Contracts MBEs Combined PDF

1. D The plaintiff’s father’s offer was for a unilateral contract — his promise to pay in return for the plaintiff’s postponing the wedding. When the plaintiff postponed the wedding, he accepted his father’s offer, and a contract was formed. Some cases have held that an agreement never to marry vi...

1. D The plaintiff’s father’s offer was for a unilateral contract — his promise to pay in return for the plaintiff’s postponing the wedding. When the plaintiff postponed the wedding, he accepted his father’s offer, and a contract was formed. Some cases have held that an agreement never to marry violates public policy, but there is no reason why an agreement to postpone a marriage would do so. A is therefore incorrect. B is incorrect because the plaintiff’s father’s promise was to pay if the plaintiff postponed the wedding. His language did not make payment conditional upon the plaintiff’s registration for a second year. Although an offer terminates upon the death of the offeror, C is incorrect because the plaintiff accepted the offer by postponing the wedding, and, once accepted, an offer is no longer revocable. 2. D Since the dealer sold the chairs to another buyer at the same price that the decorator had contracted to pay, the dealer sustained no damage. Where there is no limit to the availability of the items sold, some cases allow a seller to recover lost profits when a buyer cancels, reasoning that even though the seller resold at the same price, he or she would have made two sales instead of one if the buyer had not breached. Since there were no more barrel chairs to sell, however, the dealer lost nothing. A is therefore incorrect. An action for the price might be available where traditional calculation of damages would be inadequate, but B is incorrect because the dealer has suffered no damages. C correctly states the remedy that would have been available to the decorator in the event of a breach by the dealer. Because the fair market value exceeds the contract price, however, the formula expressed in C bears no relationship to damages suffered by the dealer as a result of the decorator’s breach. C is therefore incorrect. 3. A If an event that was not foreseeable to the parties at the time a contract was formed makes performance of the contract impossible, such performance is excused. In the absence of facts that specifically suggest the contrary, destruction of the subject matter of a contract is usually held to have been unforeseeable by the parties at the time of contracting. At the time the fire occurred, the plaintiff was not in breach because he was not required to make payment until the garage was half complete, and the defendant was not in breach because he was not required to be half finished until April 25. B and C are therefore incorrect. It is usually held that impossibility excuses performance only to the extent that performance has been made impossible. D is incorrect, however, because the contract was not for labor until June I, but rather for construction of the garage by June 1, and the fire has made completion by that date impossible. 4. A The UCC provides that where there is no agreement to the contrary, a buyer is entitled to inspect goods prior to making payment or accepting them. It provides further, however, that the parties may agree that payment is required before inspection. If so, failure to make payment upon delivery of the goods is a breach. Anticipatory repudiation occurs when, prior to the time when performance is required, a party indicates by word or deed that he or she will not perform. B is incorrect because the buyer’s refusal to pay occurred at the time payment was required, and therefore constituted a breach. The UCC provides that even if payment is made prior to inspection, no acceptance occurs until after the buyer has had a reasonable opportunity to inspect. In view of this provision, a promise to pay prior to inspection is not unconscionable, and C is incorrect. Since the seller tendered delivery in accordance with the terms of the contract, D is incorrect. 5. A A unilateral contract is a promise to perform in exchange for a specified act by the promisee. Since the company promised to make payment to the employee who submitted the winning design, its offer was for a unilateral contract. A bilateral contract is an exchange of promises, each given in return for the other. Since the company promised to pay only if the modification design was actually submitted, and asked for no promise in return for its promise to pay, B is incorrect. The company’s notice made clear its intention to pay only one prize and its obligation to pay only upon receipt of a design that complied with its requirements. Its promise, therefore, could not have been given in exchange for the promise contained in the engineer’s March 8 memo, even if that memo had been received. C is therefore incorrect. The key difference between an offer and an invitation to negotiate is that an offer creates an immediate power of acceptance in the offeree. Since any employee could have accepted the company’s offer of a reward by successfully designing and submitting the required program modification, D is incorrect. 6. B If a promise not to assign a contract is enforceable, it is like any other promise, in that damages may be available as a remedy for its breach. An assignment made in violation of such a promise is usually regarded as valid, however. This means that even though the gardener may be entitled to recover from the owner for damages resulting from the owner’s assignment to the plaintiff, the plaintiff may enforce the contract against the gardener. C is therefore incorrect. A is incorrect because a promise not to assign without a party’s consent does not require that party to act reasonably in deciding whether or not to consent. It is generally understood that a contract involving personal services is not assignable because an assignment of such a contract may increase the obligor’s burden. Since the contract between the owner and the gardener specified the tasks that the gardener was to perform, and since a change in obligee (i.e., in the ownership of the condominium) would not alter those tasks, assignment to the plaintiff did not increase the gardener’s burden. For this reason, the contract should not be regarded as one calling for personal services, and D is incorrect. 7. C Consideration is a benefit to the promisor or a detriment to the promisee that was bargained for and given in return for the promisor’s promise. For this reason, if the police officer did something that he was already obligated to do, his act could not be consideration for the city’s promise to pay since no new benefit was given to the city and no detriment was sustained by the police officer in return for that promise. A police officer’s obligation to his employer includes the duty to attempt to apprehend criminals, so the police officer’s performance was of a preexisting duty. A is incorrect because establishing that the informant is entitled to the reward does not necessarily establish that the police officer (or anybody else) is not entitled to it as well. B is incorrect because a guilty plea is a conviction. Since the city’s promise was to pay in return for information leading to a conviction, it was an offer to pay for something of value, not an offer for a gratuitous cash award. D is therefore incorrect. 8. D The parol evidence rule prohibits the introduction of extrinsic evidence of prior or contemporaneous agreements offered to contradict, vary, or modify an unambiguous writing that the parties intended to be a full and final expression of their agreement (i.e., a “complete integration”). Since the “dollar” is the unit of currency in both the United States and San Sebastian, the contract that specifies a price of 9,000 dollars without identifying which country’s dollars are intended is probably ambiguous. The evidence offered by the plaintiff would help explain and clarify the ambiguity. It is not barred by the parol evidence rule since it does not contradict, vary, or modify the writing. A and C are therefore incorrect. Ambiguities in a writing are frequently construed against the party who prepared it, but only if they cannot be clarified in some other way. B is incorrect because parol evidence may be introduced to explain an ambiguity, no matter who caused it. 9. D The man made no express promise to pay for the fishing gear. There was no implied promise because there is no fact indicating that the plaintiff acted with the expectation of compensation or reimbursement for her losses. The executor is therefore not bound to pay for her loss. Quantum meruit is available to prevent unjust enrichment only where services were rendered under circumstances such that the party from whom payment is sought was aware of the other party’s expectation of payment. A is therefore incorrect. The phrase “danger invites rescue” has been used in tort cases to explain why one who creates a peril owes a duty of care to a person attempting to rescue another from it. B is incorrect, however, because the principle has no application in contract problems. Since there is no indication that the man promised to pay for the fishing gear, the fact that someone else in his position would have is irrelevant, making C incorrect. 10. A Performance of one of a series of mutual promises is a condition precedent to others in the series if the circumstances indicate that it should obviously precede the others. Since the writing called for payment of $300 in advance, it is obvious that the parties intended that it should be paid before the work commenced. The woman’s payment of $300 was thus a condition precedent to the body shop’s obligation to paint. Since the contract called for the payment of an additional $400 after completion, it is obvious that the parties intended that the paint job should be finished before payment of the additional money was required. Completion of the paint job is thus a condition precedent to the woman’s obligation to pay the additional $400. A condition subsequent is an event the occurrence or non-occurrence of which operates to discharge a duty that had already become absolute. Since the body shop was obligated to paint before receiving the additional $400, and since it could not undo the paint job once it was completed, the woman’s payment of the additional $400 cannot be called a condition subsequent to the body shop’s obligation to paint the car. B is therefore incorrect. Concurrent conditions require the parties to exchange performance simultaneously. C is incorrect because the language of the contract makes it obvious that the parties intended a consecutive order of performance (i.e., the woman pays $300, the body shop completes paint job, the woman pays $400). Since the agreement required partial payment in advance and completion of the job before the balance was due, D is incorrect. 11. C In an action for breach of an employment contract, a non-breaching employee is entitled to receive the full contract price for the balance of the term plus consequential damages, less damages avoided by mitigation. Since the plaintiff mitigated damages by taking a job with another company at the same salary, he is entitled to what he lost between the discharge and the beginning of his new job. His advertising expenses are collectible as consequential damages. A is incorrect because the reorganization by the defendant was voluntary. An employment contract may require payment of severance pay in the event of termination, but absent such agreement, there is no such legal requirement. B is therefore incorrect. D is incorrect because the plaintiff’s work for the new company at the same salary mitigated his damages. 12. A If the defendant’s statement implied a promise to paint the cars, it was an acceptance of the plaintiff’s offer, thus forming a contract of which the defendant’s subsequent refusal to paint the cars would be a breach. (NOTE: Although the defendant’s statement probably was not a promise, the question requires this to be assumed as an additional fact.) If, on the other hand, he made no promise to paint the cars, there was no contract and could be no breach. This would be true even though the plaintiff suffered detriment in reliance on his belief that the defendant would paint his cars. B and C are therefore incorrect. When the plaintiff offered $125 per car, he rejected the defendant’s offer to paint them for $150. It was too late for him to accept that offer on January 3, so D is incorrect. 13. D None of the reasons given to justify a victory for the defendant is a good one. The doctrine of frustration of purpose may excuse performance of a contract when an unforeseen event destroys its underlying purpose, but only if both parties knew what that purpose was. A is incorrect because the plaintiff did not know the defendant’s purpose. Impossibility of performance discharges a contractual obligation when an unforeseen event makes performance vitally different from that reasonably contemplated by both parties at the time the contract was formed. B is incorrect because the plaintiff was unaware of the use contemplated by the defendant. When government action makes the subject matter of a contract unlawful, it may be unenforceable for illegality, because of frustration of purpose, or under the doctrine of impossibility of performance. C is incorrect, however, because the subject matter of the contract between the defendant and the plaintiff was the rental of a motion picture theater, and the showing of motion pictures was not made unlawful by the city council’s action. 14. D The Statute of Frauds requires a contract for the sale of goods with a price of $500 or more to be in writing, but it does not apply to a contract for services, even if goods are to be provided by the person performing the services. 15. B Usually, a promise is unenforceable unless it is supported by consideration. Consideration is a bargained-for exchange of value given for a promise and may consist of benefit to the promisor or detriment to the promisee. If an alleged debt is invalid, a person who promises to pay a sum in settlement of it receives no benefit in return for his or her promise. Similarly, if a person who receives such a promise does not honestly believe that the debt is valid, he or she suffers no detriment by agreeing to accept less in settlement. For this reason, a promise to pay a sum of money to settle a claim for debt is supported by consideration if the debt is valid or the person asserting the claim believes that it is. Thus, if the plaintiff honestly believed that the defendant owed him $3,000, his agreement to accept $2,000 was consideration for the defendant’s promise, making the promise enforceable. On the other hand, if the plaintiff did not believe that the defendant owed him the money, the plaintiff suffered no detriment and the defendant received no benefit in return for the defendant’s promise. Since the promise would, thus, be unsupported by consideration, it would be unenforceable. A is therefore incorrect. C and D are incorrect because unless the debt actually existed or the plaintiff believed that it did, his agreement to accept $2,000 would not be consideration for the defendant’s promise to pay it. 16. A Although the parol evidence rule prevents the introduction of extrinsic evidence for the purpose of modifying the terms of certain written memorandums, it does not prevent the admission of such testimony for the purpose of establishing that no contract was ever formed. Since the oral agreement made before execution of the writing establishes a condition precedent to the formation of a contract, it is admissible. An agreement to modify a contract is one that is made after formation of the contract. B is incorrect because the oral agreement regarding the loan was made before execution of the written contract. Since the defendant has not asserted that the written agreement is valid, there is no reason why he should be estopped from denying that it is. C is therefore incorrect. D is incorrect because the oral agreement relates to the formation of the contract and does not modify or contradict its terms. 17. A The Statute of Frauds requires a contract for the sale of goods with a price of $500 or more to be in writing. It might be argued that the agreement in A was divisible — really 15 separate agreements, each for a single $100 purchase — and therefore not within the Statute of Frauds. (Note: Since the agreement was for the purchase of a “series” of figurines, it was probably not a divisible contract, but A is the only one of the four fact patterns presented in which the Statute of Frauds might prevent enforcement.) UCC §2-201 specifically excludes from application of the statute a contract for the sale of specifically manufactured goods if the seller has made a substantial beginning in their manufacture. The Statute of Frauds would be inapplicable in B since the plaintiff had already completed the rough carving when the defendant attempted to cancel the contract. Since UCC 2-201 specifies that the Statute of Frauds is satisfied by an admission in the pleadings of the existence of a contract, the statute would not prevent enforcement in C. UCC §2-201 provides that between merchants, a written memorandum of a contract that is sufficient to bind the sender binds the receiver also if he or she fails to object to it within 10 days. Since both parties in D are merchants, the writing prepared by the plaintiff and not responded to by the defendant satisfies the statute. 18. B A minor may disaffirm a contract on the ground of incapacity. If, however, the disaffirming minor is the plaintiff in an action for restitution, his or her recovery will be offset by the reasonable value of the benefit that he or she had received. Measuring the benefit in terms of reasonable rental value is a common judicial approach. A is therefore incorrect. C is incorrect because the damage that the car sustained is not related to the benefit that the plaintiff received. D is incorrect because it fails to recognize the minor’s right to disaffirm the contract. 19. C An offer may be revoked at any time prior to its acceptance and is effectively revoked when the offeree learns of an act by the offeror that is wholly inconsistent with the offer. The seller’s offer to sell the tractor to the buyer was thus revoked when, the buyer learned that the seller had sold it to the other neighbor. The seller’s promise to keep the offer open until March 15 was unsupported by consideration and therefore was not enforceable. Although UCC §2-205 makes certain firm offers between merchants enforceable without consideration, A is incorrect because the seller and the buyer were not merchants regarding the sale of the tractor. B is incorrect because the revocation took effect when the buyer learned of the sale to the other neighbor. D is incorrect because the letter of February 15 was an offer to sell the tractor and could have given rise to a contract if accepted by the buyer before the seller revoked it. 20. A A court may reform a contract to reflect the intentions of the parties if, as a result of inadvertence, the writing does not actually reflect the intentions. In determining the intentions of the parties, the court may admit whatever evidence is relevant and material. B is incorrect because UCC §2-201 declares that a writing may satisfy the Statute of Frauds even though one or more terms (except the quantity term) are omitted. The Universal Commercial Code (UCC) provides that parties may conclude a contract for sale even though the price is not settled, and that if they do, the price is to be the reasonable price at the time of delivery. C is incorrect, however, because the seller and the buyer did agree on a price. D is incorrect because parol evidence may be admitted for the purpose of determining what the parties intended the price to be. 21. C The parol evidence rule prohibits the introduction of extrinsic evidence of prior or contemporaneous agreements to contradict, vary, or modify an unambiguous writing that the parties intended to be a full and final expression of their agreement. It is generally understood that in the absence of fraud or mistake, a clause in a written contract that states that the writing is intended to be a complete integration of the agreement between the parties establishes that it is a complete integration. If so, the agreement in C would be barred by the parol evidence rule since it was a contemporaneous agreement that contradicts a term of the writing. The purpose of the parol evidence rule is to discourage litigation by encouraging parties to put their entire agreement in writing. Since this purpose would not be served by prohibiting parol evidence regarding the question of whether or not the obligations created by the writing ever came into being, parol evidence pertaining to a written contract’s becoming effective is admissible. A is therefore incorrect. Since the writing requires the homeowner to pay for the paint, the agreements in B and D do not modify any obligation created by the writing and so would probably be admitted. B and D are therefore incorrect. 22. A An agreement for the sale of goods FOB a particular place requires the seller to load the goods on board a carrier at that place. Once the seller has done so, the buyer’s obligation to pay the seller for the goods becomes complete. Under UCC §2-210, a seller who has completely performed may assign its rights even if terms of the contract prohibit assignment. Since the seller’s rights have been assigned to the plaintiff, the plaintiff now is entitled to collect the price from the defendant. B correctly states the remedy usually available to the buyer in the event of the seller’s failure to deliver, but it is incorrect as a statement of the seller’s remedy. Payment by the defendant might enrich the plaintiff, but since the plaintiff has given value for the assignment of the air-conditioning company’s rights, the enrichment would not be unjust. C is therefore incorrect. So long as assignment does not impose an additional burden on the obligor, an assignment of contract rights is enforceable in spite of a clause prohibiting it. D is therefore incorrect. 23. A A contract is formed upon acceptance of an offer. An offer is a manifestation of present intent to be bound to specific terms. Since the niece’s letter of August 1 clearly expressed her willingness to sell each of the paintings to the dealer for $2,000, it was an offer. An acceptance occurs when the offeree communicates to the offeror that he or she agrees to the terms of the offer. Since the dealer’s telegram clearly expressed her willingness to pay $2,000 for painting Number 30, it was an acceptance. A contract for the sale of painting Number 30 at a price of $2,000 was thus formed. For this reason, the niece’s action for breach of a contract to purchase the painting for $3,000 must fail unless there has been an enforceable modification of the original contract. Under UCC §2-209(3), a modification of a contract must be in writing if the contract as modified is within the provisions of the Statute of Frauds. Since, as modified, the oral contract between the niece and the dealer calls for the sale of goods with a price in excess of $500, it violates the Statute of Frauds and will not be enforced over the dealer’s objection. A is therefore correct. Since an increase in the fair market value of the painting would not satisfy the requirement of a writing, B is incorrect. A promise that is not supported by consideration or one that violates the Statute of Frauds may be enforceable if the promisee justifiably relies on it to his or her detriment. C is incorrect, however, because reliance alone is insufficient to have this effect and because there is no indication that the niece changed her position (i.e., relied). Since the niece’s offer of August 1 called for acceptance by telegraphed order, the dealer’s telegram on August 2 was an acceptance even though payment had not been made. D is therefore incorrect. 24. C Assignment of a contract transfers all the assignor’s rights to the assignee. After the assignment, the assignor has no rights in the contract and cannot sue to enforce it. A is incorrect because assignment does not discharge the assignor of his or her obligations under the contract. There is a presumption, however, that an assignment of rights under a contract includes a delegation of duties as well. B is therefore incorrect because, as assignee, the new homeowner is obligated to make payment as agreed by the original homeowner. Unless there is a clear agreement to the contrary, a promise not to assign without consent of the other party is usually viewed as a covenant. An obligee who breaches that covenant by assigning may be liable for damages to the obligor, but the assignment is valid in spite of the no-assignment clause so long as it imposes no additional burden on the obligor. Since the contractor’s obligation after the assignment is identical to his obligation before the assignment (i.e., to install aluminum sliding on the outside of the building), there is no reason to hold the assignment invalid. D is therefore incorrect. 25. B The UCC treats a modification of a contract as a new contract. For this reason, if the contract as modified falls within the provisions of the Statute of Frauds, the modification must be in writing. UCC §2-209(3). Since the modification resulted in an agreement to sell goods with a price of $500 or more, the Statute of Frauds requires a written memorandum. The absence of a writing makes the contract unenforceable over the objection of the retailer. A contract is unconscionable if one party is so deprived of free choice that he or she is forced to make a one-sided bargain that favors the other party. Since the free enterprise system sometimes results in different prices being set by different suppliers of the same commodity, the mere fact that the merchandise was available at a lower price than that requested by the wholesaler is not sufficient to make the agreement to pay the wholesaler’s price unconscionable. A is therefore incorrect. C is incorrect because, under UCC §2-209(1), an agreement to modify a contract may be enforceable even if it is unsupported by consideration. D would be relevant if the wholesaler attempted to excuse his own nonperformance by asserting impossibility or frustration of purpose. Since the retailer agreed to the modification, however, the wholesaler’s reason for requesting it is irrelevant to its enforceability. 26. C A contract is formed upon acceptance of an offer. Since the buyer’s order identified the subject of the transaction, specified the quantity, set forth price and terms, and called for shipment, it conferred upon the seller the power to create a contract by accepting and was, therefore, an offer. Under UCC §2-206(1 )(b), an order to purchase goods for prompt shipment calls for acceptance either by prompt shipment or prompt promise to ship. Since the seller shipped (i.e., accepted the offer) on April 28, the contract was formed on that date. Catalogs of the kind used by the seller are mere invitations to negotiate because they are sent to a large number of buyers and do not refer to specific items for sale but rather to types of items. For that reason, the buyer’s order could not constitute an acceptance. A and B are therefore incorrect. D is incorrect because the contract had already been formed when the goods were shipped. 27. A Under UCC §2-314, an implied warranty of merchantability accompanies every sale by a merchant unless disclaimed by unequivocal language. UCC §2-316(3)(a) specifically provides that the phrase “as is” may be used to disclaim the warranty. B is incorrect because the implied warranty may accompany the sale of a used product as well as a new one. C is incorrect because liability for breach of warranty does not depend on negligence or fault by the seller. Under UCC §2-315, an implied warranty that the product is fit for the buyer’s particular purpose accompanies a sale only if the seller knows the buyer’s purpose and knows also that the buyer is relying on the seller’s judgment in furnishing a product to suit that purpose. D is incorrect, however, because the implied warranty of merchantability does not require reliance on the seller’s judgment. 28. B In the absence of an agreement to the contrary, one who seeks the services of another, knowing that the other expects to be paid for those services, impliedly promises to pay for the services by availing himself or herself of them. Although the doctor agreed to wait for payment and to bill the defendant’s insurance company directly, nothing in the conversation between the doctor and the defendant indicates that the doctor was willing to look solely to the insurance company for payment. If the benefit that a contract confers on a noncontracting party was intended to satisfy a preexisting obligation owed by one of the contracting parties, the person on whom the benefit is conferred is called a creditor third-party beneficiary. Since the defendant’s debt to the doctor did not exist at the time the insurance contract was made, the doctor could not have been a creditor beneficiary. A is therefore incorrect. C and D are incorrect because, as noted above, nothing in the conversation between the doctor and the defendant indicates that the doctor agreed to look solely to the insurance company for payment. 29. C When either party to a contract breaches it, the other party is excused from further performance. Since the landowner breached by refusing to make payment as required, the contractor may refuse to perform any further work. In addition, the non-breaching party is entitled to damages consisting of the losses that he or she sustained as a result of the breach. This may include profits that he or she would have earned if the breach had not occurred. D is therefore incorrect. Ordinarily, lost profits are measured by the balance of the contract price less whatever it would have cost the builder to complete performance. Since the amounts specified in A and B are not necessarily based on this measure, A and B are incorrect. 30. A An option is a promise to keep a particular offer open for a specified period of time. If it is supported by consideration, it is a separate contract and is enforceable during the specified period. Since the document stated that the landowner received $20 in return for her promise to keep the offer open, her promise was supported by consideration and is therefore enforceable. Many cases hold that consideration that is cited in a writing, but which was never actually given or received, is “sham consideration,” and that sham consideration does not support a promise. A is correct in spite of this, however, because the facts do not indicate that the landowner did not receive $20 from her son, and because none of the other answers listed could possibly be correct. An attempted testamentary substitute is an attempt by a person to dispose of his or her property after death without the formality of a will. Since all jurisdictions have statutes that impose certain formal requirements on wills, a testamentary substitute that fails to satisfy these requirements is ineffective. Thus, if the document signed by the landowner is an attempted testamentary substitute, the result would be a judgment for the administratrix. B is therefore incorrect. To avoid interfering with the freedom of contract, courts do not ordinarily inquire into the adequacy of consideration. This is particularly true where parties to a contract are related to each other, or where there is some other reason why one of them might be willing to accept less than actual value from the other. For this reason, C and D are incorrect. 1. Immediately after his graduation from college in June, the plaintiff announced his plan to begin law school the following September and to marry his girlfriend in December. The plaintiff’s father was afraid that marriage during the plaintiff’s first year of law school might cause him to fail or drop out of school. He called the plaintiff on the phone and said that if the plaintiff postponed his wedding plans until after the completion of his first year of law school, he would give him a cash bonus of $1,000 and would pay the plaintiff’s tuition for the second year of law school. The plaintiff agreed and called his girlfriend to tell her that he wanted to postpone the wedding. She became so angry at him that she broke off their engagement. Two months later, the plaintiff’s girlfriend married someone else. The plaintiff’s father died soon after the plaintiff began school, but the plaintiff successfully completed his first year. Although the plaintiff earned excellent grades, he decided that he was not really interested enough in the law to want to continue his legal education. After failing to register for a second year of law school, he notified his father’s administrator of his decision. The plaintiff said that although there would be no tuition expense, he expected to be paid the $1,000 cash bonus that his father had promised him. The administrator refused to pay anything. If the plaintiff brought suit against the administrator of his father’s estate for $1,000, the plaintiff would probably be 2. 3. (A) unsuccessful, because his contract with his father violated public policy. (B) unsuccessful, because the plaintiff failed to register for a second year of law school. (C) unsuccessful, because the plaintiff’s death terminated his offer. (D) successful. A furniture dealer had 500 barrel chairs for sale. The chairs had a fair market value of $100 each. The manufacturer had discontinued production of the chairs, however, and they were the last ones the dealer had. For that reason, the dealer advertised them at $75 each, even though at that price, her profit would be only $10 per chair. An interior decorator had contracted with the dealer to provide furniture for a new hotel. On May 4, after seeing the barrel chairs advertised, the decorator wired the dealer, “Please ship me 500 barrel chairs as advertised at $75 per chair COD.” On May 5, immediately upon receipt of the telegram, the dealer wired the decorator, “Accept your offer. Will ship 500 barrel chairs tomorrow.” The decorator telephoned the dealer immediately upon receipt of the dealer’s telegram on May 6, saying that, after discussing the chairs with his client, he had decided to cancel the order. On May 7, the dealer sold all the chairs to another buyer at $75 each. If the dealer sued the decorator for breach of contract, the court should award the dealer (A) $5,000 (500 chairs at $10 profit per chair). (B) $37,500 (500 chairs at $75 per chair). (C) $12,500 (fair market value of $100 minus contract price of $75 times 500 chairs). (D) nothing, since the dealer sustained no damage. On March 12, the plaintiff hired the defendant to construct a three-car garage on the plaintiff’s realty. After negotiation, they entered into a valid written contract that fixed the price at $8,000. According to the terms of the contract, the plaintiff was to pay $4,000 when the work was half completed, on or before April 25, and to pay the balance upon completion. All work was to be completed by June 1. On April 10, when the work was one-quarter complete, the partial structure was totally destroyed in a fire that started without fault by either party. The damage done by the fire made it impossible to complete construction on time. Because he was committed to begin construction on a hotel on June 1, the defendant notified the plaintiff on April 12 that he would perform no further work for the plaintiff. The plaintiff subsequently hired another contractor to build the garage at a price of $9,000. The plaintiff instituted an action against the defendant for damages resulting from breach of contract, and the defendant asserted a defense based on impossibility of performance. The court should find for 4. (A) the defendant, because the fire was not his fault. (B) the defendant, because he has not yet received any compensation from the plaintiff. (C) the plaintiff, because the work was only one-quarter complete when fire destroyed the structure. (D) the plaintiff, because the defendant’s obligation was to work for the plaintiff until June 1. The buyer agreed to purchase 250 2” x 4” construction-grade wooden studs from the seller by a written contract that provided that the buyer would make payment prior to inspection. The studs were delivered to the buyer by truck and were covered with a canvas tarpaulin when they arrived at the buyer’s work site. The driver demanded payment before he would unload or uncover the studs. The buyer refused to pay for the studs before inspecting them, and the driver returned them to the seller. If the seller asserts a claim for breach of contract against the buyer, the court should find for 5. (A) the seller, because the buyer’s refusal to pay prior to inspection was a breach. (B) the seller, because the buyer’s refusal to pay prior to inspection was an anticipatory repudiation. (C) the buyer, because the contract provision calling for payment prior to inspection was unconscionable. (D) the buyer, because the seller failed to deliver the studs. A manufacturer of computer hardware and software was seeking a way to speed up the operation of its Basic Computer Program. On March 1, it posted the following notice in the employees’ lounge: The stockholders of this company are offering a cash prize of $200 to any employee who develops a modification of the Basic Computer Program that will double its operating speed. Design modification entries should be submitted to the head of the Basic Program Department prior to June 1. In the event that modifications are submitted by more than one employee, the prize will go to the employee who submits the design which, in the opinion of the Basic Program Department, can be used most economically. An engineer employed by the company read the notice on March 5, and immediately began working on program modifications in his spare time. On March 8, he wrote and signed a memo that said, “I accept the stockholders’ offer of a $200 prize for redesigning the Basic Computer Program. I am hard at work on the project and expect to submit my modification design within a week or two.” The engineer sent the note to the head of the Basic Program Department by the interoffice correspondence system, but it was somehow diverted and was never received by the department head. The notice that was posted on March 1 constituted (A) an offer for a unilateral contract. (B) an offer for a bilateral contract. 6. (C) an offer for a unilateral contract that ripened into a bilateral contract when the engineer wrote the memo on March 8 and deposited it in the interoffice correspondence system. (D) a preliminary invitation to deal, analogous to a newspaper advertisement for the sale of goods. When he moved into a new condo, the owner entered into a written contract with a gardener. Pursuant to its terms, the gardener was to perform certain specified gardening services in the yard of the condo each week for a period of one year, for which the owner was to pay the sum of $50 per month. The contract contained a clause that stated, “The condo owner hereby agrees not to assign this contract without the written permission of the gardener.” Three months after entering into the agreement, the owner informed the gardener that he was selling the condominium to the plaintiff, and asked the gardener to consent to the owner’s assignment of the contract to the plaintiff. Because the costs of landscaping materials had increased dramatically in the last three months, the gardener was glad for an opportunity to be relieved of his obligations under the contract and refused to consent to the assignment. The owner assigned the contract to the plaintiff anyway, but the gardener refused to perform any further work on the yard. After formally demanding performance from the gardener, the plaintiff hired another gardener to do the same work for $75 per month, which was the best price the plaintiff could negotiate. In an action by the plaintiff against the gardener for breach of contract, the court should find for 7. (A) the plaintiff, because the gardener had no right to unreasonably withhold consent to the assignment. (B) the plaintiff, because the assignment was valid in spite of the gardener’s refusal to consent. (C) the gardener, because the contract prohibited assignment by the owner without the gardener’s consent. (D) the gardener, because the contract was for personal services. On June 1, after arson fires had damaged several city buildings, the city council voted to offer a reward to aid in apprehension of the arsonists. On June 2, by order of the city council, signs were posted in various locations throughout the city. The posters identified the buildings that had been burned and stated: “$1,000 REWARD is hereby offered by the city to any person furnishing information leading to the conviction of persons responsible for setting fire to said buildings.” A police officer employed by the city saw the posters on June 5 and resolved to make a special effort to catch the arsonists. Although he was not officially assigned to the case, he notified his fellow police officers and his usual underworld informants that he was especially interested in the case. As a result, another police officer and an underworld informant passed information to the police officer that they thought might relate to the arson crimes. The tip the first police officer received from the other officer proved to be of no assistance, but the tip he received from the informant led him to conduct a further investigation. His efforts eventually resulted in the arrest of two men who pleaded guilty to setting fires in public buildings. The first police officer demanded that the city council pay him $1,000, but the council refused. If the police officer institutes a lawsuit against the city for the $1,000 reward offered in the signs posted on June 2, which of the following would be the city’s most effective argument in defense? (A) The reward should go to the informant, since it was his information that eventually led to the arrest of the arsonists. (B) The reward was not accepted, since the arsonists were not convicted but pleaded guilty. 8. (C) The police officer gave no consideration for the city’s promise to pay a reward, since he was already obligated to attempt the apprehension of the arsonists. (D) There was no enforceable promise by the city, since the offer was for a gratuitous cash award. San Sebastian is an English-speaking republic on the continent of Europe. Its unit of currency is the San Sebastian dollar, which is worth about 85 U.S. cents. While on a business trip in the United States, the plaintiff, who owned a glue factory in San Sebastian, entered into a written contract with the defendant. According to the contract, the defendant was to purchase 30 tons of liquid glue from the plaintiff, to be delivered on or before July 10. The contract stated the total price of the glue to be “NINE THOUSAND ($9,000) DOLLARS.” After receiving the shipment, the defendant sent the plaintiff an international money order for 9,000 San Sebastian dollars. The plaintiff wrote to the defendant, claiming that the agreement called for the payment of 9,000 U.S. dollars, but the defendant refused to make any further payment. The plaintiff instituted an action against the defendant in the United States and offered to testify that, prior to executing the written memorandum, she and the defendant agreed that the price expressed in the writing was to be in U.S. dollars. If the defendant objects to the testimony, the objection should be 9. (A) sustained, since the oral agreement about which the plaintiff is offering to testify was made prior to the execution of the written memorandum of sale. (B) sustained, only if the written memorandum was prepared by the defendant. (C) overruled, unless the writing is found to be a complete integration of the agreement between the defendant and the plaintiff. (D) overruled, because the evidence that the plaintiff is offering to present does not modify or contradict the terms of the writing. The plaintiff was fishing on her boat when she heard a call for help. Looking around, she saw a man drowning and flailing his arms over his head. The plaintiff jumped into the water and swam toward the man, dropping her fishing gear into the lake and losing it in her effort to aid the man. She grabbed the man by the hair and swam to the shore, dragging him out of the water. The man was unconscious, but she gave him mouth-to-mouth resuscitation until he regained consciousness. When the man opened his eyes, he said, “I know I can never repay you for saving my life, but I promise to pay you $100 the first of next month as a token of my gratitude.” A few days later, the man died from causes not related to the incident. The following month, the plaintiff made demand upon the man’s executor for the $100 that the man promised her and for an additional $100, which was the value of the fishing gear that she lost in her attempt to rescue the man. The executor rejected both demands. If the plaintiff institutes an action for the value of her fishing gear against the executor of the man’s estate, the court should find for (A) the plaintiff, on a theory of quantum meruit. (B) the plaintiff, because danger invites rescue. (C) the plaintiff, because the reasonable per son in the man’s position would have offered to pay for the loss of the fishing gear in exchange for the plaintiff’s attempt to rescue him or her. (D) the executor of the man’s estate. 10. 11. 12. A woman’s hobby was restoring and collecting antique automobiles. After acquiring a 1919 Bensonhurst Bullet automobile, she contacted a body shop about having the car repainted. The body shop said that it would paint the Bullet for $700 and would sell the woman a new bumper for an additional $150. Using an order blank from a pad that he purchased at a stationery store, the body shop’s owner wrote out all the terms of the agreement. On a printed line marked “PAYMENT,” he wrote, “Paint job — $700, payable $300 in advance and $400 on completion. Bumper—$150 payable on delivery.” Both the body shop’s owner and the woman signed at the bottom of the form. Which of the following statements most correctly describes the obligations set forth in the writing signed by the woman and the body shop owner? (A) Payment by the woman of the initial $300 is a condition precedent to the body shop’s obligation to paint the car, and the body shop’s painting of the car is a condition precedent to the woman’s obligation to pay the additional $400. (B) Payment by the woman of the initial $300 is a condition precedent in form and substance to the body shop’s obligation to paint the car, and the body shop’s painting of the car is a condition precedent in form, but subsequent in substance to the woman’s obligation to pay the additional $400. (C) Payment by the woman and painting of the car by the body shop are concurrent conditions. (D) Neither party’s obligation to perform is conditioned upon performance by the other party. The plaintiff was employed by the defendant as department manager pursuant to a written contract. The contract was for a five-year term and fixed the plaintiff’s compensation at $2,000 per month. The plaintiff’s work was satisfactory, but two years after entering into the contract with him, the defendant reorganized the company. As a result of the reorganization, the plaintiff’s department was eliminated, and the defendant terminated the plaintiff’s employment. The plaintiff advertised in the “jobs wanted” section of the newspaper, but he did not find a job until six months after his discharge, when he went to work for another company doing the same general sort of work that he had been doing for the defendant and earning the same salary. In an action by the plaintiff against the defendant for damages resulting from breach of the employment contract, the court should give judgment to (A) the defendant, since the plaintiff’s position was eliminated. (B) the plaintiff, for severance pay in a sum equivalent to two months’ salary. (C) the plaintiff, in a sum equivalent to the salary that the plaintiff lost between the time of his discharge and the time he began working for the new company, plus the cost of advertising in the “jobs wanted” section of the newspaper. (D) the plaintiff, in a sum equivalent to the salary that the plaintiff would have received during the balance of the contract term. The plaintiff was the owner of a fleet of taxis that he leased to independent drivers in return for 60 percent of the fares that they collected. All the leases were scheduled to expire on December 31. Because the cars in his fleet were beginning to look shabby, the plaintiff decided to have them all painted during the first week of January, before negotiating new leases with the drivers. At the beginning of December, he called the defendant’s auto- painting company to inquire about his price for painting all the cars in the plaintiff’s fleet. The defendant said he would do the job for $150 per car. The plaintiff said, “I’m talking about 60 cars. That’s a lot of business. I’ll give you the job if you’ll do it for $125 per car.” “I’d really like to have your business,” replied the defendant. “See you the first week in January,” the plaintiff said. On January 3, the plaintiff brought one of his taxis to the paint shop and offered to make arrangements for bringing in the rest of the cars to be painted. The defendant said that he had just obtained a contract to paint some school buses and that he was too busy to do any work for the plaintiff. The plaintiff subsequently asserted a claim for damages against the defendant. Which of the following additional facts or inferences, if it were the only one true, would be most helpful to the plaintiff in his action against the defendant? 13. (A) The defendant’s statement, “I’d really like to have your business,” implied a promise to paint all the cars in the plaintiff’s fleet at $125 per car. (B) The plaintiff relied on the defendant’s statement by bringing the taxi to the shop. (C) Immediately prior to January 3, the plain tiff could have had the taxis painted at another shop for $125 each, but immediately after January 3, the lowest price he could find was $150. (D) On January 3, when the defendant told the plaintiff that he was too busy to do the work, the plaintiff offered to pay the defendant $150 per car and tendered payment of that sum. When the plaintiff’s uncle died, he left her a 10-story office building that had a motion picture theater on its ground floor. The offices in the building were all occupied when the plaintiff acquired title to it. The motion picture theater was vacant, however, so she advertised for a tenant. The defendant had researched the neighborhood and decided that it was a good location for a pornographic movie theater. When he saw the plaintiff’s advertisement, he contacted her and said that he was interested in leasing the theater. He did not tell her what type of films he intended to show because he thought that she might be unwilling to rent it to him for that purpose. On April 1, they entered into a written rental agreement for the theater, occupancy to begin on May 1. On April 15, the city council passed an ordinance prohibiting the showing of pornographic films in the neighborhood where the theater was located. As a result, the defendant advised the plaintiff that he was canceling the rental agreement. If the plaintiff sues the defendant for breach of contract, the court should find for 14. (A) the defendant, under the doctrine of frustration of purpose. (B) the defendant, under the doctrine of impossibility of performance. (C) the defendant, because after the contract had been formed, government action made its subject matter unlawful. (D) the plaintiff. A builder contracted to add a room to a homeowner’s house for $3,000, with the understanding that the materials used by the builder were to be included in that price. The day before work was to begin, the homeowner wired the builder, “The deal is off. Do not begin work.” The builder subsequently asserted a claim against the homeowner for breach of contract. The homeowner raised non-compliance with the Statute of Frauds as a defense. Which of the following statements is most correct about the application of the Statute of Frauds to the contract between the homeowner and the builder? (A) The contract was required to be in writing if the materials that would have been required had a price in excess of $500. 15. 16. (B) The contract was required to be in writing if, at the time of contracting, the parties intended that the materials required would have a price in excess of $500. (C) The contract was required to be in writing if the materials that would have been required had a price in excess of $500, and the parties intended that the materials required would have a price in excess of $500 at the time of contracting. (D) The contract was not required to be in writing. After the plaintiff said that the defendant owed him $3,000, the defendant promised to pay $2,000, which the plaintiff agreed to accept as payment in full. Subsequently, the defendant refused to make payment, and the plaintiff asserted a claim for $2,000 based on the defendant’s promise. If it was the only one true at the time of the defendant’s promise, which of the following additional facts or inferences would be most likely to result in a judgment for the plaintiff? (A) The defendant honestly believed that he owed the plaintiff $3,000, but the plaintiff did not believe that the defendant owed him the money. (B) The plaintiff honestly believed that the defendant owed him $3,000, but the defendant did not believe that he owed the plaintiff the money. (C) The plaintiff was threatening to institute a lawsuit against the defendant for $3,000 plus costs and interest. (D) The plaintiff had already commenced a lawsuit against the defendant for $3,000 plus costs and interest. A building contractor’s daughter was about to celebrate her 21st birthday, and the contractor wanted to give her a gift that would express his sentiments for her. He was a wealthy and successful contractor, but he had begun his career as an assistant bricklayer. Instead of purchasing something for his daughter, he decided to give her a gift with the labor of his hands. The contractor entered into a written contract with the defendant. According to its terms, the contractor agreed to build a brick fireplace for the defendant, performing all the labor himself. In return, the defendant agreed to pay the sum of $1,000 to the contractor’s daughter on her birthday, February 12, upon completion of the work by the contractor to the defendant’s satisfaction. The daughter did not learn of the transaction until February 12. Before signing the written contract, the defendant and the contractor agreed orally that the defendant would make a reasonable effort to obtain a loan to pay for the work, but that if the defendant was unsuccessful in doing so by January 1, the agreement between them would be of no effect. The defendant made efforts to obtain the loan but could not do so. On January 1, the defendant informed the contractor that because he was unable to obtain the loan, he was calling off the deal. In an action for breach of contract brought against the defendant by the proper party, will the defendant be successful in asserting as a defense his inability to obtain a loan? (A) Yes, because obtaining a loan was a condition precedent to the existence of an enforceable contract. (B) Yes, because a modification of a construction contract may be by oral agreement. (C) No, because the defendant is estopped from denying the validity of the written agreement. (D) No, because the agreement concerning the loan is an oral agreement that was made prior to the writing and it contradicts the terms of the writing. 17. 18. 19. Assume that the defendant in each of the following fact patterns objects to enforcement of the agreement on the ground that it violates the Statute of Frauds. In which of the following fact patterns is the agreement between the plaintiff and the defendant LEAST likely to be enforced over the defendant’s objection? (A) The defendant orally agreed to purchase a series of porcelain figurines from the plaintiff to be delivered one per week for 15 weeks at a price of $100 per figurine. Prior to the first delivery, the defendant advised the plaintiff that he was no longer interested in receiving the figurines. (B) The defendant orally agreed to purchase a hand-carved entry door for the defendant’s home with the defendant’s coat of arms on it for a price of $600. After the plaintiff completed the rough carving of the defendant’s coat of arms, the defendant changed her mind and notified the plaintiff that she would not accept delivery of the door. (C) The defendant’s pleadings admitted making an oral agreement to purchase a painting from the plaintiff for $900 but asserted as an affirmative defense that the agreement was unenforceable under the Statute of Frauds. (D) The defendant orally agreed to a price of $1,200 for the purchase of 100 lawn- trimmers manufactured by the plaintiff for resale in the defendant’s store. The plaintiff then sent the defendant a memorandum signed by the plaintiff and outlining the terms of their agreement. The defendant did not sign the memorandum or respond to it in any way. The plaintiff, a minor, purchased a used car from the defendant for $1,200. The reasonable rental value of the car was $150 per month. After she had owned the car for two months, the steering failed while she was driving it, causing it to collide with a tree. Although the plaintiff was unhurt, the car sustained $400 worth of damage. The plaintiff returned the damaged car to the defendant and demanded her money back, but the defendant refused to refund her money. If the plaintiff asserts a claim against the defendant, the court should award her a judgment in the amount of (A) $1,200 (the full purchase price of the car). (B) $900 (the purchase price of the car less its reasonable rental value). (C) $800 (the purchase price of the car less the damage that it sustained). (D) nothing. The seller and the buyer were neighbors who owned homes on adjoining parcels of realty. They were both in the business of selling art supplies, each operating an art supply store that engaged in friendly competition with the other. The seller owned a garden tractor that he used for cultivating vegetables in the backyard of his home. The buyer, who wanted to plant a garden in his own backyard, sent the seller a note in which he offered to buy the tractor from the seller for $500. The seller responded on February 15 by sending the buyer a letter that stated, “I will sell you my garden tractor for $600, and not a penny less. To give you time to think it over, I promise to hold this offer open until March 15.” On March 5, the buyer noticed a similar garden tractor in the yard of another neighbor. He called that neighbor o