the chef a specified amount of local organic tomatoes to be delivered on August 1. On June 15, the farmer called the chef to tell him that part of his crop was infested with tomato fruitworms, and he was unsure that he would be able to deliver the full amount requested by August 1. The chef told the farmer that it was absolutely essential that he receive those tomatoes on time to make organic tomato sauce for a restaurant scheduled to open in August. The farmer assured him that he would do his very best to save the crop and deliver by August 1. Does the chef have valid legal grounds to cancel the contract and order tomatoes from another source?

No, because the farmer did not state unequivocally that he could not deliver the tomatoes on time. (it was not an anticipatory repudiation because he did not unequivocally say he cannot perform) anticipatory repudiation: has to be an unequivocal refusal to perform NOTE: no adequate assurance was asked for- which would have had to be given within 30 days

The owner of a restaurant who highlighted local ingredients when creating his menu bought cheese and other dairy products from a local dairy farmer. The owner and the farmer had entered into written requirements contracts each spring for the past ten years. In the winter of the tenth year, the farmer purchased a substantial amount of new dairy cows and expanded his farming capabilities. He notified all customers that he would have a higher volume and amount of available products the following spring, and would adjust deliveries accordingly. The owner responded with a date he wished for the products to be delivered, as per custom, but said nothing else. On the agreed upon date, the farmer delivered substantially more products than he would customarily provide. The owner attempted to accept half of the shipment, as that was roughly his customary quantity, but the farmer stated that the products were already packaged and that the owner should have spoken up after receiving the notice from the farmer. The owner then rejected the shipment in its entirety. Did the owner breach the contract with the farmer as to this shipment?

No, because the farmer made a nonconforming tender of goods. (He sent more than usual without any confirmation.) No quantity needed because this was a requirements contract.

On March 1, the owner of a ferry boat that operated only during daylight hours during the summer months of June, July, and August entered into a written agreement with a man to serve as the captain of the boat for the upcoming season. On May 1, the owner contracted with a woman to serve as the captain of the boat. On May 30, the man was diagnosed with an illness, and the treatment for this illness prevented him from being employed until the following year. On May 31, the owner, learning of the man's illness, told him not to worry about their contract, as he had found someone else to serve as captain of the ferry boat. The woman served as captain of the ferry boat for the summer months of June, July, and August that year. On September 1, the man sued the owner for damages based on a breach of their contract. Will his suit succeed?

No, because the man was unable to serve as the captain of the boat during the summer months. (it was an anticipatory breach, but there were no damages because he could not perform) anticipatory breach: can (1) treat repudiation as a breach and sue immediately (unless only payment is left); (2) ignore the repudiation and demand performance

A men's apparel wholesaler was trying to expand its business, so it reached out to an online company that sold men's ties. The wholesaler mailed a letter to the online company offering to sell them 1,000 silk ties at a wholesale price of $15 per tie. The signed letter, dated July 1, assured the online company that the option to purchase would stay open, but did not specifically state how long the option would remain open. A year later, the online company sent a letter to the wholesaler accepting its offer to sell them 1,000 silk ties at a wholesale price of $15 per tie. The wholesaler and online company had no prior dealings, and offers of this kind in the industry generally do not remain open for a year with no further contact between the parties. If no other correspondence or action was taken by either party between the wholesaler's offer and the online company's purported acceptance, is there an enforceable contract between the parties?

No, because the online company did not accept the offer within a reasonable period of time. firm offer rule: if no time stated, expires after 90 days

At a local market, a buyer offered to purchase a large, framed mirror from an artist for $1,000. The artist stated that he wanted to wait to see how many people went through the market that day before he decided on whether he would accept the offer. The next morning, the buyer returned to the market only to learn that the mirror had been dropped and broken. Because the frame of the mirror was still in good condition, the buyer wrote a check for $500 and gave it to the artist without further remark. The artist loaded the frame into the buyer's vehicle and demanded the remaining $500 offered the day before. Is the buyer liable for the remaining $500?

No, because the original offer terminated. offer: an offer involving subject matter that is destroyed is terminated.

While attending a rodeo on August 20, a hat maker entered into a valid, written agreement with the rodeo manager to make 500 leather cowboy hats for an upcoming rodeo event at a price of $75 per hat. Per the agreement, the rodeo manager agreed to pay one-fourth of the total purchase price to a tannery owner to whom the hat maker owed a debt for a previous leather order. On August 25, the hat maker changed his mind about paying one-fourth of the purchase price to the tannery owner. The hat maker and rodeo manager subsequently executed a valid modification of the original agreement. The rodeo manager's brother was also present on August 20 when the original agreement was executed, but he did not know about the August 25 modification of the agreement to no longer pay the tannery owner. On August 30, the brother, who was friends with the tannery owner, called and told him that his debt from the hat maker would finally be paid off. However, the rodeo manager refused to pay one-fourth of the purchase price to the tannery owner. If the tannery owner sues the rodeo manager for one-fourth of the purchase price, will he recover?

No, because the tannery owner did not rely on the August 20 agreement between the hat maker and the rodeo manager. (TO was an intended (creditor) beneficiary but didn't know about the agreement until after it had been changed. If it stayed the same he could sue.) creditor beneficiary: when promisee strikes a deal with promisor in order to repay some earlier debt to third party

A mechanic and a farmer contracted in writing for the repair of the farmer's tractor, with a payment of $2,000 due upon completion. The mechanic called the farmer on April 15 to inform the farmer that the work was complete. When the farmer went to pick up the tractor the next day, he told the mechanic that due to an unforeseen rise in feed costs, he couldn't pay the full contract price. The farmer paid the mechanic the first $1,000, and the mechanic told the farmer that, if the farmer promised to pay the remainder by June 1, then the mechanic would not sue to recover the remaining $1,000. The farmer orally agreed. On May 1, the mechanic sued the farmer for the unpaid $1,000, and the farmer filed a motion to dismiss. Should the court grant the motion to dismiss?

No, because there is no consideration to support the mechanic's promise not to sue. (the money already paid was not consideration, and the money was liquidated so no more consideration) consideration: required for a settlement of debts to be enforceable

A junior associate at a law firm, prone to compulsive gambling and riddled with law school debt, filed a civil suit against his law firm for discrimination after having been passed over for an expected promotion. In actuality, the junior associate was never up for the promotion due to poor work performance, but the firm did not want the case to go to trial. The firm offered the associate $10,000 to drop the case and enter a settlement agreement. The associate agreed, and they validly executed a settlement agreement. However, the senior partner changed his mind and the firm later repudiated the agreement. The associate then filed suit against the firm for breach of contract. At trial, it was established that the firm did not discriminate against the associate, and that his suit was motivated by his need to pay his debts. Is the associate entitled to recover under the settlement agreement?

No, because there was a lack of consideration for the settlement agreement. (since they knew they were going to win if it went to trial) consideration: needed for a valid contract, and a promise not to bring an action is not consideration when one party has a good faith belief that nothing will come of an action

A homeowner entered into a contract with a landscaper. The contract specified that the homeowner would pay the landscaper $10,000 upon completion of a list of projects. The landscaper performed the work while the homeowner was away on vacation. When the landscaper sought payment, the homeowner refused, noting that a tree had not been trimmed as required by the contract. The landscaper responded that, since he would now have to forego other work in order to trim the tree, he would do it but only if the homeowner agreed to pay him a total of $10,500 for his services. The homeowner, desperate to have the work completed, agreed. Once the work was completed, however, the homeowner gave the landscaper a check for $10,000, and refused to pay more. The landscaper sued for breach of contract. Is the landscaper likely to succeed in his claim?

No, because there was no consideration for the promise to pay $10,500 and no unanticipated circumstances arose. (He already had a duty to perform so should have.) preexisting legal duty: at C/L does not qualify as consideration and since this is a k under C/L, needed additional contract. exceptions: change in performance; a third party promising to pay; or unforeseen difficulties that would excuse performance NOTE: under UCC, would only need good faith

A motorcycle enthusiast purchased a custom-made motorcycle from a boutique motorcycle shop. The enthusiast paid $5,000 for the motorcycle, which was to be delivered to him in one month. One week after he purchased the motorcycle, the enthusiast decided that he no longer wanted the motorcycle. He called up his best friend and told him that he would give him the motorcycle when it was finished. The enthusiast also instructed the shop to deliver the motorcycle to his friend. Three weeks later, the shop delivered the motorcycle to the enthusiast. The enthusiast accepted the motorcycle without protest. When the friend found out, he sued the shop for its failure to deliver the motorcycle to him. Will the friend succeed?

No, because there was no consideration to support the enthusiast's assignment of the motorcycle to his friend. (the enthusiast accepted the bike so that revoked the assignment) assignment: if an assignment is not supported by consideration, it is revocable (without estoppel).

A company leased office space in a downtown building and subsequently entered into a written contract with a supplier to purchase furniture for the office. Among the provisions in the contract was the following: "This document contains the entire and final agreement of the parties. It supersedes any prior agreements, understandings, or negotiations, whether written or oral." A dispute subsequently arose over the tables and desks delivered by the supplier. The contract called for "cherry tables and desks" of designated designs. The company contended that the word "cherry" indicated the type of wood that the tables and desks were made of. The supplier, having delivered tables and desks made of a less expensive wood and finished with a cherry veneer, asserted that the use of the word "cherry" referred to the appearance of these items and did not require that the furniture be made solely of cherry wood. In the litigation of this dispute, the company sought to introduce a statement made by the supplier during negotiations that the tables and desks were of "solid-wood construction." In determining whether the contract was a total integration of the agreement between the company and the supplier, which of the following rules should the court apply?

The "certainly included" rule certainly included rule (UCC): in determining whether a contract constitutes a total integration of the parties' agreement, should generally treat a written agreement as only a partial integration of the parties' agreement unless the court can conclude that the parties' "certainly would" have included the term in the written agreement. NOTE: C/L uses naturally omitted rule

On May 10, the coach of a youth league baseball team sent a letter to a supplier asking the supplier to promptly ship 20 red jerseys to him. On May 15, the supplier received this letter and sent the coach a reply letter accepting the offer. On May 16, the supplier realized that he had no red jerseys with which to fill the order, and sends the coach 20 blue jerseys with a note that the blue jerseys were tendered as an accommodation. The coach received the jerseys and accommodation note on May 18, and received the supplier's acceptance letter on May 19. On May 20, which of the following is a correct statement of the parties' legal rights and duties?

The coach can either accept or reject the blue jerseys and, in either event, recover damages, if any, for breach of contract. (The supplier accepted the offer. Otherwise, it would have been a counteroffer that coach could accept or reject.) Acceptance: the acceptance was effective when mailed (mailbox rule) so supplier gave nonconforming goods.

A homeowner entered into a written contract with a contractor to construct an elaborate tree house among the large trees located in the homeowner's backyard. After commencing construction of the tree house, the contractor discovered that one of the trees intended to be used as support for the tree house had a relatively common fungal infection in its core that would cause the strength of the tree's branches to falter if left untreated. Neither the homeowner nor the contractor had knowledge of the fungal infection when they entered into the contract, but the contractor knew that such infections were common in the area and did not request an inspection of the trees before entering the contract. The contractor also knew that treatment was available at a high cost, but even after treatment, he would need to create additional heavy-load bearing supports for the tree at a substantial cost. When the contractor informed the homeowner that he would not perform under the contract unless the homeowner provided at least 75% of the additional costs needed to make the structure safe, the homeowner refused to pay the additional amount. The homeowner then sued the contractor for breach of contract. What is the likely result?

The homeowner wins, because the contractor assumed the risk of the fungal infection. (Contractor knew it could be there but assumed the risk of the tree having an infection- it was foreseeable.) impracticability: an unforeseen event must occur and the nonoccurence of that event must be a basic assumption on the contract.

A licensing agreement provided that a manufacturer could use an inventor's patent in manufacturing its products for ten years. Immediately thereafter, the inventor assigned his rights to receive payments pursuant to the licensing agreement to a corporation in which he was the controlling shareholder. The inventor did not receive compensation for this assignment. The inventor, upon his death five years later, devised his stock in the corporation to his daughter, and all of his remaining property to his son. To whom should the manufacturer make its payments under the licensing agreement?

The inventor's son (assignment died but not contract so money goes to son because it is his property) gratuitous assignment of k rights: terminates with death of assignor.

A man was moving to another state and decided that he wanted to give away some of his belongings. He knew his brother had always expressed interest in an antique desk. The man called his brother and said, "I'm going to be moving in two weeks. I would like to give you the antique desk as a gift. I'll drop it off at your house on my way out of town." The brother told the man that he was very grateful for the gift and was looking forward to having the desk in his home office. The brother immediately disposed of his old desk and made room for the antique one. A couple of days later, an appraiser, who was a friend of the man, visited the man's house for dinner. While at his house, he saw the antique desk and informed the man that it was worth well over $20,000. The man decided to keep the desk and did not drop it off at the brother's house on his way out of town. The brother brought suit against the man to recover the antique desk. If the court finds in favor of the man on these facts, what is the most likely reason?

The man's refusal to give the piece of furniture did not cause injustice. (may not actually be true but to have found for the man this is why) promissory estoppel: a promise to make a gift is enforceable if (1) the donor should reasonably expect the promise to induce detrimental reliance by the donee; (2) the promise actually induces such reliance; and (3) the failure to enforce the promise will cause injustice.

A fashion designer who created clothing primarily for active wear decided to branch out into designing and selling sneakers for women. She contacted a sneaker manufacturer to make them for her. After negotiating the price and other terms, the two parties entered into a written contract whereby the manufacturer was to make the sneakers to the exact specifications of the designer. The manufacturer was to deliver the sneakers by May 15 on the condition that the designer sent the style specifications to the manufacturer by February 15. One day before the style specifications were due to the manufacturer, the designer was invited to showcase some of her clothing on a popular women's talk show. The date that the designer was to be on the show was February 17. The designer accepted the invitation, and spent the next three days working to prepare for her appearance on the talk show. As a result, she was unable send the style specifications for the sneakers to the manufacturer until February 27. The designer did not notify the manufacturer of the delay, and simply submitted the style specifications late. As a result, the manufacturer did not deliver the sneakers to the designer until June 1. Of the statements below, which accurately describes the legal obligations of the two parties at this time?

The manufacturer was in breach of the contract because the sneakers were not delivered to the designer by May 15. condition: can be waived by words or conduct. If a party chooses to continue performance despite the nonoccurence of a condition, they have waived the condition and must fully perform.

On January 5, a buyer and seller contracted for the delivery of 100 widgets on February 20. The agreement was made in a writing signed by both parties and provided that the buyer would pay the contract price of $1,000 upon delivery. On February 3, the buyer and seller orally agreed to postpone delivery until March 1. However, when the widgets arrived on March 1, the buyer refused to accept or pay for the widgets. If the seller sues the buyer for breach of contract, who is most likely to succeed in the action?

The seller, because the oral agreement on February 3 waived the February 20 delivery date. (buyer agreed to waive delivery date condition, on which seller relied) condition: a party whose duty is subject to one can waive it by words or conduct

A private port authority contracted with a crane operating company to assist with loading and unloading containers from ships docked at the port. One of the company's cranes was defectively manufactured. Due to this defect, a container was dropped. The container tumbled down a hill, crashed through a fence, and struck a passerby. The passerby sued the port authority alleging negligence. Neither the passerby nor the port authority notified the crane operating company of this lawsuit. The port authority settled its claim with the passerby before trial for a reasonable amount. The port authority seeks to recover the cost of the settlement from the crane operating company under a breach of contract action. Of the following, which would be the crane operating company's best defense?

The settlement was not reasonably foreseeable at the time the contract was formed. (it could be reasonably foreseeable but this is the only answer choice that protects the crane company from contractual liability) unforeseeable consequential damages: not recoverable unless the breaching party had some reason to know about the possibility of special damages at the time of contracting

A maker of hand-woven rugs contracted with a supplier to provide yarn made from sheep's wool. The written contract specified that, for four years, the supplier would provide the rug maker with 2,000 spools of yarn made from 100% sheep's wool per month, at $10 per spool, for a total of $20,000. Two years into the contract, the supplier sent 2,000 spools of yarn to the rug maker made from 90% sheep's wool and 10% synthetic fiber. The rug maker sent a check to the supplier for $15,000 for the shipment, and added a clear note on the check stating that the payment was in full for the shipment, but was $5,000 less due to the synthetic fiber in the yarn. The supplier promptly deposited the check, and then four months later filed suit against the rug maker for the remaining $5,000. The supplier has submitted evidence of the written contract, and the rug maker has submitted evidence of the deposited check. What is the rug maker's best defense in this situation?

The supplier deposited the check for $5,000 less than the contract price, thereby discharging the rug maker of any further duty to pay the remaining amount for that month's shipment. (Because the payment was for a different material, it is an accord and not modification.) accord and satisfaction: performance is competed by a difference performance (accord) and the initial performance obligation is the satisfaction NOTE: if you can do something else, it is an accord and satisfaction. if not, it is modification.

At the auction of a rare automobile that had been owned by an infamous criminal, two individuals, a museum owner and a private collector, became involved in a bidding war. After a protracted exchange of bids, the museum owner declined the auctioneer's invitation to bid a higher amount than the private collector had. However, as the auctioneer was bringing down his hammer to announce the sale of the automobile to the private collector, the museum owner called out a higher bid before the hammer struck the sounding block on the auctioneer's desk. The auctioneer acknowledged the museum owner's bid and called for other bids. A third party placed a bid, which unmatched by either the museum owner or the private collector, was subsequently accepted by the auctioneer as the winning bid. The museum owner and private collector challenged the third party's ownership of the automobile. Who is the rightful owner of the automobile?

The third party. bid: when a bid is made contemporaneously with the falling of the hammer, the auctioneer may, at his discretion, treat the bid as continuing the bidding process or declare the sale completed at the fall of the hammer.

A bicycle vendor contracted with a supplier to purchase 60 identical helmets to be delivered in six monthly shipments of 10 helmets each. The first four shipments arrived in perfect condition. Upon receiving each shipment, the vendor accepted the helmets and made a payment to the supplier for one-sixth of the total price under the contract. The fifth shipment arrived with only four helmets and a note from the supplier that read as follows: "Six of the helmets in this shipment were damaged when we received them from the manufacturer. We will deliver six replacement helmets within two business days." The four helmets received were in perfect condition, and the vendor has an adequate supply of helmets remaining to prevent any loss of sales in the next two business days. Which of the following is true regarding the vendor's rights under the contract?

The vendor must accept the four helmets and is not entitled to cancel the rest of the contract. installment contract: buyer can only reject nonconforming goods if the nonconformity substantially impairs the value of that shipment to the buyer and cannot be cured

A jeweler who specialized in engagement rings assisted a man who was trying to pick out the perfect engagement ring. The man was inexperienced with the various cuts of diamonds and types of ring settings. Over the course of a few weeks, the jeweler and the man looked at all of the ring styles and discussed pricing based on the man's budget of $5,000. The man finally settled upon a square cut diamond with a prong setting that was priced at $5,500. The man initially offered the jeweler $4,500 for the ring. While the man and the jeweler were negotiating the price, the jeweler received a phone call regarding a family emergency. The jeweler told the man that he would email him an offer in the evening, and if they could "meet halfway," the jeweler would sell the ring to the man. The man agreed. That evening, both the jeweler and the man received emails from one another at the same time. The jeweler's email contained an offer to sell the ring for $5,000, and the man's email contained an offer to buy the ring for $5,000. Both emails (i) specified the same style of ring that the two parties had discussed earlier that day, (ii) required payment upon receipt of the ring in two weeks, and (iii) were signed with an electronic signature. Based upon their earlier discussions and the jeweler's email offer to sell the ring to him for $5,000, the man did not look for an engagement ring at any other jewelry store. When the man showed up two weeks later to pick up and pay for the ring, the jeweler denied that they had a binding contract and would not sell the ring. If the man sues the jeweler for breach of contract, will he likely succeed?

Yes, because both parties conveyed an intent to contract with one another through prior negotiations and the simultaneous emails. contract (UCC): formed when parties intend to contract, and there is a reasonably certain basis for giving a remedy

At the beginning of an auction, which consists of 25 lots of goods owned by the same person, the auctioneer announced that the right of the seller to withdraw goods was not reserved. After the sales of two lots were completed but prior to the auctioneer's call for bids on the third lot, the owner sought to withdraw the third lot from the auction. Can the owner properly withdraw the third lot?

Yes, because the auctioneer has not called for bids on the third lot. auctions: in a no reserve auction, after the auctioneer calls for bids in a lot, the goods cannot be withdrawn unless no bid is received within a reasonable time. NOTE: if this was a sale with reserve, the seller could withdraw until the completion of the sale of the third lot.

A farmer owned a tractor and offered his brother the chance to purchase it. He stated that his brother had to decide whether he wanted to purchase the tractor within "six months of today's date." The brother paid him $200 on that day to keep the option open. The agreement was reduced to writing, signed by both men, and dated May 15. The farmer died on July 1. On August 15, the brother notified the executor of the farmer's estate that he wanted to accept the offer to buy the tractor. The executor refused to sell, and the brother filed suit for the enforcement of the contract. Is the brother likely to prevail?

Yes, because the brother paid $200 to keep the option open. (firm offer rule does not apply because there was consideration paid) valid options: do not terminate upon death of offeror if consideration is paid to keep it open.

In June, a local chef learned of a new business that opened in the area. Hoping to attract the business as a new client, the chef sent the business an offer consisting of a catalog of menus available through his catering service and a form letter he sent to all new businesses in the area. The letter was signed by the chef and included the following language: "Welcome! I specialize in creating delicious meals with local and organic ingredients, and I would be honored to be your catering source for all your business, promotional, and personal needs! To welcome you to the community, I would like to offer you a 25% discount off of my catalog prices on any three-course meal order, for up to 100 people, submitted this calendar year. I hope to hear from you soon and I look forward to doing business with you!" No communication occurred between the parties until the end of November, when the business faxed an order form to the chef requesting a catered meal for 60 people at a promotional event for a 25% discount. The court has found that both parties are merchants with respect to this transaction. Did the business's faxed order create an enforceable contract at a 25% discount?

Yes, because the chef had not revoked the offer before the end of the calendar year. (the offer was still open, but it was no longer a firm offer) firm offer rule: merchants can create a firm offer, but it cannot extend past 90 days without consideration.

A lawn service company agreed in writing to purchase from a supplier all of its requirements for lawn care products during the next calendar year. In the writing, the supplier agreed to fulfill those requirements and to give the company a 10% discount off its published prices, but it reserved the right to increase the published prices during the year. After the parties had performed under the agreement for three months, the supplier notified the company that it would no longer give the company the 10% discount off the published prices. Does the company have a viable claim against the supplier for breach of contract?

Yes, because the company's agreement to buy all of its lawn care products from the supplier made the agreement enforceable. acceptance: once accepted, a party does not reserve the right to discontinue a promise in the contract

A widow offered to sell her small business, together with all of the business's assets, to a non-profit organization. The organization accepted, and on June 1, they signed and executed a contract providing for the sale of the business for $25,000 at the end of the month. When the organization's agent signed the contract, she orally informed the widow that the organization's duty to purchase the business was conditioned on obtaining approval from a local zoning board to convert the business's primary office into an affordable healthcare clinic. At the end of the month, the widow refused to honor the contract because the organization neglected to request the necessary approval from the zoning board. The organization sued the widow for breach of contract. The organization presented clear evidence that they had the necessary funds to perform on the contract at the end of the month, and that the zoning board would have routinely approved the organization's plans for the office. Is the organization likely to prevail in its action against the widow?

Yes, because the condition of approval by the zoning board can and has been waived by the organization. (they created the condition so they can waive it) condition: a party whose duty is subject to the condition can waive the condition by words or conduct

A manufacturer of t-shirts contracted with a new clothing store to sell the store 1,000 t-shirts per month for a period of two years. The clothing store's signature color for their clothing was an orange-tinted red color, called coquelicot, which is very difficult to replicate on a consistent basis. The contract specified that any t-shirts that were not coquelicot could be returned, but it was silent with regard to the return of any t-shirts for other reasons. One year into the contract, the store decided to switch to coquelicot-colored baseball hats instead of t-shirts. The store returned the most recent shipment of t-shirts to the manufacturer and demanded a refund. The manufacturer refused to grant the refund, and the store sued the manufacturer for damages. At trial, the manufacturer introduced the contract, which clearly stated that t-shirts that were not coquelicot could be returned. The store then attempted to introduce evidence that it had returned t-shirts for other reasons to the manufacturer in the past and received a refund. Is this evidence admissible?

Yes, because the evidence is relevant to show that the manufacturer had accepted the return of coquelicot-colored t-shirts in the past. course of performance evidence: admitted under the UCC to explain/supplement a contract course of dealing: conduct between the parties based on another contractual relationship.

A charity, seeking to raise funds, held a legally permitted raffle in which the prize is a new automobile. A week before the raffle, the organizer of the raffle contacted a friend who had purchased a raffle ticket. The organizer promised to ensure that the friend would win the raffle if the friend gave the organizer $1,000. The friend agreed and gave the organizer $1,000. On the day before the raffle, the friend began to feel guilty. He went to the organizer, renounced the scheme, and demanded his $1,000 back. The organizer refused. The next day at the raffle, the automobile was awarded to someone else. The applicable jurisdiction makes it a crime to fraudulently conduct a contest, lottery, or prize drawing. Can the friend successfully bring a legal action against the organizer?

Yes, because the friend is entitled to a return of the $1,000 paid to the organizer. (since he pulled out before it happened) illegal contracts: not enforceable, but may be entitled to restitution if no serious misconduct

A woman was interested in creating custom wedding invitations for her upcoming wedding and entered into a written contract with a graphic designer for the production of 400 invitations. Three weeks after the contract was executed, the graphic designer informed the woman that he had sold his design shop and transferred all of his current contracts to another artist of equal skill and popularity. Reluctantly, the woman agreed to performance by the other artist. When she received the finished product, the woman discovered that the date of the wedding was incorrect and her fiancé's name was spelled incorrectly. The woman brought an action for breach of contract against the graphic designer. Is the woman likely to prevail in her action for breach of contract against the graphic designer?

Yes, because the graphic designer remained liable under the contract. delegation: when delegated, the delegator is not released from liability NOTE: A novation is the substitution of a new contract for an old one when the original obligor is released from his promises under the original agreement. A novation may be express or implied after delegation if (i) the original obligor repudiates liability to the original promisee and (ii) the obligee subsequently accepts performance of the original agreement from the delegate without reserving rights against the obligor. Merely consenting to a delegation does not create a novation.

A sister convinced her brother that they should open a small coffee shop. Their friend, a guitarist, suggested bringing his band to play live music and attract customers. He did not request any payment, saying the publicity would be good for the band. The siblings agreed, and the band started playing at the shop weekly. The coffee shop became a success, in no small part due to the band's performances. When a businessperson offered to buy the coffee shop from the siblings, they orally agreed to each pay $10,000 out of their share of the sale proceeds to the guitarist for his help in making the shop popular. The sister told the guitarist about their agreement. He was so delighted with it that he put a down payment on a new car. By the time the sale of the business was finalized, the brother had encountered financial difficulties. After the sale, the siblings signed a written contract stating that the sister would pay the guitarist $10,000 and her brother would pay him $5,000. If, after the sale, the brother pays the guitarist only $5,000, will he have a valid basis for action against the brother for another $5,000?

Yes, because the guitarist's reliance on the promised payment prevented the siblings from changing the obligations of their oral contract. (guitarist is intended beneficiary of agreement and his rights vested when he put the down payment on car (reliance)). intended beneficiary: have right to sue and will not lose enforcement rights if the vest: they detrimentally rely, they manifest assent; or they filed a lawsuit.

An organic produce supplier sent her produce catalog to a local restaurant on April 15. The catalog came with a signed letter stating: "I will supply you with as many of the items in the enclosed catalog as you order before August 1 of this year, and I assure you that this offer and the prices provided in the catalog will remain firm until August." The supplier received no reply. In June, the supplier's tomato crop was infested with a fungus that decimated her harvest. She was left with half the tomatoes she had expected to harvest. On June 15, the supplier sent the restaurant a signed letter stating that the price for the tomato crop was now twice the price listed in the catalog. On July 1, the restaurant sent the supplier an order for tomatoes. However, the restaurant demanded the tomatoes at the price listed in the catalog. Has a contract been formed for the sale of the tomatoes to the restaurant at the catalog price?

Yes, because the original offer was irrevocable on June 15 and on July 1. (after July 15 it was bad, reasonable time doesn't matter) firm offer rule: applies for 90 days

On November 1, the owner of a yacht posted a flier at a local coffee shop reading "Yacht for Sale: Make me an offer!" The flier also included the owner's phone number. A buyer called the owner on November 3 to ask how much the owner wanted for the yacht. The owner said, "Well, I'd hate to part with it for less than $55,000, but if you can pay me $50,000 by November 20, I suppose I'd sell it to you. I'll hold onto the yacht for you until then." Elated, the buyer took steps to obtain a loan by November 20. On November 15, a second buyer called the owner and offered to buy the yacht for $60,000. The owner immediately accepted, and the second buyer picked up the yacht the next day. On November 20, having obtained a loan, the first buyer visited the owner with a check for $50,000. The first buyer then learned the owner had already sold the yacht. Can the first buyer bring a successful suit against the owner for breach of contract?

Yes, because the owner's offer to the first buyer was still outstanding on November 20. (the owner never terminated the offer) offer: can be accepted any time before it is terminated. NOTE: not constructive revocation because buyer did not know about it.

A woman sent an offer to sell her office printer to her friend for $450. In her offer, the woman mentioned that an acceptance could be mailed to her business address, and that the friend should let her know within the next couple of weeks whether she was interested. The friend needed an office printer, so she immediately accepted the woman's offer by mailing a letter to the woman's home address. The woman only checked her mailbox at home once a week because she received so much junk mail, so she did not see the acceptance letter. Thinking that her friend was not interested, the woman sold her office printer to a different person. The next day, the friend came to the woman's house with a check for $450. The woman told the friend she had already sold the office printer. Will the friend succeed in an action for breach of contract?

Yes, because the woman did not specify that mailing an acceptance to her business address was the only mode of acceptance. (friend didn't say it HAD to be at work so she did not specify how acceptance must be given) acceptance of an offer: offeror can dictate terms of acceptance, and if none, then acceptance must be reasonable