LAW Chapter 10 Book Questions

Question: Yasmine is negotiating to buy Stewart's house. She asks him what condition the roof is in. "Excellent," he replies. "It is only 2 years old and should last 25 more." In fact, Stewart knows that the roof is 26 years old and has had a series of leaks. The parties sign a sales contract for $600,000. A week before Yasmine is to pay for the house and take possession, she discovers the leaks and learns that the mandatory new roof will cost $35,000. At the same time, she learns that the house has increased in value by $60,000 since she signed the agreement. What options does Yasmine have? Strategy: You know intuitively that Stewart's conduct is as shabby as his roof. What is the legal term for his deception? Fraud. Does fraud make an agreement void or voidable? Does it matter?

Indeed, it does matter. Stewart's fraud makes the contract voidable by Yasmine. She has the right to terminate the agreement and pay nothing. However, she may go through with the contract if she prefers. The choice is hers—but not Stewart's.

Question: The Hoffmans owned and operated a successful small bakery and grocery store. They spoke with Lukowitz, an agent of Red Owl Stores, who told them that, for $18,000, Red Owl would build a store and fully stock it for them. The Hoffmans sold their bakery and grocery store and purchased a lot on which Red Owl was to build the store. Lukowitz then told Hoffman that the price had gone up to $26,000. The Hoffmans borrowed the extra money from relatives, but then Lukowitz informed them that the cost would be $34,000. Negotiations broke off, and the Hoffmans sued. The court determined that there was no contract because too many details had not been worked out—the size of the store, its design, and the cost of constructing it. Can the Hoffmans recover any money? Strategy: Because there is no contract, the Hoffmans must rely on either promissory estoppel or quasi-contract. Promissory estoppel focuses on the defendant's promise and the plaintiff's reliance. Those suing in quasi-contract must show that the defendant received a benefit for which it should reasonably expect to pay. Does either fit here?

Red Owl received no benefit from the Hoffmans' sale of their store or purchase of the lot. However, Red Owl did make a promise and expected the Hoffmans to rely on it, which they did. The Hoffmans won their claim of promissory estoppel.

Question: "Huge selection of Guernsey sweaters," reads a newspaper ad from Stuffed Shirt, a clothing retailer. "Regularly $135, today only $65." Waldo arrives at Stuffed Shirt at 4:00 that afternoon, but the shop clerk says there are no more sweaters. He shows Waldo a newly arrived Shetland sweater that sells for $145. Waldo sues, claiming breach of contract and violation of a consumer protection statute. Who will prevail? Waldo will win the breach of contract suit and the consumer protection suit. Waldo will lose the breach of contract suit but might win the consumer protection suit. Waldo will lose the consumer protection suit but should win the breach of contract suit. Waldo will win the consumer protection suit only if he wins the contract case. Waldo will lose both the breach of contract suit and the consumer protection suit. Strategy: Waldo assumes that he is accepting the store's offer. But did Stuffed Shirt make an offer? If not, there cannot be a contract. Does the consumer protection statute help him?

Result: An advertisement is usually not an offer, but merely a solicitation of one. It is Waldo who is making the offer, which the store may reject. Waldo loses his contract case, but he may win under the consumer protection statute. The correct answer is (b). If Stuffed Shirt proclaimed "huge selection" when there were only five sweaters, the store was deliberately misleading consumers, and Waldo wins. However, if there was indeed a large selection, and Waldo arrived too late, he is out of luck.

Question: Rick is selling his espresso coffeemaker. He sends Tamara an email offering to sell the machine for $350. Tamara promptly emails back offering to buy the item for $300. She hears nothing from Rick, so an hour later, Tamara stops by his apartment where she learns that he just sold the machine to his roommate for $250. She sues Rick. Outcome? Tamara will win because her offer was higher than the roommate's. Tamara will win because Rick never responded to her offer. Tamara will win because both parties made clear offers, in writing. Tamara will lose because she rejected Rick's offer. Tamara will lose because her offer was not definite. Strategy: A valid contract requires a definite offer and acceptance. Rick made a valid offer. When Tamara said she would buy the machine for a lower amount, was that acceptance? If not, what was it?

Tamara made a counteroffer of $300. A counteroffer is a rejection. Tamara rejected Rick's offer and simultaneously offered to buy the coffeemaker at a lower price. Rick was under no obligation to sell to Tamara at any price. He will win Tamara's suit.

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

a Zoey, under the theory of promissory estoppel.

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

a an executory contract.

Zayn boards the Big Rock Metro to ride downtown to his job. Zayn gives his money to the driver and takes his seat. Neither the driver nor Zayn says anything. Zayn and the bus driver: a have an express contract. b have an implied contract. c have no contract. d have a formal contract.

b have an implied contract.

Consider the following scenarios: Madison says to a group of students, "I'll pay $35 to the first one of you who shows up at my house and mows my lawn." Lea posts a flyer around town that reads, "Reward: $500 for information about the person who keyed my truck last Saturday night in the Wag-a-Bag parking lot. Call Lea at 555-5309." Which of these proposes a unilateral contract? Answer a I only b II only c Both I and II d None of these

c Both I and II

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

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

Brindley has an old shed on her property that needs to be removed. She posts the following ad on Facebook: "Shed needs to be gone. You take down and haul away. (Much of the wood is reusable.) $100 to the first person to show up and haul this away." This is an example of a(n): a unconscionable contract. b bilateral contract. c illegal contract. d unilateral contract.

d unilateral contract.

A sitcom actor, exhausted after his 10-hour workweek, agrees to buy a briefcase full of cocaine from Lewis for $12,000. Lewis and the actor have a contract. Answer a valid b unenforceable c voidable d void

d void

Rebecca, in Honolulu, faxes a job offer to Spike, in Pittsburgh, saying, "We can pay you $55,000 per year, starting June 1." Spike faxes a reply, saying, "Thank you! I accept your generous offer, though I will also need $3,000 in relocation money. See you June 1. Can't wait!" On June 1, Spike arrives and finds that his position is filled by Gus. He sues Rebecca. a Spike wins $55,000. b Spike wins $58,000. c Spike wins $3,000. d Spike wins restitution. e Spike wins nothing.

e Spike wins nothing.