Examples BLAW

a statement such as "This car has been driven only 20,000 miles" is

an express warranty because it is a statement of fact.

A model of an oil-drilling rig or a sample of wheat taken from a silo creates

an express warranty.

A used car salesperson says, "This is the best used car available in town," but this statement does not create an express warranty because it is

an opinion and mere puffing

If a contract specifies "F.A.S. The Gargoyle, New Orleans," and the goods are to be shipped to Anchorage, Alaska, the seller

bears the expense and risk of loss until it delivers the goods into the hands of the vessel The Gargoyle in New Orleans. Once this is done, the buyer pays the shipping costs, and the risk of loss passes to the buyer during transport to Anchorage, Alaska.

Promises are statements such as

"This car will go 100 miles per hour" or "This house paint will last at least five years."

A used car salesperson warrants that a used car has been driven only 20,000 miles. If true, that would make the car worth $20,000. The salesperson gives the buyer a "good deal" and sells the car for $16,000. Unfortunately, the car was worth only $10,000 because it was actually driven 100,000 miles. The buyer discovers the breach of warranty and sues the salesperson for damages. The buyer can recover

$10,000 ($20,000 warranted value minus $10,000 actual value). The contract price ($16,000) is irrelevant to this computation.

Ferguson v. Carnes

A promise, no matter how slight, can constitute sufficient consideration so long as a party agrees to do something that they are not bound to do. The oral agreement between Ferguson and Carnes did not lack consideration. Essentially, the terms of the oral agreement delineated mutual promises. The consideration lies in the fact that each gave up the possibility of inheriting more than the other in return for insuring that neither would be disinherited in whole or part.

RXZ Corporation contracts to have Ace Construction Company build a factory building for $1,200,000. It will cost Ace $800,000 in materials and labor to build the factory for RXZ. If RXZ Corporation breaches the contract before construction begins,

Ace can recover $400,000 in "lost profits" from RXZ as compensatory damages.

Albert purchases a refrigerator on credit from Appliance World, an appliance store. The store takes back a security interest in the refrigerator. Before completely paying off the refrigerator, Albert sells it to Monica for cash. Monica has no knowledge of the store's security interest in the refrigerator. After Albert misses several payments, the appliance store discovers that Monica has the refrigerator and repossesses the refrigerator. Monica can recover against

Albert, based on his breach of warranty of no security interests in the goods

Andrew is employed as a chief financial officer of Financial Company in New York City for a salary of $200,000 per year on a 3-year contract. His employer terminates Andrew with 2 years left on the contract. Andrew accepts employment as a financial analyst at a new employer that pays $150,000 per year.

Andrew can sue his prior employer Financial Company and recover $100,000 ($50,000 difference in salary per year for 2 years).

Ashley, who owns a women's retail store, contracts to purchase a lot of high-fashion blue jeans from a manufacturer for $75,000. At the time of performance, Ashley tenders the $75,000.

Ashley has performed her obligation under the contract once she tenders the $75,000 to the manufacturer. The manufacturer tenders the jeans to Ashley when required to do so and Ashley accepts the jeans. There is a complete performance of the contract.

State law provides that legal services can be provided only by lawyers who have graduated from law school and passed the appropriate bar exam. Nevertheless, suppose Marie, a first-year law student, agrees to draft a will for Randy for a $450 fee.

Because Marie is not licensed to provide legal services, she has violated a regulatory statute. She cannot enforce the contract and recover payment from Randy. Randy, even though receiving services by having his will drafted, does not have to pay Marie $450.

Mr. Jones, the CEO of Ace Corporation, wants to sell a manufacturing division to Baker Corporation. He puts the offer in writing, but he does not send it. Mr. Griswald, the CFO of Baker Corporation, visits Mr. Jones and sees the written offer lying on Jones's desk. Griswald tells his CEO about the offer.

Because Mr. Jones never communicated the offer to Baker Corporation, there is no offer to be accepted.

Barney hires Cynthia, a licensed real estate broker, to sell his house.

Because a contract to sell real estate must be in writing pursuant to the Statute of Frauds, the equal dignity rule requires that the real estate agent's contract be in writing as well. Some state Statutes of Frauds expressly state that the real estate broker and agents' contracts must be in writing.

A lessor and lessee enter into an oral lease contract for the lease of goods at a rent of $450. Subsequently, the contract is modified by raising the rent to $550.

Because the modified contract rent is more than $499.99, the contract comes under the UCC Statute of Frauds, and the modification must be in writing to be enforceable.

A buyer contracts to purchase a sofa from a seller. The seller agrees to deliver the sofa to the buyer's home. The truck delivering the sofa is hit by an automobile, and the sofa is totally destroyed.

Because the risk of loss has not passed to the buyer, the contract is voided, and the buyer does not have to pay for the sofa.

Entel Corporation contracts to have the Beta Construction Company build a factory building for Entel for $1,200,000. It will cost Beta Construction Company $800,000 to construct the building. Thus, Beta Corporation will make $400,000 profit on the contract. Beta begins construction and has spent $300,000 on materials and labor before Entel breaches the contract by terminating Beta.

Beta can recover $700,000, which is comprised of $400,000 lost profits ($1,200,000 − $800,000) plus $300,000 expended on materials and labor. The $700,000 of compensatory damages will make Beta Construction Company "whole."

Henrietta, an heiress worth millions of dollars, signs a will, leaving all her property to her granddaughter Brittany. Brittany has only an expected future right, not a current right, to the money.

Brittany cannot lawfully assign her expected future right to receive her inheritance. The assignment would be invalid.

Suppose City Bank offers to loan ABC Corporation $5 million at an 18 percent interest rate. Prior to ABC's acceptance of the offer, the state legislature enacts a statute that sets a usury interest rate of 12 percent.

City Bank's offer to ABC Corporation is automatically terminated when the usury statute became effective.

Ethel is president and sole shareholder of Computer Corporation, Inc. Assume (1) that the corporation borrows $100,000 from CityBank for working capital and (2) that Ethel orally guarantees to repay the loan if the corporation fails to pay it.

CityBank can enforce the oral guaranty contract against Ethel if the corporation does not meet its obligation because the main purpose of the loan was to benefit her as the sole shareholder of the corporation.

Donald is severely injured by Alice in an automobile accident caused by Alice's negligence. Donald can sue Alice for the tort of negligence to recover monetary damages for his injuries.

Donald's right to sue Alice is a personal right that cannot be assigned to another person.

Ford Motor Company v. Ghreiwati Auto

Ford argues that the executive order renders performance of the agreement illegal, thereby permitting Ford to immediately terminate Auto's dealership agreement and discharges Ford from any duties under the agreement. The Court agrees with Ford and its arguments. A contract that violates an executive order or law is unlawful and discharges performance of the contract.

DeCormier v. Harley-Davidson Motor Company Group, Inc.

Harley-Davidson and Gateway asserted that, prior to taking the course, DeCormier signed an agreement releasing them from any future claim of negligence arising out of DeCormier's participation in the program. Harley-Davidson and Gateway claimed the release barred DeCormier's action. While exculpatory agreements will be strictly construed, this court will enforce exculpatory agreements to protect a party from liability for their own negligence. Therefore, Harley-Davidson and Gateway were entitled to judgment on their affirmative defense of release.

Fei says to Harold, "I will sell you my house for $700,000." Harold says, "I think $700,000 is too high; I will pay you $600,000."

Harold has made a counteroffer. Fei's original offer is terminated, and Harold's counteroffer is a new offer that Fei is free to accept or reject.

Henry owns a computer on which he sends and receives email. Harriet learns Henry's access code to his email account. Harriet opens Henry's email and reads his emails.

Harriet has violated the ECPA

Carpet Store purchases hundreds of oriental rugs from manufacturers that it sells to customers in its store. Mary contracts to purchase an oriental rug for $3,000 from Carpet Store. This rug cost Carpet Store $1,200. Mary defaults and does not take possession of the rug. Carpet Store sells the rug to another buyer for $3,000.

Here, Carpet Store can recover lost profits from Mary because the buyer of the rug that Mary did not buy might have purchased a different rug from Carpet Store and, therefore, Carpet Store would have had two sales if Mary had not breached the sales contract. Therefore, Carpet Store can recover $1,800 of lost profits from Mary.

Ethenol Corporation contracts to have the Sherry Construction Company build a factory building for Ethenol for $1,200,000. Just before Sherry Construction Company is to begin work, it breaches the contract by withdrawing from the project. Ethenol seeks new bids, and the lowest bid to construct the building is $1,700,000.

Here, Ethenol can recover $500,000 in compensatory damages from Sherry Construction Company ($1,700,000 [new contract price] − $1,200,000 [Sherry Construction's original price]).

University contracts to purchase 1,000 electronic tablets from Orange Store for $300 each to be used by its faculty members. Orange Store breaches the contract and does not deliver the tablets to University. University covers and contracts with Apple Store to purchase 1,000 tablets at the price of $400 per tablet.

Here, University may recover $100,000 from Orange Store ($400 cover price − $300 contract price = $100 × 1,000 tablets).

John works for the National Paper Corporation. In his job, he has access to a computer on which to conduct work for his employer. John receives and sends email that is work-related. John also has access on his computer to the internet. The National Paper Corporation investigates what John has been viewing and what he has stored on his computer. During its investigation, the National Paper Corporation discovers that John has been viewing and storing child pornography images. The National Paper Corporation fires John for his conduct because it violates company policy of which John is aware.

Here, the National Paper Company did not violate ECPA

A concert hall contracts with a famous rap artist to hold a series of concerts. Later, the rap artist refuses to perform.

Here, the concert hall cannot require the rap artist to perform because it is a personal service contract. The concert hall could, however, sue to recover any payments it has made to the rap artist and recover any damages that it may have suffered because of the breach.

In The Matter of Pilgrim's Pride Corporation

Here, the contracts between PPC and the growers bar the growers' claims because the contracts and the claims cover the same subject matter: the duration of the agreements. The essence of PPC's alleged oral representations—for example, to commit to the growers "for the long haul"—is the promise of a long-term relationship. The plain language of the contracts, however, specifies and is sure that the agreements between PPC and the growers are to "continue on a flock to flock basis"—a time-period spanning between four and nine weeks. In sum, the contracts between PPC and the growers bar PPC's oral promises because the contracts address the same subject matter as the growers' claims.

Jim voluntarily enrolls in a parachute jump course and signs a contract containing an exculpatory clause that relieves the parachute center of liability for ordinary negligence. After receiving proper instruction, he jumps from an airplane. Unfortunately, Jim is injured when he could not steer his parachute toward the target area. He sues the parachute center for damages.

Here, the court would usually enforce the exculpatory clause, reasoning that parachute jumping was a voluntary choice and did not involve an essential service.

A city law imposes a legal duty on homeowners to keep the sidewalk in front of their house repaired. The sidewalk in front of a homeowner's house is damaged by tree roots. The homeowner hires a contractor, who is an independent contractor, to repair the damage.

Here, the homeowner is the delegator and the contractor is the delegatee.

A lessor orally contracts to lease 20 automobiles to a lessee. The lessee accepts the first eight automobiles tendered by the lessor. This action is part acceptance. The lessee refuses to take delivery of the remaining 12 automobiles.

Here, the lessee must pay for the eight automobiles it originally received and accepted. The lessee does not have to accept or pay for the remaining 12 automobiles.

A retailer enters into a contract to license computer software from a technology company for $300,000. This software is to be used to keep track of inventory, accounts receivable, and other financial data. After the software is installed, the computer system works but not as well as promised. The retailer refuses to pay the full amount of the contract. To settle the dispute, the parties agree that $200,000 is to be paid as full and final payment for the software. The retailer pays the $200,000 as agreed.

Here, the retailer performed the accord, so there is an accord and satisfaction.

Lyle tells Candice that he is forming a partnership to invest in drilling for oil in an oil field and invites her to invest in this venture. There is no oil field, and Lyle intends to use whatever money he receives from Candice for his personal expenses. Candice relies on Lyle's statements and invests $30,000 with Lyle. Lyle absconds with Candice's $30,000 investment.

Here, there has been fraud in the inducement. Candice has been induced to give Lyle $30,000 based on Lyle's misrepresentation of fact. Candice can rescind the contract and recover the money from Lyle, if she can find him and locate his money or property.

Heather brings her professor a grade card to sign. The professor signs the grade card on the front without reading the grade card. On the front, however, are contract terms that transfer all of the professor's property to Heather.

Here, there is fraud in the inception. The contract is void.

Edith is employed by Software Inc., a software company located in the Silicon Valley of California, as a software manager. Her contract is for 3 years at $200,000 per year. If Software Inc. terminates Edith after one year, she is under a duty to mitigate the damages that would be owed to her by Software Inc. If Edith finds a job as a software manager at another software company located in the Silicon Valley for the same salary, she is required to take the job

However, if Edith finds a job at a similar salary as a sales manager in the Silicon Valley, or if she is offered a job as a software manager at the same salary at a software company in Los Angeles, California, or if she is offered a job as a software manager at a company in the Silicon Valley but at a salary of $120,000 per year, she is not required to accept any of these job offers because they are not comparable jobs.

A salesperson at a Lexus dealership offers to sell an automobile to a buyer for $65,000. The buyer replies, "I accept your offer, but I would like to have a satellite radio in the car." The satellite radio is a proposed addition to the contract.

If the salesperson agrees, the contract between the parties consists of the terms of the original offer plus the additional term regarding the satellite radio. If the salesperson rejects the proposed addition, the sales contract consists of the terms of the original offer because the buyer made a definite expression of acceptance.

XYZ Construction Company, a general contractor, requests bids from subcontractors for work to be done on a hospital building that XYZ plans to submit a bid to build. Bert Plumbing Company, a plumbing subcontractor, submits the lowest bid for the plumbing work, and XYZ incorporates Bert's low bid in its own bid for the general contract. Based on all of the subcontractors' bids, XYZ submits the lowest overall bid to build the hospital and is awarded the contract. Bert Plumbing plans to withdraw its bid.

However, the doctrine of promissory estoppel prevents Bert from withdrawing its bid. Since XYZ has been awarded the contract to build the hospital based partially on Bert's Plumbing bid, XYZ can enforce Bert's promise to perform under the doctrine of promissory estoppel. Allowing Bert to withdraw its bid would cause injustice.

Descriptions of goods include terms such as

Idaho potatoes and Michigan cherries.

Donald Trump contracts with Big Apple Construction Co. to have Big Apple construct an office building for $100 million. The architectural plans call for installation of 3-ply windows in the building. Big Apple constructs the building exactly to plan except that it installs 2-ply windows. There has been substantial performance. It would cost $5 million to install the correct windows.

If Big Apple agrees to replace the windows and does so, its performance is elevated to complete performance, and Trump must pay the entire contract price. However, if Trump has to hire someone else to replace the windows, he may deduct this cost of repair of $5 million from the contract price of $100 million and remit the difference of $95 million to Big Apple. If Trump had already paid the $100 million and Big Apple refuses to install the proper windows, Trump can sue and recover the $5 million.

Steel Inc. contracts to buy used manufacturing equipment from United Inc. United Inc. does not show Steel Inc. the invoices for repairs to the equipment even though Steel Inc. has asked to see all of the repair invoices for the equipment. Relying on the knowledge that the equipment is in good condition and has never been repaired, Steel Inc. purchases the equipment.

If Steel Inc. subsequently discovers that a significant repair record has been concealed by United Inc., Steel Inc. can sue United Inc. for fraud by concealment.

Wei, a recent college graduate, offers to purchase a new automobile on credit from a Mercedes-Benz automobile dealership. Because Wei does not have a credit history, the dealer will agree to sell the car to her only if there is a guarantor. If Wei's father signs a written guaranty contract, he becomes responsible for any payments his daughter fails to make.

If Wei's father only orally guaranteed Wei's contract, he would not be bound to the guaranty because it was oral and not in writing.

A state licensing statute requires licensed attorneys to pay an annual $500 renewal fee without requiring continuing education or other new qualifications.

If a lawyer provides legal services but has not paid the annual licensing fee, the lawyer can still recover for her services.

Statutes prohibit police officers from demanding money for investigating and apprehending criminals and prohibit firefighters from demanding payment for fighting fires.

If a person agrees to such a demand, he or she does not have to pay it because public servants are under a preexisting duty to perform their functions.

Michael enters into a written contract with Vivian to sell Vivian his house for $1 million. Closing is to be June 1. These are covenants: Michael owes a duty to deliver the deed to his house to Vivian and Vivian owes a duty to pay $1 million to Michael.

If either of the parties fails to perform, the other party can sue the breaching party for nonperformance of his or her covenant.

Mr. Johnson, who is 70 years old, had a stroke and is partially paralyzed. He is required to use a wheelchair, and he needs constant nursing care. Prior to his stroke, Mr. Johnson had executed a will, leaving his property on his death equally to his 4 grandchildren. Edward, a licensed nurse, is hired to care for Mr. Johnson on a daily basis, and Mr. Johnson relies on Edward's care. Edward works for Mr. Johnson for 2 years before Mr. Johnson passes away. It is later discovered that Mr. Johnson had executed a written contract with Edward 3 months before he died, deeding a valuable piece of real estate to Edward.

If it is shown that Edward has used his dominant and fiduciary position to unduly influence Mr. Johnson to enter into this contract, then the contract is invalid. If no undue influence is shown, the contract with Edward is valid, and Edward will receive the property deeded to him by Mr. Johnson.

A cattle rancher contracts to purchase 3,000 bushels of "corn" from a farmer. The farmer delivers feed corn to the rancher. The rancher rejects this corn and demands delivery of corn that is fit for human consumption.

If the parties did not have any prior course of performance or course of dealing that would indicate otherwise, usage of trade would be used to interpret the word corn. Thus, the delivery of feed corn would be assumed and become part of the contract.

A retail clothing store purchases $5,000 worth of goods on credit from a manufacturer. Payment is due in 120 days. If the manufacturer needs cash before the 120-day period expires, the manufacturer (assignor) can sell its right to collect the money to another party (assignee) for some price, let's say $4,000.

If the retail store is given proper notice of the assignment, it must pay $5,000 to the assignee when the 120-day period is reached.

A contract by Samantha's Club to purchase goods from Kid's Toys Inc. provides that payment is due on delivery of the goods.

In other words, Samantha's Club's duty to pay and Kid's Toys Inc.'s duty to deliver the goods are concurrent conditions. Recovery of damages is available if one party fails to respond to the other party's performance.

Andrea borrows $10,000 from Country Bank with an 8 percent interest rate. The loan is to be repaid in equal monthly installments over a 5-year period. If Andrea defaults on the loan, Country Bank may sue Andrea to collect the unpaid amount of the loan.

Instead, Country Bank may sell (assign) its legal right to a collection agency to recover the money Andrea still owes on the loan. In this case, Country Bank is the assignor, and the collection agency is the assignee.

An automobile owner's advertisement to sell a "previously owned white 2015 Land Rover SUV, vehicle identification number (vin) SALMF13478A315624, $38,000"

Is an offer-- Because the advertisement identifies the exact automobile for sale, the first person to accept the offer owns the automobile

Fresh Foods Company contracts to purchase 10,000 bushels of soybeans from Sunshine Farms for $14 per bushel. Delivery is to occur on August 1. On August 1, the market price of soybeans is $24 per bushel. Sunshine Farms does not deliver the soybeans to Fresh Foods. Fresh Foods decides not to cover and to do without the soybeans. Fresh Foods sues Sunshine for market value minus the contract price damages

It can recover $100,000 ($24 market price − $14 contract price = $10 × 10,000 bushels) plus incidental damages less expenses saved because of Sunshine's breach. Fresh Foods cannot recover consequential damages because it did not attempt to cover.

Big Hotels obtains a loan from City Bank to build an addition to a hotel it owns in Atlanta, Georgia. The parties sign a promissory note requiring Big Hotels (promisor) to pay off the loan in equal monthly installments over a period of 10 years to City Bank (promisee). With six years left before the loan would be paid, Big Hotels sells the hotel to Palace Hotels, another chain of hotels. Palace Hotels (new promisor) agrees with Big Hotels (new promisee) to complete the payments due to City Bank on the loan. If Palace Hotels fails to pay the loan, City Bank has two options:

It can sue Big Hotels on the original promissory note to recover the unpaid loan amount, or it can use its status as a creditor beneficiary to sue and recover the unpaid loan amount from Palace Hotels.

Helen cleans her attic and finds a red and green silkscreen painting of a tomato soup can. She has no use for the painting, so she offers to sell it to Qian for $100. Qian, who thinks that the painting is "cute," accepts the offer and pays Helen $100. It is later discovered that the painting is worth $2 million because it was painted by the famous American pop artist Andy Warhol.Neither party knew this at the time they entered into the contract.

It is a mistake of value. Helen cannot recover the painting.

Nina goes to Life Insurance Company and purchases a $2 million life insurance policy on her life. Nina names her husband John as the beneficiary of the life insurance policy—that is, he is to be paid the $2 million if Nina dies. John is an intended beneficiary of the Nina-Life Insurance Company contract. Nina makes the necessary premium payments to Life Insurance Company. She dies in an automobile accident. Life Insurance Company does not pay the $2 million life insurance benefits to John.

John, as an intended beneficiary, can sue Life Insurance Company to recover the life insurance benefits. Here, John has rights as an intended third-party beneficiary to enforce the Nina-Life Insurance Company contract

Juan borrows $10,000 from Sam. Juan is to pay Sam the principal amount, with 10 percent interest, over 3 years in 36 equal monthly payments. After 6 months of receiving the proper payments from Juan, Sam assigns this right to receive future payments to Heather. Heather, as the assignee, owes a duty to notify Juan that he is to now make the payments to Heather. If Heather fails to give Juan this notice,

Juan will continue to pay Sam. In this situation, Heather cannot recover from Juan the money that Juan continued to pay Sam; Heather's only recourse is to recover the money from Sam.

Kim brings her diamond ring to Ring Store to be repaired. Ring Store both sells and repairs jewelry. Kim leaves (entrusts) her diamond ring at the store until it is repaired. Ring Store sells Kim's ring to Harold, who is going to propose marriage to Gretchen. Harold, a buyer in the ordinary course of business, acquires title to the ring.

Kim cannot reclaim her ring from Harold (or Gretchen). Her only recourse is to sue Ring Store.

Laura, who has a safe driving record, purchases automobile insurance from an insurance company.

Laura cannot assign her rights to be insured to another driver because the assignment would materially alter the risk and duties of the insurance company.

Mary enters into an employment contract with Microhard Corporation. It is a 3-year contract, and Mary is to be paid $100,000 per year. After Mary works for one year, Microhard Corporation fires Mary. The next day, Mary finds a better position at Microsoft Corporation, in the same city, paying $125,000 per year on a 2-year contract.

Mary has suffered no monetary damages but could bring a civil lawsuit against Microhard Corporation because of its breach and recover nominal damages ($1).

On May 1, Mr. Smith promises to give his granddaughter $10,000 on June 1. If Mr. Smith gives the $10,000 to his granddaughter on or before June 1, it is a completed gift promise.

Mr. Smith cannot thereafter recover the money from his granddaughter, even if the original promise lacked consideration.

Some states require that home sellers disclose material facts about their property, such as structural problems, the existence of mold or mildew, water leaks in the foundations or walls, or unresolved disputes with adjacent landowners about the size or survey lines of the property. Some states require disclosure of suicides and other deaths that have occurred on the property within a certain time period prior to listing the property for sale.

Nondisclosure of such required facts constitutes silence as misrepresentation and violates the law.

Coco sends a letter to Dwayne stating, "You have agreed to purchase my motorcycle for $4,000 unless I otherwise hear from you by Friday."

Obviously, there is no contract if Dwayne ignores the letter.

If a reward offer for a lost watch was published in 2 local newspapers each week for 4 weeks, notice of revocation must be published in the same newspapers for the same length of time. The revocation is effective against all offerees, even those who saw the reward offer but not the notice of revocation

Offers made to the public may be revoked by communicating the revocation by the same means used to make the offer.

Pralene's Store contracts to purchase $1,000,000 of goods from a clothing manufacturer. Pralene's pays $100,000 as a down payment, and the first $200,000 worth of goods are delivered. The goods are materially defective, and the defect cannot be cured. This breach is a material breach.

Pralene's can rescind the contract. Pralene's is entitled to receive its $100,000 down payment back from the manufacturer, and the manufacturer is entitled to receive the goods back from Pralene's.

A fish wholesaler who delivers 30 pounds of fish to a restaurant each Friday for several years and is paid for the fish can continue the deliveries with expectation of payment until notified otherwise by the restaurant.

Prior dealings between the parties indicate that silence means acceptance.

Retail Clothing contracts to purchase 1,000 designer dresses for $500 per dress from Manhattan Loft, a women's clothes designer and manufacturer. Retail Clothing pays for the dresses prior to delivery. After the dresses are delivered, Retail Clothing discovers that 200 of the dresses have flaws in them.

Retail Clothing may accept these nonconforming dresses and sue Manhattan Loft for reasonable damages resulting from the nonconformity.

Revlon, Inc. contracts to buy a piece of equipment from Greenway Supply Co. for $80,000. Greenway does not deliver the equipment to Revlon when it is required to do so. Revlon purchases the equipment from another vendor but has to pay $100,000 because the current market price for the equipment has risen.

Revlon can recover $20,000 from Greenway—the difference between the market price paid ($100,000) and the contract price ($80,000)—in compensatory damages.

John Anderson accidentally leaves a briefcase containing $500,000 in negotiable bonds on a subway train. He places newspaper ads stating "$5,000 reward for return of briefcase left on a train in Manhattan on January 10, 2018, at approximately 10:00 a.m. Call 212-555-6789." Helen Smith, who is unaware of the offer, finds the briefcase. She reads the luggage tag containing Anderson's name, address, and telephone number, and she returns the briefcase to him.

She is not entitled to the reward money because she did not know about it when she performed the requested act.

When Sherry is 17 years old (a minor) she enters into a contract to purchase an automobile costing $10,000 from Bruce, a competent adult. Bruce, who believes that Sherry is an adult and does not ask for verification of her age, delivers ownership of the automobile to Sherry after he receives her payment of $10,000. Subsequently, before Sherry reaches the age of 18 (the age of majority), she is involved in an automobile accident caused by her own negligence. The automobile sustains $7,000 worth of damage in the accident (the automobile is now worth only $3,000).

Sherry can disaffirm the contract, return the damaged automobile to Bruce, and recover $10,000 from Bruce. In this result, Sherry recovers her entire $10,000 purchase price from Bruce, and Bruce has a damaged automobile worth only $3,000.

If in the prior example Sherry had recklessly caused the accident (e.g., by driving 20 miles an hour over the speed limit) or had misrepresented her age when she purchased the car

Sherry can still disaffirm the contract and return the damaged automobile to Bruce, but she can recover only $3,000 from Bruce. In this result, Bruce is made whole (he keeps $7,000 of Sherry's money and has a damaged automobile worth $3,000). Sherry has $3,000.

Susan wants to buy lumber to build a small deck in her backyard. She goes to Joe's Lumber Yard to purchase the lumber and describes to Joe, the owner of the lumber yard, the size of the deck she intends to build. Susan also tells Joe that she is relying on him to select the right lumber for the project. Joe selects the lumber and states that the lumber will serve Susan's purpose. Susan buys the lumber and builds the deck. The deck collapses because the lumber was not strong enough to support it.

Susan can sue Joe for breach of the implied warranty of fitness for a particular purpose.

Portugués-Santana v. Rekomdiv International, Inc.

The U.S. court of appeals affirmed the U.S. district court's finding of fraud and the award of $625,000 in favor of the plaintiff.

Osorio v. One World Technologies, Inc.

The U.S. court of appeals affirmed the U.S. district court's finding that Ryobi breached the implied warranty of merchantability.

Burke v. 401 N. Wabash Venture, LLC

The U.S. court of appeals affirmed the district court's decision that enforced the liquidated damage agreement permitting the developer to retain the plaintiff's deposit.

Geshke v. Crocs, Inc.

The U.S. court of appeals affirmed the district court's grant of summary judgment in favor of Crocs, Inc.

Does I-XI, Workers in China, Bangladesh, Indonesia, Swaziland, and Nicaragua v. Wal-Mart Stores, Inc.

The U.S. court of appeals held that the plaintiff foreign workers were not intended third-party beneficiaries to Wal-Mart's contracts with its foreign suppliers. The U.S. court of appeals affirmed the dismissal of the plaintiff's case.

Manley v. Doe

The U.S. district court granted summary judgment to the defendant. The U.S. court of appeals affirmed the decision.

Mance v. Mercedes-Benz USA

The U.S. district court held that the arbitration clause was enforceable and granted Mercedes-Benz's motion to compel arbitration.

Facebook, Inc. v. Porembski

The U.S. district court held that the defendants had violated the CAN-SPAM Act, awarded Facebook $360,000,000 in damages, and issued a permanent injunction against the defendants.

Accent Commercial Furniture, Inc. v. P. Schneider & Associates, PLLC

The UCC provides that acceptance of goods takes place when the buyer fails to reject them after having reasonable opportunity to inspect them. Plaintiff Accent met its burden on the summary judgment motion by submitting proof that it delivered and installed the furniture and defendant Schneider accepted the furniture by retaining it without attempting to return it.

A buyer offers to purchase 500 red umbrellas from a seller. The seller's red umbrellas are temporarily out of stock. The seller sends the buyer 500 green umbrellas and notifies the buyer that these umbrellas are being sent as an accommodation.

The accommodation is a counteroffer from the seller to the buyer. The buyer is free either to accept or to reject the counteroffer.

Clemmons v. Kansas City Chiefs Football Club, Inc.

The agreement contains promises made only by Clemmons. Only Clemmons agreed that all matters in dispute should be referred to the Commissioner for a binding and conclusive decision. Nowhere did the Chiefs agree to do anything. The Agreement does not contain any mutual promises by the Chiefs that constitute sufficient consideration for Clemmons's promise to forego his right of access to the courts and arbitrate his claims against them. Because the Chiefs did not prove that the agreement was supported by consideration, they failed to establish the existence of a valid and enforceable arbitration contract.

Yarde Metals, Inc. v. New England Patriots Limited Partnership

The appeals court held that there was an express written contract between Yarde and the Patriots, and that the parol evidence rule prevented Yarde's alleged implied right to purchase season tickets from becoming part of that contract. The appeals court affirmed the trial court's dismissal of Yarde's case.

Hubbert v. Dell Corporation

The appellate court held that Dell's terms and conditions of sale, which were accessible by clicking on a blue hyperlink and which included the arbitration clause, were part of the web contract between the plaintiffs and Dell. The appellate court reversed the decision of the trial court and held in favor of Dell.

Alba v. Kaufmann

The appellate court, as a matter of law, granted the Albas' motion for summary judgment and ordered Kaufmann specifically to perform the real estate contract.

New York Yankees Partnership d/b/a The New York Yankees Baseball Club

The arbitrator held that Moniker violated the ICANN Policy and ordered that the <nyyankees.com> domain name be transferred from Moniker to the Yankees.

A buyer enters into a sales contract to purchase a specific Rembrandt painting from a seller for $25 million. When the buyer tenders payment, the seller refuses to sell the painting to the buyer.

The buyer may bring an equity action to obtain a decree of specific performance from the court, which orders the seller to sell the painting to the buyer.

Echo enters an oral contract to sell James her used car for $10,000, with the delivery date to be May 1. When May 1 comes and James tenders $10,000 to Echo, Echo refuses to sell her car to James.

The contract will not be enforced against Echo because it was an oral contract for the sale of goods costing $500 or more, and it should have been in writing.

Cline v. Homuth

The court of appeal found that Homuth was an intended beneficiary of the release and affirmed the trial court's grant of summary judgment in her favor.

Roberts v. Lanigan Auto Sales

The court of appeals affirmed the trial court's decision that the "sold as is" language in the sales contract prevented Roberts from recovering damages from Lanigan Auto Sales. The Supreme Court of Kentucky affirmed the decision.

Krysa v. Payne

The court of appeals found that Payne's fraudulent concealment, fraudulent misrepresentation, and reckless disregard for the safety of the Krysas and the public justified the award of $500,000 of punitive damages to the Krysas.

Cooper v. Smith

The court of appeals held that the gifts made by Cooper to Julie (other than the engagement ring) and to Janet were irrevocable gifts that he could not recover simply because his engagement with Julie ended. The court of appeals affirmed the judgment of the trial court, allowing Julie and Janet Smith to keep these gifts.

In the celebrated case Raffles v. Wichelhaus,3 which has become better known as the case of the good ship Peerless, the parties agreed on a sale of cotton that was to be delivered from Bombay (now Mumbai) by the ship. There were two ships named Peerless, however, and each party, in agreeing to the sale, was referring to a different ship. Because the sailing time of the two ships was materially different, neither party was willing to agree to shipment by the other Peerless.

The court ruled that there was no binding contract because each party had a different ship in mind when the contract was formed.

A buyer contracts to purchase 1,000 bushels of wheat from a farmer. The contract requires delivery on September 1. In July, the buyer learns that floods have caused substantial crop loss in the area of the seller's farm.

The farmer receives the buyer's written demand for adequate assurance on July 15. The farmer fails to give adequate assurance of performance. The buyer may suspend performance and treat the sales contract as having been repudiated.

Frederick, the owner of a store, hires Anna as the store manager for 6 months. Assume that after three months, Frederick and Anna agree to extend the contract for an additional 11 months. At the time of the extension, the contract would be for 14 months (the 3 left on the original contract plus 11 months added by the extension).

The modification would have to be in writing because it exceeds the one-year rule.

A famous actor signs a contract with a movie studio where she agrees to star in a romantic comedy.

The movie studio cannot assign the actor's contract to another movie studio because it is a personal service contract.

Suppose that on June 1, Shari offers to sell her house to Damian for $1 million, provided that Damian decides on or before June 15 that he will buy it. Shari dies on June 7, before Damian has made up his mind.

The offer automatically terminates on June 7 when Shari dies.

"If you do not hear from me by Friday, ship the order."

The offeree has indicated that silence means assent.

Book of the Month Club, which is a subscription-based e-commerce service that offers a selection of electronic books to its members each month, is an example of such an acceptance.

The offeree has signed an agreement indicating continuing acceptance of delivery until further notification.

A buyer orders 1,000 talking dolls from a seller. The contract is a shipment contract, which normally places the risk of loss during transportation on the buyer. However, the seller ships to the buyer totally nonconforming dolls that cannot talk. This switches the risk of loss to the seller during transit. The goods are destroyed in transit.

The seller bears the risk of loss because he breached the contract by shipping nonconforming goods.

A seller orally agrees to sell her computer to a buyer for $550. When the buyer tenders the purchase price, the seller asserts the Statute of Frauds and refuses to sell the computer to him.

The seller is correct. The contract must be in writing to be enforceable because the contract price for the computer exceeds $499.99.

On May 1, Mrs. Colby promises to give her son $10,000 on June 1. When June 1 arrives, Mrs. Colby refuses to pay the $10,000.

The son cannot recover the $10,000 because it was a gift promise that lacked consideration

Brandt v. Boston Scientific Corporation and Sarah Bush Lincoln Health Center

The supreme court of Illinois held that the provision of services, and not the sale of goods, was the predominant feature of the transaction between Brandt and Health Center and that Health Center was not liable under Article 2 (Sales) of the UCC. The supreme court of Illinois upheld the dismissal of the case against Health Center.

Lindholm v. Brant

The trial court held that Brant was a buyer in the ordinary course of business who obtained ownership to Red Elvis when he purchased the stolen Red Elvis from Malmberg. Lindholm appealed the decision of the trial court to the supreme court of Connecticut, which affirmed the decision of the trial court and awarded the Red Elvis to Brant. A court in Sweden convicted Malmberg of criminal fraud and sentenced him to 3 years in prison. A Swedish court awarded Lindholm $4.6 million in damages against Malmberg.

EBM Corporation enters into a written contract to employ Mohammad as a chief financial officer of the company for 3 years at a salary of $30,000 per month. Before Mohammad starts work, EBM informs Mohammad that his employment is terminated.

This is a material breach of the contract. If Mohammad is unable to find a comparable job, Mohammad can recover $1,080,000 (36 months × $30,000) as compensatory damages.

It would be an illegal restraint of trade for Toyota, General Motors, and Ford to agree to fix the prices of the automobiles they sell.

Their contract would be void and could not be enforced by any of the parties against the other parties.

A dentist places a crown on a patient's tooth. Although the crown is a good, the predominant part of the transaction is the provision of services by the dentist.

Therefore, the UCC would not apply to the transaction.

Many professional sports players agree in their contracts with professional team owners that their contracts may be assigned.

Therefore, the professional team that owns a player's contract can trade a player by assigning the contract to another team.

A student installs a new software program on his computer that is licensed from a software company. The license price was $100. The software was installed, but it was defective. The software causes files in the computer, including the student's class notes, Ph.D. dissertation, and other valuable information, to be deleted. These were the only copies of the files. The student suffers a loss by having his only copies of these important materials to be deleted because of the newly installed software.

These losses are consequential damages. However, the software license contains a disclaimer stating that the licensor is not liable for consequential damages. Therefore, the student cannot recover monetary damages for his consequential damages. The student can recover $100 in compensatory damages, however, for the license price he paid for the defective software.

A person threatens a business owner, "I will burn your business down unless you agree to pay me $10,000." Out of fear, the business owner promises to pay the money.

This agreement is not an enforceable contract because the consideration given—not to burn a business—is illegal consideration. Thus, the extortionist cannot enforce the contract against the business owner.

Jordan offers to sell his computer to Taryn for $450. Taryn says, "Okay, I'll take the computer, but I sure wish you would make me a better deal."

This grumbling acceptance creates an enforceable contract because it was not a rejection or a counteroffer.

E-Commerce Company hires Einstein to install a state-of-the-art internet web page ordering system that will handle its order-entry and record-keeping functions. Einstein installs a state-of-the-art internet web page ordering system that meets current industry standards. E-Commerce Company rejects the contract as not meeting its personal satisfaction.

This is a breach of contract because the personal satisfaction test does not apply to this contract. Instead, the objective reasonable person test applies, and a reasonable e-commerce company in the same situation would have accepted the system.

Gretchen employs an artist to paint her daughter's portrait. The contract provides that Gretchen does not have to accept and pay for the portrait unless she is personally satisfied with it.

This is a condition precedent based on the personal satisfaction test. Gretchen rejects the painting because she personally dislikes it. This rejection is lawful because it is based on the personal satisfaction test.

SoftWare Company offers Joan, a senior who is a computer science major in college, a job. SoftWare and Joan sign a three-year employment contract, but the contract contains a provision that SoftWare Company has to hire Joan only if she graduates from college.

This is a condition precedent. If Joan graduates, the condition precedent has been met and a contract is created. If SoftWare Company refuses to hire Joan at that time, she can sue SoftWare Company for breach of contract. If Joan does not graduate from college, however, SoftWare Company is not obligated to hire her because there has been a failure of the condition precedent.

Bill is hired as an employee by Google.com as a web troubleshooter. The 3-year employment contract provides that Google.com can terminate Bill's employment anytime during the 3-year employment period if he fails a random drug test.

This is a condition subsequent. If Bill fails a random drug test, Google.com can terminate Bill immediately. Bill cannot sue Google.com for breach of contract.

Suppose a state has set a usurious rate of interest as any interest rate above 15 percent. Christopher borrows $1,000 from Tony, which requires Christopher to pay $4,000 in one year to pay off the loan.

This is a usurious loan because that amount of interest—$3,000—calculates to a 300 percent annual interest rate.

Rent-to-Own Store is a store that rents furniture to individuals who are usually poorer, and these individuals take title to the furniture after having paid the cost of the furniture (which is often overpriced with high interest rates). Mable, an elderly person who is poor, has rented and purchased a living room set, a dining room set, and a bedroom set from Rent-to-Own Store. Mable rents a flat-screen television from Rent-to-Own Store and signs a contract that states that if Mable falls more than 3 months behind in her television payments, Rent-to-Own Store can recover all of the furniture she had previously purchased from the store as liquidated damages.

This is an example of a liquidated damages clause that is a penalty and that would not be enforced.

Goodyear Tire & Rubber Company manufactures tires that are used on automobiles. Ford Motor Company manufactures automobiles on which it must place tires before the automobiles can be sold. Assume that Ford Motor Company enters into a contract with Goodyear Tire & Rubber Company to purchase all of the tires it will need this year from Goodyear.

This is an example of a requirements contract: Ford Motor Company has agreed to purchase all of the tires that it will need from Goodyear. Goodyear may sell tires to other purchasers, however.

Organic Foods Inc. is a company that operates farms that produces organically grown grains and vegetables. Urban Food Markets is a grocery store chain that sells organically grown foods. Urban Food Markets contracts with Organic Foods Inc. to purchase all the foods Organic Foods Inc. grows organically this year.

This is an example of an output contract: Organic Foods Inc. must sell all of its output to Urban Foods Market, and Urban Foods Market must buy all of the output.

Abraham says to Caitlin, "I will sell you my electronic tablet for $300." Caitlin says, "Yes, I will buy your tablet at that price."

This is an unequivocal acceptance that creates a contract.

Halim offers to sell his computer to Nicole for $450. Nicole says, "I think I would like it, but I'm not sure."

This is equivocation and does not amount to an acceptance.

Seed Company borrows $400,000 from Rural Bank and signs a promissory note to repay the $400,000 plus 10 percent interest in one year.

This promise is a covenant. That is, it is an unconditional promise to perform.

Ji Eun, a sales manager at Apple Computer, Inc., offers to sell 4,000 iMac computers to Ted, the purchasing manager of General Motors Corporation, for $4,000,000. The offer is made on August 1. Ted telephones Ji Eun to say that he is not interested.

This rejection terminates the offer. If Ted later decides that he wants to purchase the computers, an entirely new contract must be formed.

An agreement between two companies to engage in price fixing in violation of federal antitrust statutes is illegal and therefore void

Thus, neither company to this illegal contract can enforce the contract against the other company.

Whitehall (obligor) owes $10,000 to Vinnie. On April 1, Vinnie (assignor) sells (assigns) his right to collect this money to Jackson (first assignee) for the payment of $8,000. On April 15, Vinnie (assignor) sells (assigns) his right to collect this money to Maybell (second assignee) for the payment of $7,000. Maybell notifies Whitehall to make future payments to her. There has been a successive assignment of the same right.

Under the American rule, Jackson, the assignee who was first in time, can recover the money from Whitehall. Maybell's only recourse is to sue Vinnie to recover her $7,000.

Millicent (obligor) owes $20,000 to Tony. On August 1, Tony (assignor) sells (assigns) his right to collect this money to Justin (first assignee) for the payment of $15,000. Justin does not notify Millicent of this assignment. On August 20, Tony (assignor) sells (assigns) his right to collect the money from Millicent to Marcia (second assignee) for the payment of $14,000. Marcia notifies Millicent to make future payments to her. There has been a successive assignment of the same right.

Under the English rule, Marcia, the second assignee, can recover the money from Millicent because Marcia was the first to give notice of the assignment to Millicent. Justin's only recourse is to sue Tony to recover his $15,000.

Edward enters an oral contract to sell his house to Lana for $400,000, the closing of the transaction to be in 30 days. At the time of closing, Edward signs the deed to the property to Lana and Lana pays Edward the $400,000 purchase price.

Under the Statute of Frauds, this contract for the sale of real estate would have had to be in writing to be enforceable. However, since both parties have performed the oral contract, neither party can raise the Statute of Frauds to rescind the contract.

A merchant-seller in Chicago orally contracts by telephone to sell goods to a merchant-buyer in Phoenix for $100,000. Within a reasonable time after contracting, the seller sends a sufficient written confirmation to the buyer of the agreed-on transaction. The buyer, who has reason to know the contents of the written confirmation, fails to object to the contents of the confirmation in writing within 10 days after receiving it.

Under the UCC, the Statute of Frauds has been met, and the buyer cannot thereafter raise it against enforcement of the contract.

Ivie v. Smith

Under the common law, a contract is deemed void if a party lacks the requisite mental capacity at the time of contracting—meaning mental capacity must be present for a contract to exist at all. The record supports the conclusion that Watson lacked capacity regarding the changes to the beneficiary designations and property transfers. Therefore, substantial evidence supports the circuit court's judgment that all changes to beneficiary designations and property transfers after July 1, 2007, were void.

A seller offers to sell a specific automobile she owns for $30,000. The automobile is a certain brand, model, year, color, and condition. The automobile contains a radio. A buyer accepts the exact terms of the offer.

Under the mirror image rule, a contract has been created.

Felipe, who has worked in management for the Acme Corporation for thirty years, is retiring. The president of Acme says, "Because you were such a loyal employee, Acme will pay you a bonus of $100,000." Subsequently, the corporation refuses to pay the $100,000.

Unfortunately for Felipe, he has already done the work for which he has been promised payment. The contract is unenforceable against Acme because it is based on past consideration.

Lederle Laboratories enters into a written contract to employ Wei as a chief operations officer of the company for three years, at a salary of $20,000 per month. After one year at work, Lederle informs Wei that her employment is terminated. This is a material breach of the contract. If Wei is unable to find a comparable job,

Wei can sue Lederle Laboratories and recover $480,000 (24 months × $20,000) as compensatory damages. However, if after six months of being unemployed Wei finds a comparable job that pays $20,000 per month, Wei can recover $120,000 from Lederle (6 months × $20,000) as compensatory damages. In these examples, the damages awarded to Wei place her in the same situation as if her contract with Lederle had been performed.

On September 1, Won-Suk enters into a contract to purchase a house from Geraldine for $1 million. The closing date is set for November 1. On November 1, Won-Suk brings the money to the closing, but Geraldine does not appear at the closing and thereafter refuses to sell the house to Won-Suk. In this case, because each piece of real estate is considered unique,

Won-Suk can bring an action of specific performance against Geraldine and obtain a court judgment ordering Geraldine to sell the house to Won-Suk.

X-Mart, a major retailer, contracts with Mattel, a major manufacturer of toys, to purchase one million of the new "G.I. Barbie Dolls" produced by Mattel at $20 per doll. X-Mart plans to sell these dolls in its stores nationwide at $50 per doll, and Mattel is aware that X-Mart intends to resell the dolls. The popularity of Barbie Dolls guarantees that all the dolls purchased by X-Mart will be sold. If Mattel breaches this contract and fails to deliver the dolls to X-Mart, X-Mart cannot purchase the dolls elsewhere because Mattel holds the copyright and trademark on the doll.

X-Mart can recover the lost profits on each lost sale as consequential damages from Mattel—that is, the difference between the would-be sales price of the dolls ($50) and the purchase price of each doll ($20), or $30 lost profit per doll. In total, X-Mart can recover $30 million in consequential damages from Mattel ($50 − $20 = $30 × 1,000,000).

If a contract specifies "C.I.F. The Gargoyle, New Orleans, Louisiana" or "C.&F. The Gargoyle, New Orleans, Louisiana," and the goods are to be shipped to Anchorage, Alaska, the seller

bears the expense and risk of loss until it delivers the goods into the hands of the vessel The Gargoyle in New Orleans. Once this is done, the risk of loss passes to the buyer during transport from New Orleans to Anchorage, Alaska.

If a shipment contract specifies "F.O.B. Anchorage, Alaska," and the goods are shipped from New Orleans, Louisiana, the buyer

bears the shipping expense and risk of loss while the goods are in transit to Anchorage, Alaska.

Max buys a Rolex watch from his neighbor Dorothy for nearly fair market value. It is later discovered that Dorothy obtained the watch from Jewelry Store with a bounced check—that is, a check for which there were insufficient funds to pay for the Rolex watch. Jewelry Store

cannot reclaim the watch from Max because Max, the second purchaser, purchased the watch in good faith and for value.

If a building is destroyed by fire, the lessees are

discharged from further performance unless otherwise provided in the lease.

A buyer contracts to purchase cattle from a seller with a delivery date of July 1, 2017. The seller breaches the contract and does not deliver the cattle on July 1, 2017. Under the UCC four-year statute of limitations,

he buyer has until July 1, 2021, to bring a lawsuit against the seller for breach of contract. If the buyer waits until after this date has passed then the buyer loses the right to sue the seller. The parties could have included a provision in their contract to reduce the limitations period to one year, or July 1, 2018.

Heather owns a house on Residential Street. Her house, which is somewhat older, needs a new exterior coat of paint. Her neighbor John owns the house next door. If Heather has her house painted, John will benefit by having a nicer-looking house next door that may actually raise housing values on the street. Heather contracts with George, a painting contractor, to paint her house. George breaches the contract and does not paint Heather's house. Although John may have benefited if Heather's house had been painted,

he is merely an incidental beneficiary to the Heather-George contract and has no cause of action to sue George for not painting Heather's house. Heather, of course, can sue George for breach of contract.

If a professional athlete dies prior to or during a contract period

his or her contract with the team is discharged.

A professional basketball team enters into a 5-year employment contract with a basketball player. The basketball player breaches the contract and enters into a contract to play for a competing professional basketball team. Here, the first team can obtain an

injunction to prevent the basketball player from playing for the other team during the remaining term of the original contract.

A piece of farm machinery, a car, or a boat is identified when

its serial number is listed on a sales or lease contract.

Stocks, bonds, and patents are

not tangible goods.

A buyer contracts to purchase 500 red dresses from a seller for delivery on July 1. On July 1, the seller delivers 100 blue dresses to the buyer. In the past, the buyer has accepted different-colored dresses than those ordered. This time, though, the buyer rejects the blue dresses as nonconforming. The seller has

reasonable time after July 1 to deliver conforming red dresses to the buyer.

Jack steals a truckload of consumer electronic devices that are owned by Electronics Store. The thief resells the devices to City-Mart, which does not know that the goods were stolen. If Electronics Store finds out where the electronic devices are, it can

reclaim them because the thief had no title in the goods, so title was not transferred to City-Mart. There is void title. City-Mart's only recourse is against the thief, if the thief can be found.

A clerical error is made during the typing of a contract, and both parties sign the contract without discovering the error. If a dispute later arises, the court can

reform the contract to correct the clerical error to read as the parties originally intended.

Louis Vuitton delivers ten women's handbags to a Fashion Boutique Store on a sale or return basis. The boutique pays $10,000 ($1,000 per handbag). If Fashion Boutique Store sells six handbags but fails to sell the other four handbags within a reasonable time, such as three months, it may

return the unsold handbags to Louis Vuitton and can recover the compensation it paid to Louis Vuitton for the four returned handbags ($4,000).

A sales contract requires the Lawn Mower Company to deliver 100 lawn mowers to Outdoor Store. When the buyer inspects the delivered goods, it is discovered that 80 lawn mowers conform to the contract and that 20 lawn mowers do not conform. Pursuant to the perfect tender rule,

the buyer Outdoor Store may reject the entire shipment of lawn mowers. In the alternative, the buyer Outdoor Store can accept the 80 conforming lawn mowers and reject the 20 nonconforming lawn mowers. As another alternative, the buyer Outdoor Store may accept the whole shipment, both the conforming and the nonconforming lawn mowers, and seek remedies from the seller Lawn Mower Company for the 20 nonconforming lawn mowers.

If, however, Mrs. Colby promises to pay her son $10,000 if he earns an A in his business law course and the son earns the A

the contract is enforceable and the son can recover the $10,000.

If a buyer signs a sales contract to purchase bricks from a seller, and the contract stipulates that the buyer will pick up the bricks at the seller's place of business, title passes when

the contract is signed by both parties. This situation is true even if the bricks are not picked up until a later date.

If a contract specifies "Ex-ship, The Gargoyle, Anchorage, Alaska," and the goods are shipped from New Orleans, Louisiana, the seller bears

the expense and risk of loss before and until the goods are unloaded from The Gargoyle at the port in Anchorage, Alaska.

If a destination contract specifies "F.O.B. Anchorage, Alaska," and the goods are shipped from New Orleans, Louisiana, the seller bears

the expense and risk of loss before and while the goods are in transit until the goods are tendered to the buyer at the port of Anchorage, Alaska.

An art dealer contracts to purchase native art found in a foreign country. The contract is discharged if

the foreign country enacts a law forbidding native art from being exported from the country before the contract is performed.

A chair must be able to safely perform the function of a chair. If a normal-sized person sits in a chair that has not been tampered with and the chair collapses, there has been a breach of

the implied warranty of merchantability. If the same person is injured because he or she uses the chair as a ladder and it tips over, there is no breach of implied warranty because use as a ladder is not the ordinary purpose of a chair.

if the potential buyer agrees to all of the terms of the seller's offer but demands that a satellite radio be installed to replace the regular radio and that a 5-year subscription be paid for the satellite service

the mirror image rule has not been met, and no contract is created.

If a fire destroys an office building that has been listed for sale

the offer automatically terminates

If an offer states, "This offer is good for 10 days,"

the offer expires at midnight of the tenth day after the offer was made.

If an offer states, "This offer must be accepted by January 1, 2018,"

the offer expires on midnight of January 1, 2018.

Ehlen v. Melvin

the parties did not agree to the essential terms of the agreement and the Melvins' modifications to the agreement constituted a counteroffer. Ehlen did not sign the modified agreement or initial the changes. The evidence supports the court's finding that Ehlen did not accept the Melvins' counteroffer.

McKee v. Isle of Capri Casinos, Inc.

the rules of the Miss Kitty game were an express contract between McKee and the casino. Ruled in casino's favor

A professional football player signs a 5-year contract to play football for a certain professional football team. Two years into the contract, another professional football team, with full knowledge of the player's contract with the other team, offers the player twice the amount of money that he is currently making to breach his contract and sign and play with the second football team. The player breaches his contract and signs to play for the second team.

the second team intentionally interfered with the player's contract with the first team. The first team can recover tort damages—including punitive damages—from the second team for the tort of intentional interference with a contract.

If the goods named in a sales contract are located at a warehouse, title passes when

the seller delivers to the buyer a warehouse receipt representing the goods.

If a food processor contracts to purchase 150 cases of oranges from a farmer who has 1,000 cases of oranges, the buyer's goods are identified when

the seller explicitly separates or tags the 150 cases for that buyer.

ngersoll-Rand owns a heavy-duty crane. A thief steals the crane and sells it to Turner Construction. Turner Construction does not know that the crane is stolen. If Ingersoll-Rand discovers that Turner Construction has the equipment, it can reclaim it. Turner Construction, in turn, can recover against

the thief for breach of the warranty of title. This is because the thief impliedly warranted that he had good title to the equipment and that the transfer of title to Turner Construction was rightful.

A university contracts with a general contractor to build a new three-story classroom building with classroom space for 1,000 students. The contract price is $100 million. However, the completed building cannot support more than 500 students because the contractor used inferior materials. The defect cannot be repaired without rebuilding the entire structure. Because this is a material breach,

the university may rescind the contract, recover any money that it has paid to the contractor, and require the contractor to remove the building. The university is discharged of any obligations under the contract and is free to employ another contractor to rebuild the building. However, the building does meet building codes so that it can be used as an administration building of the university. Thus, as an alternative remedy, the university could accept the building as an administration building, which has a value of $20 million. The university would owe this amount—$20 million—to the contractor.

Adams Company, a manufacturer of machines that make shoes, sells a machine to Smith & Franklin, a shoe manufacturer. Subsequently, Nerdette claims that she has a patent on the machine. Nerdette proves her patent claim in court. Nerdette notifies Smith & Franklin that the machine can no longer be used without her permission and the payment of a fee to her. Smith & Franklin may rescind the sales contract with Adams Company, based on the breach of

the warranty against infringement.

Occi-Petroleum, as lessor, leases a piece of heavy equipment to Aztec Drilling. Occi-Petroleum later gives a security interest in the equipment to CityBank as collateral for a loan. If Occi-Petroleum defaults on the loan to CityBank and CityBank repossesses the equipment from Aztec, Aztec can recover damages from Occi-Petroleum for breach of

the warranty of no interference.

Statements such as "This painting is worth a fortune" or "Others would gladly pay $20,000 for this car" do not create an express warranty because

these are statements of value and not statements of fact.

Suppose a door-to-door salesperson sells a poor family a freezer full of meat and other foods for $3,000, with monthly payments for 60 months at 20 percent interest. If the actual cost of the freezer and the food is $1,000,

this contract could be found to be unconscionable. The court could either find the entire contract unenforceable or rewrite the contract so that it has reasonable terms.

If a buyer contracts to purchase a new automobile while thinking that there is a V-8 engine in the automobile when in fact there is a V-6 engine,

this unilateral mistake does not excuse the buyer from the contract.

If a department store had a sign above the entrance stating, "The store is not liable for the ordinary negligence of its employees,"

this would be an illegal exculpatory clause and would not be enforced.

A lessee contracts to lease a BMW 750i automobile from a lessor for delivery on July 1. On June 15, the lessor delivers a BMW 550i to the lessee, and the lessee rejects it as nonconforming. The lessor has

until July 1 to cure the nonconformity by delivering the BMW 750i specified in the contract.