CONTRACTS-missed MBE ?s

Question 181 - Contracts - The question is: A painter, who has been in the painting business for 10 years and has a fine reputation, contracts to paint the farmer's barn. The farmer's barn is a standard red barn with a loft. The contract has no provision regarding assignment. If the painter assigns the contract to a contractor and thereafter the contractor does not meet the contract specifications in painting the farmer's barn, the farmer A: has a cause of action against the painter for damages. B: has a cause of action only against the contractor for damages. C: has a cause of action against the painter for damages only after he has first exhausted his remedies against the contractor. D: does not have a cause of action against the painter for damages, because he waived his rights against the painter by permitting the contractor to perform the work.

The correct answer is A.

Question 1356 - Contracts - The question is: A buyer ordered a new machine from a manufacturer. The machine arrived on time and conformed in all respects to the contract. The buyer, however, rejected the machine because he no longer needed it in his business and returned the machine to the manufacturer. The manufacturer sold many such machines each year, and its factory was not operating at full capacity. In an action by the manufacturer against the buyer for breach of contract, which of the following is NOT a proper measure of the manufacturer's damages? A: The contract price of the machine. B: The difference between the contract price and the market price of the machine. C: The difference between the contract price and the price obtained from a proper resale of the machine. D: The profit the manufacturer would have made on the sale of the machine to the buyer.

The correct answer is A.

Question 1175 - Contracts - A buyer mailed a signed order to a seller that read: "Please ship us 10,000 widgets at your current price." The seller received the order on January 7 and that same day mailed to the buyer a properly stamped, addressed, and signed letter stating that the order was accepted at the seller's current price of $10 per widget. On January 8, before receipt of the seller's letter, the buyer telephoned the seller and said, "I hereby revoke my order." The seller protested to no avail. The buyer received the seller's letter on January 9. Because of the buyer's January 8 telephone message, the seller never shipped the goods. Under the relevant and prevailing rules, is there a contract between the buyer and the seller as of January 10? A: No, because the order was an offer that could be accepted only by shipping the goods; and the offer was effectively revoked before shipment. B: No, because the buyer never effectively agreed to the $10 price term. C: Yes, because the order was, for a reasonable time, an irrevocable offer. D: Yes, because the order was an offer that seller effectively accepted before the buyer attempted to revoke it.

D

Question 1019 - Contracts - The question is: A buyer contracted in writing with a shareholder, who owned all of XYZ Corporation's outstanding stock, to purchase all of her stock at a specified price per share. At the time this contract was executed, the buyer's contracting officer said to the shareholder, "Of course, our commitment to buy is conditioned on our obtaining approval of the contract from our parent company." The shareholder replied, "Fine. No problem." The shareholder subsequently refused to consummate the sale on the ground that the buyer had neglected to request the parent company's approval of the contract, which was true. The parent company's chief executive officer, however, is prepared to testify that the parent company would have routinely approved the contract if requested to do so. The buyer can also prove that he has made a substantial sale of other assets to finance the stock purchase, although he admittedly had not anticipated any such necessity when he entered into the stock purchase agreement. If the buyer sues the shareholder for breach of contract, is the buyer likely to prevail? A: Yes, because the condition of the parent company's approval of the contract, being designed to protect only the buyer and the parent company, can be and has been waived by those entities. B: Yes, because the buyer detrimentally relied on the shareholder's commitment by selling off other assets to finance the stock purchase. C: No, because the express condition of the parent company's approval had not occurred prior to the lawsuit. D: No, because obtaining the parent company's approval of the contract was an event within the buyer's control and the buyer's failure to obtain it was itself a material breach of contract.

The correct answer is A.

Question 1110 - Contracts - The question is: On April 1, an owner and a buyer signed a writing in which the owner, in consideration of $100 to be paid to the owner by the buyer, offered the buyer the right to purchase Greenacre for $100,000 within 30 days. The writing further provided, "This offer will become effective as an option only if and when the $100 consideration is in fact paid." On April 20, the owner, having received no payment or other communication from the buyer, sold and conveyed Greenacre to a citizen for $120,000. On April 21, the owner received a letter from the buyer enclosing a cashier's check for $100 payable to the owner and stating, "I am hereby exercising my option to purchase Greenacre and am prepared to close whenever you're ready." Which of the following, if proved, best support the buyer's suit against the owner for breach of contract? A: The buyer was unaware of the sale to the citizen when the owner received the letter and check from the buyer on April 21. B: On April 15, the buyer decided to purchase Greenacre, and applied for and obtained a commitment from a bank for a $75,000 loan to help finance the purchase. C: When the April 1 writing was signed, the owner said to the buyer, "Don't worry about the $100; the recital of '$100 to be paid' makes this deal binding." D: The owner and the buyer are both professional dealers in real estate.

The correct answer is A.

Question 1238 - Contracts - The question is: A bakery offered a chef a permanent full-time job as a pastry chef at a salary of $3,000 per month. The chef agreed to take the position and to begin work in two weeks. In her employment application, the chef had indicated that she was seeking a permanent job. One week after the chef was hired by the bakery, a hotel offered the chef a position as a restaurant manager at a salary of $3,500 a month. The chef accepted and promptly notified the bakery that she would not report for work at the bakery. Is the bakery likely to prevail in a lawsuit against the chef for breach of contract? A: No, because a contract for permanent employment would be interpreted to mean the chef could leave at any time. B: No, because the position the chef took with the hotel was not substantially comparable to the one she had agreed to take with the bakery. C: Yes, because the chef's acceptance of a permanent position meant that she agreed to leave the bakery only after a reasonable time. D: Yes, because the chef's failure to give the bakery a chance to match the salary offered by the hotel breached the implied right of first refusal.

The correct answer is A.

Question 1279 - Contracts - The question is: A mother, whose adult son was a law school graduate, contracted with a tutor to give the son a bar exam preparation course. "If my son passes the bar exam," the mother explained to the tutor, "he has been promised a job with a law firm that will pay $55,000 a year." The tutor agreed to do the work for $5,000, although the going rate was $6,000. Before the instruction was to begin and before any payment was made, the tutor repudiated the contract. Although the mother or the son reasonably could have employed, for $6,000, an equally qualified instructor to replace the tutor, neither did so. The son failed the bar exam, and the law firm refused to employ him. It can be shown that had the son received the tutor's instruction, he would have passed the bar exam. If the mother and the son join as plaintiffs and sue the tutor for breach of contract, how much, if anything, are they entitled to recover? A: $1,000, because all other damages could have been avoided by employing another equally qualified instructor. B: $55,000, because damages of that amount were within the contemplation of the parties at the time they contracted. C: Nominal damages only, because the mother was not injured by the breach and the tutor made no promise to the son. D: Nothing, because neither the mother nor the son took steps to avoid the consequences of the tutor's breach.

The correct answer is A.

Question 1989 - Contracts - The question is: A homeowner and a contractor entered into a contract under which the homeowner agreed to pay the contractor $50,000 for remodeling the homeowner's basement according to a set of plans. After the work was completed, the homeowner honestly believed that there were defects in the contractor's work as well as departures from the plans. In fact, the contractor had fully performed. The homeowner offered to pay the contractor $35,000 in full settlement in exchange for the contractor's promise to surrender his entire claim. The contractor accepted the homeowner's offer, and the homeowner paid the contractor $35,000. The reasonable value of the work was $35,000. Is the contractor likely to succeed in an action challenging the validity of the settlement agreement? A: No, because the homeowner honestly disputed the amount he owed the contractor. B: No, because the reasonable value of the work was only $35,000. C: Yes, because the contractor reasonably relied on the homeowner's contractual promise to pay the full $50,000, and that promise should be enforced to avoid injustice. D: Yes, because the homeowner's payment of $35,000 cannot furnish consideration for the contractor's relinquishment of a claim for $50,000.

The correct answer is A.

Question 299 - Contracts - The question is: A professor said to the president of a secretarial service, "Since you folks have done good typing work for me in the past, I promise to bring you the manuscript for my new book." "When?" asked the president. "First chapter next Monday," replied the professor. "Wouldn't that be nice," said the president. The following Monday the professor, foregoing the services of another secretarial service, brought chapter one to the secretarial service's office but the president refused to take it, saying that they were all booked up for three weeks. Which of the following facts or inferences would be most helpful in an action by the professor against the secretarial service? A: "When" and "Wouldn't that be nice" implied a promise to type the manuscript. B: The professor relied on the president's statement by bringing the manuscript to her service's office. C: The secretarial service had done good work for the professor in the past. D: The professor had foregone the services of another secretarial service.

The correct answer is A.

Question 371 - Contracts - The question is: In a written contract a seller agreed to deliver to a buyer 500 described chairs at $20 each F.O.B. seller's place of business. The contract provided that "neither party will assign this contract without the written consent of the other." The seller placed the chairs on board a carrier on January 30 and notified the buyer the goods had been shipped. On February 1 the seller said in a signed writing, "I hereby assign to my friend all my rights under the seller-buyer contract." The seller did not request and did not get the buyer's consent to this transaction. On February 2 the chairs while in transit were destroyed in a derailment of the carrier's railroad car. In an action by the friend against the buyer, the friend probably will recover A: $10,000, the contract price. B: the difference between the contract price and the market value of the chairs. C: nothing, because the chairs had not been delivered. D: nothing, because the seller-buyer contract forbade an assignment.

The correct answer is A.

Question 421 - Contracts - The question is: A written contract was entered into between a financier-investor and a winery. The contract provided that the financier-investor would invest $1,000,000 in the winery for its capital expansion and, in return, that the winery, from grapes grown in its famous vineyards, would produce and market at least 500,000 bottles of wine each year for five years under a label with the financier's name on it. The contract included provisions that the parties would share equally the profits and losses from the venture and that, if feasible, the wine would be distributed by the winery only through a wholesale distributor of fine wines. Neither the financier-investor nor the winery had previously dealt with this wholesale distributor. The wholesale distributor learned of the contract two days later from reading a trade newspaper. In reliance thereon, he immediately hired an additional sales executive and contracted for enlargement of his wine storage and display facility. Soon after making its contract with the financier-investor, the winery, without the financier-investor's knowledge or assent, sold its vineyards but not its winery to a large agricultural corporation. Under the terms of this sale, the agricultural corporation agreed to sell to the winery all grapes grown on the land for five years. The agricultural corporation's employees have no experience in grape production, and the agricultural corporation has no reputation in the wine industry as a grape producer or otherwise. The investor-winery contract was silent on the matter of the winery selling any or all of its business assets. If the financier-investor seeks an appropriate judicial remedy against the winery for entering into the winery-agricultural corporation transaction, is the financier-investor likely to prevail? A: Yes, because the winery-agricultural corporation transaction created a significant risk of diminishing the profits in which the financierinvestor would share under his contract with the winery. B: Yes, because the investor-winery contract did not contain a provision authorizing a delegation of the winery's duties. C: No, because the winery remains in a position to perform under the investor-winery contract. D: No, because the winery, as a corporation, must necessarily perform its contracts by delegating duties to individuals.

The correct answer is A.

Question 515 - Contracts - The question is: A farmer leased in writing a 100-acre farm from a landowner for five years at $2,000 per year, with an option to purchase "five acres of the land for $10,000 cash" at the end of the lease term. Before the lease was executed, the landowner orally promised to have a five-acre parcel surveyed before the end of the lease term. The farmer took possession of the farm and paid for the rent for five years. During the fifth year, having decided that he would exercise the purchase option, the farmer planted several fruit trees and built a large grain silo on the property. At the end of the term, the farmer tendered the landowner $10,000 and demanded a conveyance, but the landowner repudiated the option agreement and retook possession of the farm. He had never had the five-acre parcel surveyed. The landowner is not liable to the farmer for breach of land-sale contract. In an action by the farmer against the landowner for the reasonable value of the improvements that the farmer added to the farm, which of the following theories would best support the farmer's claim? A: Quasi-contract, for benefits inofficiously and non-gratuitously conferred upon the landowner by the farmer. B: Tort, for conversion by the landowner in retaking possession of the improvements. C: Breach of trust by the landowner as trustee of a resulting trust of the improvements. D: Breach by the landowner of an implied-in-fact promise (manifested by his retaking possession of the farm and improvements) to compensate the farmer for the improvements.

The correct answer is A.

Question 60 - Contracts - The question is: While negligently driving his father's uninsured automobile, the 25-year-old son crashed into an automobile driven by a woman. Both the son and the woman were injured. The father, erroneously believing that he was liable because he owned the automobile, said to the woman: "I will see to it that you are reimbursed for any losses you incur as a result of the accident." The father also called a physician and told him to take care of the woman and that he would pay the bill. The son, having no assets, died as a result of his injuries. One of the son's creditors wrote to the father stating that his son owed him a clothing bill of $200 and that he was going to file a claim against the son's estate. The father replied: "If you don't file a claim against my son's estate, I will pay what he owed you." In an action by the woman against the father for wages lost while she was incapacitated as a result of the accident, which of the following would be the father's best defense? A: Lack of consideration. B: Mistake of fact as to basic assumption. C: Statute of Frauds. D: Indefiniteness of the father's promise

The correct answer is A.

Question 606 - Contracts - The question is: On July 18, a shovel manufacturer received an order for the purchase of 500 snow shovels from a wholesaler. The wholesaler had mailed the purchase order on July 15. The order required shipment of the shovels no earlier than September 15 and no later than October 15. Typed conspicuously across the front of the order form was the following: "[the wholesaler] reserves the right to cancel this order at any time before September 1." The manufacturer's mailed response, saying "We accept your order," was received by the wholesaler on July 21. The wholesaler did not cancel the order, and the manufacturer shipped the shovels to the wholesaler on September 15. When the shovels, conforming to the order in all respects, arrived on October 10, the wholesaler refused to accept them. Which of the following is an accurate statement as of October 10 after the wholesaler rejected the shovels? A: The wholesaler's order for the shovels, even if initially illusory, became a binding promise to accept and pay for them. B: The wholesaler's order was an offer that became an option after shipment by the manufacturer. C: The wholesaler's right to cancel was a condition subsequent, the failure of which resulted in an enforceable contract. D: In view of the wholesaler's right to cancel its order prior to September 1, the shipment of the shovels on September 15 was only an offer by the manufacturer.

The correct answer is A.

Question 7 - Contracts - The question is: A contractor had painted an owner's house under a contract which called for payment of $2,000. The owner, contending in good faith that the porch had not been painted properly, refused to pay anything. On June 15, the contractor mailed a letter to the owner stating, "I am in serious need of money. Please send the $2,000 to me before July 1." On June 18, the owner replied, "I will settle for $1,800 provided you agree to repaint the porch." The contractor did not reply to this letter. Thereafter the owner mailed a check for $1,800 marked "Payment in full on the painting contract as per letter dated June 18." The contractor received the check on June 30. Because he was badly in need of money, the contractor cashed the check without objection and spent the proceeds but has refused to repaint the porch. In an action by the owner against the contractor for any provable damages the owner sustained because the porch was not repainted, he probably will A: succeed, because by cashing the check the contractor impliedly promised to repaint the porch. B: succeed, because the contractor accepted the owner's offer by not replying to the letter of June 18. C: not succeed, because the owner's letter of June 18 was a counter-offer which the contractor never accepted. D: not succeed, because there is no consideration to support the contractor's promise, if any.

The correct answer is A.

Question 709 - Contracts - The question is: A seller and a buyer, standing on Greenacre, orally agreed to its sale and purchase for $5,000 and orally marked its bounds as "that line of trees down there, the ditch that intersects them, the fence on the other side, and that street on the fourth side." In which of the following is the remedy of reformation most appropriate? A: As later reduced to writing, the agreement by clerical mistake included two acres that are actually beyond the fence. B: The buyer reasonably thought that two acres beyond the fence were included in the oral agreement but the seller did not. As later reduced to writing, the agreement included the two acres. C: The buyer reasonably thought that the price orally agreed upon was $4,500, but the seller did not. As later reduced to writing, the agreement said $5,000. D: The buyer reasonably thought that a dilapidated shed backed up against the fence was to be torn down and removed as part of the agreement, but the seller did not. As later reduced to writing, the agreement said nothing about the shed.

The correct answer is A.

Question 73 - Contracts - The question is: On March 1, a computer programming company orally agreed with a department store to write a set of programs for the department store's computer and to coordinate the programs with the department store's billing methods. A subsequent memo, signed by both parties, provided in its entirety: "The department store will pay the computer programming company $20,000 in two equal installments within one month of completion if the computer programming company is successful in shortening by one-half the processing time for the financial transactions now handled on the department store's Zenon 747 computer; the computer programming company to complete by July 1. This agreement may be amended only by a signed writing." On June 6, the computer programming company demanded $10,000, saying the job was one-half done. After the department store denied liability, the parties orally agreed that the department store should deposit $20,000 in escrow, pending completion to the satisfaction of the department store computer systems manager. The escrow deposit was thereupon made. On July 5, the computer programming company completed the programs. Tests then showed that the computer programs cut processing time by only 47 percent. The department store's computer systems manager refused in good faith to certify satisfactory completion. The department store requested the escrow agent to return the $20,000 and asserted that nothing was owed to the computer programming company even though the department store continued to use the programs. Was the escrow agreement a valid modification? A: Yes, because it was the compromise of an honest dispute. B: Yes, because the Statute of Frauds does not apply to subsequent oral modifications. C: No, because it was oral. D: No, because it was not supported by consideration.

The correct answer is A.

Question 751 - Contracts - The question is: On December 1, a broker contracted with a collector to sell her one of a certain type of rare coin for $12,000, delivery and payment to occur on the next March 1. To fulfill that contract, and without the collector's knowledge, the broker contracted on January 1 to purchase for $10,000 a specimen of that type of coin from a hoarder, delivery and payment to occur on February 1. The market price of such coins had unexpectedly fallen to $8,000 by February 1, when the hoarder tendered the coin and the broker repudiated. On February 25, the market in such coins suddenly reversed and had stabilized at $12,000 on March 1. The broker, however, had failed to obtain a specimen of the coin and repudiated his agreement with the collector when she tendered the $12,000 agreed price on March 1. Later that day, after learning by chance of the broker's dealing with the collector, the hoarder telephoned the collector and said: "Listen, the broker probably owes me at least $2,000 in damages for refusing wrongfully to buy my coin for $10,000 on February 1 when the market was down to $8,000. But I'm in good shape in view of the market's recovery since then, and I think you ought to get after the so-and-so." If the collector immediately sues the broker for his breach of the broker-hoarder contract, which of the following will the court probably decide? A: The broker wins, because the collector, if a beneficiary at all of the broker-hoarder contract, was only an incidental beneficiary. B: The broker wins, because as of March 1 neither the hoarder nor the collector had sustained any damage from the broker's repudiation of both contracts. C: The collector wins, because she was an intended beneficiary of the broker-hoarder contract, under which damages for the broker's repudiation became fixed on February 1. D: The collector wins, because she took an effective assignment of the hoarder's claim for damages against the broker when the hoarder suggested that the collector "get after the so-and-so."

The correct answer is A.

Question 797 - Contracts - The question is: Responding to the county's written advertisement for bids, a tire salesman was the successful bidder for the sale of tires to the county for the county's vehicles. The tire salesman and the county entered into a signed, written agreement that specified, "It is agreed that the tire salesman will deliver all tires required by this agreement to the county in accordance with the attached bid form and specifications, for a one-year period beginning September 1, 1990." Attached to the agreement was a copy of the bid form and specifications. In the written advertisement to which the tire salesman had responded, but not in the bid form, the county had stated, "Multiple awards may be issued if they are in the best interests of the county." No definite quantity of tires to be bought by the county from the tire salesman was specified in any of these documents. In January 1991, the tire salesman learned that the county was buying some of its tires from one of the tire salesman's competitors. Contending that the tire salesman-county agreement was a requirements contract, the tire salesman sued the county for the damages caused by the county buying some of its tires from the competitor. If the county defends by offering proof of the advertisement concerning the possibility of multiple awards, should the court admit the evidence? A: Yes, because the provision in the written agreement, "all tires required by this agreement," is ambiguous. B: Yes, because the advertisement was in writing. C: No, because of the parol evidence rule. D: No, because it would make the contract illusory.

The correct answer is A.

Question 868 - Contracts - The question is: A woman owns an exceptionally seaworthy boat that she charters for sport fishing at a $500 daily rate. The fee includes the use of the boat with the woman as the captain, and one other crew member, as well as fishing tackle and bait. On May 1, a father agreed with the woman that the father would have the full-day use of the boat on May 15 for himself and his family for $500. The father paid an advance deposit of $200 and signed an agreement that the deposit could be retained by the woman as liquidated damages in the event the father canceled or failed to appear. On May 15 at 1 a.m., the Coast Guard had issued offshore "heavy weather" warnings and prohibited all small vessels the size of the woman's from leaving the harbor. This prohibition remained in effect throughout the day. The father did not appear at all on May 15, because he had heard the weather warnings on his radio. Which of the following is an accurate statement? A: The contract is discharged because of impossibility, and the father is entitled to return of his deposit. B: The contract is discharged because of mutual mistake concerning an essential fact, and the father is entitled to return of his deposit. C: The contract is not discharged, because its performance was possible in view of the exceptional seaworthiness of the woman's boat, and the father is not entitled to return of his deposit. D: The contract is not discharged and the father is not entitled to return of his deposit because the liquidated-damage clause in effect allocated the risk of bad weather to the father.

The correct answer is A.

Question 102 - Contracts - The question is: During 2006, a series of arsons, one of which damaged a huge store, occurred in a city. In early 2007, the sitting city council adopted this resolution: The city will pay $10,000 for the arrest and conviction of anyone guilty of any of the 2006 arsons committed here. The foregoing was telecast by the city's sole television station once daily for one week. Subsequently, the store, by a written memorandum to a private detective, proposed to pay the detective $200 "for each day's work you actually perform in investigating our fire." Thereafter, in August 2007, the city council by resolution repealed its reward offer and caused this resolution to be broadcast once daily for a week over two local radio stations. The local television station had meanwhile ceased operations. In September 2007, an employee of the store voluntarily confessed to the detective to having committed all of the 2006 arsons. The store's president thereupon paid the detective at the proposed daily rate for his investigation and suggested that the detective also claim the city's reward, of which the detective had been previously unaware. The detective immediately made the claim. In December 2007, as a result of the detective's investigation, the store's employee was convicted of burning the store. The city, which has no immunity to suit, has since refused to pay the detective anything, although the detective swears that he never heard the city's announcement of the repeal before claiming the reward. In a suit by the detective against the city to recover the $10,000 reward, which of the following, in light of the facts given, most usefully supports the detective's claim? A: The city was benefited as a result of the detective's services. B: The city's offer was in the nature of a bounty, so that the elements of contract are not essential to the city's liability. C: The fact that the city attempted to revoke its offer only a few months after making it demonstrated that the attempted revocation was in bad faith. D: Although there was no bargained for exchange between the detective and the city, the detective's claim for the reward is supported by a moral obligation on the part of the city.

The correct answer is B.

Question 152 - Contracts - The question is: On March 1, a mechanic agreed to repair an owner's machine for $5,000, to be paid on completion of the work. On March 15, before the work was completed, the mechanic sent a letter to the owner with a copy to the mechanic's creditor, telling the owner to pay $5,000 to the creditor. The mechanic then completed the work. Which of the following, if true, would best serve the owner as a defense in an action brought against him by the creditor for $5,000? A: The creditor was incapable of performing the mechanic's work. B: The mechanic had not performed his work in a workmanlike manner. C: On March 1, the mechanic had promised the owner that he would not assign the contract. D: The creditor was not the intended beneficiary of the mechanic-owner contract.

The correct answer is B.

Question 164 - Contracts - The question is: A new business enterprise, about to commence the manufacture of clothing, entered into a written agreement to purchase all of its monthly requirements of a certain elasticized fabric for a period of three years from a fabric company at a specified unit price and agreed upon delivery and payment terms. The agreement also provided: 1. The parties covenant not to assign this contract. 2. Payments coming due hereunder for the first two months shall be made directly by the new business enterprise to the creditor of the fabric company. The fabric company promptly made an "assignment of the contract" to a finance company as security for a $100,000 loan. The new enterprise subsequently ordered, took delivery of, and paid the fabric company the agreed price ($5,000) for the new enterprise's requirement of the fabric for the first month of its operation. Assume that the assignment from the fabric company to the finance company was effective and that the new enterprise was unaware of the assignment when it paid the fabric company the $5,000. Which of the following is correct? A: The new business enterprise is liable to the finance company for $5,000. B: The fabric company is liable to the finance company for $5,000. C: The new business enterprise and the fabric company are each liable to the finance company for $2,500. D: Neither the new business enterprise nor the fabric company is liable to the finance company for any amount.

The correct answer is B.

Question 1964 - Contracts - The question is: A buyer expressed interest in purchasing an industrial air-conditioning system manufactured by the seller. The parties agreed orally on a price of $100,000 for the system, but continued to negotiate over several points. When all matters regarding the air-conditioning system were finally settled, the parties signed a written agreement. It provided that the price for the system, which would be delivered on June 1, would be $110,000. The written agreement, a lengthy form contract, did not contain a merger clause. The seller delivered the system on June 1, but the buyer refused to pay more than $100,000, citing the earlier oral agreement as to price. The seller sued the buyer for the additional $10,000 under the written agreement. Is the court likely to admit the evidence of the orally agreed price of $100,000? A: No, because the buyer assumed the risk of any mistake as to price. B: No, because the oral price term would contradict an express term in the written agreement. C: Yes, because the oral price term is relevant to whether the writing should be reformed. D: Yes, because the written agreement did not contain a merger clause.

The correct answer is B.

Question 1971 - Contracts - The question is: In order to raise revenue, a city required home-repair contractors who performed work within the city limits to pay a licensing fee to a city agency. A contractor who was unaware of the fee requirement agreed to perform home repairs for a city resident. After the contractor completed the work, the resident discovered that the contractor had not paid the licensing fee, and she refused to pay for the repairs, which were otherwise satisfactory. If the contractor sues the resident for breach of contract, how is the court likely to rule? A: Although the contract violates the law and is void, the court will require the homeowner to pay the contractor the reasonable value of the work accepted. B: Although the contract violates the law, the court will find that public policy does not bar enforcement of the contract, because the purpose of the fee is merely to raise revenue. C: Because the contract violates the law and is void, the court will not enforce it. D: Because the purpose of the fee is merely to raise revenue, the court will find that the contract does not violate the law but will allow the contractor to recover his costs only.

The correct answer is B.

Question 265 - Contracts - The question is: A father had made a legally binding promise to furnish his son and the son's fiancée a house on their wedding day, planned for June 10, 2002. Pursuant to that promise, the father telephoned his old contractor-friend on May 1, 2001, and made the following oral agreement - each making full and accurate written notes thereof: The contractor was to cut 30 trees into fireplace logs from a specified portion of a certain one-acre plot owned by the father, and the father was to pay therefore $20 per tree. The contractor agreed further to build a house on the plot conforming to the specifications of Plan OP5 published by Builders, Inc. for a construction price of $18,000. The father agreed to make payments of $2,000 on the first of every month for nine months beginning August 1, 2001, upon monthly presentation of a certificate by Builders, Inc. that the specifications of Plan OP5 were being met. The contractor delivered the cut logs to the father in July 2001, when he also began building the house. The father made three $2,000 payments for the work done in July, August, and September 2001, without requiring a certificate. The contractor worked through October, but no work was done from November 1, 2001, to the end of February 2002, because of bad weather, and the father made no payments during that period. The contractor did not object. On March 1, 2002, the contractor demanded payment of $2,000, but the father refused on the grounds that no construction work had been done for four months and Builders had issued no certificate. The contractor thereupon abandoned work and repudiated the agreement. The contractor failed to object to the father's failure to make payments on November 1, December 1, January 1, and February 1. Additionally, the father made payments in August through October without requiring a certificate from Builders. What was the probable legal effect of these actions? A: Estoppel-type waiver as to both the contractor's failure to object and the father's payments without requiring a certificate. B: Waiver of delay in payment as to the contractor's failure to object and revocable waiver as to the father's payments without requiring a certificate. C: Mutual rescission of the contract. D: Discharge of the father's duty to make the four payments as to the contractor's failure to object and estoppel-type waiver as to the father's payments with requiring a certificate.

The correct answer is B.

Question 310 - Contracts - The question is: On November 1, the following notice was posted in a privately-operated law school: The faculty, seeking to encourage legal research, offers to any student at this school who wins the current National Obscenity Law Competition the additional prize of $500. All competing papers must be submitted to the Dean's office before May 1. A student read this notice on November 2, and thereupon intensified his effort to make his paper on obscenity law, which he started in October, a winner. The student also left on a counter in the Dean's office a signed note saying, "I accept the faculty's $500 Obscenity Competition offer." This note was inadvertently placed in a student's file and never reached the Dean or any faculty member personally. On the following April 1, the above notice was removed and the following substituted therefore: The faculty regrets that our offer regarding the National Obscenity Law Competition must be withdrawn. The student's paper was submitted through the Dean's office on April 15. On May 1, it was announced that the student had won the National Obscenity Law Competition and the prize of $1,000. The law faculty refused to pay anything. Assuming that the faculty's notice of November 1 was posted on a bulletin board or other conspicuous place commonly viewed by all persons in the law school, such notice constituted a A: preliminary invitation to deal, analogous to newspaper advertisements for the sale of goods by merchants. B: contractual offer, creating a power of acceptance. C: preliminary invitation, because no offeree was named therein. D: promise to make a conditional, future gift of money.

The correct answer is B.

Question 514 - Contracts - The question is: A farmer leased in writing a 100-acre farm from a landowner for five years at $2,000 per year, with an option to purchase "five acres of the land for $10,000 cash" at the end of the lease term. Before the lease was executed, the landowner orally promised to have a five-acre parcel surveyed before the end of the lease term. The farmer took possession of the farm and paid the rent for five years. During the fifth year, having decided that he would exercise the purchase option, the farmer planted several fruit trees and built a large grain silo on the property. At the end of the term, the farmer tendered the landowner $10,000 and demanded a conveyance, but the landowner repudiated the option agreement and retook possession of the farm. He had never had the five-acre parcel surveyed. In an action by the farmer against the landowner for specific performance of the option agreement, which of the following is the landowner's best defense? A: The option part of the agreement is unenforceable because it lacked a separate consideration. B: The description of the property to be sold in the parties' written agreement is too indefinite to permit the remedy sought. C: The landowner's failure to have the five-acre parcel surveyed was failure of a condition precedent to his own duty of performance. D: The option part of the agreement is unenforceable under the parol evidence rule.

The correct answer is B.

Question 677 - Contracts - The question is: A borrower asked a lender to lend her $1,000. The lender replied that he would do so only if the borrower's father would guarantee the loan. At the borrower's request, the father mailed a signed letter to the lender: "If you lend $1,000 to my daughter, I will repay it if she doesn't." On September 15, the lender, having read the father's letter, lent $1,000 to the borrower, which the borrower agreed to repay in installments of $100 plus accrued interest on the last day of each month beginning October 31. The father died on September 16. Later that same day, unaware of the father's death, the lender mailed a letter to the father advising that he had made the $1,000 loan to the borrower on September 15. The borrower did not pay the installments due on October 31, November 30, or December 31, and has informed the lender that she will be unable to make repayments in the foreseeable future. On January 15, the lender is entitled to a judgment against the borrower for which of the following amounts? A: Nothing, because if he sues before the entire amount is due, he will be splitting his cause of action. B: $300 plus the accrued interest, because the borrower's breach is only a partial breach. C: $1,000 plus the accrued interest, because the borrower's unexcused failure to pay three installments is a material breach. D: $1,000 plus the accrued interest, because the failure to pay her debts as they come due indicates that the borrower is insolvent and the lender is thereby entitled to accelerate payment of the debt.

The correct answer is B.

Question 71 - Contracts - The question is: On March 1, a computer programming company orally agreed with a department store to write a set of programs for the department store's computer and to coordinate the programs with the department store's billing methods. A subsequent memo, signed by both parties, provided in its entirety: "The department store will pay the computer programming company $20,000 in two equal installments within one month of completion if the computer programming company is successful in shortening by one-half the processing time for the financial transactions now handled on the department store's Zenon 747 computer; the computer programming company to complete by July 1. This agreement may be amended only by a signed writing." On June 6, the computer programming company demanded $10,000, saying the job was one-half done. The parties orally agreed that the store should deposit $20,000 in escrow, pending completion to the satisfaction of the store's computer systems manager. On July 5, the programming company completed the programs. Tests showed that the computer programs, not being perfectly coordinated with the store's billing methods, cut processing time by only 47 percent. The department store's computer systems manager refused in good faith to certify satisfactory completion, requested that the escrow agent return the $20,000, and asserted that nothing was owed to the programming company even though the department store continued to use the programs. The department store denies liability on the ground that the programming company had orally agreed to coordinate with the department store's methods of accounting, and the programming company seeks to bar introduction of that agreement based on the parol evidence rule. The department store's most effective argument is that A: the parol evidence rule does not bar the introduction of evidence for the purpose of interpreting a written agreement. B: the memorandum was not a completely integrated agreement. C: the department store detrimentally relied on the oral promise of coordination in signing the memorandum. D: the memorandum was not a partially integrated agreement.

The correct answer is B.

Question 744 - Contracts - The question is: A landowner contracted in a signed writing to sell Greenacre, a 500-acre tract of farmland, to a farmer. The contract provided for exchange of the deed and purchase price of $500,000 in cash on January 15. Possession was to be given to the farmer on the same date. On January 15, the landowner notified the farmer that because the tenant on Greenacre wrongfully refused to quit the premises until January 30, the landowner would be unable to deliver possession of Greenacre until then, but he assured the farmer that he would tender the deed and possession on that date. When the landowner tendered the deed and possession on January 30, the farmer refused to accept either, and refused to pay the $500,000. Throughout the month of January, the market value of Greenacre was $510,000, and its fair monthly rental value was $5,000. Will the landowner probably succeed in an action against the farmer for specific performance? A: Yes, because the court will excuse the delay in tender on the ground that there was a temporary impossibility caused by the tenant's holding over. B: Yes, because time is ordinarily not of the essence in a land-sale contract. C: No, because the landowner breached by failing to tender the deed and possession on January 15. D: No, because the landowner's remedy at law for monetary relief is adequate.

The correct answer is B.

Question 766 - Contracts - The question is: A wallpaper hanger sent a general contractor this telegram: Will do all paperhanging on new Doctors' Building, per owner's specs, for $14,000 if you accept within reasonable time after main contract awarded. /s/ the wallpaper hanger Three other competing hangers sent the general contractor similar bids in the respective amounts of $18,000, $19,000, and $20,000. The general contractor used the wallpaper hanger's $14,000 figure in preparing and submitting her own sealed bid on Doctors' Building. Before the bids were opened, the wallpaper hanger truthfully advised the general contractor that the former's telegraphic sub-bid had been based on a $4,000 computational error and was therefore revoked. Shortly thereafter, the general contractor was awarded the Doctors' Building construction contract and subsequently contracted with another paperhanger for a price of $18,000. The general contractor now sues the wallpaper hanger to recover $4,000. Which of the following, if proved, would most strengthen the general contractor's prospect of recovery? A: After the wallpaper hanger's notice of revocation, the general contractor made a reasonable effort to subcontract with another paperhanger at the lowest possible price. B: The general contractor had been required by the owner to submit a bid bond and could not have withdrawn or amended her bid on the main contract without forfeiting that bond. C: The wallpaper hanger was negligent in erroneously calculating the amount of his sub-bid. D: The general contractor dealt with all of her subcontractors in good faith and without seeking to renegotiate (lower) the prices they had bid.

The correct answer is B.

Question 843 - Contracts - The question is: A son, who knew nothing about horses, inherited a thoroughbred colt whose disagreeable behavior made him a pest around the barn. The son sold the colt for $1,500 to an experienced racehorse-trainer who knew of the son's ignorance about horses. At the time of the sale, the son said to the trainer, "I hate to say it, but this horse is bad-tempered and nothing special." Assume that soon after the sale, the horse won three races and earned $400,000 for the trainer. Which of the following additional facts, if established by the son, would best support his chance of obtaining rescission of the sale to the trainer? A: The son did not know until after the sale that the purchaser was an experienced racehorse-trainer. B: At a pre-sale exercise session of which the trainer knew that the son was not aware, the trainer clocked the horse in record-setting time, far surpassing any previous performance. C: The horse was the only thoroughbred that the son owned, and the son did not know how to evaluate young and untested racehorses. D: At the time of the sale, the son was angry and upset over an incident in which the horse had reared and thrown a rider.

The correct answer is B.

Question 904 - Contracts - The question is: A client consulted a lawyer about handling the sale of the client's building, and asked the lawyer what her legal fee would be. The lawyer replied that her usual charge was $100 per hour, and estimated that the legal work on behalf of the client would cost about $5,000 at that rate. The client said, "Okay, let's proceed with it," and the lawyer timely and successfully completed the work. Because of unexpected title problems, the lawyer reasonably spent 75 hours on the matter and shortly thereafter mailed the client a bill for $7,500, with a letter itemizing the work performed and time spent. The client responded by a letter expressing his good-faith belief that the lawyer had agreed to a total fee of no more than $5,000. The client enclosed a check in the amount of $5,000 payable to the lawyer and conspicuously marked, "Payment in full for legal service in connection with the sale of the client's building." Despite reading the "Payment in full. . ." language, the lawyer, without any notation of protest or reservation of rights, endorsed and deposited the check to her bank account. The check was duly paid by the client's bank. A few days later, the lawyer unsuccessfully demanded payment from the client of the $2,500 difference between the amount of her bill and the check, and now sues the client for that difference. What, if anything, can the lawyer recover from the client? A: Nothing, because the risk of unexpected title problems in a real-property transaction is properly allocatable to the seller's attorney and thus to the lawyer in this case. B: Nothing, because the amount of the lawyer's fee was disputed in good faith by the client, and the lawyer impliedly agreed to an accord and satisfaction. C: $2,500, because the client agreed to an hourly rate for as many hours as the work reasonably required, and the sum of $5,000 was merely an estimate. D: The reasonable value of the lawyer's services in excess of $5,000, if any, because there was no specific agreement on the total amount of the lawyer's fee.

The correct answer is B.

Question 923 - Contracts - The question is: On November 15, a contractor, in a signed writing, contracted with a homeowner for an agreed price to personally remodel the homeowner's kitchen according to specifications provided by the homeowner and to start work on December 1. The contractor agreed to provide all materials for the job in addition to all of the labor required. On November 26, the homeowner without legal excuse repudiated the contract. Notwithstanding the homeowner's repudiation, however, the contractor subsequently purchased for $5,000 materials that could only be used in remodeling the homeowner's kitchen, and promptly notified the homeowner, "I will hold you to our contract." If allowed to perform, the contractor would have made a profit of $3,000 on the job. If the homeowner refuses to retract his repudiation, and the contractor sues him for damages, what is the maximum that the contractor is entitled to recover? A: Nothing, because he failed to mitigate his damages. B: $3,000, his expectation damages. C: $5,000, on a restitutionary theory. D: $5,000, his reliance damages, plus $3,000, his expectation damages.

The correct answer is B.

Question 966 - Contracts - The question is: A ski-shop operator, in a telephone conversation with a glove manufacturer, ordered 12 pairs of vortex-lined ski gloves at the glove manufacturer's list price of $600 per dozen "for delivery in 30 days." The glove manufacturer orally accepted the offer, and immediately faxed to the ski-shop operator this signed memo: "Confirming our agreement today for your purchase of a dozen pairs of vortex-lined ski gloves for $600, the shipment will be delivered in 30 days." Although the ski-shop operator received and read the glove manufacturer's message within minutes after its dispatch, she changed her mind three weeks later about the purchase and rejected the conforming shipment when it timely arrived. On learning of the rejection, does the glove manufacturer have a cause of action against the ski-shop operator for breach of contract? A: Yes, because the gloves were identified in the contract and tendered to the ski-shop operator. B: Yes, because the glove manufacturer's faxed memo to the ski-shop operator was sufficient to make the agreement enforceable. C: No, because the agreed price was $600 and the ski-shop operator never signed a writing evidencing a contract with the glove manufacturer. D: No, because the ski-shop operator neither paid for nor accepted any of the goods tendered.

The correct answer is B.

Question 982 - Contracts - The question is: On July 15, in a writing signed by both parties, a fixture company agreed to deliver to a druggist on August 15 five storage cabinets from inventory for a total price of $5,000 to be paid on delivery. On August 1, the two parties orally agreed to postpone the delivery date to August 20. On August 20, the fixture company tendered the cabinets to the druggist, who refused to accept or pay for them on the ground that they were not tendered on August 15, even though they otherwise met the contract specifications. Assuming that all appropriate defenses are seasonably raised, will the fixture company succeed in an action against the druggist for breach of contract? A: Yes, because neither the July 15 agreement nor the August 1 agreement was required to be in writing. B: Yes, because the August 1 agreement operated as a waiver of the August 15 delivery term. C: No, because there was no consideration to support the August 1 agreement. D: No, because the parol evidence rule will prevent proof of the August 1 agreement.

The correct answer is B.

Question 1126 - Contracts - The question is: A contractor agreed to build a power plant for a public utility. A subcontractor agreed with the contractor to lay the foundation for $200,000. The subcontractor supplied goods and services worth $150,000, for which the contractor made progress payments aggregating $100,000 as required by the subcontract. The subcontractor then breached by unjustifiably refusing to perform further. The contractor reasonably spent $120,000 to have the work completed by another subcontractor. The subcontractor sues the contractor for the reasonable value of benefits conferred, and the contractor counterclaims for breach of contract. Which of the following should be the court's decision? A: The subcontractor recovers $50,000, the benefit conferred on the contractor for which the subcontractor has not been paid. B: The subcontractor recovers $30,000, the benefit the subcontractor conferred on the contractor minus the $20,000 in damages incurred by the contractor. C: The contractor recovers $20,000, the excess over the contract price that was paid by the contractor for the performance it had bargained to receive from the subcontractor. D: Neither party recovers anything, because the subcontractor committed a material, unexcused breach and the contractor received a $50,000 benefit from the subcontractor for which the subcontractor has not been paid.

The correct answer is C.

Question 1317 - Contracts - The question is: In a written contract, an architect agreed to draw up the plans for and to supervise construction of a client's new house. In return, the client agreed to pay the architect a fee of $10,000 to be paid upon the house's completion. After completion, the client claimed erroneously but in good faith that the architect's plans were defective. The client orally offered to pay the architect $7,500 in full settlement of the claim for the fee. The architect orally accepted that offer despite the fact that the reasonable value of his services was in fact $10,000. The client paid the architect $7,500 pursuant to their agreement. The architect subsequently sued the client for the remaining $2,500. In a preliminary finding, the trier of fact found that there were no defects in the architect's plans. Will the architect be likely to prevail in his action against the client for $2,500? A: Yes, because payment of $7,500 cannot furnish consideration for the architect's promise to surrender his claim. B: Yes, because the oral agreement to modify the written contract is not enforceable. C: No, because the architect's promise to accept $7,500 became binding when the client made the payment. D: No, because the architect's acceptance of partial payment constituted a novation.

The correct answer is C.

Question 1357 - Contracts - The question is: An insurance company issued an insurance policy to a homeowner. The policy failed to contain certain coverage terms required by a state insurance statute. When the homeowner suffered a loss due to a theft that was within the policy's terms, the insurance company refused to pay, claiming that the policy was unenforceable because it violated the statute. Will the homeowner likely succeed in an action against the insurance company to recover for the loss? A: No, because the insurance policy is not a divisible contract. B: No, because the insurance policy violated the statute. C: Yes, because the homeowner belongs to the class of persons intended to be protected by the statute. D: Yes, because the insurance policy would be strictly construed against the insurance company as the drafter.

The correct answer is C.

Question 1436 - Contracts - The question is: A bank agreed to lend a merchant $10,000 for one year at 8% interest. The loan proceeds were to be disbursed within two weeks. The merchant intended to use the loan proceeds to purchase a specific shipment of carpets for resale at an expected profit of $5,000 but said nothing about these plans to the bank. The bank failed to disburse the proceeds and refused to assure the merchant that it would do so. The merchant was able to secure a loan from another lender at 10% interest for one year. However, by the time the merchant started the application process for a substitute loan, it was too late to pursue the opportunity to buy the shipment of carpets. In an action against the bank for breach of contract, which of the following amounts is the merchant likely to recover? A: Nothing, because damages for lost opportunities are not recoverable. B: Nothing, because the parties failed to tacitly agree that the merchant would be entitled to damages in the event of a breach by the bank. C: The difference in cost over time between a loan at 10% and a loan at 8%. D: $5,000, the merchant's foreseeable loss

The correct answer is C.

Question 155 - Contracts - The question is: A manufacturer of computers pays its salespeople a salary of $1,000 per month and a commission of five percent on billings actually rendered for machines that they sell. The manufacturer's salespeople are employed at will under written agreements which provide that in order to receive a commission, the salesperson must be in the employment of the manufacturer when the bill is sent to the customer. In 2006, a salesperson for the manufacturer worked for eight months to get an order from a large corporation for a $750,000 computer. He consulted extensively with the corporation's top executives and worked with its operating personnel to develop detailed specifications for the new equipment. He also promised the corporation, with the manufacturer's knowledge and approval, to assist the corporation for six months after installation in making the equipment work. On January 1, 2007, the corporation signed an order, and on March 1, the computer was installed. On March 15, the manufacturer fired the salesperson on the stated ground that he had failed to meet his 2005 and 2006 sales quotas. The salesperson thought that the manufacturer was correct in this statement. A coworker was thereupon assigned to service the corporation account. On March 31, the manufacturer billed the corporation for the computer. Which of the following, if shown by the evidence, would support a claim by the salesperson against the manufacturer? A: The manufacturer terminated the salesperson because the coworker is the son of the company's president, who wanted his son to have the commission instead of the salesperson. B: The manufacturer and the salesperson were mistaken; the salesperson had in fact exceeded his sales quotas for 2005 and 2006. C: The manufacturer and the salesperson were mistaken because the salesperson had in fact exceeded his sales quotas for 2005 and 2006; the manufacturer terminated the salesperson because the coworker is the son of the company's president, who wanted his son to have the commission instead of the salesperson. D: The salesperson had worked for the manufacturer as a salesperson for 20 years.

The correct answer is C.

Question 1962 - Contracts - The question is: An employer offered to pay a terminated employee $50,000 to release all claims the employee might have against the employer. The employee orally accepted the offer. The employer then prepared an unsigned release agreement and sent it to the employee for him to sign. The employee carefully prepared, signed, and sent to the employer a substitute release agreement that was identical to the original except that it excluded from the release any age discrimination claims. The employer signed the substitute release without reading it. Shortly thereafter, the employee notified the employer that he intended to sue the employer for age discrimination. Is the employer likely to prevail in an action seeking reformation of the release to conform to the parties' oral agreement? A: No, because the employer acted unreasonably by failing to read the substitute release prior to signing it. B: No, because the parol evidence rule will preclude evidence of the oral agreement. C: Yes, because the employee's fraudulent behavior induced the employer's unilateral mistake. D: Yes, because the parties were mutually mistaken regarding the contents of the signed release.

The correct answer is C.

Question 1973 - Contracts - The question is: A buyer sent a signed letter to a seller that stated: "Ship 100 boxes of nails at $3 per box, the price quoted in your circular." The seller mailed the buyer a signed form acknowledgment that agreed to the buyer's terms and stated on the reverse side: "Disputes regarding quality shall be arbitrated." The buyer did not reply to the seller's acknowledgment, and the seller shipped the nails. When the buyer received the nails, it found their quality to be unsatisfactory and sued the seller for breach of warranty. The seller has asked an attorney whether the parties' contract requires arbitration of the buyer's claim. What is the best advice the attorney can provide? A: A contract was formed pursuant to conduct when the buyer received the nails, and a court would exclude the arbitration provision from the contract. B: A contract was formed when the seller mailed its acknowledgment, and the arbitration term became part of the contract. C: A contract was formed when the seller mailed its acknowledgment, and the court must decide whether the arbitration term should be excluded as a material alteration of the contract. D: No contract exists, because the arbitration term in the seller's acknowledgment created a counteroffer that the buyer never accepted.

The correct answer is C.

Question 243 - Contracts - The question is: A victim, injured by a driver in an auto accident, employed an attorney to represent him in the matter. The victim was chronically insolvent and expressed doubt whether he could promptly get necessary medical treatment. Accordingly, the attorney wrote into their contract his promise to the victim "to pay from any settlement with the driver compensation to any physician who provides professional services for the victim's injuries." The contract also provided that the attorney's duties were "non-assignable." The attorney immediately filed suit against the driver. The victim then sought and received medical treatment, reasonably valued at $1,000, from the doctor, but failed to inform the doctor of the attorney's promise. After receiving a bill from the doctor for $1,000, the victim immediately wrote the doctor explaining that he was unable to pay and enclosing a copy of his contract with the attorney. The victim then asked the attorney about payment of this bill, but the attorney requested a release from their employment contract, stating that he would like to refer the victim's claim to a colleague and that the colleague was willing to represent the victim in the pending lawsuit. The victim wrote a letter to the attorney releasing him from their contract and agreeing to the colleague's representation. A copy of this letter was sent to the doctor. The colleague subsequently promised the attorney to represent the victim and soon negotiated a settlement of the victim's claim against the driver which netted $1,000, all of which was paid by the victim to creditors other than the doctor. The victim remains insolvent. In an action by the doctor against the colleague, the colleague is most likely to argue on these facts that A: the colleague made only a gratuitous promise to the attorney. B: at the time the colleague promised to represent the victim, the doctor was only a member of an unidentified class of beneficiaries. C: there is insufficient evidence to support a finding that the doctor was either a creditor or donee beneficiary of the colleague's promise to the attorney. D: there is insufficient evidence to support a finding that the doctor substantially changed his position in reliance on the colleague's promise.

The correct answer is C.

Question 319 - Contracts - The question is: A photographer and a customer entered a contract in writing on November 1, the essential part of which read as follows: "[the photographer] to supply the customer with 200 personalized Christmas cards on or before December 15, bearing a photograph of [the customer] and his family, and [the customer] to pay $100 30 days thereafter. Photograph to be taken by [the photographer] at [the customer]'s house. Cards guaranteed to be fully satisfactory and on time." Because the customer suddenly became ill, the photographer was unable to take the necessary photograph of the customer and his family until the first week of December. The final week's delay was caused by the photographer's not being notified promptly by the customer of his recovery. Before taking the photograph of the customer and his family, the photographer advised the customer that he was likely to be delayed a day or two beyond December 15 in making delivery because of the time required to process the photograph and cards. The customer told the photographer to take the photograph anyway. The cards were finally delivered by the photographer to the customer on December 17, the photographer having diligently worked on them in the interim. Although the cards pleased the rest of the family, the customer refused to accept them because, as he said squinting at one of the cards at arm's length without bothering to put on his reading glasses, "The photograph makes me look too old. Besides, the cards weren't delivered on time." Which of the following statements regarding the legal effect of the customer's illness is LEAST accurate? A: The customer's illness and the related development excused the photographer from his obligations to deliver the cards on or before December 15. B: Prompt notice by the customer to the photographer of the customer's recovery from illness was an implied condition of the photographer's duty under the circumstances. C: The photographer was under a duty of immediate performance of his promise to deliver the cards, as of December 15, by reason of the express language of the contract and despite the illness of the customer and the related developments. D: The customer's conduct after his illness constituted a waiver of the necessity of the photographer's performing on or before December 15.

The correct answer is C.

Question 37 - Contracts - The question is: On March 1, a seller orally agreed to sell his land, Homestead, to the buyer for $46,000 to be paid on March 31. The buyer orally agreed to pay $25,000 of the purchase price to a creditor of the seller in satisfaction of a debt which the seller said he had promised to pay the creditor. On March 10, the buyer dictated the agreement to his secretary but omitted all reference to the payment of the $25,000 to the creditor. In typing the agreement, the secretary mistakenly typed $45,000 rather than $46,000 as the purchase price. Neither the buyer nor the seller carefully read the writing before signing it on March 15. Neither noticed the error in price and neither raised any question concerning omission of the payment to the creditor. If the buyer refused to pay more than $45,000 for Homestead, in an action by the seller against the buyer for an additional $1,000, it would be to the seller's advantage to try to prove that A: the writing was intended only as a sham. B: the writing was only a partial integration. C: there was a mistake in integration. D: there was a misunderstanding between the seller and the buyer concerning the purchase price.

The correct answer is C.

Question 391 - Contracts - The question is: A seller contracted in writing to deliver to a buyer 100 bushels of wheat on August 1 at $3.50 a bushel. Because his suppliers had not delivered enough wheat to him by that time, the seller on August 1 had only 95 bushels of wheat with which to fulfill his contract with the buyer. If the seller tenders 95 bushels of wheat to the buyer on August 1, and the buyer refused to accept or pay for any of the wheat, which of the following best states the legal relationship between the seller and the buyer? A: The seller has a cause of action against the buyer, because the seller has substantially performed his contract. B: The seller is excused from performing his contract because of impossibility of performance. C: The buyer has a cause of action against the seller for the seller's failure to deliver 100 bushels of wheat. D: The buyer is obligated to give the seller a reasonable time to attempt to obtain the other five bushels of wheat.

The correct answer is C.

Question 725 - Contracts - The question is: A debtor's $1,000 contractual obligation to a creditor was due on July 1. On the preceding June 15, the creditor called her niece and said, "As my birthday gift to you, you may collect on July 1 the $1,000 the debtor owes me." The creditor also called the debtor and told him to pay the $1,000 to the niece on July 1. On July 1, the debtor, saying that he did not like the niece and wouldn't pay anything to her, paid the $1,000 to the creditor, who accepted it without objection. Will the niece succeed in an action for $1,000 against the debtor? A: Yes, because the creditor had effectively assigned the $1,000 debt to her. B: Yes, because the creditor's calls to the niece and the debtor effected a novation. C: No, because the creditor's acceptance of the $1,000, without objection, was in effect the revocation of a gratuitous assignment. D: No, because the debtor cannot be compelled to render performance to an assignee whom he finds personally objectionable.

The correct answer is C.

Question 1111 - Contracts - The question is: On April 1, an owner and a buyer signed a writing in which the owner, in consideration of $100 to be paid to the owner by the buyer, offered the buyer the right to purchase Greenacre for $100,000 within 30 days. The writing further provided, "This offer will become effective as an option only if and when the $100 consideration is in fact paid." On April 20, the owner, having received no payment or other communication from the buyer, sold and conveyed Greenacre to a citizen for $120,000. On April 21, the owner received a letter from the buyer enclosing a cashier's check for $100 payable to the owner and stating, "I am hereby exercising my option to purchase Greenacre and am prepared to close whenever you're ready." Assume that, for whatever reason, the buyer prevails in the suit against the owner. Which of the following is the buyer entitled to recover? A: Nominal damages only, because the remedy of specific performance was not available to the buyer. B: The fair market value, if any, of an assignable option to purchase Greenacre for $100,000. C: $20,000, plus the amount, if any, by which the fair market value of Greenacre on the date of the owner's breach exceeded $120,000. D: The amount, if any, by which the fair market value of Greenacre on the date of the owner's breach exceeded $100,000.

The correct answer is D.

Question 753 - Contracts - The question is: For an agreed price of $20 million, a builder specializing in large scale construction projects contracted with a property owner to design and build on the property owner's commercial plot a 15-story office building. As per a local statute due to the number of earthquakes in the area, the building's foundation required a minimum excavation of 25 feet. In excavating for the foundation and underground utilities, the builder encountered a massive layer of granite at a depth of 15 feet. When the contract was made, neither the property owner nor the builder was aware of the subsurface granite, for the presence of which neither party had hired a qualified expert to test. Claiming accurately that removal of enough granite to permit the construction as planned would cost him an additional $3 million and a probable net loss on the contract of $2 million, the builder refused to proceed with the work unless the property owner would promise to pay an additional $2.5 million for the completed building. If the property owner refuses and sues the builder for breach of contract, which of the following will the court probably decide? A: The builder is excused under the modern doctrine of supervening impossibility, which includes severe impracticability. B: The builder is excused, because the contract is voidable on account of the parties' mutual mistake concerning an essential underlying fact. C: The property owner prevails, because the builder assumed the risk of encountering subsurface granite that was unknown to the property owner. D: The property owner prevails, because the builder did not know that there was subsurface granite in the area.

The correct answer is C.

Question 855 - Contracts - The question is: The owner of a fleet of taxis contracted with a dealer in petroleum products for the purchase and sale of the taxi fleet owner's total requirements of gasoline and oil for one year. As part of that agreement, the petroleum dealer also agreed with the taxi fleet owner that for one year the petroleum dealer would place all his advertising with the taxi fleet owner's wife who owned her own small advertising agency. When the wife was informed of the owner-dealer contract, she declined to accept an advertising account from the soap company because she could not handle both the petroleum dealer and the soap company accounts during the same year. During the first month of the contract, the taxi fleet owner purchased substantial amounts of his gasoline from a supplier other than the petroleum dealer, and the petroleum dealer thereupon notified the wife that he would no longer place his advertising with her agency. In an action against the petroleum dealer for breach of contract, the wife probably will A: succeed, because she is a third-party beneficiary of the owner-dealer contract. B: succeed, because the taxi fleet owner was acting as the wife's agent when he contracted with the petroleum dealer. C: not succeed, because the failure of a constructive condition precedent excused the petroleum dealer's duty to place his advertising with the wife. D: not succeed, because the wife did not provide any consideration to support the petroleum dealer's promise to place his advertising with her.

The correct answer is C.

Question 1041 - Contracts - The question is: A potential buyer telegraphed a vendor on June 1, "At what price will you sell 100 of your QT-Model garbage-disposal units for delivery around June 10?" Thereafter, the following communications were exchanged: 1. Telegram from the vendor received by the potential buyer on June 2: "You're in luck. We have only 100 QT's, all on clearance at 50% off usual wholesale of $120 per unit, for delivery at our shipping platform on June 12." 2. Letter from the potential buyer received in U.S. mail by the vendor on June 5: "I accept. Would prefer to pay in full 30 days after invoice." 3. Telegram from the vendor received by the potential buyer on June 6: "You must pick up at our platform and pay C.O.D." 4 Letter from the potential buyer received in U.S. mail by the vendor on June 9: "I don't deal with people who can't accommodate our simple requests." 5. Telegram from the potential buyer received by the vendor on June 10, after the vendor has sold and delivered all of the QT's to another buyer earlier that day: "Okay. I'm over a barrel and will pick up the goods on your terms June 12." The potential buyer now sues the vendor for breach of contract. Which of the following arguments will best serve the vendor's defense? A: The vendor's telegram received on June 2 was merely a price quotation, not an offer. B: The potential buyer's letter received on June 5 was not an acceptance because it varied the terms of the vendor's initial telegram. C: The potential buyer's use of the mail in response to the vendor's initial telegram was an ineffective method of acceptance. D: The potential buyer's letter received on June 9 was an unequivocal refusal to perform that excused the vendor even if the parties had previously formed a contract.

The correct answer is D.

Question 1054 - Contracts - The question is: A famous chef entered into a written agreement with his neighbor, a well-known interior decorator respected for his unique designs, in which the decorator agreed, for a fixed fee, to design the interior of the chef's new restaurant, and, upon the chef's approval of the design plan, to decorate and furnish the restaurant accordingly. The agreement was silent as to assignment or delegation by either party. Before beginning the work, the decorator sold his decorating business to his friend under an agreement in which the decorator assigned to the friend, and the friend agreed to complete, the chef-decorator contract. The friend, also an experienced decorator of excellent repute, advised the chef of the assignment, and supplied him with information confirming both the friend's financial responsibility and past commercial success. If the chef allows the friend to perform and approves his design plan, but the friend fails without legal excuse to complete the decorating as agreed, against whom does the chef have an enforceable claim for breach of contract? A: The decorator only, because the decorator's agreement with the friend did not discharge his duty to the chef, and the friend made no express promise to the chef. B: Only the friend, because the decorator's duty to the chef was discharged when the decorator obtained a skilled decorator (the friend) to perform the chef-decorator contract. C: Only the friend, because the chef was an intended beneficiary of the decorator-friend agreement, and the decorator's duty to the chef was discharged when the chef permitted the friend to do the work and approved the friend's designs. D: Either the decorator, because his agreement with the friend did not discharge his duty to the chef, or the friend, because the chef was an intended beneficiary of the decorator-friend agreement.

The correct answer is D.

Question 1138 - Contracts - The question is: A computer company contracted in writing with a bank to sell and deliver to the bank a mainframe computer using a new type of magnetic memory, then under development but not perfected by the computer company, at a price substantially lower than that of a similar computer using current technology. The contract's delivery term was "F.O.B. the bank, on or before July 31." After making the contract with the bank, the computer company discovered that the new technology it intended to use was unreliable and that no computer manufacturer could yet build a reliable computer using that technology. The computer company thereupon notified the bank that it was impossible for the computer company or anyone else to build the contracted-for computer "in the present state of the art." If the bank sues the computer company for failure to perform its computer contract, the court will probably decide the case in favor of A: the computer company, because its performance of the contract was objectively impossible. B: the computer company, because a contract to build a machine using technology under development imposes only a duty on the builder to use its best efforts to achieve the result contracted for. C: the bank, because the law of impossibility does not apply to merchants under the applicable law. D: the bank, because the computer company assumed the risk, in the given circumstances, that the projected new technology would not work reliably.

The correct answer is D.

Question 1530 - Contracts - The question is: A farmer who wanted to sell her land received a letter from a developer that stated, "I will pay you $1,100 an acre for your land." The farmer's letter of reply stated, "I accept your offer." Unbeknownst to the farmer, the developer had intended to offer only $1,000 per acre but had mistakenly typed "$1,100." As both parties knew, comparable land in the vicinity had been selling at prices between $1,000 and $1,200 per acre. Which of the following states the probable legal consequences of the correspondence between the parties? A: There is no contract, because the parties attached materially different meanings to the price term. B: There is no enforceable contract, because the developer is entitled to rescission due to a mutual mistake as to a basic assumption of the contract. C: There is a contract formed at a price of $1,000 per acre. D: There is a contract formed at a price of $1,100 per acre.

The correct answer is D.

Question 1542 - Contracts - The question is: A buyer purchased a new car from a dealer under a written contract that provided that the price of the car was $20,000 and that the buyer would receive a "trade-in allowance of $7,000 for the buyer's old car." The old car had recently been damaged in an accident. The contract contained a merger clause stating: "This writing constitutes the entire agreement of the parties, and there are no other understandings or agreements not set forth herein." When the buyer took possession of the new car, she delivered the old car to the dealer. At that time, the dealer claimed that the tradein allowance included an assignment of the buyer's claim against her insurance company for damage to the old car. The buyer refused to provide the assignment. The dealer sued the buyer to recover the insurance payment. The dealer has offered evidence that the parties agreed during their negotiations for the new car that the dealer was entitled to the insurance payment. Should the court admit this evidence? A: No, because the dealer's acceptance of the old car bars any additional claim by the dealer. B: No, because the merger clause bars any evidence of the parties' prior discussions concerning the trade-in allowance. C: Yes, because a merger clause does not bar evidence of fraud. D: Yes, because the merger clause does not bar evidence to explain what the parties meant by "trade-in allowance."

The correct answer is D.

Question 165 - Contracts - The question is: A new business enterprise, about to commence the manufacture of clothing, entered into a written agreement to purchase all of its monthly requirements of a certain elasticized fabric for a period of three years from a fabric company at a specified unit price and agreed upon delivery and payment terms. The agreement also provided: 1. The parties covenant not to assign this contract. 2. Payments coming due hereunder for the first two months shall be made directly by the new business enterprise to the creditor of the fabric company. The fabric company promptly made an "assignment of the contract" to a finance company as security for a $100,000 loan. The new enterprise subsequently ordered, took delivery of, and paid the fabric company the agreed price ($5,000) for the new enterprise's requirement of the fabric for the first month of its operation. Assume that the assignment from the fabric company to the finance company was effective and that the creditor did not become aware of the original agreement between the new business enterprise and the fabric company until after the fabric company's acceptance of the $5,000 payment from the new business enterprise. Which of the following is correct? A: The creditor was an incidental beneficiary of the new business enterprise-fabric company agreement. B: The creditor has a prior right to the new business enterprise's $5,000 payment as against either the fabric company or the finance company. C: The creditor was an incidental beneficiary of the new business enterprise-fabric company agreement and has a prior right to the new business enterprise's $5,000 payment as against either the fabric company or the finance company. D: The creditor was not an incidental beneficiary of the new business enterprise-fabric company agreement and does not have a prior right to the new business enterprise's $5,000 payment as against either the fabric company or the finance company.

The correct answer is D.

Question 250 - Contracts - The question is: On March 1, a landowner and builder orally agreed that the builder would erect a boathouse on the landowner's lot and dig a channel from the boathouse, across a neighbor's lot, to a lake. The neighbor had already orally agreed with the landowner to permit the digging of the channel across the neighbor's lot. The builder agreed to begin work on the boathouse on March 15, and to complete all the work before June 1. The total price of $10,000 was to be paid by the landowner in three installments: $2,500 on March 15; $2,500 when the boathouse was completed; $5,000 when the builder finished the digging of the channel. Assume that the landowner tendered the $2,500 on March 15, and that the builder refused to accept it or to perform. In an action by the landowner against the builder for breach of contract, which of the following can the builder successfully use as a defense? A: The neighbor-landowner agreement permitting the digging of the channel across the neighbor's lot was not in writing. B: The landowner-builder agreement was not in writing. C: The landowner-builder agreement was not in writing and the neighbor-landowner agreement permitting the digging of the channel across the neighbor's lot was not in writing. D: The builder does not have a defense.

The correct answer is D.

Question 401 - Contracts - The question is: A corporation, through its president, requested from a financing company a short-term loan of $100,000. On April 1, the corporation's president and the financing company's loan officer agreed orally that the financing company would make the loan on the following terms: (1) The loan would be repaid in full on or before the following July 1 and would carry interest at an annual rate of 15 percent (a lawful rate under the applicable usury law); and (2) the corporation's president would personally guarantee repayment. The loan was approved and made on April 5. The only document evidencing the loan was a memorandum, written and supplied by the financing company and signed by the president for the corporation, that read in its entirety: "April 5 In consideration of a loan advanced on this date, the corporation hereby promises to pay the financing company, $100,000 on September 1. The corporation By /s/ the president" The corporation did not repay the loan on or before July 1, although it had sufficient funds to do so. On July 10, the financing company sued the corporation as principal debtor and the corporation's president individually as guarantor for $100,000, plus 15 percent interest from April 5. At the trial, can the financing company prove the corporation's oral commitment to repay the loan on or before July 1? A: Yes, because the oral agreement was supported by an independent consideration. B: Yes, because the evidence of the parties' negotiations is relevant to their contractual intent concerning maturity of the debt. C: No, because such evidence is barred by the preexisting duty rule. D: No, because such evidence contradicts the writing and is barred by the parol evidence rule.

The correct answer is D.

Question 588 - Contracts - The question is: The plaintiff, a baseball star, contracted with the Municipal Symphony Orchestra, Inc., to perform for $5,000 at a children's concert as the narrator of "Peter and the Wolf." Shortly before the concert, the baseball star became embroiled in a highly publicized controversy over whether he had cursed and assaulted a baseball fan. The orchestra canceled the contract out of concern that attendance might be adversely affected by the baseball star's appearance. The baseball star sued the orchestra for breach of contract. His business agent testified without contradiction that the cancellation had resulted in the baseball star's not getting other contracts for performances and endorsements. The trial court instructed the jury, in part, as follows: "If you find for the plaintiff, you may award damages for losses which at the time of contracting could reasonably have been foreseen by the defendant as a probable result of its breach. However, the law does not permit recovery for the loss of prospective profits of a new business caused by breach of contract." On the baseball star's appeal from a jury verdict for the baseball star, and judgment thereon, awarding damages only of the $5,000 fee promised by the orchestra, the judgment will probably be A: affirmed, because the trial court stated the law correctly. B: affirmed, because the issue of damages for breach of contract was solely a jury question. C: reversed, because the test for limiting damages is what the breaching party could reasonably have foreseen at the time of the breach. D: reversed, because under the prevailing modern view, lost profits of a new business are recoverable if they are established with a reasonable certainty.

The correct answer is D.

Question 759 - Contracts - The question is: A notorious spendthrift, who was usually broke for that reason, received the following letter from his uncle, a wealthy and prudent man: "I understand you're in financial difficulties again. I promise to give you $5,000 on your birthday next month, but you'd better use it wisely or you'll never get another dime from me." The spendthrift thereupon signed a contract with a car dealer to purchase a $40,000 automobile and to make a $5,000 down payment on the day after his birthday. If the spendthrift sues his uncle for $5,000 after the latter learned of the car-purchase contract and then repudiated his promise, which of the following is the uncle's best defense? A: A promise to make a gift in the future is not enforceable. B: Reliance by the promisee on a promise to make a future gift does not make the promise enforceable unless the value of the promised gift is substantially equivalent to the promisee's loss by reliance. C: Reliance by the promisee on a promise to make a future gift does not make the promise enforceable unless that reliance also results in an economic benefit to the promisor. D: Reliance by the promisee on a promise to make a future gift does not make the promise enforceable unless injustice can be avoided only by such enforcement.

The correct answer is D.

Question 896 - Contracts - The question is: A flour wholesaler contracted to deliver to a producer of fine baked goods her flour requirements for a one-year period. Before delivery of the first scheduled installment, the flour wholesaler sold its business and "assigned" all of its sale contracts to a miller, another reputable and long-time flour wholesaler. The original flour wholesaler informed the baked goods producer of this transaction. Assume that when the miller tendered the first installment to the baked goods producer in compliance with the flour wholesaler-baked goods contract, the baked goods producer refused to accept the goods. Can the baked goods producer legally reject the goods? A: Yes; executory requirements contracts are nonassignable. B: Yes; duties under an executory bilateral contract are assumable only by an express promise to perform on the part of the delegatee. C: Yes; language of "assignment" in the transfer for value of a bilateral sale-of-goods contract effects only a transfer of rights, not a delegation of duties. D: No; requirements contracts are assignable as long as the assignee does not disproportionately alter the contemplated quantity

The correct answer is D.