Business Law HW problems

Thomas Bell, a minor, went to work in the Pittsburgh beauty parlor of Sam Pankas and agreed that when he left the employment, he would not work in or run a beauty parlor business within a 10-mile radius of downtown Pittsburgh for a period of two years. Contrary to this provision, Bell and another employee of Pankas's opened a beauty shop three blocks from Pankas's shop and advertised themselves as Pankas's former employees. Pankas sued Bell to stop the breach of the noncompetition, or restrictive, covenant. Bell claimed that he was not bound because he was a minor when he had agreed to the covenant. Was he bound by the covenant?

By being a minor when the covenant is made, he is not bound to it.

With regard to an agreement for the sale of real estate, the statute of frauds: .

Does not require the agreement to be signed by all parties

Willis Music Co. advertised a television set at $22.50 in the Sunday news. Ehrlich ordered a set but the company refused to deliver it on the grounds that the price was a mistake. Ehrlich sued the company, was it liable? Why or why not?

Ehrlich's lawsuit against the company is not liable since newspaper ads are solely invitations to negotiate and are not acceptances as contracts.

James Fitl attended a sports- card show in San Francisco, California, where he met Mark Strek, an exhibitor at the show. Fitl bought a 1952 Mickey Mantle Topps baseball card for $ 17,750 from Strek, who had repre-sented that the card was in near- mint condition. Strek deliv-ered it to Fitl in Nebraska, and Fitl placed it in a safe- deposit box. Two years later, Fitl sent the card to Professional Sports Authenticators ( PSA), a sports- card grading service. PSA told Fitl that the card was ungradable because it had been discol-ored and doctored. Fitl complained to Strek, who refused to refund the purchase price because of the amount of time that had gone by. Fitl then filed a lawsuit

Fitl should file a lawsuit to recover damages. The court held that Fitl had reasonably relied on Strek's representation that the card was " authentic," which it was not, and that Fitl had given Strek timely notice of the card's defects when they were discovered.

Willingham proposed to obtain an investment property for the Tschiras at a fair market price, lease it back from them, and pay the Tschiras a guaranteed return through a management contract. Using a shell corporation, The Wellingham Group bought a commerical property in Nashville for $774,000 on Dec 14 and the very same day sold the building to the Tschiras for 1.985 million. The title insurance policy purchased for the Tschiras property by Willingham for just 774,000. Willingham believes the deal was legitamate in that they gauranteed a reutrn on the investment. The Tschiras disagree. In a lawsuit against Willingham, what theory will Tschiras rely on?

Fraudulent misrepresentation of the fair market price by Willingham who they trusted as a professional

Vern Westby inherited a "ticket" from Anna Sjoblom, a survivor of the sinking of the Titanic, which had been pinned to the inside of her coat. When examined, Gorsuch said it's not worth anything. He paid a small price then months later sold it for crazy amounts. Gorsuch is a well known professional. Westby claims fraud.

Gorsuch should have known the value of the ticket and committed fraud by misleading Westby

A made a contract to construct a house for B. Subsequently, B sued A for breach of contract. A raised the defense that the contract was not binding because it was not sealed. Is this a valid defense?

If all elements are present, then it is a contract because sealing it isn't a big deal anymore. Both parties had clear intent, communication, and acceptance of the offer.

Nelson wanted to sell his home, Baker sent him a written offer to purchase the home. Nelson made some changes to Baker's offer and wrote him that he was accepting the offer as amended. Baker notified Nelson that he was dropping out of the transaction. Nelson sued him for breach of contract. Decide

Nelson made changes to Baker's offer, meaning a counteroffer was provided to Baker. Due to the counteroffer, there was no contract made it was nearly a negotiation made. He rejects the counteroffer, therefore there is no contract and nothing has been breached.

Kelly made a written contract to sell certain land to Brown and gave Brown a deed to the land. Thereafter, Kelly sued Brown to get back a 20-foot strip of land. Kelly claimed that before making the written contract, it was agreed that Kelly would sell all of his land to Brown to make it easier for Brown to get a building permit, but after that was done, the 20 foot strip would be conveyed to Kelly. Was Kelly entitled to the 20 foot strip?

No she is not entitled to the strip due to the parol evidence/four corners rule

Zehmer discussed selling a farm to Lucy. After a 40 min discussion, the first draft of a contract, Zehmer signed a second draft stating, "We hereby agree to sell to W.O. Lucy the Ferguson farm complete for $50,000 title satisfactory to buyer". Lucy agreed to purchase the farm on these terms. Thereafter, the Zehmers refused to transfer the title to Lucy and claimed that the contract for sale was a joke. Lucy brought an action to compel the performance of the contract. Lucy claimed that there was no contract. Were they correct?

No they made a contract and offered it to Lucy. The contract did not seem like it was a joke because there were several drafts. If everyone wanted to get out of a contract, they would just say they were joking. It had clear intent, communication, and had signed the contract so they must be held liable for it.

Buster Cogdill, a real estate developer, made an offer to the Bank of Benton to have the bank provide construction financing for the development of an outlet mall, with funds to be provided at prime rate plus two percentage points. The bank's president Julio Plunkett thanked Buster for the proposal and said, "I will start the paperwork." Did Cogdill have a contract with the Bank of Benton?

No, Buster did not have a contract with the Bank of Benton because when the bank's president says, "I'll start the paperwork," this is still a preliminary discussion and is ambiguous. Although there is a definite offer made, the exact details of the contract have not been agreed upon and there is not an acceptance

When Harriet went away for the summer, Landry, a house painter, painted her house. He had a contract to paint a neighbor's house but painted Harriet's instead by mistake. When Harriet returned, Landry billed her $3000. She refused to pay, Landry claimed that she had a quasi-contractual liability for the amount. Was he correct?

No, Harriet had no knowledge of the painting for her house, while there was an added benefit. There is no quasi-contract at all (quasi-contracts prevent unjust enrichment)

On September 27, Summer sent Fox a letter offering to sell Fox a vacation home for 150,000. On October 2, Fox replied by mail agreeing to buy the home for 145,000. Summer did not reply to Fox. Do Summer and Fox have a binding contract?

No, because Fox's letter was a counteroffer

While Clara Novak was sick, her daughter helped her in many ways. Clara died, and Janie then claimed that she was entitled to be paid for the services that she had done for her mother. The claim was opposed by her 3 siblings who had also rendered services to the mother. They claimed that Janie was barred because of the presumption that services rendered between family members are gratuitous. Janie claimed that this was not applicable because she had lived with her mother, but had her own house. Was Janie correct?

No, there is no written/oral expressed contract evident. There is no quasi or implied contract, and therefore the law sees the relationship and the services rendered as a gratuitous service.

Kelsoe worked at International Wood Products. One day her supervisor, Rene Hernandez, promised Kelsoe 5 percent of the company's stock. This promise was never kept and Kelsoe sued for breach of contract. Had the company broken its contract?

No. The company offered something for nothing in return so there is no consideration and she already had an existing contract with the company

Sarah's house caught on fire. Through the prompt assistance of her neighbor Odessa, the fire was quickly extinguished. In gratitude, Sarah promised to pay $1000. Can this be enforced?

No. The promise was made after the fire was already extinguished so there's no consideration

A building subcontractor submitted a bid for construction of a portion of a high-rise office building. The bid contained material computational errors. The general contractor accepted the bid with knowledge of errors. Which of the following statements best represents the subcontractor's liability?

Not liable because the contractor knew of the errors- unilateral contracts are voidable if the errors are known to the other party

West, an Indiana real estate broker, misrepresented to Zimmer that West was licensed in Kansas under the Kansas statute that regulates real estate brokers and requires all brokers to be licensed. Zimmer signed a contract agreeing to pay West a 5% commission for selling Zimmer's home in Kansas. West did not sign the contract. West sold Zimmer's home. If West sued Zimmer for nonpayment of commission, Zimmer would be

Not liable to West for any amount because West violated the Kansas licensing requirements (illegal contract since he's not licensed)

CEO Bernard Ellis sent a memo to shareholders of his Internet-related services business some four days before the expiration of a lock-up period during which these shareholders had agreed not to sell their stock. He said he thought about the company's strong performance. One man didn't sell and lost everything and sued for fraud

Opinions cannot be sued for fraud. He used the words "I think"

In negotiations with Andrews for the lease of Kemp's warehouse, Kemp orally agreed to pay one half of the cost of the utilities. The written lease, later prepared by Kemp's attorney, provided that Andrews pay all of the utilities. Andrews failed to carefully read the lease and signed it. When Kemp demanded that Andrews pay all the utilities, Andrews refused, claiming that the lease did not accurately reflect the oral agreement. Andrews also learned that Kemp intentionally misrepresented the conditions of the structure of the warehouse during negotiations between the parties. Andrews sued to rescind the lease and intends to introduce evidence of the parties' oral agreement about sharing utilities and the fraudulent statements made by Kemp. Will the parol evidence prevent the admission of evidence concerning each of the following

Oral agreement regarding who pays the utilities? Yes the parole evidence rule will prevent this Fraudulent statements by Kemp? No the parole evidence rule does not bar evidence to prove fraud

On June 15th, Peter orally offered to sell a used lawn mower to Mason for 125. Peter specified that Mason had until June 20th to accept the offer. On June 16th, Peters received an offer to purchase the lawn mower for 150 from Bronson, Mason's neighbor. Peter accepted Bronson's offer. On June 17th, Mason saw Bronson using the lawn mower and was told the mower had been sold to Bronson. Mason immediately wrote Peter to accept the offer.

Peter's offer had been revoked and Mason's acceptance was ineffective

Helen, age 17, wanted to buy a motorcycle. She didn't have the funds to pay cash, but persuaded the dealer to sell the cycle to her on credit. The dealer did so partly because she said she was 22 and showed the dealer an id card that falsely stated her age at 22. Helen drove the motorcycle away. A few days later, she damaged it and then returned it to the dealer and stated that she disaffirmed the contract because she was a minor. The dealer said that she could not because she misrepresented her age and the motorcycle was damaged.

She can avoid the contract because she is a minor and is disaffirming it before 18. Despite the damage, she is able to return it but just must pay for to return it to the condition status quo ante

High-tech collieries borrowed money from Holland. High-Tech later refused to be bound by the loan contract, claiming the contract was not binding because it had been obtained by duress. The evidence showed that the offer to make the loan was made on a take it or leave it basis. Was the defense of duress valid?

Take it or leave it does not characterize duress. It still gives a voluntary decision

Radio Station KSCS broadcast a popular music program. It Announced That It Would Pay $25,000 To Any Listener Who Detected That It Did Not Play three songs in a row without commercial.

The announcement by Radio station KSCS to pay $25,000 to any listener who discovered that it did not play three consecutive songs was a unilateral contract and enforceable. A listener's time was given up in exchange for money while the station gave up money for someone to find an error in their songs

The city of Salinas entered into a contract with Souza & McCue Construction Co. to construct a sewer. City officials knew unusual subsoil conditions (including extensive quicksand) existed that would make performance of the contract unusually difficult. This information was not disclosed when the bid was done. It could not complete the project on time due to the soil. The city sued Souza and Souza counter sued the city for not revealing the information.,

The city was liable because their sole misrepresentation caused for the project delay.

Lawrence loaned money to Moore, who died without repaying the loan. Lawrence claimed that when he mentioned the matter to Moore's widow, she promised to pay the debt. She did not pay it and Lawrence sued her on her promise. Does she have any defense?

The claim was never written down so the statute of frauds is her defense. Repaying another's debt requires it to be in writing

Office Supply Outlet, Inc., a single-store office equipment and supply retailer, ordered 100 model RVX-414 computers from Compuserve, Inc. A new staff member made a clerical error and ordered too many. Once the mistake was realized, the supplier wouldn't take back the extras. Is this contract enforceable?

The contract is voidable because the error, while a mistake, was unilateral and palpable. The company should have checked but the excess number of computers should've been a clear indication to the supplier that it was an error

Which of the following statements is true with regard to the statute of frauds?

The contract may be stated in more than one document

Martin made an oral contract with Cresheim Garage to work as its manager for two years. Cresheim wrote Martin a letter stating that the oral contract had been made and setting forth all of its terms. Cresheim later refused to recognize the contract. Martin sued for breach of contract and offered Cresheim's letter in evidence as proof of the contract. Cresheim claimed that the oral contract was not binding because the contract was not in writing and the letter referring to the contract was not a contract but only a letter. Was the contract binding/

The contract was binding because it was written as a letter with intent, the essential terms saying there's an agreement, and Cresheim signed it

On the death of their mother, the children of Jane Smith gave their interests in their mother's estate to their father in consideration of his payment of $1 to each of them and his promise to leave them the property on his death. His new wife said that contract wasn't binding when he died because the amount was so trivial.

The money value is not up to the court to decide. $1 is enough to make consideration

Katherine mailed Paul an offer with definite and certain terms and that was legal in all respects stating that it was good for 10 days. 2 days later she sent Paul a letter by certified mail (timestamped by PS at 1:14 PM) stating that the original offer was revoked. That evening, Paul emailed acceptance of the offer to Kate. She immediately phoned him to tell him that she revoked the offer that afternoon, and that he would surely receive it in the mail tomorrow. Was the offer revoked by Katherine?

The offer was not revoked by Kate because the mail box rule does not apply to revoking. Unless Paul saw the letter or knew of the cancelled offer the offer is still open. Acceptance occurs when the letter is mailed/sent while revocation doesn't occur until it is received. It is unreasonable to believe that the letter reached Paul's home or place of business within a few hours. Since Paul accepted the offer before it was effectively revoked, the contract is valid.

Blue purchased a travel agency business from Drye. The purchase price included payment for Drye's goodwill. The agreement contained a covenant prohibiting Drye from competing with Blue in the travel agency business. Which of the following statements regarding the covenant is NOT correct?

The value to be assigned to it is the excess of the price paid over the seller's cost of all intangible assets (THIS ISN'T TRUE)

Aldrich and Co. sold goods to Donovan on credit. The amount owed grew steadily, and finally Aldrich refused to sell any more to Donovan unless he signed a promissory note for the amount due. Donovan did not want to but signed the note because he had no money and needed more goods. When Aldrich brought an action to enforce the note, Donovan claimed that the note was not binding because it had been obtained by economic duress. Was he correct?

This is not economic duress becuase he they were not doing anything wrongful and it was not a threat

Blubaugh was a district manager of Schlumberger Well Services. Turner was an executive employee of Schlumberger. Blubaugh was told that he would be fired unless he chose to resign. He was also told that if he would resign and release the company and its employees from all claims for wrongful discharge, he would receive about $5,000 in addition to his regular severance pay of approximately $25,000 and would be given job-relocation counseling. He resigned, signed the release, and received about $40,000 and job counseling. Some time thereafter, he brought an action claiming that he had been wrongfully discharged. He claimed that the release did not protect the defendants because it had been obtained by economic duress. Were the defendants protected by the release?

This release does not constitute economic duress because B did not need to take the deal and resign. He still would've received his regular severance pay

The Printers International Union reached agreement for a new three-year contract with a large regional printing company. When the contract was typed, a new benefit of 75 percent employer-paid coverage for a dental plan was inadvertently omitted from the final contract. This mistake was not discovered for months. The union believes that clear and convincing evidence shows an inadvertent typing error.

This was a mutual mistake as it wasn't omitted on purpose. Both parties thought the correct way was in the contract. The contract can be voided and adjusted.

Paden sued the Murrays for fraudulent concealment and breach of the sales agreement. If Mr. Murray told Paden on May 26 that the house had a concrete foundation, would this be fraud? Decide (note that while Paden had the home inspected, he did not fix things before buying)

Yes, if he told him it had a concrete foundation that would be a material misrepresentation of fact only if it is intended to be relied on and in fact is

Lester purchased a used car from Motors. He asked the seller if it had ever been in a wreck. The salesperson had never seen the car before that morning and knew nothing of its history but quickly answered Lester's question by stating, "No." In fact, the auto had been seriously damaged and although repaired, was worth much less than the value it would have been if there had been no wreck. When Lester learned the truth, he sued Motors and the salesperson for damages They raised the defense that the statement was false and had not intended to deceive Lester. Did the conduct of the salesperson constitute fraud?

Yes, since the salesperson negligently misrepresented the history of the car and misled Lester. As a reasonable salesperson, he could easily find out the truth. The salesperson didn't though and was recklessly indifferent toward it. Lester can either sue to return car or sue for the difference in price. He can also get punitive damages with fraud.

Dozier, and his wife, daughter, and grandson lived in a house that Dozier owned. At the request of the daughter and grandson, Paschal made some improvements to the house. Dozier didn't authorize these, but he knew of the improvements, but Dozier argued that he had not made any contract for such improvements. Was he obligated to pay for such improvements?

Yes, there is a quasi contract. A benefit was received, Dozier knew of it, would be unjust if Paschal didn't receive any payment. Dozier is obligated to pay for the house improvements since he knew they were happening and did not try to stop them. There is a quasi contact as he has a duty/obligation to pay someone who he let do improvements on his house due to a request. He is benefiting and he knew that the improvements were happening. It would be unjust not to pay Paschall.

Egan, a minor, contracted with Baker to purchase Baker's used computer for $400. The computer was purchased for Egan's personal use. The agreement provided that Egan would pay $200 down on delivery and $200 thirty days later.Egan took delivery and paid the $200 down payment. Twenty days later, the computer was damaged seriously as a result of Egan's negligence. Five days after the damage occurred, and one day after Egan reached the ago of majority, Egan attempted to disaffirm the contract with Baker. Egan will

be able to disaffirm despite the fact that Egan was not a minor at the time of disaffirmance

Sippy was thinking of buying Christich's house. He noticed watermarks on the ceiling, but the agent showing him the house stated that the roof had been repaired and was in good condition. Sippy was not told that the roof still leaked and that the repairs had not been able to stop the leaking. Sippy bought the house and some time later heavy rains caused water to leak into the house and suppy claimed that Christich was liable for damages.

material misrepresentation and fraud

Able Sofa sent Noll a letter offering to sell Noll a custom made sofa for $5,000. Noll immediately sent a telegram purporting to accept the offer. However, the telegram company erroneously delivered the telegram to Abel Sofa. Three days later, Able mailed a letter of revocation to Noll and refused to sell Noll the sofa. Noll sued Able for breach of contract.

Able Sofa has a binding contract and will be liable for breach of contract