Contracts Flashcards
(43 cards)
The owner of a restaurant who highlighted local ingredients when creating his menu bought cheese and other dairy products from a local dairy farmer. The owner and the farmer had entered into written requirements contracts each spring for the past 10 years. In the winter of the tenth year, the farmer purchased a substantial amount of new dairy cows and expanded his farming capabilities. He notified all customers that he would have a higher volume and amount of available products the following spring and would adjust deliveries accordingly. The owner responded with a date he wished the products to be delivered, as per custom, but said nothing else. On the agreed-upon date, the farmer delivered substantially more products than he had customarily provided. The owner attempted to accept half of the shipment, as that was roughly his customary quantity, but the farmer stated that the products were already packaged and that the owner should have spoken up after receiving the notice from the farmer. The owner then rejected the shipment in its entirety.
A. No, because no contract existed, as the parties did not agree to a quantity.
B. No, because the farmer made a nonconforming tender of goods.
C. Yes, because the owner should have given the farmer time to cure the nonconformity.
D. Yes, because the owner rejected the shipment in its entirety.
B. No, because the farmer made a nonconforming tender of goods.
- Under the perfect-tender rule, the goods and the seller’s tender of those goods must fully conform with the terms of the agreement. If the tender of goods in a single delivery would be unreasonable, then the buyer can reject the delivery for imperfect tender.
A maker of handwoven rugs contracted with a supplier to provide yarn made from sheep’s wool. The written contract specified that, for four years, the supplier would provide the rugmaker with 2,000 spools of yarn made from 100% sheep’s wool per month, at $10 per spool, for a total of $20,000. Two years into the contract, the supplier sent the rugmaker 2,000 spools of yarn made from 90% sheep’s wool and 10% synthetic fiber. The rugmaker sent the supplier a check for $15,000 for the shipment, and added a clear note on the check stating that the payment was in full for the shipment but was $5,000 less due to the synthetic fiber in the yarn. The supplier promptly deposited the check, and then four months later filed suit against the rugmaker for the remaining $5,000. The supplier has submitted evidence of the written contract, and the rugmaker has submitted evidence of the deposited check.
What is the rugmaker’s best defense in this situation?
A. By depositing the check, the supplier was estopped from claiming that the rugmaker owed him an additional $5,000.
B. The rugmaker’s and supplier’s good-faith dispute over the yarn composition suspended the rugmaker’s obligation to pay the remaining $5,000.
C. The supplier deposited the check for $5,000 less than the contract price, thereby discharging the rugmaker of any further duty to pay the remaining amount for that month’s shipment.
D. The supplier’s act of knowingly depositing the check for $15,000 was a novation that relieved the rugmaker from any further liability
C. The supplier deposited the check for $5,000 less than the contract price, thereby discharging the rugmaker of any further duty to pay the remaining amount for that month’s shipment.
- A contractual obligation is discharged by accord and satisfaction if a party tendered a negotiable instrument with a conspicuous statement that it was tendered as “payment in full” and the other party obtained payment of the instrument.
Ways to discharge contractual obligations: FIRM SCAN
- Full performance of contractual obligations
- Impossibility, impracticability, or frustration of purpose
- Release (in writing only)
- Mutual rescission
- Substituted contract
- Contract or covenant not to sue
- Accord & satisfaction
- Novation
A homeowner entered into a written contract with a contractor to construct an elaborate tree house among the large trees located in the homeowner’s backyard. After commencing construction of the tree house, the contractor discovered that one of the trees intended to be used as support for the tree house had a relatively common fungal infection in its core that would cause the strength of the tree’s branches to falter if left untreated. Neither the homeowner nor the contractor had knowledge of the fungal infection when they entered into the contract, but the contractor knew that such infections were common in the area and did not request an inspection of the trees before entering the contract. The contractor also knew that treatment was available at a high cost, but that even after treatment, he would need to create additional heavy-load-bearing supports for the tree at a substantial cost. When the contractor informed the homeowner that he would not perform under the contract unless the homeowner provided at least 75% of the additional costs needed to make the structure safe, the homeowner refused to pay the additional amount. The homeowner then sued the contractor for breach of contract.
What is the likely result?
A. The contractor wins, because his performance was discharged due to impracticability.
B. The contractor wins, because neither party was aware of the fungal infection.
C. The homeowner wins, because the contractor assumed the risk of the fungal infection.
D. The homeowner wins, because the fungal infection did not render performance impossible.
C. The homeowner wins, because the contractor assumed the risk of the fungal infection.
- Performance can be discharged by impracticability if (1) an unforeseeable event has occurred, (2) the contract was formed under the basic assumption that the event would not occur, and (3) the party seeking discharge is not at fault (e.g., did not assume the risk).
A nature magazine advertised a photography contest in its January issue, offering “$1,000 to any subscriber who sends us a photograph of the rare Florida Grasshopper Sparrow that we use for the cover of our May issue. Only submissions meeting our technical specifications and received by April 1 will be considered.” The only subscriber to respond to the advertised contest sent the magazine a photograph of the sparrow that met the magazine’s technical specifications. The photograph arrived on March 15. However, due to an ecological disaster that occurred in early April, the magazine decided to use a different picture on the cover of its May issue. The magazine used the subscriber’s picture on the cover of its June issue and has refused to pay $1,000 to the subscriber on the ground that it was not used on the May cover.
Is the subscriber likely to prevail in a breach-of-contract action against the nature magazine?
A. No, because the subscriber’s photograph was not used on the cover of the May issue.
B. No, because the subscriber failed to adequately notify the magazine of his acceptance.
C. Yes, because all of the express conditions of the offer have been satisfied.
D. Yes, because the magazine prevented the publication of the photograph.
D. Yes, because the magazine prevented the publication of the photograph.
- A condition precedent to a contractual duty to perform will be excused if a party whose performance is subject to that condition wrongfully prevents the condition from occurring—e.g., by breaching the implied duty of good faith and fair dealing.
A homeowner called a septic cleaning company and made arrangements for the company to remove the waste from the septic tank on the homeowner’s property. After completing the job, the company mailed the homeowner a bill for $500, the fair market value of the services rendered by the company. The bill indicated that payment was due in 60 days. Upon receiving the bill, the homeowner called the company and informed it that, since he had lost his job due to an accident, he would not be paying the company’s bill. The following day, the company filed suit for breach of contract. Ten days later, the homeowner moved to dismiss the suit. The court granted the motion, dismissing the suit without prejudice.
Is the court’s dismissal proper?
A. No, because the parties’ dealings created an implied-in-fact contract.
B. No, because the homeowner has repudiated the contract.
C. Yes, because the company failed to demand assurances.
D. Yes, because the company’s complaint is premature.
D. Yes, because the company’s complaint is premature.
- A nonrepudiating party can treat an anticipatory repudiation as a breach or ignore it and demand performance. But if the date of performance has not passed and the nonrepudiating party has fully performed, then the nonrepudiating party must wait until the repudiating party’s performance is due before filing suit.
A new florist placed a written order with a wholesaler for $15,000 worth of fresh flowers. Delivery was to be made to the florist’s shop via a national delivery service. Because the florist was a new customer, the wholesaler accepted the order on the condition that the florist pay $5,000 in advance and the remaining $10,000 within 20 days of delivery. There was no discussion as to who bore the risk of loss.
The florist paid the wholesaler $5,000, and the wholesaler arranged with a national delivery service to pick up and deliver the flowers to the florist. The delivery service picked up the flowers, but, due to malfunction of the temperature controls on the transporting plane, the flowers were worthless upon arrival. The florist rejected the flowers and notified the wholesaler, who refused to ship other flowers. The wholesaler filed a claim against the florist for the remaining $10,000. The florist counterclaimed for the return of his $5,000 payment to the wholesaler.
How should the court rule on these claims?
A. Deny both claims, because the florist accepted the risk of loss up to the amount he had paid for the goods.
B. Grant the florist’s claim for $5,000 and deny the wholesaler’s claim for $10,000, because the risk of loss remained with the wholesaler.
C. Grant the wholesaler’s claim for $10,000 and deny the florist’s claim for $5,000, because the risk of loss passed to the florist.
D. Offset the two claims against each other and require the florist to pay the wholesaler $2,500, because each party should bear the loss equally.
B. Grant the florist’s claim for $5,000 and deny the wholesaler’s claim for $10,000, because the risk of loss remained with the wholesaler.
- A contract that requires the seller to deliver the goods by third-party carrier to a particular location is a destination contract. Under such a contract, the risk of loss does not shift to the buyer until the goods are delivered at the named location.
orange - A jeweler and a goldsmith signed a written agreement that provided as follows: “For $3,000, the goldsmith shall sell to the jeweler a size six gold ring setting that the jeweler shall select from only the goldsmith’s white gold ring designs.” The agreement did not address any other specific terms with regard to the business arrangement between the jeweler and the goldsmith.
When the jeweler arrived to select a ring, he refused to select one of the goldsmith’s white gold ring designs. The jeweler claimed that the goldsmith, immediately prior to the execution of the written agreement, had orally agreed to broaden the jeweler’s choices to also include rose gold ring designs. The jeweler also claimed that the goldsmith had, at the same time, orally agreed to include a set of earring settings, valued at $1,000, as an incentive for the jeweler’s continued business. The goldsmith refused to sell to the jeweler any of his rose gold ring designs or include the earring settings.
If the jeweler sues the goldsmith for damages, how should the court handle the evidence of the alleged oral agreements?
A. The court should admit the evidence as to both the promise to include the earring settings and the option to choose a rose gold ring design.
B. The court should admit the evidence as to the promise to include the earring settings but not the option to choose a rose gold ring design.
C. The court should admit the evidence as to the option to choose a rose gold ring design but not the promise to include the earring settings.
D. The court should exclude the evidence as to both the option to choose a rose gold ring design and the promise to include the earring settings.
B. The court should admit the evidence as to the promise to include the earring settings but not the option to choose a rose gold ring design.
- The UCC presumes that a written contract is partially integrated. As a result, evidence that supplements the written contract is admissible—but evidence that contradicts the writing is inadmissible—under the parol evidence rule.
red - A dancer signed a contract with a traveling circus to travel and perform as an aerialist for six months. The contract provided that the dancer would be paid $500 per week and would be guaranteed employment for the full six months, with an option to renew the contract for the next traveling season. Excited for the opportunity to perform for a traveling circus, the dancer turned down an invitation to dance with a theatre group for the same time period as the circus contract. After two weeks of traveling and dancing for the circus, the dancer sprained her ankle and was briefly hospitalized for one week. The circus was forced to hire another aerialist. After an additional week, the dancer’s doctor gave her approval to return to work, but the circus refused to honor the remainder of the contract. The dancer brought an action against the circus for breach of contract.
If the dancer wants to recover the highest possible amount of damages, which of the following is the dancer’s best legal theory?
A. The dancer detrimentally relied on the contract by declining the other dancing job.
B. The dancer’s failure to perform for two weeks was not a material breach of the contract.
C. The dancer’s performance of the terms of the contract was impracticable given her injury.
D. The dancing contract with the circus is legally severable into weekly units.
B. The dancer’s failure to perform for two weeks was not a material breach of the contract.
- A party who substantially performs contractual obligations can generally recover the contract price minus any cost that the nonbreaching party incurred to receive full performance. In contrast, a party who commits a material breach can recover only for any benefit conferred on the nonbreaching party minus damages for the breach.
orange - A licensing agreement provided that a manufacturer could use an inventor’s patent in manufacturing its products for 10 years. Immediately thereafter, the inventor assigned his rights to receive payments pursuant to the licensing agreement to a corporation. The inventor did not receive compensation for this assignment. The inventor, upon his death five years later, devised his stock in the corporation to his daughter and all of his remaining property to his son.
To whom should the manufacturer make its payments under the licensing agreement?
A. The corporation.
B. The inventor’s daughter.
C. The inventor’s son.
D. No one, because the manufacturer’s obligation to make payments under the licensing agreement terminated upon the death of the inventor.
C. The inventor’s son.
- A gratuitous assignment—i.e., an assignment that is not supported by consideration—is automatically revoked upon the death, incapacity, or bankruptcy of the assignor.
red - A student inherited a large tract of undeveloped land from an eccentric uncle. The student had no present need for the land, and because he had numerous student loans, he decided to sell the land. He advertised a proposed sale of the property, and he was soon contacted by a rancher who owned property adjacent to the offered land. The rancher wanted to purchase the student’s property to expand his ranch and to build facilities for dairy production. The student told the rancher that his car had just broken down and that he was eager to sell the property quickly so that he could repair his car for his commute to class. Although the rancher was fully aware of the fair market value of the property, he offered the student a cash price 80 percent less than the property was worth. The student, disappointed with the low price but desperate to repair his car, accepted the rancher’s offer.
On these facts, which of the following legal concepts would give the student the best chance of canceling the contract with the rancher?
A. Bad faith.
B. Duress.
C. Equitable estoppel.
D. Unconscionability.
D. Unconscionability.
- A court may modify or refuse to enforce a contract on the ground that it is unconscionable. A contract is unconscionable when it is so unfair to one party that no reasonable person in that party’s position would have agreed to it.
orange - A couple, who wanted to open a pet grooming and supply store, contracted with a developer to lease space in a small strip mall that the developer was constructing. The lease was to begin on July 1, but on June 20, the developer informed the couple that the mall would not be finished, nor would the space be available, until August 1. The developer indicated that the first month’s rent would be waived but that, because the lease did not contain a liquidated damages clause, he was not responsible for any damages attributable to the delay. As a consequence of the delay, the couple incurred storage costs and additional advertising expenses of $3,000. They also estimated in good faith that they lost $10,000 in sales.
Which of the following amounts is the couple entitled to recover from the developer for the delay?
A. Nothing, because the damages suffered by the couple’s new business are too speculative.
B. Nothing, because the lease did not contain a liquidated damages clause.
C. $3,000, the amount incurred as a consequence of the delay.
D. $10,000, the good-faith estimate of lost sales.
C. $3,000, the amount incurred as a consequence of the delay.
- Incidental damages may be awarded as compensation for commercially reasonable expenses incurred because of the other party’s breach. And consequential damages may be awarded to compensate for losses that do not flow directly and immediately from the other party’s breach—so long as the losses are not too speculative.
red - An honest dispute developed between a condominium owner and a plumber over whether plumbing installed in the kitchen and bathrooms of the condominium satisfied contractual specifications. If the plumbing met those specifications, the condominium owner would owe the plumber $15,000 under the terms of the contract. The condominium owner offered to pay the plumber $10,000 in satisfaction of the owner’s contractual obligations if the plumber replaced the plumbing in the kitchen with another grade of pipe. The plumber accepted the condominium owner’s offer. After the plumber replaced the kitchen plumbing, the condominium owner refused to pay the plumber.
In a breach-of-contract action brought by the plumber, the fact finder determined that the plumbing originally installed by the plumber did satisfy the contract specifications. The fact finder also determined that the plumber and the condominium owner entered into a substitute agreement under which the owner failed to deliver the required performance.
What is the maximum amount that the plumber can recover in damages from the condominium owner?
A. $25,000.
B. $15,000.
C. $10,000.
D. Nothing.
C. $10,000.
- A substitute contract is a second agreement that immediately discharges the original contract such that the remedy for breach is limited to the terms of the second contract.
- Whether the parties formed an accord agreement or a substitute contract is a fact issue that depends on the formality of the agreement. The more formal the agreement (e.g., words discharging original duties, consideration on both sides), the more likely the fact finder will determine that the parties intended to create a substitute contract.
- Accord agreement – when a party agrees to accept different performance in satisfaction of (i.e., in place of) the original promise; after breach, the party can sue under either the original contract or the accord agreement.
- Substitute contract – when the parties form a second agreement that immediately discharges the original contract; after breach, a party can sue under the substitute contract only.
red - On March 1, a company contracted with a singer to perform for the company picnic on May 1 for a fee of $10,000. On March 17, the singer informed the company that she had signed a contract to film a movie. She suggested that the company hire another singer to take her place at the picnic. On April 1, the company hired the recommended replacement singer to perform at its picnic for $15,000. On April 25, the original singer informed the company that she had decided not to take the movie deal and will be available to perform on May 1. The original singer arrived at the picnic on May 1 ready to sing, but the company let the replacement singer perform. The company refused to pay $10,000 to the original singer.
Is the company likely to prevail in a breach-of-contract claim against the original singer?
A. No, because the company prevented the original singer from fulfilling her contractual obligation by refusing to let her perform on May 1.
B. No, because the original singer retracted her repudiation before the scheduled performance.
C. Yes, because the company hired the replacement singer as a substitute for the original singer before she retracted her repudiation.
D. Yes, because the replacement singer’s consent to the delegation of the original singer’s duties did not create a novation.
C. Yes, because the company hired the replacement singer as a substitute for the original singer before she retracted her repudiation.
- A repudiation of contractual duties may be retracted before the nonrepudiating party (1) cancels the contract, (2) materially changes position in reliance on the repudiation, or (3) indicates that he/she considers the repudiation to be final.
red - An independent trucker and a manufacturer entered a written contract for the delivery of a farming implement from the manufacturer to a farmer. Under the terms of the contract, the trucker promised “to deliver a farming implement from the manufacturer to the farmer,” and in exchange, the manufacturer promised “to pay the trucker if the trucker delivers the implement directly to the farmer after picking it up.” The trucker picked up the implement but, instead of driving directly to the farmer, drove 100 miles out of his way to pick up another item from a third party before delivering the implement to the farmer. The manufacturer, unaware that the trucker had failed to deliver the implement directly to the farmer, refused to pay the trucker.
Who has breached this contract?
A. Both the trucker and the manufacturer.
B. The trucker only.
C. The manufacturer only.
D. Neither the trucker nor the manufacturer.
D. Neither the trucker nor the manufacturer.
- Here, the trucker fully performed his promise to deliver a farming implement from the manufacturer to the farmer, so the trucker has not breached the contract (Choices A & B). However, the manufacturer’s duty to pay the trucker was expressly predicated on the trucker’s direct delivery of the implement to the farmer. The trucker did not fully satisfy this condition precedent because he took a 100-mile detour, so the manufacturer’s performance is not due (Choice C). Therefore, neither party has breached the contract.*
*Although the manufacturer is not in breach, the trucker is not without remedy. He can still seek restitution for the benefit conferred on the manufacturer by the delivery.
red - During the warm months of the year, the owner of a fur coat stored it with the furrier from whom she had bought it. While the coat was at the furrier’s store, a salesperson, mistakenly thinking that the coat was for sale, sold it to a customer. The customer was allowed to reduce the purchase price by the amount of an outstanding debt owed by the furrier to the customer; the customer paid the remainder in cash. In the process of purchasing the coat, the customer was told by the salesperson about the furrier’s storage service but, like the salesperson, was unaware that the coat was not part of the store’s merchandise. After the sale, the owner learned of the transaction between the furrier and the customer. Since the coat had significant sentimental value to the owner, she sought its return from the customer. When the customer refused, the owner filed an action to recover the coat from the customer.
Will the owner likely prevail?
A. No, because the customer was a good-faith purchaser of the coat that had been entrusted to the furrier.
B. No, because the owner is entitled to damages from the furrier.
C. Yes, because the customer did not give full value in acquiring the coat.
D. Yes, because the furrier transferred only voidable title in the coat to the customer.
A. No, because the customer was a good-faith purchaser of the coat that had been entrusted to the furrier.
- A merchant entrusted with goods has the power to convey good title to a buyer in the ordinary course. A buyer in the ordinary course is someone who buys goods (1) in good faith, (2) without knowledge that the sale violates the owner’s rights to the goods, and (3) from a merchant in the business of selling goods of that kind.
red - The owner of a ferry boat operated the boat only during daylight hours during the summer months of June, July, and August. On March 1, the owner entered into a written agreement with a man to serve as the captain of the boat for the upcoming season. On May 1, the owner contracted with a woman to serve as the captain of the boat. On May 30, the man was diagnosed with an illness, and the treatment for this illness prevented him from being employed until the following year. On May 31, the owner learned of the man’s illness and told the man not to worry about their contract as he had found someone else to serve as captain of the boat. The woman served as captain of the boat for the summer months of June, July, and August that year.
On September 1, the man sued the owner for damages based on a breach of their contract.
Can the man recover damages based on breach of contract?
A. No, because the man was unable to serve as the captain of the boat during the summer months.
B. No, because the owner informed the man about the owner’s contract with the woman prior to June 1.
C. Yes, because the owner did not inform the man of the owner’s contract with the woman until after the owner learned of the man’s illness.
D. Yes, because the owner’s contract with the woman constituted an anticipatory breach of the owner’s contract with the man.
A. No, because the man was unable to serve as the captain of the boat during the summer months.
- A nonrepudiating party who materially breaches the contract cannot recover damages for the other party’s anticipatory breach because the material breach discharges the other party’s duty to perform.
red - private port authority contracted with a company that manufactures and operates cranes to assist with loading and unloading containers from ships docked at the port. One of the company’s cranes was defectively manufactured. Due to this defect, a container was dropped, injuring an individual below.
The individual sued the port authority, alleging negligence. Neither the individual nor the port authority notified the crane company of this lawsuit. The port authority settled its claim with the individual before trial for a reasonable amount. The port authority seeks to recover the cost of the settlement from the crane company under a breach-of-contract action.
Is the port authority likely to prevail?
A. No, because damages for personal injury cannot be recovered in a breach-of-contract action.
B. No, because the port authority settled the lawsuit rather than litigating the matter to a final judgment.
C. Yes, because the crane company is liable for all consequences flowing from its breach of the contract.
D. Yes, because the settlement was reasonably foreseeable at the time the contract was formed.
D. Yes, because the settlement was reasonably foreseeable at the time the contract was formed.
- i think this one is stupid
- Here, the crane company breached its contract with the port authority when one of its defective cranes dropped a container and injured an individual. Due to its special circumstances as the dock operator, the port authority suffered damages from the individual’s negligence suit. It was reasonably foreseeable that a defect in the crane might cause personal injury and that the port authority, as the dock operator, would be sued for that injury. Therefore, the port authority will likely prevail in its breach-of-contract suit to recover the settlement cost.
- The primary goal of contract damages is to put the nonbreaching party in the same position as if the contract had been performed. This is typically done by compensating the nonbreaching party for actual economic losses. Such losses include consequential damages, which arise from special circumstances unique to the contracting parties rather than directly from the transaction itself. To be recoverable, consequential damages must have been reasonably foreseeable to the breaching party when the contract was entered.
red - The owner of a retail clothing store regularly displayed for-sale works by local artists on a wall in the store. An art collector who came into the store inquired about purchasing a particular work for display at his home. The two agreed upon a price, but the collector was not ready to commit to purchasing it immediately. Confident that the collector would purchase the work, the owner promised in a signed writing to sell the work to the collector at the agreed-upon price at any time before the end of the month. On the last day of the month, the collector sent the owner a check for the agreed-upon price, which the owner received on the following day.
If the owner returns the collector’s check and refuses to sell the artwork to the collector, which of the following best supports the owner’s position that a contract had not been formed?
A. The collector could not accept the owner’s offer by mailing a check.
B. The collector’s acceptance of the owner’s offer was not timely.
C. The firm-offer rule is not applicable because the collector was not a merchant with respect to the artwork.
D. The firm-offer rule is not applicable because the owner was not a merchant with respect to the artwork.
B. The collector’s acceptance of the owner’s offer was not timely.
- Acceptance of a firm offer, option, or other irrevocable offer is effective only when it is received by the offeror. The mailbox rule does not apply.
- Here, the owner’s signed writing that promised to sell the work to the collector was a firm offer that remained open until the end of the month. Although the collector sent a check to accept the offer on the last day of the month, it was not received by the owner until the following day. Therefore, the best support for the owner’s position that no contract was formed is that the collector’s acceptance of the owner’s offer was untimely.
red - On January 5, a buyer and a seller contracted for the delivery of 100 widgets if they could be delivered by February 20. The agreement was made in a writing signed by both parties and provided that the buyer would pay the contract price of $1,000 upon delivery. On February 3, the buyer and the seller orally agreed to postpone delivery until March 1. However, when the widgets arrived on March 1, the buyer refused to accept or pay for the widgets.
If the seller sues the buyer for breach of contract, who is most likely to succeed in the action?
A. The buyer, because any modification of the parties’ contract must satisfy the statute of frauds.
B. The buyer, because the agreement on February 3 was not supported by consideration.
C. The seller, because the contract modification on February 3 was immediately binding on both parties.
D. The seller, because the oral agreement on February 3 waived the February 20 delivery date.
D. The seller, because the oral agreement on February 3 waived the February 20 delivery date.
- Nonoccurrence of a condition may be excused if the party who would benefit from the condition waives it by words or conduct. And that waiver cannot be retracted if the other party has detrimentally relied on it.
red - A caterer contracted with a local farmer for the delivery of three dozen fresh local eggs. The contract provided that because the caterer planned to use the eggshells to serve one of her signature dessert recipes, the eggs needed to be a uniform color.
The farmer delivered the caterer 20 white eggs and 16 speckled eggs. The caterer immediately emailed the farmer and informed him that she was rejecting the eggs because she could not use the inconsistent shells to serve her desserts. The caterer also told the farmer that she did not have the ability to refrigerate the eggs or the space to store them for long and that she would wait for his instructions. The caterer stored the eggs on her countertop for a week and had not heard from the farmer. Concerned that the unrefrigerated eggs would soon spoil, the caterer promptly returned the eggs to the farmer. Due to the perishable nature of the eggs, the farmer had to resell the eggs at half the normal price.
If the farmer brings a breach-of-contract claim against the caterer to recover the full contract price of the eggs, will he succeed?
A. No, because the caterer behaved appropriately after rightfully rejecting the eggs.
B. No, because the caterer had no obligations regarding the nonconforming eggs.
C. Yes, because the caterer had a duty to retain the eggs until the farmer retrieved them.
D. Yes, because the caterer was required to sell the eggs on the farmer’s behalf.
A. No, because the caterer behaved appropriately after rightfully rejecting the eggs.
- A buyer must retain rejected goods for a reasonable time to allow the seller to reclaim them. In the absence of other instructions, the buyer must sell the goods on the seller’s behalf if the buyer is a merchant, the goods are perishable, and there is no local agent to whom the goods can be returned.
red - A general contractor was preparing a bid to build a “green home” designed to be environmentally friendly and sustainable. The general contractor received five bids from subcontractors ranging from $22,000 to $29,000 for the installation of solar panels on the roof of the house. In computing his own bid, the general contractor used the lowest sub-bid of $22,000 for installation of the solar panels. The general contractor was awarded the contract to build the green home. After winning the bid, the general contractor was approached by another solar panel installer, who offered to install the solar panels for $20,000. The general contractor entered into a contract with this installer to mount solar panels onto the roof of the green home.
The subcontractor who had submitted the $22,000 sub-bid learned of the general contractor’s contract with the installer and sued the general contractor for breach of contract.
Will he succeed?
A. No, because his sub-bid was higher than the sub-bid accepted by the general contractor.
B. No, because his sub-bid was never accepted.
C. Yes, because of detrimental reliance.
D. Yes, because the general contractor was bound to accept his sub-bid.
B. No, because his sub-bid was never accepted.
- A subcontractor’s bid is considered an outstanding offer, so a general contractor is not bound to accept the sub-bid—even if the general contractor is awarded the general contract.
A party-planning company specialized in creating and selling nine different kits for themed parties. A store that sells party-related items entered into a written agreement with the company. Under this agreement, the company was to deliver 500 kits to the store by November 1. The agreement stated that selections regarding the types of kits and the number of each were to be made by October 15, but the agreement did not specify who was to make the selections. Neither the store nor the company selected any assortment of the kits by October 15.
On October 16, the company notified the store that due to its breach, the company would not be shipping the party kits. On October 17, after receiving the company’s notification, the store informed the company of its selections. The company refused to send the kits that the store selected even though it had a surplus of all of the merchandise and could have filled the store’s order with any combination of themed kits.
If the store sues the company for breach of contract on November 2, is the store likely to prevail?
A. No, because the company had no duty to perform since an assortment was not selected by October 15.
B. No, because the failure to specify the party responsible for selecting the types and numbers of each kit renders the contract unenforceable due to the indefiniteness of its terms.
C. Yes, because the company was required to make a reasonable selection of available merchandise to fill the order.
D. Yes, because the store’s two-day delay in making its selections did not have a material effect on the company’s ability to perform the contract.
D. Yes, because the store’s two-day delay in making its selections did not have a material effect on the company’s ability to perform the contract.
- The UCC imposes a duty on the buyer of assorted goods to specify the assortment unless the contract states otherwise. The seller can treat the buyer’s failure to specify the assortment as a breach only if it materially impacts the seller’s performance.
A comic-book collector agreed to purchase comic books from a man who had just inherited a large collection of them. Before they signed the written agreement, the collector emailed the man to ask if he would include a particularly rare issue of Batman in the sale, and the man agreed by email that he would. The written contract provided that the man would sell to the collector “a collection of comic books containing the following issues,” followed by a list of each comic book to be included in the sale, for a total price of $4,000. The list did not include the Batman issue. The contract also stated that it was “the complete and final agreement” between the man and the collector.
When the collector received the comic books, he discovered that the shipment did not include the Batman issue. He sued the man, stating that even though the list in the written contract did not mention the particular Batman issue, the collector had relied on the promise in the man’s email when he signed the contract. At trial, the collector seeks to introduce the emails sent prior to the execution of the agreement that referenced the Batman issue.
Are the emails admissible?
A. No, because of the parol evidence rule.
B. No, because the Uniform Commercial Code does not apply to this transaction.
C. Yes, because the agreement was only partially integrated.
D. Yes, because the parol evidence rule applies only to oral communications.
A. No, because of the parol evidence rule.
- The parol evidence rule generally bars the admission of extrinsic evidence of prior or contemporaneous agreements that modify or contradict the terms of an integrated writing.
A construction company contracted with a manufacturer to purchase 100 identical prefabricated windows to use while constructing houses in a gated community. The windows were to be delivered in shipments of 25 windows each on April 1, May 15, July 1, and August 15. The written contract, signed by both parties, was silent as to when payment for each shipment would be due. The manufacturer made the first two shipments in conformity with the contract requirements, and the construction company paid one-fourth of the full contract price upon each delivery. However, on June 1, the manufacturer demanded that the construction company pay the entire remainder of the contract price before the manufacturer made any further shipments.
Which of the following statements is true?
A. The construction company has no duty under the contract to make any payments until the final delivery is made.
B. The construction company must pay the manufacturer one-fourth of the contract price upon delivery of each conforming shipment of windows.
C. The construction company’s failure to pay the requested sum will amount to a repudiation of the contract.
D. The manufacturer waived his right to demand immediate payment of the full contract price when he accepted the first payment of one-fourth of the contract price on April 1.
B. The construction company must pay the manufacturer one-fourth of the contract price upon delivery of each conforming shipment of windows.
- Under the UCC, an installment contract is defined as a contract in which the goods are to be delivered in multiple shipments, and each shipment is to be separately accepted by the buyer. Payment by the buyer is due upon each delivery unless the price cannot be apportioned.
- Here, the parties formed an installment contract in which 100 identical windows were to be delivered to the construction company in four equal shipments on four separate dates. The price of these windows can be easily apportioned between the shipments. Therefore, the construction company is obligated to pay the manufacturer one-fourth of the full contract price upon each conforming delivery.
