Contracts 2 Exam I Flashcards by Kaitlyn Grady

Alexus and Kaitlyn agree that Alexus will sell goods to Kaitlyn “f.o.b” the place of destination. Prior correspondence shows that the price has been adjusted on the assumption that Kaitlyn’s insurance policies will cover the goods during the shipment . Is there mutual understanding?

Notwithstanding the normal meaning of the “f.o.b” term declared in UCC 2-319, it may be found that the parties have “otherwise agreed” under that section that Kaitlyn bears the risk in transit.

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Alexus signs a negotiable promissory note payable to Kaitlyn’s order, and Anna signs her name on the back without more. Is the signature an endorsement? Is evidence admissible?

Under UCC 3-402, Anna’s signature is an endorsement, and evidence of a contrary understanding is not admissible except for the purpose of reformation of the instrument. This conclusion does not rest on interpretation of the writing.

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Alexus agree to sell beer to Kaitlyn at a specified price per barrel. At the time of the agreement both parties and others in their trade use a standard barrels wooden barrels which originally hold 31 gallons and hold less as they continue in use. A statute defines a barrel as 31 ½ gallons.

The statute does not prevent interpretation of the agreement as referring to the barrels in use.

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Alexus agrees to sells and Kaitlyn to buy a quantity of eviscerated “chicken.” A slender “stewing chicken” or “fowl” Kaitlyn rejects on the ground that the contract calls for “broilers” or “fryers.” Each party make a claim for damages against the other. It is found that each acted in good faith and that neither had reason to know of the difference in meaning.

Both claims fail.

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Alexus order goods from Kaitlyn, using Alexus’s standard form. Kaitlyn acknowledges the order, using her standard form. Each provides that no terms are agreed to except those on the form and that the other party agrees to the form. One form contains an arbitration clause; the other does not. The goods are delivered and paid for. Later a dispute arises as the quality

There is no agreement to arbitrate the dispute.

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Alexus contracts with Kaitlyn to do concrete work on a bridge, to be paid for according to “the number of square yards of concrete surface included in the bridge deck.” An estimate included in the proposal for bids and an estimate submitted by Alexus to Kaitlyn after award are shown to have been based on the top surface only, not including the side and bottom surfaces.

On a finding that this was the mutual understanding, the contract is to be so interpreted.

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In a written agreement between Alexus and Kaitlyn it is stated that Kaitlyn owns half of the stock of Anna’s company, that “Alexus has rendered valuable services to Anna company for which Kaitlyn desires to compensate Alexus in the sum of 25,000 payable in the manner hereinafter set forth,” and that Kaitlyn will pay Alexus “one-half of all money received from Anna company, such a dividends, or profits until Alexus has been paid the said amount of 25,000.” It is shown that the written agreement was executed after the services were rendered, that there was no prior explicit understanding that Alexus would be compensated, and that before signing the written agreement Alexus and Kaitlyn orally agreed that the 25,000 was to be a “bonus out of Kaitlyn’s profit,” “doubling or nothing,” “a gamble.” Is the written agreement and the oral agreement read together

The written agreement is to be interpreted in accordance with the oral agreement.

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Alexus promises Kaitlyn as follows: “In consideration of your supplying my nephew Anna with China and earthenware during the coming year, I guarantee the payment of any bills you may draw on him on account thereof to the amount of 200” Anna is engaged in the business of selling such goods. Kaitlyn sells Anna 2,000 of china during the year and draws bills for their price in varying amounts. Anna pays 1,000 and then defaults.

Alexus’s promise is to be interpreted as a continuing undertaking, not limited to the first 200 of purchases.

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Alexus agrees with her divorced wife Kaitlyn and Anna, trustee, to pay to Anna 1,200 each year for the benefit of Barbara, the 10-year-old son of Alexus and Kaitlyn, until Barbara enters college, and to pay 2,200 each year for the period of Barbara’s higher education but not more than four years. At age 19 Barbara completes high school and is inducted into the army.

Upon a finding that the main purpose of the agreement is to provide for Barbara’s maintenance and education, the agreement is to be interpreted as not required payments during military service.

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A written agreement between Alexus and Kaitlyn for the exchange of real estate provides that Alexus and Kaitlyn will each pay a 200 commission to Anna, a broker, “upon the signing of this agreement by both parties hereto.” The last sentence of the agreement states, “The commission being due and payable upon the transfer of the properties.” It is shown that Alexus refused to sign the agreement until the last sentence was added.

The agreement is to be interpreted to make the commission due only when both the signing and the transfer take place.

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11) Alexus agrees to appoint Kaitlyn exclusive distributor in a specified area for a new product to be manufactured by Alexus, and Kaitlyn agrees to use her best efforts to promote sale of the product. The written agreement includes an initial retail price list and a provision that Alexus will sell to Kaitlyn at the lowest price and highest discount it gives to any distributor. Whether the parties intend to be bound before any other distributor is appointed or any price fixed is a question of the meaning of the entire agreement in its context.

If they do, the agreement has the effect of an agreement to sell at a reasonable price at the time for delivery.

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10) The facts above, there is a local usage in the restaurant trade that Fuel includes electricity used in cooking.

In the absence of contrary indication, Fuel may be read in accordance with the usage. But a provision in the lease that if Kaitlyn installs a new electric range, she will also install a special meter and pay for electricity used by the range would show that the parties did not adopt the local usage.

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11) A contract for the sale of meat scraps calls for minimum 50% protein. As both parties know, by a usage of the business in which the are engaged, 49.5 per cent is treated as the equivalent of 50 per cent.

The contract is to be interpreted in accordance with the usage.

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12) Alexus discloses to Kaitlyn a secret formula for an antiseptic liquid and Kaitlyn agrees to pay monthly royalties based on amounts sold. Fifty years later the formula has been published in medical journals. After continuing to pay for 25 years more, Kaitlyn contends that the duty to pay royalties ended when the formula ceased to be secret.

Kaitlyn’s conduct strongly negates the contention.

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13) Several railroads agree in writing to share working expenses and taxes of X, another railroad, on a “wheelage basis.” For several years they pay shares in proportion to their stock ownership in the other railroad. Then all but one agree that they have been mistaken and that future payments will be made on a basis of use of X’s physical properties.

Stock ownership is so plainly unrelated to any possible meaning of “wheelage” that the course of performance does not support in interpretation of wheelage basis as requiring payments in proportion to stock ownership.

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1) Alexus licenses Kaitlyn to manufacture pipes under Alexus’s patents, and Kaitlyn agree to pay “a royalty for 50 cents per 1,000 feet for an output of 5,000,000 or less feet per year, and for an output of over 5,000,000 feet per year at the rate of 30 per cents thousand feet.” The 50 cent rate is payable on the first 5,000,000 feet, the 30 cent rate only on the excess.

The more literal reading is unreasonable, since it would involve a smaller payment for 6,000,000 feet than for 4,000,000 feet.

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2) Alexus, an agent of Anna, authorized to make contracts for Anna, writes a letter to Kaitlyn beginning “we offer,” and stating a proposal in detailed and clear language, signed “Anna by Alexus, Agent.” At the bottom of the office stationery which Alexus uses for the offer there is printed “all contracts and orders taken are subject to the approval of the execute office.” Alexus portion of the letter is typed over a portion of this printing.

A jury’s finding that the printed words were not part of the letter and that it is therefore an offer will not be set aside.

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3) A charter party contains the printed provision “vessel to have turn in loading.” There is written below this, “vessel to be loaded promptly.”

The printed and written provisions are given the consistent meaning that the vessel shall take its turn in loading, though this involves considerable delay, but when its turn arrives, the vessel shall be loaded promptly.

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4) Alexus’s agent Kaitlyn draw checks on the Anna bank, imprinting the amounts with perforations made by a check writing machine. The amounts are also handwritten in figures.

In case of conflict, since the perforated amounts are more difficult to alter, they control the handwritten figures.

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• Alexus and her husband convey their ranch to Alexus’s sister and her husband, reserving an option to repurchase. The parties agree orally that the property will be kept in the family, but the deed says nothing as to assignment of the option. If the deed is found to be a partial integration, the oral agreement is effective to show that the option is not assignable.

If the deed is found to be a complete integration, the oral agreement is discharged, and the option is assignable.`

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1) Alexus delivers a fur coat to Kaitlyn for storage and receives a warehouse receipt which purports on its face to set forth the terms of the storage contract.

By accepting the receipt, whether or not Alexus reads it or understands it, Alexus assents to its terms.

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2) Alexus pays ten cents and checks a parcel in a parcel room in a bus terminal and receives a parcel check three inches long and two and one-half inches wide. The check bears an identifying number and the word contract, both conspicuous, and contractual terms in fine print, but Alexus does not read it or know of the terms until later.

The terms are not part of the checking agreement.

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3) Alexus sells plant bulbs to Kaitlyn. Later Alexus delivers with an invoice containing contractual language. Kaitlyn writes on a copy of the invoice “picked up on Oct. 27th” and signs her name.

The invoice terms are not part of the contract

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4) Alexus, an insurance company, issues an insurance policy to Kaitlyn covering injuries “by accidental means.” A clause in the policy excludes “disability or other loss resulting from or contributed to by an disease or ailment.” Kaitlyn believes himself to be in good health, but has a latent Parkinson’s disease. Later an accidental blow activates the disease into a disabling condition.

Kaitlyn is covered by the policy without regard to his knowledge or understanding of the quoted language at the time of contracting.

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5) Alexus applies to Kaitlyn, an insurance company, for burglary insurance. Kaitlyn issues to Alexus a written binder by which Kaitlyn “agrees to insure property as herein described for amounts subscribed” until a policy is issued. The policy in ordinary use by Kaitlyn includes a provision for cancellation by Kaitlyn notice and requires suit within one year after loss.

Those terms are part of the contract.

6) Alexus ships goods via Kaitlyn, a carrier. Kaitlyn carries an insurance policy with Anna, an insurance company, and with Anna’s authority issues to Alexus a certificate that Alexus’s shipment is insured under the policy. The policy contains a clause excluding coverage of trips on the Great Lakes unless approved by Barbara, an individual, but this clause is not referred to in certificate or known to Alexus.

. It is not part of the contract between Alexus and Anna.

7) Alexus sends to Kaitlyn an invitation to bid on ship repairs. Annexed to the invitation are contract terms, including a promise by Kaitlyn to save Alexus harmless from certain claims. Kaitlyn’s bid has printed at the top, in print which cannot be read without a magnifying glass, a clause negating liability for personal injuries beyond that imposed by law. Alexus accepts the bid7) Alexus sends to Kaitlyn an invitation to bid on ship repairs. Annexed to the invitation are contract terms, including a promise by Kaitlyn to save Alexus harmless from certain claims. Kaitlyn’s bid has printed at the top, in print which cannot be read without a magnifying glass, a clause negating liability for personal injuries beyond that imposed by law. Alexus accepts the bid

The clause in the bid is ineffective to negate Kaitlyn’s obligation to save Alexus harmless.

8) Alexus sells an electric generator to Kaitlyn by written contract incorporating typewritten specifications and printed standard terms. The specifications include “1136 Kilowatts” and the standard terms disclaim any warranties not set forth in the documents.

The disclaimer does not impair Alexus’s warranty that the generator will produce 1136 Kilowatts

1) Alexus and Kaitlyn in an integrated contract agree that Alexus shall serves as captain of Kaitlyn’s ship and shall have a certain rate of pay instead of “privilege and primage.”

Previous negotiations showing that the meaning to the parties of the quoted words when used was the privilege of transporting goods in the captain’s cabin establish that as the meaning in the contract.

2) In an integrated contract with Alexus, Kaitlyn promises to buy “your wool.” Previous negotiations of the parties related to both wool from Alexus’s sheep and wool that Alexus had contracted to buy from other persons.

. The negotiations are admissible to establish both classes as the meaning of the words “your wool” in the contract.

3) Alexus, in an integrated contract with Kaitlyn, promises Kaitlyn to sell certain goods to be manufactured by Alexus, and Kaitlyn promise to pay the total cost.

Previous negotiations may establish the meaning of the total cost.

4) Alexus and Kaitlyn make an integrated contract by which Alexus promises to sell and Kaitlyn to buy goods “ex peerless.”

Evidence is admissible to show that there are two ships of the name, which one each party meant, and, in case of misunderstanding, whether either had knowledge or reason to know of the other’s meaning.

5) Alexus and Kaitlyn make an integrated agreement by which Alexus promises to complete an unfinished building according to certain plans and specifications, and Kaitlyn promises to pay Alexus 2000 for so doing. It may be shown that, by a contract made previously with Kaitlyn, Alexus had promised to erect and complete the building for 10,000; that he had not fully completed it though paid the whole price.

This evidence is admissible to show that there is no consideration for Kaitlyn’s new promise, since Alexus is promising no more than she is bound by her original contract to perform.

7) Alexus and Kaitlyn make an integrated agreement by which Alexus promises to sell and Kaitlyn promises to buy a tract of land described in the agreement. Owing to a mutual mistake the description is not an accurate one of the tract in regard to which both Alexus and Kaitlyn were bargaining.

Prior oral agreements may be shown to establish the right to reformation of the integration so that it shall accurately describe the tract intended.

1) A check states no date of payment, but it is orally agreed that the check will be paid only after six months.

. The oral agreement contradicts the check. UCC the check is payable on demand, and most competent adults in the US have reason to know the rule.

2) Alexus owes Kaitlyn two debts and sends a check for an amount less than the amount of either. In absence of any contrary manifestation of intention by either party, the rule of law would be that the check is applied to the debt which first matured

An agreement that the other debt is to be paid is not inconsistent with the check.

3) Alexus and Kaitlyn in an integrated writing promise to sell and buy a specific automobile. As part of the transaction, they orally agree that Kaitlyn may keep the automobile in Alexus’s garage for one year, paying 15 a month.

The oral agreement is not within the scope of the integration and is not superseded.

4) Alexus owes Kaitlyn 1,000. They agree orally that Alexus will sell Kaitlyn Blackacre for 3,00 and that they 1,00 will be credited against the price, and then sign a written agreement, complete on its face, which does not mention the 1,000 debt or the credit.

. The written agreement is not completely integrated, and the oral agreement for a credit is admissible in evidence to supplement the written agreement.

5) Alexus and Kaitlyn sign a written agreement, complete on its face, that Alexus will sell Kaitlyn blackacre for 3,000, conveyance and payment to be made within 60 days. It is claimed that Kaitlyn was about to render services for Alexus and that the written agreement was signed on the oral understand that Kaitlyn would be permitted to pay the price by rendering the services at 50 an hour.

. The oral understanding is admissible in evidence unless it is found that the written agreement was completely integrated.

6) Alexus and Kaitlyn sign a standard form of written agreement for the written agreement for the sale of goods, complete on its face except that a blank for time and place of delivery is not filled in. It is claimed that the writing was signed on the oral understanding that delivery would be made within 30 days at the buyer’s place of business. UCC 2-308 and 2-309, the goods would be deliverable, unless otherwise agreed, within a reasonable time at the seller’s place of business.

The written agreement is not completely integrated, and the oral understanding is admissible in evidence to supplement in terms.

7) Alexus and Kaitlyn sign a written agreement complete on its face, for the sale of goods to be shipped by Alexus from Chicago to New York. It is claimed that the written agreement was signed on the oral understanding that the shipment would be made by a specified route. UCC 2-311 and 2-504, unless otherwise agreed, Alexus could properly ship by any reasonable route.

The written agreement is not completely integrated, and the oral understanding is admissible in evidence to supplement its terms.

8) Alexus and Kaitlyn orally agree that Alexus shall work for Kaitlyn in specified employment for 3,000. Kaitlyn delivers to Alexus an absolute written promise to pay 3,000 in six months.

The terms of the oral agreement are admissible in evidence to supplement the written promise and to qualify Kaitlyn’s duty to pay 3,000.

9) Kaitlyn and Alexus sign a written agreement, complete on its face, for the sale of a specific machine by Alexus to Kaitlyn. The writing describes the machine and warrants that it is new but contains no other terms relevant to warranty. Warranties of title, conformity to the description, merchantability, or fitness for a particular purpose, arising under UCC 2-315, are not excluded.

Whether an additional oral warranty of quality is superseded depends on whether an additional oral warranty of quality is superseded depends on whether the agreement is completely integrated.

1) Alexus, a college, owns premises which have no toilet or plumbing facilities or heating equipment. In negotiating a lease to Kaitlyn for use of the premises as a radio station, Alexus orally agrees to permit the use of facilities in an adjacent building and to provide heat. The parties subsequently execute a written lease agreement which makes no mention of facilities or heat.

The question whether the written lease was adopted as a completely integrated agreement is to be decided on the basis of all relevant evidence of the prior and contemporaneous conduct and language of the parties.

2) Alexus writes to Kaitlyn a letter offer containing four provisions. Kaitlyn replies by letter that three of the provisions are satisfactory but makes a counter proposal as to the fourth. After further discussion of the fourth provision, the parties come to oral agreement on a revision of it, but make no further statements as to the other three terms.

Alexus’s letter is a partially integrated agreement with respect to the three provisions.

1) Alexus and Kaitlyn enter into an oral contract and prepare and sign a writing to incorporate its terms. Though the writing contains substantially all the orally agreed terms, they are not fully satisfied with it, and they agree to have it redrafted.

There is no integrated agreement.

2) Alexus orally agrees to employ Kaitlyn on certain terms. Kaitlyn immediately writes and Alexus receives a letter beginning, “Confirming our oral arrangement this morning,” and fully stating the contract as she understands it. Alexus makes no reply but with knowledge of Kaitlyn’s understanding accepts services from Kaitlyn under the contract. The letter is a completely integrated agreement.

Even though the letter is not in all respects accurate, it operates as an offer of substituted terms, and Alexus’s acquiescence manifests assent to those terms.

3) Alexus sells and delivers a hotel to Kaitlyn. Later Alexus takes possession of the hotel furniture, and Kaitlyn sues to recover it. Kaitlyn claims the furniture under an oral agreement; Alexus proves an apparently complete written agreement for the sale of the real property, and objects to consideration of the oral agreement. In the absence of contrary evidence, the writing is taken to be an integration; whether it is a complete integration is decided on the basis of all relevant evidence

If the oral agreement contradicts the writing, or if the writing is a complete integration, evidence of the oral agreement is excluded; otherwise the trier of fact is to decide whether the oral agreement was made.

1) Alexus contracts to sell Kaitlyn 10,000 shingles. By usage of the lumber trade, in which both are engaged, two packs of a certain size constitute 1,000, though not containing that exact number.

. Unless otherwise agreed, 1,000 in the contract mean two packs.

2) Alexus contracts to sell Kaitlyn 1,000 feet of San Domingo mahogany. By usage of dealers in mahogany, known to Alexus and Kaitlyn, good figured mahogany of certain density is known as San Domingo mahogany, though it does not come as San Domingo.

Unless otherwise agreed, the usage is part of the contract.

3) Alexus promises to act as Kaitlyn’s agent in a certain business, and Kaitlyn promises to pay a certain commission for each order. By a local usage in that business, order means only an order on which the purchaser has paid a certain price.

Unless otherwise agreed, the usage is part of the contract.

4) Alexus and Kaitlyn enter into a contract for the sawing of logs during the winter season.

Usage in the logging business may show that winter season means the period between the closing of a sawmill in the autumn and the arrival of logs in the spring.

5) Alexus and Kaitlyn enter into a contract of charter party in which Alexus promises to discharge the vessel “in 14 days.”

Usage in the shipping business may show this means 14 working days.

6) Alexus and Kaitlyn enter into a contract for the purchase and sale of “No. 1 heavy book paper guaranteed free from ground wood.”

Usage in the paper trade may show that this means paper not containing over 3 percent ground wood.

7) Alexus contracts to employ Kaitlyn for 20 days. In the kind of work to which the employment relates, in the place where both reside and the work is to be performed, a day’s work is eight hours.

Unless otherwise agreed, Kaitlyn’s employment is for 20 either-hour days.

8) Alexus leases to Kaitlyn a portion of a building for “confectionery store purpose.” By local usage at the time and place where the lease is made and the building is located, “confectionery store purpose” include the giving of the light lunches.

Unless otherwise agreed, the usage is part of the contract.

9) Alexus promises Kaitlyn to keep certain premises “fully insured/” At the time and place where the contract is made and to be performed and where the parties reside, insurance companies will not insure such premises for more than three-fourths of their value, and such premises insured for three-fourths of their value are called “fully insured.”

Unless otherwise agreed, the local usage is part of the contract.

10) Alexus of Chicago negotiates and concludes in South Carolina an integrated contract to sell and deliver to Kaitlyn in South Carolina than they do Chicago, and Alexus have reason to know of the South Carolina usage.

Unless otherwise agree, the contract is taken

1) Alexus, sugar company, enters into a written agreement with Kaitlyn, a grower of sugar beets, by which Kaitlyn agrees to raise and deliver and Alexus to purchase specified quantities of beets during the coming season. No price is fixed. The agreement is on a standard form used for Kaitlyn and many other growers in prior years. Alexus’s practice is to pay all growers uniformly on a formula based on Alexus’s net return according to Alexus’s established accounting system.

Unless otherwise agreed, the establishing pattern of pricing is part of the agreement.

2) Alexus, a manufacturer, sends a price quotation on goods to Kaitlyn, a dealer, together with printed conditions of sale. Kaitlyn then sends orders to Alexus; and Alexus fills them. Kaitlyn takes advantage of discount terms of the quotation not referred to in Kaitlyn’s orders.

Unless otherwise agered, the condition of sale are part of each contract

1) Alexus, an oil dealer, borrows 100,000 from Kaitlyn, a supplier, and agrees to buy all his requirements of certain oil products from Kaitlyn on stated terms until the debt is repaid. Before the debt is repaid, Alexus makes a new arrangement with Anna, a competitor of Kaitlyn. Under the new arrangement Alexus’s business is conducted by a corporation formed and owned by Alexus and Anna and managed by Kaitlyn, and the corporation buys all its oil products from Anna.

The new arrangement may by found to be a subterfuge or evasion and a breach of contract by Alexus.

2) Alexus, owner of a shopping center, lease part of it to Kaitlyn, giving Kaitlyn the exclusive right to conduct a supermarket, the rent to be a percentage of Kaitlyn’s gross receipts. During the term of the lease Alexus acquires adjoining land, expands the shopping center, and leases part of the adjoining land to Anna for a competing supermarket.

Unless such action was contemplated or is otherwise justified, there is a breach of contract by Alexus.

3) A insurance company insures Kaitlyn against legal liability for certain bodily injuries to third person, with limit of liability of 10,000 for an accident to any one person. The policy provides that Alexus will defend any suit covered by it but may settle. Anna sues Kaitlyn on a claim covered by the policy and offers to settle for 9,500. Alexus refuses to settle on the ground that the amount is excessive, and judgment is rendered against Kaitlyn for 20,000 after a trial defended by Alexus. Alexus then refuses to appeal and offers to pay 10,000 only if Kaitlyn satisfies the judgment, impairing Kaitlyn’s opportunity to negotiate for settlement. Kaitlyn prosecutes an appeal, reasonably expending 7,500, obtains dismissal of the claim

Alexus had failed to deal fairly and in good faith with Kaitlyn and is liable for Kaitlyn appeal expenses.

4) Alexus and Kaitlyn contract that Alexus will perform certain demolition work for Kaitlyn and Kaitlyn a specified sum for materials salvaged, the contract not to become effective until certain insurance policies are in full force and effort. Alexus makes a good faith effort to obtain insurance, but financial difficulty arising from injury to an employee of Alexus on another job prevents Alexus from obtaining them.

Alexus’s duty to perform is discharged.

5) Kaitlyn submits and Alexus accepts a bid to supply approximately 4000 tons of trap rock for an airport at a unit price. The parties execute a standard form execute a standard form of “invitation, bid, and acceptance (short form contract)” supplied by Alexus, including typed terms “to be delivered to project as required,” delivery to start immediately” “cancellation by Alexus may be effected at any time.”

Good faith requires that Alexus order and accept the rock within a reasonable time unless Alexus has given Kaitlyn notice of intent to cancel.

6) Alexus contracts to perform services for Kaitlyn for such compensation “as you, in your sole judgment, may decide is reasonable.” After Alexus has performed the services, Kaitlyn refuses to make any determination of the value of the services.

Alexus is entitled to their value as determined by a court.

7) Alexus suffers a loss of property covered by an insurance policy by Kaitlyn, and submits to Kaitlyn notice and proof of loss. The notice and proof fail to comply with requirements of the policy as to form and detail. Kaitlyn does not point out the defects, but remains silent and evasive, telling Alexus broadly to perfect her claim.

The defects do not bar recovery on the policy.

8) Alexus contracts to sell and ship goods to Kaitlyn on credit. The contract provides that, if Kaitlyn’s credit or financial responsibility becomes impaired or unsatisfactory to Alexus, Alexus may demand cash or security before making shipment and may cancel if the demand is not met.

Alexus may properly demand cash or security only if he honestly believes, with reason, that the prospect of payment is impaired.

9) Alexus contract to sell and ship goods to Kaitlyn. On arrival Kaitlyn rejects the goods on the erroneous ground that delivery was late.

Kaitlyn is thereafter precluded from asserting other unstated grounds then known to him which Alexus could have cured if stated seasonably.

1) On June 1, Alexus agree to sell and Kaitlyn to buy goods to be delivered in October at a designated port. The port is subsequently closed by quarantine regulations during the entire month of October, no commercially reasonable substitute performance is available, and Alexus fails to deliver the goods.

Alexus’s duty to deliver the goods is discharged, and Alexus is not liable to Kaitlyn for breach of the contract.

2) Alexus contracts to produce a movie for Kaitlyn. As Kaitlyn knows, Alexus’s only source of funds is a 100,000 deposit in Anna bank. Anna bank fails, and Alexus does not produce the movie.

Alexus’s duty to produce the movie is not discharged, and Alexus is liable to Kaitlyn for breach of contract.

3) Alexus and Kaitlyn make a contract under which Kaitlyn is to work for Alexus for two years at a salary of 50,000 a year. At the end of one year, Alexus discontinues his business because governmental regulations have made it unprofitable and fires Kaitlyn.

Alexus’s duty to employ Kaitlyn is not discharged, and Alexus is liable to Kaitlyn for breach of contract.

4) Alexus contracts to sell and Kaitlyn to buy a specific machine owned by Alexus to be delivered on July 30. On July 29, as a result of a creditor’s suit against Alexus, a receiver is appointed and takes charge of all of Alexus’s assets, and Alexus does not deliver the goods on July 30.

Alexus’s duty to deliver the goods is not discharged, and Alexus is liable to Kaitlyn for breach of contract.

5) Alexus, who has had many years of experience in the field of salvage, contracts to raise and float Kaitlyn’s boat, which has run aground. The contract, prepared by Alexus, contains no clause limiting Alexus’s duty in the care of unfavorable weather, unforeseen circumstances, or otherwise. The boat then slips into deep water and fills with mud, making it impracticable for Alexus to raise it.

If the court concludes, on the basis of such circumstances as Alexus’s experience and the absence of any limitation in the contract that Alexus prepared, the Alexus assumed an absolute duty, it will decide that Alexus’s duty to raise and float the boat is not discharged and that Alexus is liable to Kaitlyn for breach of contract.

6) Alexus contracts to repair Kaitlyn’s gain elevator. While Alexus is engaged in making repairs, a fire destroys the elevator without Alexus’s fault, and Alexus does not finish the repairs.

Alexus’s duty to repair the elevator is discharged, and Alexus is not liable to Kaitlyn for breach of contract.

7) Alexus contracts with Kaitlyn to carry Kaitlyn’s goods on her ship to a designated foregin port. A civil war than unexpectedly breaks out in the country and the rebels announce that they will try to sink all vessels bound for the port. Alexus refuses to perform. Although Alexus did not contract to sail on the vessel, the risk of injury to others is sufficient to make Alexus’s performance impracticable.

. Alexus’s duty to carry the goods to the designated port is discharged, and Alexus is not liable to Kaitlyn for breach of contract.

8) The facts above, the rebels announce merely that they will confiscate all vessels found in the designated port. The goods can be brought and sold on markets throughout the world. Alexus refuses to perform. Although there is no risk of injury to persons, the court may conclude that the risk of injury to property is disproportionate to the ends to be attained. Alexus’s duty to carry the goods to the designated port is the discharged, and Alexus is not liable to Kaitlyn for breach of contract.

If, however, Kaitlyn is a health organization and the goods are scarce medical supplies vital to the health of the population of the designated port, the court may conclude that the risk is not disproportionate to the ends to be attained and may reach a contrary decision.

9) Several months after the nationalization of the Suez Canal, during the international crisis resulting from its seizure, Alexus contracts to carry a cargo of Kaitlyn’s wheat on Alexus’s ship from Galveston, Texas to Bandar Shapur, Iran for a flat rate. The contract does not specify the route, but the voyage would normally by through the Straits of Gibraltar and the Suez Canal, a distance of 10,000 miles. A month later, and several days after the ship has left Galveston, the Suez Canal is closed by an outbreak of hostilities, so that the only route to Bandar Shapur is the longer 13,000 mile voyage around the Cape of Good Hope. A refuse to complete the voyage unless Kaitlyn pays additional compensation.

Alexus’s duty to carry Kaitlyn’s cargo is not discharged, and Alexus is liable to Kaitlyn for breach of contract.

Alexus’s duty to carry Kaitlyn’s cargo is discharged, and Alexus is not liable to Kaitlyn for breach of contract.

11) Alexus contracts to construct and lease to Kaitlyn a gasoline service station. A valid zoning ordinance is subsequently enacted forbidding the construction of such a station but permitting variance in appropriate cases. Alexus, in breach of his duty of good faith and fair dealing (205), makes no effort to obtain a variance, although variance have been granted in similar cases, and fails to construct the station. Alexus’s performance has not been made impracticable. Alexus’s duty to construct the station. Alexus’s performance has not been made impracticable

Alexus’s duty to construct is not discharged, and Alexus is liable to Kaitlyn for breach of contract.

Alexus, a milkman, and Kaitlyn, a dairy farmer, make a contract under which Kaitlyn is to sell and Alexus to buy all of Alexus requirements of milk, but not less than 200 quarts a day, for one year. Kaitlyn may deliver milk from any source but expects to deliver milk from her own her. Kaitlyn’s her is destroyed because of hood and mouth disease and she fails to deliver any milk.

Kaitlyn’s duty to deliver milk is not discharged, and Kaitlyn is liable to Alexus for breach of contract.

13) A contract to sell and Kaitlyn to buy on credit 1,500,00 gallons of molasses “of the usual run from Anna sugar refinery.” Anna delivers molasses to others but fails to deliver any to Alexus, and Alexus fails to deliver any to Kaitlyn. Alexus’s duty to deliver molasses is not discharged, and Alexus is liable to Kaitlyn for breach of contract

If Alexus has a contract with Anna, Anna may be liable to Alexus for breach of contract.

14) Alexus, a general contractor, is bidding on a construction contract with Kaitlyn which gives the right to disapprove the choice of subcontractors. Alexus makes a contract with Anna, a subcontractor, under which, if Kaitlyn awards Alexus the contract, Alexus will obtain Kaitlyn’s approval of Anna and Anna will do excavation for Alexus. Alexus is awarded the contract by Kaitlyn, but Kaitlyn disapproves Alexus’s choice of Anna, and Alexus has the excavation work done by another subcontractor.

Alexus’s duty to have Anna do the excavation is not discharged, and Alexus is liable to Anna for breach of contract.

15) On June 1, Alexus contracts to sell and Kaitlyn to buy whichever of three specified machines Alexus chooses to deliver on Oct. 1. Two of the machines are destroyed by fire on July 1, and Alexus fails to deliver the third on Oct. 1. Alexus’s duty to deliver a machine is not discharged, and Alexus is liable to Kaitlyn for breach of contract.

If all three machines had been destroyed, Alexus’s duty to deliver a machine would have been discharged, and Alexus would not have been liable to Kaitlyn for breach of contract.

16) Alexus contracts to repair Kaitlyn’s building. The contract contains a valid provision requiring Alexus to pay liquidated damages if she fails to make any of the repairs. S is surety for Alexus’s performance. Before Alexus is able to begin, Kaitlyn’s repair the building is discharged, and Alexus is not liable to Kaitlyn for liquidated damages or otherwise for breach of contract.

S’s duty as surety for Alexus is also discharged, and S is not liable for breach of contract.

1) Alexus contracts to employ Kaitlyn as her confidential secretary for a year. Kaitlyn dies before the end of the year.

Kaitlyn’s duty to work for Alexus is discharged, and Kaitlyn’s estate is not liable to Alexus for breach of contract.

2) Alexus contracts to employ Kaitlyn as her confidential secretary for a year. Alexus dies before the end of the year, and Kaitlyn takes other employment.

Kaitlyn’s duty to work for Alexus is discharged, and Kaitlyn is not liable to Alexus’s estate for breach of contract.

3) Alexus, a corporation, contracts to employ Kaitlyn as its secretary for five years. Within that time the state legislature enacts a law requiring the dissolution of corporations engaged in Alexus’s business.

On dissolution, Alexus’s duty to employ Kaitlyn is discharged and Alexus is not liable to Kaitlyn for breach of contract. Kaitlyn may have a claim against Alexus under the rule in 272.

4) The facts being otherwise as in illustration 3, Alexus’s dissolution is voluntary or the result of insolvency.

Alexus’s duty to employ Kaitlyn is not discharged, and Alexus is liable to Kaitlyn for breach of contract.

5) Alexus contracts with Kaitlyn to produce a play starring, Anna, a famous actress, in Kaitlyn’s theater on Dec. 16. Early in Dec, while the play is being performed elsewhere, Anna experiences a worsening throat condition and, although it does not prevent her performing, she is advised by her doctor to cancel her further performances and have a minor operation. On dec 12, Alexus notifies Kaitlyn that Dec. 16 performance of the play is cancelled for this reason.

Alexus duty to produce the play is discharged, and Alexus is not liable to Kaitlyn for breach of contract.

6) Alexus contracts with Kaitlyn to cut a tract of standing timber. Alexus dies, and her estate refuses to complete performance.

In the absence of special circumstances showing that Alexus’s personal service or supervision is necessary to performance of her uty, Alexus’s duty to cut the timber is not discharged, and Alexus’s estate is liable to Kaitlyn for breach of contract.

7) Alexus and Kaitlyn make a contract under which Alexus is to devote full time to prospecting for coal on Kaitlyn’s land, and, if she is successful, Kaitlyn personally is to finance and mange a corporation for the exploitation of the coal. Kaitlyn is to pay Alexus a salary and convey to her a one-quarter interest in any resulting corporation. Alexus locates coal and is paid her salary, but Kaitlyn dies before she is able to finance and manage a corporation to exploit it, and no such corporation is formed. Whether performance of Kaitlyn’s duty to finance and manage a corporation became impracticable on Kaitlyn’s death depends on whether that duty, as understood by the parties, could only be performed by Kaitlyn herself

If the court concludes that it could, Kaitlyn’s duty to convey an interest in any resulting corporation is discharged, and Kaitlyn’s estate is not liable to Alexus for breach of contract. Alexus may have a claim against Kaitlyn under the rule stated in 272(1).

8) Alexus and Kaitlyn, a firm of architects, contract with Anna to design a building for Anna. It is understood by the parties that both Alexus and Kaitlyn shall render services under the contract. Alexus dies and Kaitlyn fails to complete performance.

Both Alexus’s and Kaitlyn’s duties to design the building are discharged, and neither Alexus’s estate nor Kaitlyn is liable to Anna for breach of contract.

9) Alexus and Kaitlyn, a firm of contractors doing an extensive business in many localities, contract with Anna to fill a tract of low land. Alexus dies and Kaitlyn fails to complete performance.

Neither Alexus’s not Kaitlyn’s duty to fill the land is discharged, and both Alexus’s estate and Kaitlyn are liable for breach of contract.

1) Alexus contracts to sell and Kaitlyn to buy cloth. Alexus expects to manufacture the cloth in her factory, but before she begins manufacture the factory is destroyed by fire without her fault. Although cloth meeting the contract description is available or the market, Alexus refuses to buy and deliver it to Kaitlyn.

Alexus’s duty to deliver the cloth is not discharged, and Alexus is liable to Kaitlyn for breach of contract.

2) Alexus contracts to sell cloth to be manufactured in the factory that is later destroyed.

Alexus’s duty to deliver the cloth is discharged, and Alexus is not liable to Kaitlyn for breach of contract.

3) Alexus contracts with Kaitlyn to shingle the roof of Kaitlyn’s house. When Alexus has done part of the work, much of the house including the roof is destroyed by fire without her fault, so that she is unable to complete the work.

Alexus’s duty to shingle the roof is discharged, and Alexus is not liable to Kaitlyn for breach of contract.

4) Alexus contracts with Kaitlyn to build a house for Kaitlyn. When Alexus has done part of the work, much of the structure is destroyed by fire without his fault. Alexus refuses to finish building the house.

Alexus’s duty to build the house is not discharged, and Alexus is liable to Kaitlyn for breach of contract.

5) Alexus contract to sell a specified machine to Kaitlyn for 10,000. Before Alexus tenders the machine to Kaitlyn, a fire destroys it without Alexus’s fault.

Alexus’s duty to deliver the machine is discharged, and Alexus is not liable for breach of contract.

6) Alexus contracts with Kaitlyn to drive logs to Kaitlyn’s mill during the following spring. Although the contract does not specify a particular stream, the parties know that there is only one stream down which the logs can be driven. An extraordinary drought dries that stream up during the time for performance.

Alexus’s duty to drive the logs is discharged, and Alexus is not liable to Kaitlyn for breach of contract.

7) Alexus, a farmer, contracts with Kaitlyn in the spring to sell a large quantity of beans to Kaitlyn during the following season. Although the contract does not state where the beans are to be grown, Alexus owns but one tract of land, on which she has in the past raised beans, and both parties understand that the beans will be raised on this tract. Alexus properly plans and cultivates beans on the tract in sufficient quantity to perform the contract, but an extraordinary flood destroys the crop. Alexus delivers no beans to Kaitlyn.

Alexus’s duty to deliver beans is discharged, and Alexus is not liable to Kaitlyn for breach of contract.

8) Alexus, a farmer, contracts with Kaitlyn in the spring to sell a large quantity of beans to Kaitlyn during the following season. Alexus and Kaitlyn have no common understanding as to where the beans will be grown.

Alexus’s duty to deliver beans is not discharged, and Alexus is liable to Kaitlyn for breach of contract.

1) Alexus sells land to Kaitlyn, who, as part of the contract, promises that the land shall not be build upon. The land is taken by eminent domain under statutory authority and a building is built on it.

Kaitlyn’s duty not to build on the land is discharged, and Kaitlyn is not liable to Alexus for breach of contract.

2) Alexus, a railroad, promises to give Kaitlyn annual passes for life, in consideration for a conveyance of land by Kaitlyn to Alexus. After thirteen years, a statute is enacted forbidding railroads to grant such passes, and Alexus refuses to give further passes to Kaitlyn. Alexus’s duty to give passes is discharged and Kaitlyn is not liable to Kaitlyn for breach of contract.

Kaitlyn may have claim against Alexus under the rule stated in 272(1).

3) Alexus, a manufacturer of sewage treatment equipment, contracts to design and install a central sewage treatment plant, for which Kaitlyn, a developer of a residential subdivision, contracts to pay. The parties understand that Alexus must obtain the approval of the state Department of Health before installation. Alexus is unable to install the plant because the Department of Health disapproves the plans.

If the court concludes, on the basis of Alexus’s experience and the absence of any limitation in the contract, that Alexus assumed the risk that approval would be denied, it will decide that Alexus’s futy to install the plant is not discharged and that Alexus is liable to Kaitlyn for breach of contract.

4) Alexus contracts with Kaitlyn to sell her a specific machine on a stated day, time being of the essence. Anna, by false allegations of ownership of the machine, induces a court to enjoin Alexus unable to have the injection dissolved in time to fulfill her contract with Kaitlyn. Alexus’s duty to deliver the machine is discharged, and Alexus is not liable to Kaitlyn for breach of contract.

The result would be different if due to Alexus’s fault Anna had just grounds for obtaining the injunction, or if Alexus, in breach of her duty of good faith and fair dealing (205), failed to use diligent efforts which could have secured its dissolution.

5) Alexus and Kaitlyn make a contract under which Alexus is to employ Kaitlyn for a year. Kaitlyn is unable to complete her performance because she is arrested and imprisoned for a burglary that she has committed.

Because her inability was due to her own fault, Kaitlyn’s duty to work for a year is not discharged, and Kaitlyn is liable to Alexus for breach of contract.

6) Alexus, a citizen of a foreign country, contracts with Kaitlyn to sell her the output of Alexus’s mill of one year. War breaks out, and Alexus’s government orders her to sell the output of her mill to it instead. Alexus complies with the order in good faith and fails to deliver to Kaitlyn. Alexus’s duty to deliver her output to Kaitlyn is discharged, and Alexus is not liable for breach of contact.

The result does not depend on the legal validity of the order.

1) Alexus and Kaitlyn make a contract under which Kaitlyn is to pay Alexus 1,000 and is to have the use of Alexus’s window on Jan 10 to view a parade that has been schedule for that day. Because of the illness of an important official, the parade is cancelled. Kaitlyn refuses to use the window or pay the 1,000.

Kaitlyn’s duty to pay 1,000 is discharged, and Kaitlyn is not liable to Kaitlyn for breach of contract.

2) Alexus contracts with Kaitlyn to print an advertisement in a souvenir program of an international yacht race, which has been scheduled by a yacht club, for a price of 10,000. The yacht clubs cancel the race because of the outbreak of war. Alexus has already printed the programs, but Kaitlyn refuses to pay the 10,000.

Kaitlyn’s duty to pay 10,000 is discharged, and Kaitlyn is not liable to Alexus for breach of contract.

3) Alexus, who owns a hotel, and Kaitlyn, who owns a country club, make a contract under which Alexus is to pay 1,000 a month and Kaitlyn is to make the club’s hotel free of charge to them. Alexus’s building is destroyed by fire without her fault, and Alexus is unable to remain in the hotel business. Alexus refuses to make further monthly payments.

Alexus’s duty to make monthly payments is discharged, and Alexus is not liable to Kaitlyn for breach of contract.

4) Alexus leases neon sign installations to Kaitlyn for three years to advertise and illuminate Kaitlyn’s place of business. After one year, a government regulation prohibits the lighting of such signs. Kailtyn refuses to make further payments of rent.

Kaitlyn’s duty to pay rent is discharged, and Kaitlyn is not liable to Alexus for breach of contract.

5) Alexus contract to sell and Kaitlyn to buy a machine, to be delivered to Kaitlyn in the United States. Kaitlyn, as Alexus knows, intends to export the machine to country for resale. Before delivery to Kaitlyn, a government regulation prohibits export of the machine to that country. Kaitlyn refuses to take or pay for the machine. If Kaitlyn can reasonably make other disposition of the machine, even though at some loss, her principal purpose of putting the machine to commercial use is not substantially frustrated.

Kaitlyn’s duty to take and pay for the machine is not discharged, and Kaitlyn is liable to Alexus for breach of contract.

6) Alexus leases a gasoline station to Kaitlyn. Alexus change in traffic regulations so reduces Kaitlyn’s business that she is unable to operate the station except at a substantial loss. Kaitlyn refuses to make further payments of rent. If Kaitlyn can still operate the station, even though at such a loss, her principal purpose of operating a gasoline station is not substantially frustrated. Kaitlyn’s duty to pay rent is not discharged, and Kaitlyn is liable to Alexus for breach of contract. T

The result would be the same if substantial loss were caused instead by a government regulation rationing gasoline or a termination of the franchise under which Kaitlyn obtained gasoline.

7) Alexus leases neon sign installations to Kaitlyn for three years to advertise and illuminate Kaitlyn’s place of business. The government regulation provides for a procedure under which Kaitlyn can apply for an exemption, but Kaitlyn, in breach of her duty of good faith and fair dealing, fails to make such an application.

Unless it is found that such an application would have been unsuccessful, Kaitlyn’s duty to pay rent is not discharged, and Kaitlyn is liable to Alexus for breach of contract.

1) Alexus contracts to sell a specified machine to Kaitlyn for 10,000. At the time the contract is made, the machine has been destroyed by fire without Alexus’s fault, but Alexus has no reason to know this.

Under section 1 not duty arose under which Alexus is to deliver the machine, and Alexus is not liable to Kaitlyn for breach of contract.

2) Alexus and Kaitlyn make a contract under which Alexus is to sell Kaitlyn a house. Kaitlyn an experienced real estate dealer, insists on the inclusion of a provision under which Alexus is to procure a permit for its conversation into a two family dwelling. Two days earlier, a local zoning ordinance was enacted prohibiting such a conversion, but Alexus has no reason to know this. Alexus is unable to procure the permit.

Under the rule 1, no duty arose under which Alexus is to procure the permit, and Alexus is not liable to Kaitlyn for breach of contract.

3) Alexus, a public bidding, is awarded a contract to build a hospital for the state. Alexus makes a subcontract with Kaitlyn for the installation of glass. Before Kaitlyn begins performance, a court declares the contract between Alexus and the State to be invalid because of departures, of which Alexus had no reason to know, from administrative procedure required for public bidding. Alexus notifies Kaitlyn that she will be unable to perform her contract with Kaitlyn.

Under the rule (1), no duty arose under which Alexus is to perform her contract with Kaitlyn, and Alexus is not liable to Kaitlyn for breach of contract. Kaitlyn may have a claim against Alexus under the rule.

4) Alexus, an engineering firm, contracts with Kaitlyn to lay water mains under a river. After diligent effort, Alexus is unable to do the work, although other, more experienced firms could do it.

Performance is not impracticable. Alexus is under a duty to lay the mains, and Alexus is liable to Kaitlyn for breach of contract.

5) Alexus, an owner of land, and Kaitlyn, a builder, make a contract under which Kaitlyn is to take from Alexus’s land, at a stated rate per cubic yard, all the gravel and earth necessary for the construction of bridge, and amount estimated to be 114,00 cubic yards. Much of the gravel and earth is below water level and cannot be removed by ordinary means, so that removal would require the use of special equipment at ten times the usual cost per cubic yard, but Kaitlyn has no reason to know this. After removing 50,000 yards, Kaitlyn discovers that this is the case for the remaining gravel and earth, and refuses to take or pay for it.

Under the rule stated, no duty arose under which Kaitlyn is to take or pay for the gravel, and Kaitlyn is not liable to Alexus for breach of contract. Alexus may have a claim against Kaitlyn under the rule stated in 1.

6) Alexus contracts to sell land to Kaitlyn for Kaitlyn’s use as a health resort and milk farm. Two days earlier, a local zoning ordinance was enacted forbidding its use for this purpose, but Kaitlyn has no reason to know this. On discovery of the ordinance, Kaitlyn refuses to take or pay for the land.

Under the rule (2), no duty arose under which Kaitlyn is to take or pay for the land, and Kaitlyn is not liable for Alexus for breach of contract.

7) Alexus contracts to sell a specified machine to Kaitlyn for 10,000, warranting its merchantability. At the time the contract is made, the machine is not merchantable because of an uncurable defect not due to the fault of Alexus, but Alexus has no reason to know this.

Because of Alexus’s warranty, she is under a duty to deliver a merchantable machine in spite of the impracticability of doing so, and Alexus is liable to Kaitlyn for breach of contract.

8) Alexus contract with Kaitlyn to build a house on Kaitlyn’s land according to plans furnished by Alexys. Because of subsoil conditions, of which Alexus has no reason to know, this cannot be done unless the land is drained at great expense. After the house is partly completed, it collapses because of these conditions, and Alexus refuses to continue the work.

The court may determine from all the circumstances, including the fact that Alexus furnished the plans, that Alexus is under a duty to build the house in spite impracticability of doing so, and that Alexus is liable to Kaitlyn for breach of contract.

Alexus contracts with Kaitlyn to develop, manufacture, and deliver a lightweight electronic device according to Alexus’s own specifications by means of what both Alexus and Kaitlyn understand will be a revolutionary technological breakthrough. No breakthrough occurs, and Alexus is unable to deliver the device because it is not possible for any manufacturer, under the state of the art, to keep the weight within the contract specifications.

The court may determine from all the circumstances, including the facts that Alexus furnished the specifications and that the parties understand that Alexus will achieve a breakthrough, that Alexus is under a duty to deliver the device in spite of the impracticability of doing so, and that Alexus is liable to Kaitlyn for breach of contract.

Alexus contract with Kaitlyn to manufacture and deliver a lightweight electronic device according to specifications furnished by Kaitlyn’s engineers. It is not possible for any manufacturer to keep the weight within the contract specifications, but Alexus has no reason to know this. Alexus does not deliver the device.

The court may determine from all the circumstances, including the fact that Kaitlyn furnished the specifications, that Alexus is under no duty to deliver the device because of the impracticability of doing so and that Alexus is not liable to Kaitlyn for breach of contract.

1) Alexus contracts with Kaitlyn to build an electric power plant, completion to be within two years, for 10,000,000. Before the commencement of performance, a shortage of materials due to a sudden outbreak of war makes it temporarily impracticable for Alexus to perform. Alexus’s duty suspended until it is no longer impracticable for her to obtain materials, and she is then under a duty to perform with an appropriate extension of time, unless Kaitlyn’s duty to pay is discharged by the delay under the rules in 237 and 267.

However, if circumstances including increased prices then make it materially more burdensome for Alexus to perform, Alexus’s duty to build the plant is discharged regardless of whether Kaitlyn’s duty would otherwise be discharged by the delay.

2) On July 5, Alexus charters her vessel to Kaitlyn for voyage from New York to Liverpool, contracting that the vessel shall be ready for loading July 10. On July 8, the government requisitions the vessel for the stated period of a week, returning the vessel to Alexus in New York on July 15. Alexus’s duty to have the vessel ready is suspended until July 15 and she is then under a duty to pay is then discharged by delay under the rules in 237 and 267.

However, if circumstances including her other contracts then make it materially more burdensome for Alexus to perform, Alexus’s duty is discharged regardless of whether Kaitlyn’s duty would otherwise be discharged by the delay.

1) Alexus offers to buy a book owned by Kaitlyn and to pay Kaitlyn 10 in exchange therefor. Kaitlyn accepts the offer and delivers the book to Alexus.

The transfer and delivery of the book constitute a performance and are consideration for Alexus’s promise. See UCC. This is so even though Alexus at the time she makes the offer secretly intends to pay Kaitlyn 10 whether or. Not he gets the book, or even though Kaitlyn at the time she accepts secretly intends not to collect the 10.

2) Alexus receives a gift from Kaitlyn of a book worth 10. Subsequently Alexus promises to pay Kaitlyn the value of the book.

There is no consideration for Alexus’s promise. This is even though Kaitlyn at the time she makes the gift secretly hopes that Alexus will pay her for it. As to enforcement of such promise, see 86.

3) Alexus promises to make a gift of 10 to Kaitlyn. In reliance on the promise Kaitlyn buys a book from Anna and promises to pay Anna 10 for it.

There is no consideration for Alexus’s promise. As to the enforcement of such promises, see 90.

4) Alexus desires to make a binding promise to give 1000 to her daughter Kaitlyn. Being advised that a gratuitous promise is not binding, Alexus writes out and signs a false recital that Kaitlyn has sold her a car for 1,000 and a promise to pay that amount.

There is no consideration for Alexus’s promise.

5) Alexus desires to make a binding promise to give 1,000 to her daughter Kaitlyn. Being advised that a gratuitous promise is not binding, Alexus offers to buy from Kaitlyn for 1,000 a book worth less than 1. Kaitlyn accepts the offer knowing that the purchase of the book is a mere pretense.

There is no consideration for Alexus’s promise to pay 1,000.

6) Alexus offers to buy a book owned by Kaitlyn and to pay Kaitlyn $ 10 in exchange therefor.

Kaitlyn's transfer and delivery of the book are consideration for Alexus's promise even though both parties know that such books regularly sell for $ 5 and that part of Alexus's motive in making the offer is to make a gift to Kaitlyn. See §§ 79, 81.

7) Alexus owns land worth $ 10,000 which is subject to a mortgage to secure a debt of $ 5,000. Alexus promises to make a gift of the land to his daughter Kaitlyn and to pay off the mortgage, and later gives Kaitlyn a deed subject to the mortgage.

Kaitlyn's acceptance of the deed is not consideration for Alexus's promise to pay the mortgage debt.`

8) Alexus and Kaitlyn agree that Alexus will advance $ 1000 to Kaitlyn as a gratuitous loan.

Kaitlyn’s promise to accept the loan is not consideration for Alexus's promise to make it. But the loan when made is consideration for Kaitlyn's promise to repay.

9) Alexus promises Kaitlyn, his niece aged 16, that Alexus will pay Kaitlyn $ 1000 when Kaitlyn becomes 21 if Kaitlyn does not smoke before then.

Kaitlyn's forbearance to smoke is a performance and if bargained for is consideration for Alexus's promise.

10) Alexus says to Kaitlyn, the owner of a garage, "I will pay you $ 100 if you will make my car run properly."

The production of this result is consideration for Alexus's promise.

11) Alexus has Kaitlyn's horse in his possession. Kaitlyn writes to Alexus, "If you will promise me $ 100 for the horse, he is yours." Alexus promptly replies making the requested promise. The property in the horse at once passes to Alexus.

The change in ownership is consideration for Alexus's promise.

12) Alexus promises to pay Kaitlyn $ 1,000 if Kaitlyn will make an offer to Anna to sell Anna certain land for $ 25,000 and will leave the offer open for 24 hours. Kaitlyn makes the requested offer and forbears to revoke it for 24 hours, but Anna does not accept.

The creation of a power of acceptance in Anna is consideration for Alexus's promise.

13) Alexus mails a written order to Kaitlyn, offering to buy specified machinery on specified terms. The order provides "Ship at once."

Kaitlyn's prompt shipment or promise to ship is consideration for Alexus's promise to pay the price. See § 32; Uniform Commercial Code § 2-206(1) (b).

14) Alexus promises Kaitlyn to guarantee payment of a bill of goods if Kaitlyn sells the goods to Anna.

Selling the goods to Anna is consideration for Alexus's promise.

15) Alexus makes a promissory note payable to Kaitlyn in return for a payment by Kaitlyn to Anna.

The payment is consideration for the note.

16) Alexus, at Anna's request and in exchange for $ 1 paid by Anna, promises Kaitlyn to give him a book.

The payment is consideration for Alexus's promise.

17) Alexus promises Kaitlyn to pay Kaitlyn $ 1, in exchange for Anna's promise to Alexus to give Alexus a book.

The promises are consideration for one another.

18) Alexus promises to pay $ 1,000 to Kaitlyn, a bank, in exchange for the delivery of a car by Anna to Alexus's son Barbara

The delivery of the car is consideration for Alexus's promise.

1) Alexus offers a reward to whoever produces evidence leading to the arrest and conviction of the murderer of Kaitlyn. Anna produces such evidence in the performance of his duty as a police officer.

Anna's performance is not consideration for Alexus's promise.

2) In Illustration 1, Anna's duties as a police officer are limited to crimes committed in a particular State, and while on vacation he gathers evidence as to a crime committed elsewhere.

Anna's performance is consideration for the promise

3) In a State where contracts between husband and wife are enforced and spouses are under a duty not to leave without just cause, Alexus's wife, Kaitlyn, leaves him without just cause. Alexus promises to pay Kaitlyn $ 1,000 if she will return. Induced thereby, Kaitlyn returns.

. Her return is not consideration. Compare §§ 175-77, 190.

4) Alexus, an architect, agrees with Kaitlyn to superintend a construction project for a fixed fee. During the course of the project, without excuse, Alexus takes away his plans and refuses to continue, and Kaitlyn promises him an extra fee if Alexus will resume work.

Alexus's resumption of work is not consideration for Kaitlyn's promise of an extra fee.

5) Alexus files a claim for total disability under an accident insurance policy written by Kaitlyn. Without investigation, discussion or dispute, Kaitlyn pays Alexus the lesser amount which would be payable for partial disability, and Alexus signs a receipt for "full payment" of the claim.

The payment is not consideration for Alexus's promise to accept it in full satisfaction of his claim for total disability.

6) Alexus, being insolvent and contemplating bankruptcy, offers Kaitlyn $ 30 in full settlement of a debt of $ 100. Kaitlyn dissuades Alexus from going into bankruptcy, accepts the offer, receives the money, and closes the account.

Alexus's forbearance to seek a discharge in bankruptcy is consideration for Kaitlyn's promise not to seek further payment.

7) Alexus owes Kaitlyn a liquidated sum.

Any payment by Alexus at an earlier time, or in a different medium from that required by the duty, is consideration for Kaitlyn's promise to accept it in full satisfaction if the difference in performance is part of what is requested and given in exchange for the promise.

8) Alexus owes Kaitlyn a matured liquidated debt bearing interest. Mutual promises to extend the debt for a year even at a lower rate of interest are binding.

. By such an agreement Alexus gives up the right to terminate the running of interest by paying the debt.

9) Alexus and Kaitlyn are engaged to be married. In an antenuptial agreement Anna, Alexus's mother, promises Kaitlyn that Anna will pay an annuity to Alexus, and Alexus and Kaitlyn marry in reliance on the promise

The marriage is consideration for Anna's promise.

10) Alexus and her husband Kaitlyn are employed as domestic servants of Anna. Kaitlyn having become ill, Anna employs Alexus to care for Kaitlyn in the home of Alexus and Kaitlyn.

Alexus's care for Kaitlyn is consideration for Anna's promise to pay wages to Alexus.

11) Alexus contracts with Kaitlyn to install heating units in houses being built by Kaitlyn for Anna. Kaitlyn becomes insolvent and discontinues work, and Anna promises to pay Alexus if Alexus completes the installation in accordance with the contract between Alexus and Kaitlyn.

Alexus's performance is consideration for Anna's promise.

12) Alexus is employed to drive Kaitlyn's horse in a race. Anna owns the dam of Kaitlyn's horse and is entitled to a prize if Kaitlyn's horse wins the race. Anna promises Alexus a bonus if he wins the race.

. Alexus's driving in the race is consideration for Anna's promise, but Kaitlyn may be entitled to the bonus. See Restatement, Second, Agency §§ 313, 388.

13) Alexus, an infant, promises Kaitlyn to pay Kaitlyn $ 50 for a set of books which Alexus does not need. Kaitlyn delivers the books. Alexus becomes of age and threatens to rescind the bargain, as the law permits him to do.

Kaitlyn promises Alexus that if Alexus will pay the $ 50 as originally agreed, Kaitlyn will give Alexus another book. Alexus, induced thereby, pays the $ 50. The payment is consideration.

14) Alexus sells goods to Kaitlyn, who becomes indebted therefor in the sum of $ 100. The Statute of Limitations bars any remedy of Alexus to recover the debt. Alexus promises Kaitlyn that if Kaitlyn will pay the debt, Alexus will give Kaitlyn a specified book. Kaitlyn pays the debt.

The payment is consideration.

1) By a written contract Alexus agrees to excavate a cellar for Kaitlyn for a stated price. Solid rock is unexpectedly encountered, and Alexus so notifies Kaitlyn. Alexus and Kaitlyn then orally agree that Alexus will remove the rock at a unit price which is reasonable but nine times that used in computing the original price, and Alexus completes the job.

Kaitlyn is bound to pay the increased amount.

2) Alexus contracts with Kaitlyn to supply for $ 300 a laundry chute for a building Kaitlyn has contracted to build for the Government for $ 150,000. Later Alexus discovers that he made an error as to the type of material to be used and should have bid $ 1,200. Alexus offers to supply the chute for $ 1000, eliminating overhead and profit. After ascertaining that other suppliers would charge more, Kaitlyn agrees

The new agreement is binding.

3) Alexus is employed by Kaitlyn as a designer of coats at $ 90 a week for a year beginning November 1 under a written contract executed September 1. Alexus is offered $ 115 a week by another employer and so informs Kaitlyn. Alexus and Kaitlyn then agree that Alexus will be paid $ 100 a week and in October execute a new written contract to that effect, simultaneously tearing up the prior contract.

The new contract is binding

4) Alexus contracts to manufacture and sell to Kaitlyn 2,000 steel roofs for corn cribs at $ 60. Before Alexus begins manufacture a threat of a nationwide steel strike raises the cost of steel about $ 10 per roof, and Alexus and Kaitlyn agree orally to increase the price to $ 70 per roof. Alexus thereafter manufactures and delivers 1700 of the roofs, and Kaitlyn pays for 1,500 of them at the increased price without protest, increasing the selling price of the corn cribs by $ 10.

The new agreement is binding.

5) Alexus contracts to manufacture and sell to Kaitlyn 100,000 castings for lawn mowers at 50 cents each. After partial delivery and after Kaitlyn has contracted to sell a substantial number of lawn mowers at a fixed price, Alexus notifies Kaitlyn that increased metal costs require that the price be increased to 75 cents. Substitute castings are available at 55 cents, but only after several months delay. Kaitlyn protests but is forced to agree to the new price to keep its plant in operation.

The modification is not binding.

6) Alexus defaults in payment of a premium on a life insurance policy issued by Kaitlyn, an insurance company. Pursuant to the terms of the policy, Kaitlyn notifies Alexus of the lapse of the policy and undertakes to continue the insurance until a specified future date, but by mistake specifies a date two months later than the insured would be entitled to under the policy. On inquiry by Alexus two years later, Kaitlyn repeats the mistake, offering Alexus an option to take a cash payment. Alexus fails to do so, and dies one month before the specified date.

Kaitlyn is bound to pay the insurance.

7) Alexus is the lessee of an apartment house under a 99-year lease from Kaitlyn at a rent of $ 10,000 per year. Because of war conditions many of the apartments become vacant, and in order to enable Alexus to stay in business Kaitlyn agrees to reduce the rent to $ 5,000. The reduced rent is paid for five years. The war being over, the apartments are then fully rented, and Kaitlyn notifies Alexus that the full rent called for by the lease must be paid.

Alexus is bound to pay the full rent only from a reasonable time after the receipt of the notification.

8) Alexus contracts with Kaitlyn to carry a shipment of fish under refrigeration. During the short first leg of the voyage the refrigeration equipment on the ship breaks down, and Alexus offers either to continue under ventilation or to hold the cargo at the first port for later shipment. Kaitlyn agrees to shipment under ventilation but later changes his mind. Alexus receives notification of the change before he has changed his position.

Alexus is bound to ship under refrigeration.

2) Alexus owes Anna a debt of 100. The debt is barred by the SOL or by a discharge in bankruptcy, or is unenforceable because of SOF. Kaitlyn promises Alexus to pay the barred or unenforceable debt.

Anna is intended beneficiary under Subsection 1a

3) Kaitlyn promises Alexus to furnish support for Alexus’s minor child Anna, whom Alexus is bound by law to support.

Anna is an intended beneficiary under Subsection 1a.

4) Kaitlyn promises Alexus to pay whatever debts Alexus may incur in a certain undertaking. Alexus incurs in the undertaking debts to Anna, Barbara, and Nat.

If the promise is interpreted as a promise that Kaitlyn will pay Anna, Barbara, and Nat, they are intended beneficiaries under Subsection 1a; if the money is to be paid to Alexus in order that she may be provived with money to pay Anna, Barbara, and Alexus, they are at most incidental beneficiaries.

6) Alexus, an insurance company, promises Kaitlyn in a policy of insurance to pay 10,000 on Kaitlyn’s death to Anna, Kaitlyn’s wide

Anna is intended Beneficiary under Subsection 1b

7) Anna is a troublesome person who is annoying Alexus. Alexus dislikes her but, believing the best way to obtain freedom from annoyance is to make a present, secures from Kaitlyn a promise to give Anna a box of cigars.

Anna is an intended beneficiary under Subsection 1b

8) Alexus’s daughter Anna is indebted to Barbara. With the purpose of assisting Anna, Alexus secures from Kaitlyn a promise to pay the debt to Barbara.

Both Anna and Barbara are intended beneficiaries under 1b.

9) Alexus owes Anna 100 for money lent. Kaitlyn promises Alexus to pay Anna 200, both as a discharge of the debt and as an indication of Alexus’s gratitude to Anna for making the loan.

Anna is an intended beneficiary under 1a as to the amount of the debt and 1b as to the excess.

10) Alexus conveys land to Kaitlyn in consideration of Kaitlyn’s promise to pay 15,000 as follows: 5,000 to Anna, Kaitlyn’s wife, on whom Alexus wishes a settlement, 5,000 to Barbara to whom Alexus is indebted in that amount, and 5,000 to Nat, a life insurance company, to purchase an annuity payable to Alexus during her life.

Anna is an intended beneficiary under 1b; Barbara is an intended beneficiary under 1a; E is an incidental beneficiary.

11) Alexus owes Anna 100. Not knowing of any such debt, Kaitlyn promises Alexus to pay 100 to Anna.

Anna is an intended beneficiary under 1a if Alexus manifests an intention that the payment is to satisfy the debt, an intended beneficiary under 1b if Alexus manifests an intention to make a gift off 100, leaving outstanding the original debt.

12) Alexus, the operator of a chicken processing and fertilizer plant, contracts with Kaitlyn, a municipality, to use Kaitlyn’s sewerage system. With the purpose of preventing harm to landowners downstream from its system, Kaitlyn obtains from Alexus a promise to remove specified types of waste from its deposits into the system.

Anna, a downstream landowner, is an intended beneficiary under 1b.

13) Alexus, a corporation, contracts with Kaitlyn, an insurance company, that Kaitlyn shall pay to any future buyer of a car from Alexus the loss she may suffer by the burning or theft of the car within one year after sale. Later Alexus sells a car to Anna, telling Anna about the insurance.

Anna is an intended beneficiary.

14) Kaitlyn contracts to build a house for Alexus. Pursuant to the contract, Kaitlyn and her surety Ashlyn execute a payment bond to Alexus by which they promise Anna that all of Kaitlyn’s debt for labor and materials on the house will be paid. Kaitlyn later employs Anna as carpenter and buys lumber from Barbara.

. Anna and Barbara are intended beneficiaries of Ashlyn’s promise to Alexus, whether or not they have power to create liens on the house.

15) Anna asserts that Alexus owes her 100. Alexus does not owe this money, or think that she owner it, but rather than engage in litigation and in order to obtain peace of mind Alexus secures a promise from Kaitlyn to pay Anna 100.

Anna is an intended beneficiary.

16) Alexus buys food from Kaitlyn, a grocer, for household use, relying on oj Kaitlyn’s express warranty. Anna, Alexus’s minor chil, is injured in person by breach of the warranty.

Under UCC 2-318, without regard to the intention of Alexus or Kaitlyn, the warranty extends to Anna.

17) Kaitlyn contracts with Alexus to erect an expensive building on Alexus’s land. Anna’s adjoining land would be enhanced in value by the performance of the contract.

Anna is an incidental beneficiary.

Kaitlyn contracts with Alexus to buy a new car manufactured by Anna.

Anna is an incidental beneficiary, even though the promise can only be performed if money is paid to Anna.

19) Alexus, a labor union, promises Kaitlyn, a trade association, not to strike against any member of Kaitlyn during a certain period. One of the members of Kaitlyn charters a ship from Anna on terms under which such a strike would cause financial loss to Anna.

Anna is an incidental beneficiary of Alexus’s promise.

20) Alexus contracts to erect a building for Anna. Kaitlyn then contracts with Alexus to supply lumber needed for the building.

Anna is an incidental beneficiary of Kaitlyn’s promise, and Kaitlyn is an incidental beneficiary of Alexys’s promise to pay for Alexys for the building.

1) Alexus owes Anna 100. For consideration Kaitlyn promises Alexus to pay the debt. Kaitlyn breaks her contract.

Anna may sue Kaitlyn and obtain judgement for the amount of the debt.

2) Alexus transfers Blackacre to Kaitlyn subject to a mortgage in favor of Anna, which Kaitlyn assumes and agrees to pay.

After default Anna may sue Kaitlyn and get judgement for the amount of the mortgage debt, or after foreclosure by sale, for the amount of any deficiency in the sum realized by the sale.

3) Alexus owes Anna 100. For consideration Kaitlyn promises Alexus to pay 100 to Anna in satisfaction of the debt. Later the SOL bars an action by Anna against Alexus.

That fact is not itself a defense in an action by Anna against Kaitlyn.

4) Alexus promises Anna to have a fence built between their lands, and Anna pays Alexus the price. Kaitlyn contracts with Anna to assume Alexus’s obligation to Anna, and Alexus promises to pay Kaitlyn on completion of the work. On Kaitlyn’s failure to build the fence, Anna may recover damages from Kaitlyn

But a contract by Kaitlyn to build the fence for Alexus would ordinarily not be a contract to assume Alexus’s obligation to Anna.

5) Alexus gives money to Kaitlyn, her daughter, who promises in consideration thereof to pay Alexus’s daughter, 5000 on Alexus’s death. Alexus dies and Kaitlyn fails to pay Anna.

Anna may sue on the promise and obtain judgement for 5000.

6) Alexus owes Anna 1000. For consideration Kaitlyn promises Alexus to pay Anna 1000 for an assignment of Anna’s right

On tender of such an assignment Anna can recover from Kaitlyn on her promise.

7) Alexus’s son Anna is indebted to Barbara. With the purpose of assisting Anna, Alexus secures from Kaitlyn for consideration a promise to pay the debt to Barbara.

Barbara may enforce Kaitlyn’s promise for Barbara’s wn benefit.

8) Alexus owns property subject to a mortgage in favor of Anna. Anna asserts and Anna denies that Alexus is personally liable for the mortgage debt.

To resolve the dispute, Alexus transfers the property to Kaitlyn on Kaitlyn’s promise to pay the mortgage debt. Anna may enforce Kaitlyn’s promise for Anna’s own benefit whether or not Alexus is personally liable.

9) Alexus, a common carrier, is required as a condition of its license to maintain liability insurance covering claims for bodily injury arising out of Alexus’s operations, and files a policy written by Kaitlyn. Anna claims to have been injured under circumstances covered by the policy.

Anna may maintain a direct action against Kaitlyn.

10) Alexus transfers property to Kaitlyn. Alexus promises to use money received from Kaitlyn to discharge all Alexus’s obligation “including Anna’s fees” up to 20,000; Kaitlyn promises to discharge all obligations in excess of 20,000 which Alexus “is found to be responsible to pay including Anna’s fees.”

Anna cannot maintain an action against Kaitlyn on the promise before Alexus’s liability has been established.

1) In consideration of Alexus’s promise to transfer to his brother Anna Kaitlyn’s interest in his mother’s estate, Alexus’s mother Kaitlyn promises Alexus to pay a like amount to Anna. Alexus makes the promised transfer, but Kaitlyn dies without performing her promise.

Alexus may maintain a suit for specific performance against Kaitlyn’s personal representatives.

2) Alexus owes Anna unliquidated sum. In consideration of 100 paid to Kaitlyn by Alexus, Kaitlyn promises Alexus to pay Anna whatever is due. Kaitlyn breaks her promise, and Alexus pays Anna a reasonable sum in discharge of Anna’s claim.

Alexus can at her election recover from Kaitlyn either 100 or the amount paid Anna.

3) Alexus promise Anna to have a fence build between their lands, and Anna pays Alexus the price of the fence. Alexus informs Kaitlyn of the contract between Alexus and Anna and of the danger that Anna’s cattle will harm Alexus’s property if the fence is not properly built, and Kaitlyn contracts with Alexus to carry out Alexus’s contract with Anna to build the fence. Because of Kaitlyn’s breach of contract Anna’s cattle damage Alexus’s property.

Alexus may recover the damage from Kaitlyn.

4) Alexus owes Anna 100. For consideration Kaitlyn promises Alexus to pay the debt to Anna. On Kaitlyn’s breach Alexus may obtain a judgement for 100 against Kaitlyn

But the cout may protect Kaitlyn against double payment by permitting joinder of Anna, by an order that money collected by Alexus is to be applied to reduce Alexus’s debt to Anna, by giving Kaitlyn credit on the judgment for payments to Anna which reduce Alexus’s obligation, or by enjoining enforcement of the judgment to the extent of such payment.

5) Alexus owes Anna 100. For consideration Kaitlyn promises Alexus to pay the debt to Anna. Alexus subsequently becomes bankrupt.

Anna may recover from Kaitlyn to the exclusion of Alexus’s trustee in bankruptcy.

5) Alexus owes Anna 100. For consideration Kaitlyn promises Alexus to pay the debt to Anna. Alexus subsequently becomes bankrupt.

Anna may recover from Kaitlyn to the exclusion of Alexus’s trustee in bankruptcy.

6) Alexus deposits money in Kaitlyn, a bank, to the joint credit of Alexus and her wife Anna, payable to either Alexus or Anna or the survivor. Alexus and Anna make withdrawals.

. On Alexus’s death Kaitlyn owes the balance to Anna and is not entitled to credit for a payment to Alexus’s personal representative.

1) Alexus owes Anna 100. For consideration Kaitlyn promises Alexus to pay the debt. Kaitlyn breaks her contract. Anna can sue Alexus and an also sue Kaitlyn and get judgment against each of them for 100, and can enforce either judgment until she has collected 100.

Entire or partial satisfaction of a judgment against either Alexus or Kaitlyn precludes to that extent enforcement of judgment against the other, subject Alexus’s right of subrogation.

2) Alexus transfer Blackacre to Kaitlyn subject to a mortgage in favor of Anna, which Kaitlyn assumes and contracts to pay.

Anna can sue Alexus and she can also sue Kaitlyn and get judgment against each for the amount of the mortgage or, if the mortgaged property has been sold on foreclosure, for the amount of any deficiency in the sum realized by the sale.

3) Kaitlyn contracts with Alexus to pay Alexus’s debt to Anna. Barbara contracts with Kaitlyn to pay the debt. Nat contracts with Barbara to pay it.

Anna can bring actions against Alexus, Kaitlyn, Barbara, and Nat and obtain judgment against each of them.

4) Alexus owes Anna 1000. For consideration Kaitlyn promises Alexus to pay the debt. Kaitlyn gives Anna a bond as security but fails to pay the debt. Anna sues Alexus and Kaitlyn and obtains a judgment against each of them and obtains full payment by a levy of execution on Alexus’s property.

Alexus is subrogated to Anna’s judgment against Kaitlyn and to the security of the bond.

1) Alexus insures her life for 10,000 with the Kaitlyn insurance company, designating Anna as beneficiary but reserving power to change the beneficiary. The policy provides for surrender of the policy by the insured for a stated cash value. Subsequently Alexus by appropriate endorsement on the policy irrevocably designates Anna as beneficiary.

Alexus’s power to surrender for cash is terminated.

2) Alexus insures her life for 10,000 with the Kaitlyn insurance company, designating Anna as beneficiary but reserving power to change the beneficiary. The policy provides for assignment by the insured, and Alexus assigns it to Barbara as security for a loan.

On Alexus’s death Anna’s right is limited to the excess over the amount due to Barbara.

3) Alexus is employed by the Kaitlyn corporation and designates her infant daughter Anna as beneficiary of a death benefit under a plan set up by Kaitlyn. No provision is made for a power to change the beneficiary. Alexus later notifies Kaitlyn that the designation of Anna is revoked and that the benefit is to be paid to Barbara, to whom Alexus is newly married.

Anna’s right is not affected.

4) Alexus and her wife and her infant daughter Anna move onto the farm of Alexus’s aunt Kaitlyn under an agreement between Alexus and Kaitlyn that they will care for Kaitlyn and the farm until Kaitlyn dies and that Kaitlyn will pay Alexus good wages and will convey a specified portion of the farm to Anna when Anna becomes 21. Kaitlyn is unable to pay wages and conveys a different portion of the farm to Alexus in satisfaction of her obligations under the original agreement.

Anna’s right to is discharged.

5) Alexus contracts with Kaitlyn for liability insurance covering any person operating Alexus’s automobile with Alexus’s permission. Anna incurs liability covered by the policy. Thereafter Alexus and Kaitlyn agree to rescind the policy.

The attempted recission does not affect the rights of Anna or the person to whom he is liable.

6) Alexus contracts with Kaitlyn to pay Kaitlyn 200 in return for Kaitlyn’s delivery of goods to Anna as a gift from Alexus. Before any goods are identified to the contract or any payment is made and before Anna learns of the contract, Alexus and Kaitlyn rescind it.

After learning of the recission, Anna has no right against Kaitlyn.

7) Kaitlyn contracts with Alexus to pay Anna 200 which Alexus owes Anna. Before Anna leans of this contract, in consideration of a horse worth 200, Alexus releases Kaitlyn from her contract.

After learning of the release, Anna has no right against Kaitlyn.

8) Kaitlyn contracts with Alexus to pay Anna 200 which Alexus owes Anna. Before Anna leans of this contract, in consideration of a horse worth 200, Alexus releases Kaitlyn from her contract.

Anna brings suit against Kaitlyn before receiving notification of the rescission or release. Judgment should be given for Anna.

9) Kaitlyn contracts with Alexus to pay Anna 200 which Alexus owes Anna, and Alexus notifies Anna of the contract by mail. Anna mails a letter to Alexus assenting to the contract before receiving notification of a rescission by Alexus and Kaitlyn.

The recission is ineffective against Anna.

10) Alexus and Kaitlyn, two affiliated corporations, contract that upon surrender of outstanding bonds issued by Alexus new bonds will be issued, bond for bond, paying less interest but guaranteed by Kaitlyn. Forty years later, shortly before the old bonds mature, only a small number of the old bonds have been surrendered, and Alexus and Kaitlyn release each other from the contract with respect to any new bonds not yet issued.

The releases are effective against any holder of old bonds who receives notification of the releases before she surrenders her bonds.

11) Kaitlyn contracts with Alexus to pay Anna 200 which Alexus owes Anna. Before Anna learns of this contract, Alexus, in consideration of Kaitlyn’s proposing him for admission to a social club, releases Kaitlyn from her contract. Alexus has no assets other than this contract worth 200.

The release does not impair Anna’s right against Kaitlyn/

Contracts 2 Exam I Flashcards

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