CONTRACTS Questions
The owner of a failing cafe and a well-known restaurateur signed a written document indicating that the restaurateur would "pay for the transfer of all kitchen equipment within the kitchen at the cafe to the restaurant by December 31." After the cafe closed, the restaurateur went to the cafe and transferred all kitchen equipment to his own new restaurant site. The restaurateur researched the cost of the equipment at the time it was purchased and mailed a check to the cafe's owner for that amount. He had entered into many similar agreements with other businesses before, without any problems. The cafe owner immediately sent a letter to the restaurateur demanding the return of the kitchen equipment. The cafe owner argued that no contract was formed because the parties had not agreed to price and that the owner had anticipated a much higher sales price. Have the parties formed a valid and enforceable contract? A.Yes, because the court may supply the missing price term. B.No, because the court had not supplied the missing price prior to performance. C.No, because a contract cannot be formed when there are missing terms. D.Yes, because the restaurateur had entered into many similar agreements in the past.
A. . Under the UCC a court can find that a contract for the sale of goods was formed if (1) the parties intended to contract, and (2) there is an objective standard to fill in any missing term. Here, the objective standard for the omitted price term (and the one presumably intended by the parties) was the fair market value of the restaurant equipment. Note, though that the terms typically used by the buyer are not an objective standard for the court to reference.
A restaurant owner sent a signed order form to a produce supplier that read: "Please ship us 100 pounds of potatoes at your current price." The supplier received the order form on November 9. Later the same day, the supplier mailed the owner a letter with the proper address and postage. The letter stated that the order had been accepted at the supplier's current price for potatoes. On November 10, before receiving the supplier's reply, the owner telephoned the supplier to inform the supplier that the owner had found a closer supplier and was canceling the order. The supplier asked the owner to reconsider, but the owner refused. On November 11, the owner received the supplier's letter. Relying on the owner's telephone call, the supplier never shipped any potatoes to the restaurant. As of November 12, is there an enforceable contract between the supplier and the owner? A. Yes, because the supplier effectively accepted the owner's offer before the owner revoked it. B. Yes, because the owner's offer was irrevocable for a reasonable time. C. No, because the owner's offer could be accepted only by shipment of the goods, and the supplier never shipped the potatoes. D. No, because the owner effectively revoked its offer before it was properly accepted.
A. An acceptance that is mailed within the allotted response time is effective when sent rather than upon receipt, unless the offer provides otherwise. The mailing must be properly addressed and include correct postage. Here, those requirements are met. Offers revoked by the offeror are effective upon receipt. Therefore, the supplier effectively accepted the offer before receiving the owner's revocation of the offer, and a contract was formed upon acceptance.
A corporation decided to hold an annual retreat for a long weekend during the summer. The corporation entered into a written agreement with a contractor for $8,000 to build a large stage on which the president, CEO, and other corporate officers could deliver speeches and present different programs. The stage was to contain all of the sophisticated technology necessary for innovative programming. The contractor was also responsible for installing a large tent to cover the area next to the stage, in case of bad weather. The agreement mandated that the work had to be completed by 6:00 p.m. on the day before the annual retreat was set to begin. The contractor was on vacation the week leading up to the annual retreat and decided to spend an extra day away. Two days before the corporation's annual retreat, the contractor finally began working on the project. Due to the time constraints, he realized that he would not be able to complete the project without extra help at an additional cost of $1,000. The corporation agreed to the additional cost because it had no other option and needed the project completed on time. After the contractor timely completed the project, the corporation paid him $8,000 but refused to pay the additional $1,000. Can the contractor recover the additional $1,000 from the corporation? · A. No, because there was no consideration for the corporation's promise to pay the additional amount. · B. Yes, because the unforeseen difficulties make this modification enforceable. · C. No, because the agreement to pay the additional cost was not in writing. · D. Yes, because the corporation agreed and the contractor completed performance on time.
A. At common law, modification of an existing contract must be supported by consideration. Here, the contractor was already obligated to build the large stage and install the tent and has suffered no additional legal detriment that could be considered consideration. The corporation did not receive any consideration from the contractor for its promise to pay the additional $1,000. A modification of a contract can also be enforced when there are unforeseen difficulties, and one of the parties agrees to compensate the other when the difficulties are discovered if those difficulties would make performance impracticable. However, performance is not made impracticable here because the contractor willingly extended his vacation. Therefore, the contractor cannot recover the additional $1,000.
On November 1, the following notice was posted in a privately-operated law school: "The faculty, seeking to encourage appellate advocacy, offers to match the prize money for any student at this school who wins the current National Appellate Advocacy Competition. All competing briefs must be submitted to the Dean's office before May 1." The National Competition is conducted by an outside agency, unconnected with any law school. A student read this notice on November 2, and thereupon intensified his effort to make his appellate brief, 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 $2,000 Appellate Advocacy Competition offer." This note was inadvertently placed in the 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 Appellate Advocacy Competition must be withdrawn." The student's brief was submitted through the Dean's office on April 15. On May 1, it was announced that the student had won the National Appellate Advocacy Competition and the prize of $2,000. The law faculty refused to pay anything.As to the student, was the offer effectively revoked? A. No, because of the student's reliance, prior to April 1, on the offer. B. No, unless the student became aware of the April 1 posting and removal before submitting the paper. C. Yes, by the faculty's second notice. D. No, because it became irrevocable after a reasonable time had elapsed.
A. In general, an offer can be terminated by the offeror at any time, even if the offer states it will remain open for a specific amount of time. A revocation is not effective until communicated. In a unilateral contract, the offeree's promise to perform is insufficient to constitute acceptance. Acceptance of an offer for a unilateral contract requires complete performance. Note that merely starting performance is not enough to accept a unilateral contract, but it will make the offer irrevocable for a reasonable period of time to allow for complete performance unless there is a manifestation of a contrary intent. A unilateral contract is not formed until performance is complete. Here, the attempt at revocation did not occur until April 1, at which time the student had already begun and relied on the promise.
A mother was in a canoe with her young son on a river. As the son leaned over the edge of the canoe to watch some ducks swim by, he fell into the river. The son could not swim and began to drown, so the mother jumped into the river to save him. However, she could not find him in the choppy water. A nearby fisherman saw the incident, jumped into the water, and saved the drowning boy by carrying him to the riverbank. In doing so, the fisherman was forced to drop the expensive fishing pole he was using to catch fish in the river, losing it forever. When the woman met the fisherman on the riverbank, she thanked him and promised to repay him for the lost fishing pole within the week. A week later, when the fisherman asked for the money, the mother changed her mind and told him she would not pay for his fishing pole. Assuming that none of the parties can be found negligent, under the common law, can the fisherman recover the cost of his fishing pole from the mother? · A. No, because the mother's promise to pay for the fishing pole is not supported by consideration. · B. No, because the son, and not the mother, received a material benefit from the fisherman. · C. Yes, because the fisherman can recover under an implied-in-law contract. · D. Yes, because the fisherman suffered a detriment when he dropped his fishing pole to save the son.
A. Under the common law, something given in the past is typically not good consideration because it could not have been bargained for, nor could it have been done in reliance upon a promise. Therefore, the fisherman's rescue of the son cannot be valid consideration for an enforceable contract between the mother and the fisherman.
A tennis instructor gives group lessons for adult beginners at a tennis court in a private club. A novice adult player showed up at the court to participate in the drills conducted by the instructor. The instructor gave the novice instruction on her tennis game for that day and several more days. The lessons cost $50 per hour. The novice refused to pay the instructor. In a breach of contract action to recover the lesson fees, will the instructor prevail? · A. Yes, because the conduct of the novice manifested assent to the bargain. · B. Yes, because the bargain, if expressly made, would have been supported by consideration. · C. No, because the instructor's only recovery would be in quantum meruit. · D. No, because there was no formal offer and acceptance.
A. When a person's assent to an offer is inferred from the person's conduct and the person has reason to know his conduct may be construed as assent, an implied-in-fact contract exists. Here, the novice's participation in the drills implied such consent.
An undergraduate student planned to transfer to a university in the town where her aunt resided and to live in an on-campus dorm. She told her aunt about her plans in an email. The next day, the aunt replied with an email containing the following: "I am so excited! If you don't want to deal with a roommate, don't apply for a room in the dorms, you can just stay in my spare room rent-free!" Elated, the student immediately submitted her transfer application without submitting an application for a dorm room on campus. After the deadline to apply for a dorm room had passed, the student's aunt called and explained that she had no room for the student because she was renting out her spare room to another student who was willing to pay rent. The student had to sign a lease in an off-campus apartment and ended up paying much more than she would have paid to live in the dorm. If the student sues her aunt to recover damages, is the student likely to recover? · A. No, because the aunt's promise to provide a rent-free room is an unenforceable gift promise. · B. Yes, because the student decided not to apply for a dorm room in reasonable reliance on her aunt's promise to provide her a room. · C. No, because the student did not effectively accept the aunt's offer before it was revoked. · D. Yes, because the agreement was in writing and the apartment was more expensive than the dorm.
B. A promise is binding if the promisor should reasonably expect it to induce action or forbearance on the part of the promisee or a third person, the promise does induce such action or forbearance, and injustice can be avoided only by enforcement of the promise. Here, the student reasonably relied on her aunt's promise of rent-free boarding when she did not apply for on-campus housing. Therefore, the student will likely succeed in her action against her aunt.
A shoe manufacturer contends that the owner of a shoe store called and ordered 50 pairs of Oxford-style dress shoes at $100 per pair to be shipped within three weeks and that the manufacturer's representative immediately accepted this order. The manufacturer promptly sent the owner a signed, written acknowledgment of the alleged order that reflected the manufacturer as seller and the shoe store owner as buyer, as well as the number and style of shoes, but that did not indicate the price of the shoes. The owner admits to receiving the acknowledgment the following day and taking no action regarding it. Two weeks later, the owner received a shipment of 50 pairs of Oxford-style dress shoes. The owner immediately called the manufacturer and asserted that he had never ordered the shoes. Will the Statute of Frauds prevent the manufacturer from enforcing this contract against the owner? · A. Yes, because the acknowledgment did not indicate the price of the shoes. · B. No, because the owner received and did not respond to the written acknowledgment in a timely manner. · C. No, because an oral contract made between merchants is enforceable. D. Yes, because the price of the shoes exceeds the $500 threshold of the Statute of Frauds.
B. Generally, a contract that falls within the Statute of Frauds is unenforceable unless evidenced by a writing. The writing must (i) be signed by the party to be charged and (ii) contain the essential elements of the deal. A contract for the sale of goods for a price of at least $500 falls with the Statute of Frauds. Consequently, the purported order of 50 pairs of shoes at $100 per pair is subject to the Statute of Frauds. Although the acknowledgment sent by the manufacturer to the owner is otherwise sufficient to satisfy the Statute of Frauds, it was not signed by the owner. However, if both parties are merchants and a memorandum sufficient against one party is sent to the other party, who has reason to know its contents, and the receiving party does not object in writing within 10 days, then the contract is enforceable against the receiving party even though he has not signed it. Here, this merchant's exception applies to the owner who received the acknowledgment of his order and did not reply for more than 10 days after receiving it.
A salon owner contacted a manufacturer by email about purchasing shampoo sinks. The manufacturer sent the salon owner the following email: "I will sell you four shampoo sinks at a discounted price of $300 apiece." The salon owner responded immediately, rejecting the offer. However, due to a transmission problem in the internet routing system, the message was not delivered to the manufacturer until the following day. In the meantime, the salon owner contacted several other sellers, all of whom made significantly higher offers. The salon owner then sent another email to the manufacturer, stating, "I accept your offer." This email was delivered immediately. The following day, the misrouted rejection email arrived in the manufacturer's inbox. Assume the parties are in a jurisdiction that applies the mailbox rule to electronic communications. Was a contract formed? A.Yes, because the mailbox rule applies. B.Yes, because the salon owner accepted the manufacturer's offer. C.No, because the salon owner rejected the offer prior to accepting the offer. D.No, because the manufacturer received the salon owner's rejection.
B. The mailbox rule states that a timely sent acceptance is effective when sent, not upon receipt. However, if a communication is sent rejecting the offer, and a later communication is sent accepting the contract, the mailbox rule does not apply, and the first one to be received by the offeror prevails. Here, the salon owner rejected the offer, then sent an acceptance. Since the acceptance was received by the offeror first, the acceptance prevails.
A ski-shop operator, in a telephone conversation with a glove manufacturer, ordered 12 pairs of vortex-lined ski gloves at the manufacturer's list price of $600 per dozen "for delivery in 30 days." The 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 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 manufacturer have a cause of action against the ski-shop operator for breach of contract? A. No, because the ski-shop operator neither paid for nor accepted any of the goods tendered. B. Yes, because the 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 manufacturer. D. Yes, because the gloves were identified in the contract and tendered to the ski-shop operator.
B. Under the U.C.C., if both parties are merchants (as here), and a memorandum sufficient against one party is sent to the other party, who has reason to know its contents, and that receiving party does not object in writing within ten days, the contract is enforceable against the receiving party even though he has not signed it.
A wholesaler of bicycle chains sent a retailer the following fax on December 1: "Because of your continued loyalty as a customer, I am prepared to sell you up to 1,000 units of Bicycle Chain Model D at $7.50 per unit, a 25% discount off our original $10.00 price. This offer will remain open for 7 days." The fax lacked a full, handwritten signature, but was on the wholesaler's letterhead and had been initialed by the wholesaler's head of sales. On December 4, the wholesaler's head of sales called the retailer and informed the retailer that he had decided to revoke his December 1 offer. On December 5, the retailer placed an order for 1,000 bicycle chains, stating that he would pay the discounted price of $7.50 per unit. What is the correct value of the order placed by the retailer? A.$10,000, because the retailer did not provide consideration to hold the offer open. B.$7,500, because the wholesaler was bound to keep the offer open for 7 days. C.$10,000, because the offer was not signed by the wholesaler. D.$7,500, because the wholesaler's revocation was not in writing.
B. Under the UCC's firm offer rule, an offer to buy or sell goods is irrevocable if the offeror is a merchant, there is an assurance that the offer is to remain open, and the assurance is contained in a signed writing from the offeror. No consideration by the offeree is needed to keep the offer open. Here, all three conditions are satisfied (note that letterhead and an agent's initials suffices as a "signature"), and the wholesaler's offer was irrevocable until the offer period expired. The retailer's order was within the 7-day window, and thus the order for 1,000 units is priced at $7.50 each, or $7,500 total.
Two roommates lived together in a modest apartment for many years, during which time the female roommate purchased many items of furniture for the apartment. These items were worth roughly $10,000. When the female roommate decided to relocate across the country for a large promotion, she told the male roommate he could have all of the furniture when she left at the end of the month, as he had a much lower income. He wrote a long thank-you note telling her he was grateful. The next day at work, before the female roommate read the note, she learned that her promotion fell through and she decided to stay in the apartment. At the end of the month, can the male roommate enforce the female's promise to give him the furniture? · A. Yes, because he acquired full ownership of the property upon acceptance. · B. No, because the female roommate had not yet read the note regarding acceptance. · C. No, because the male roommate did not bargain for a legal detriment in exchange for the promise. · D. Yes, because he accepted the offer of the furniture through the thank-you note.
C. A promise to make a gift does not involve bargained-for consideration and is therefore unenforceable. In order to be enforceable under the majority rule, the promisee must suffer a bargained-for detriment. Here, the female roommate promised to give the male roommate the furniture as a gift. He gave her nothing in return, and no other consideration was provided. The promise is not enforceable because under the terms of the female roommate's promise, the male roommate would receive the furniture without any bargained-for detriment. Therefore, the male roommate cannot enforce the promise.
On November 1, an accountant and a lawyer contracted for the sale by the accountant to the lawyer of the law books the accountant had inherited from his father. The lawyer agreed to pay the purchase price of $10,000 when the accountant delivered the books on December 1. On November 10, the lawyer received a signed letter from the accountant that stated: "I have decided to dispose of the book stacks containing the law books you have already purchased. If you want the stacks, I will deliver them to you along with the books on December 1 at no additional cost to you. Let me know before November 15 whether you want them. I will not sell them to anyone else before then." On November 14, the lawyer e-mailed and the accountant received the following message: "I accept your offer of the stacks." The accountant was not a merchant with respect to either law books or book stacks. On November 12, the accountant told the lawyer that he had decided not to part with the stacks.Will this communication operate as a legally effective revocation of his offer to deliver the stacks? · A. No, because the accountant had given a signed assurance that the offer would be held open until November 15. · B. No, because by delaying his acceptance until November 14, the lawyer detrimentally relied on the accountant's promise not to sell the stacks to anyone else in the meantime. · C. Yes, because the accountant was not a merchant with respect to book stacks. · D. Yes, because the lawyer had a pre-existing obligation to pay $10,000 for the law books.
C. Since the accountant was not a merchant, he was not required under the U.C.C. to keep his offer open and could properly revoke it prior to acceptance.
Completing an online order form, a customer ordered a handmade colored glass ornament to hang in the window of her home. In a box labeled "Comments," the customer wrote, "red, please." Via email, the online retailer sent a notice acknowledging the order, but reserving the right to send an ornament in any color. The retailer shipped the customer a green ornament. Which of the following arguments would not support the customer's position that she does not have to pay for the ornament? A.The customer did not separately agree to receive an ornament in any color. B.Because customer was not a merchant, the retailer's additional term in acknowledgment is not part of contract. C.The retailer's acceptance did not mirror the customer's offer. D.The retailer shipped nonconforming goods.
C. The mirror image rule, which states that the acceptance must mirror the terms of the offer, does not apply to a sale of goods, such as a glass ornament. The other answer choices are incorrect because they all support the customer's position that she does not have to pay for the ornament.
A man learned that his ex-wife might lose their former marital home, which she had been awarded outright as part of the divorce decree, due to her inability to make the monthly mortgage payment of $2,500. He sent her a letter promising to send her $2,500 in a week "for the house." Upon receipt of the letter, the ex-wife entered into a contract to purchase a big screen TV for $2,500. Upon learning of the contract for the TV, the man told his ex-wife he would not be sending her any money. She has sued him for $2,500. Will the ex-wife prevail? · A. Yes, because the amount of the ex-wife's reliance equaled the amount promised by the man. · B. No, because the man's promise to give his ex-wife $2,500 did not result in an economic benefit to him. · C. No, because repudiating the promise to give his ex-wife $2,500 did not result in injustice to her. · D. Yes, because the ex-wife took action in response to the man's promise.
C. Under the doctrine of promissory estoppel, a promise is binding if (i) the promisor should reasonably expect it to induce action or forbearance on the part of the promisee or a third person, (ii) the promise does induce such action or forbearance, and (iii) injustice can be avoided only by enforcement of the promise. Here, the ex-wife relied on the man's promise to give her $2,500. It is arguable whether the man could reasonably have expected his promise to send her money "for the house" would induce her to buy a big screen TV rather than paying the mortgage. Regardless, denying the ex-wife the money did not cause injustice to her because she should have put the money towards the mortgage, not an extravagance like a big screen TV.
Fred owned a small gift shop specializing in cat decorations called "Fred's Fabulous Feline Flea Market." Fred contacted the local newspaper and published an advertisement that said "FIRST COME, FIRST SERVED! Rare one-of-a-kind Siamese statue valued at $825, selling for $50." Ginger, a regular customer who often shopped at Fred's Fabulous Feline Flea Market, saw the advertisement and was the first to arrive at the store the very next morning, asking to purchase the statue. Fred refused, stating that the sale on the Siamese statue was available to first-time customers only. Ginger wishes to bring an action against Fred for not selling her the statue. Will she win? A.No, because the advertisement in the local newspaper was only an invitation to the public to make an offer. B.No, because Ginger did not write to Fred stating her intent to accept the offer to sell the Siamese statue. C.Yes, because the advertisement placed in the local newspaper will be considered a binding offer. D.Yes, because Fred is not allowed to limit his invitation to first-time customers.
C. Usually, advertisements are considered to be an invitation to deal. However, ads that are very specific and leave nothing open to negotiation, like this one, are considered an offer.
A 17-year-old individual, who was one month shy of his 18th birthday, purchased a used car from its owner. The owner was aware of the individual's age, but, having known the individual and his family for many years, agreed to the sale. Under the terms of sale, which were agreed to by both parties orally, the owner immediately transferred title to the car to the individual, and the individual agreed to make monthly payments of $200 for two years. Shortly after turning 18 years old, the individual, while carelessly driving the car, was involved in an accident that resulted in serious injuries to the driver of the other car and totaled the individual's car. Upon learning about the accident the following day, the owner contacted the individual. The individual told the owner that he did not intend to pay for the car. The age of majority in the applicable jurisdiction is 18 years old. The owner of the car has filed a breach of contract complaint against the individual to recover the contract price of $4,800. Who is likely to be successful in this action? · A. The owner, because the car was totaled due to the individual's carelessness. · B. The individual, because the contract was oral. · C. The individual, because he told the owner that he did not intend to pay for the car. · D. The owner, because the individual had anticipatorily repudiated his contractual obligation to pay for the car.
C. When a contract is made by an infant, it is voidable by the infant but not by the other party. This means that the infant may either disaffirm (void) the contract and avoid any liability under it or choose to hold the adult party to the contract. The disaffirmance must be effectuated either before the infant reaches the age of majority or within a reasonable time thereafter. Here, the individual disaffirmed the contract for the sale of the car that he had entered into when he was 17 years old by refusing to make the payments required under the contract shortly after he turned 18 years old. Consequently, it is likely that the individual will be successful in the action.
A produce wholesaler owed a sizeable debt that was past due. The lender offered, in exchange for a small parcel of land owned by the wholesaler, to reduce the amount of the debt by an amount equal to half of the fair market value of the land; the wholesaler refused. In order to compel the wholesaler to sell the land, the lender threatened to sue the wholesaler for the outstanding amount of the debt and to immediately attach a major shipment of produce to the wholesaler's most important and newly acquired client, although the wholesaler had sufficient other assets that could be attached. The wholesaler, feeling he had no choice since he did not have the cash on hand to pay off the debt, sold the land to the lender. The wholesaler subsequently sued the lender to void the sale. Will the wholesaler be able to void the sale? · A. No, because the wholesaler owed the amount that the lender threatened to collect. · B. No, because the lender's threat was economic. · C. Yes, because the wholesaler sold the land under duress. · D. Yes, because the wholesaler had been threatened with litigation.
C. While the lender's threat of initiating a civil action to recover the debt was not improper since the debt was past due, the lender's use of the attachment process was improper. The lender was using the process, not to ensure the recovery of the debt, but to force the wholesaler to sell the land to lender at an unfair price since the wholesaler had sufficient other assets that the lender could have attached in order to protect himself from the possibility of non-payment. The wholesaler lacked a reasonable alternative to succumbing to the threat.
The Magic Supply House offers to buy "all the rabbits Old MacDonald's Farm produces next year" and Old MacDonald verbally accepts. Does this transaction constitute a valid offer and acceptance? A.No, because the UCC requires that acceptance be given in writing. B.Yes, because Old MacDonald is dealing in good faith with the Magic Supply House. C.Yes, because an output contract is specific enough under the UCC to satisfy the quantity requirement. D.No, because the UCC requires that quantity be established as an essential term of the offer.
C. With an output contract, the seller agrees to sell his entire output of a stated item to the buyer, and buyer agrees to buy that output. Output contracts are specifically made valid by UCC 2-306.
A borrower failed to make several payments due on a business loan. While the borrower was in the hospital recovering from a major operation, the lender, who was a family friend, approached the borrower's wife about additional security for the business loan. The lender intimated that, if some action was not taken with regard to the loan, the lender would have to file a civil action. Distraught over her husband's physical condition, the borrower's wife, at the lender's suggestion, granted the lender a mortgage on valuable property that she had recently inherited. The mortgaged property was to serve as additional security for the business loan. As a consequence of the mortgage, the lender did not reduce the outstanding amount of the business loan but did extend the time in which the borrower had to repay the loan. Of the following, which would be the best basis on which the borrower's wife can seek to avoid the mortgage? · A. The lender did not give additional consideration for the mortgage. · B. The borrower's wife granted the mortgage under duress. · C. The borrower's wife lacked the capacity to enter into a contract. · D. The mortgage was obtained through undue influence.
D. . Undue influence is the unfair persuasion of a party to assent to a contract. Here, the circumstances surrounding the mortgage, such as the mortgagor's emotional trauma over her husband's physical condition, the friendship between the mortgagee and the mortgagor, the granting of the mortgage at the lender's suggestion, and the failure of the mortgagee to reduce the outstanding amount of the business loan despite the mortgaged property being valuable, all point to the mortgage being obtained through undue influence. While undue influence is not a certainty, it is the best available avenue for the wife to pursue rescission.
A customer visited several area car dealerships, looking for a family car. One local car dealer named a price for the car that the customer wanted, which the customer asked be put in writing. The dealer wrote down the car's unique vehicle identification number, the price, the date, and the statement, "Firm offer for 30 days from today's date, provided car is in stock." The dealer signed the document. Twenty-nine days later, the customer returned to the dealer. The dealer admitted that the car was still in stock, but told the customer that it would now cost $500 more. The customer replied that he was ready, willing and able to buy the car, but only at the lower price. Does the customer's statement constitute acceptance of the dealer's lower price for the car? A.No, because the offer was subject to a condition and was therefore not a firm offer. B.Yes, because the customer was not a merchant. C.No, because the dealer withdrew the offer of a lower price before the customer accepted it. D. Yes, because the dealer was a merchant.
D. Generally, unless consideration is given to keep an offer open, the offeror can withdraw an offer at any time prior to its acceptance by the offeree, even an offer that the offeror states is irrevocable. However, a firm offer made by the offeror in a signed writing is irrevocable for the stated time period, where such period is three months or less, provided that the offeror is a merchant. For purposes of this rule, a merchant includes not only a person who regularly deals in the type of goods involved in the transaction or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction, but also any businessperson when the transaction is of a commercial nature. Here, the car dealer is a merchant who regularly deals in the type of goods involved in the transaction (here, cars). Therefore, the dealer's attempt to revoke his offer was unsuccessful. By making the customer a firm offer in a signed writing, that offer was irrevocable and the customer could and did accept it within the 30-day period fixed by the offer.
An adult daughter called a local restaurant to place a large delivery order. The restaurant generally requires a credit card for all delivery orders, but the daughter's father, who is a regular at the restaurant and happened to be there when the daughter placed the order, told the clerk that, in the event the daughter failed to pay for the food, he would do so. The restaurant delivered the order to the daughter, who, having decided to order something else instead, refused to accept or pay for the food. Can the restaurant collect from the father? · A. Yes, because a parent is liable to pay for necessities provided to a child. · B. Yes, because the father promised to pay. · C. No, because a third party will not be held liable for the contract obligations of another. · D. No, because the father's promise was made orally.
D. The Statute of Frauds applies to suretyship agreements (i.e., one person's promise to pay the debts of another). Here, the daughter ordered food and was obligated to pay for the food. However, the father also promised to pay for the food if the daughter did not. This promise created a suretyship agreement. Since this agreement was not in writing, the restaurant cannot enforce it. Note that some oral suretyship contracts can be enforced (indemnity contracts and contracts wherein the surety's main reason for paying the debt is the surety's own economic advantage), but those circumstances are not present here.
A buyer mailed a signed order to a seller that read: "Please ship us 10,000 baseballs 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 $1 per baseball. 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 seller as of January 10? · A. Yes, because the order was, for a reasonable time, an irrevocable offer. · B. No, because the order was an offer that could be accepted only by shipping the goods, and the offer was effectively revoked before shipment. · C. No, because the buyer never effectively agreed to the $1 price term. · D. Yes, because the order was an offer that the seller effectively accepted before the buyer attempted to revoke it.
D. The mailbox rule makes an acceptance effective when sent, unless the offer provides otherwise, which means that the seller accepted the buyer's offer on January 7. Because the contract was already created on January 7, the buyer was not able to revoke his offer on January 8. Because the seller did not agree to rescind the contract, the contract remained. (Note that both parties were obligated to perform as of January 10, although the seller could argue that the buyer repudiated.)
A wallpaper hanger sent a general contractor this telegram: "Will do all paperhanging on new building, per owner's specs, for $14,000 if you accept within reasonable time after main contract awarded. /s/ Wallpaper Hanger." Three other competitors 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 the new 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 building's 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. The wallpaper hanger was negligent in erroneously calculating the amount of his sub bid. · B. 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. · C. The general contractor dealt with all of her subcontractors in good faith and without seeking to renegotiate (lower) the prices they had bid. · D. 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.
D. Under the doctrine of promissory estoppel, a promise that the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, and that does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise. In this case, if there was a bid bond, the bond would be forfeited unless the promise was enforced.
A builder contracted with an artist to construct for $200,000 a gallery and an access driveway at street level. Shortly after commencing work on the driveway, which required some excavation and removal of surface material, the builder unexpectedly encountered a large layer of mud. The builder informed the artist (accurately) that because of the mud, the driveway would cost at least $23,000 more than figured, and for that reason, the builder demanded a total contract price of $223,000. Since the artist was expecting customers immediately after the agreed completion date, she signed a writing promising to pay the additional $23,000. Following timely completion of the gallery and driveway, which conformed to the contract in all respects, the artist refused to pay the builder more than $200,000. What is the maximum amount to which the builder is entitled? A. $200,000, because there was no consideration for the artist's promise to pay the additional $23,000. B. $223,000, provided that the reasonable value of the builder's total performance was that much or more. C. $200,000, because the artist's promise to pay the additional $23,000 was exacted under duress. D. $223,000, because the modification was fair and was made in the light of circumstances not anticipated by the parties when the original contract was made.
D. While at common law modification of an existing contract must be supported by consideration, agreements to modify a contract may still be enforced if there are unforeseen difficulties, and one of the parties agrees to compensate the other when the difficulties are discovered. Here, the modification was fair because no one anticipated the unforeseen difficulties, and the additional $23,000 was the accurate cost of the unexpected change in circumstances.
