Contracts & Sales MBE PQs Session 2

Question 1

A homeowner entered into a written agreement with a company to build a swimming pool in the homeowner’s backyard for $40,000, to be paid upon completion of the pool. The company delegated its duty to an independent contractor. The independent contractor began the excavation for the pool, but after realizing that the costs would be higher than anticipated, it abandoned the project. The homeowner hired a partnership to complete the pool for $50,000.

Can the homeowner sue the company for its expectation damages of $10,000?

Answers:

A) No, because the company was released from liability.
B) No, because the high costs rendered performance under the contract impracticable.
C) Yes, because the homeowner’s lack of consent invalidated the delegation.
D) Yes, because the independent contractor did not perform.

Answer 1

D) Yes, because the independent contractor did not perform.

Question 2

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?

Answers:

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.

Answer 2

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.

Question 3

A builder ordered 100 squares of shingles from a home-supply store for installation on the roofs of homes that he was building. The builder agreed to a price of $120 per square. Delivery to the construction site was set for no later than noon on the following Monday. The store’s truck with the ordered shingles arrived at 1:00 p.m. the following Monday. The builder rejected the shipment due to its failure to arrive on time. The store, which regularly sold 600 squares of shingles per week, resold the squares that had been rejected by the builder at a price of $110 per square. The store would have made a profit of $3,000 had the builder accepted the shingles.

If the store sues the builder for breach of contract, how much can the store recover from the builder?

Answers:

A) Nothing.
B) $1,000, the contract price minus the resale price.
C) $3,000, the store’s lost profit on the initial sale.
D) $4,000, to recover the store’s total expectation damages.

Answer 3

A) Nothing.

Question 4

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?

Answers:

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.

Answer 4

B) The dancer’s failure to perform for two weeks was not a material breach of the contract.

Question 5

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?

Answers:

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.

Answer 5

C) The inventor’s son.

Question 6

The owner of a rare eighteenth-century chest offered to sell it to a connoisseur of antiques for $75,000. The connoisseur countered that she would buy the chest for $50,000. The owner rejected this price. The owner and the connoisseur then executed a written agreement for the sale of the chest at a price to be determined only by a particular antiques dealer whose expertise in valuing this rare item they both trusted.

Two weeks later, the agreed-upon antiques dealer examined the chest. He told the owner and the connoisseur that he had to do further research on the chest but that he would let them know his decision in several days. Unfortunately, the dealer died before doing so. A reasonable price for the chest can be established by the court.

Is there likely an enforceable contract?

Answers:

A) No, because the owner and the connoisseur did not intend to be bound unless the dealer set the price of the chest.
B) No, because the price of the chest was not determined at the time the agreement was executed.
C) Yes, because a reasonable price for the chest can be established by the court.
D) Yes, because the owner and the connoisseur executed a written agreement for the sale of the chest.

Answer 6

A) No, because the owner and the connoisseur did not intend to be bound unless the dealer set the price of the chest.

Question 7

A maker of perfume contacted a manufacturer about supplying 1,000 readily available glass bottles for retail sales of perfume. The manufacturer offered to supply the bottles and to ship them within one week. The perfumer responded, “Ship them as soon as possible.” The manufacturer shipped 1,000 bottles to the perfumer five days later. The perfumer accepted the bottles and filled them with perfume. Without waiting for the manufacturer’s invoice, the perfumer sent a payment to the manufacturer based on a price of $2.50 per bottle. Prior to receiving this payment, the manufacturer sent the perfumer an invoice that reflected a charge of $3.50 per bottle.

When the perfumer refused to pay $3.50 per bottle, the manufacturer returned the payment to the perfumer and initiated an action for the price. The court determined that a reasonable price for the bottles at the time of delivery was $3.25 per bottle.

What amount should the court award the manufacturer per bottle?

Answers:

A) Nothing, because no contract was formed in the absence of a price term.
B) $2.50, because the perfumer, as offeror, was master of the offer.
C) $3.25, because this was a reasonable price for the bottles at the time of delivery.
D) $3.50, because the manufacturer, as offeror, was master of the offer.

Answer 7

C) $3.25, because this was a reasonable price for the bottles at the time of delivery.

Question 8

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?

Answers:

A) Bad faith.
B) Duress.
C) Equitable estoppel.
D) Unconscionability.

Answer 8

D) Unconscionability.

Question 9

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?

Answers:

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.

Answer 9

C) $3,000, the amount incurred as a consequence of the delay.

Question 10

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?

Answers:

A) $25,000.
B) $15,000.
C) $10,000.
D) Nothing.

Answer 10

C) $10,000.

Question 11

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?

Answers:

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.

Answer 11

C) Yes, because the company hired the replacement singer as a substitute for the original singer before she retracted her repudiation.

Question 12

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?

Answers:

A) Both the trucker and the manufacturer.
B) The trucker only.
C) The manufacturer only.
D) Neither the trucker nor the manufacturer.

Answer 12

D) Neither the trucker nor the manufacturer.

Question 13

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?

Answers:

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.

Answer 13

A) No, because the customer was a good-faith purchaser of the coat that had been entrusted to the furrier.

Question 14

As part of a divorce settlement, an ex-husband purchased an annuity from an insurance company to be paid to his ex-wife so that she would receive a fixed amount quarterly for the duration of her life. Within a week after the purchase, the ex-wife learned that she had a fatal illness, which had not previously manifested itself but had existed for some time. She died two months later, prior to receiving any payments from the annuity.

The ex-husband has filed suit to rescind the annuity contract.

Will the ex-husband be likely to prevail?

Answers:

A) No, because the annuity contract was a third-party beneficiary contract.
B) No, because the ex-husband assumed the risk of his ex-wife’s death.
C) Yes, because the ex-wife’s death frustrated the purpose of the annuity.
D) Yes, because the ex-husband and the insurance company made a mutual mistake as to the ex-wife’s health.

Answer 14

B) No, because the ex-husband assumed the risk of his ex-wife’s death.

Question 15

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?

Answers:

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.

Answer 15

A) No, because the man was unable to serve as the captain of the boat during the summer months.

Question 16

A 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?

Answers:

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.

Answer 16

D) Yes, because the settlement was reasonably foreseeable at the time the contract was formed.

Question 17

A wedding planner contracted with a local bakery to make cupcakes for an upcoming wedding reception. The bakery was very experienced in making cupcakes and had a great reputation in the community. Although there were other comparably skilled cupcake makers in the area, the wedding planner eventually chose the bakery due to the price it quoted her for the cupcakes.

A few months before the wedding reception, the bakery’s head baker unexpectedly had to take a leave of absence to deal with a medical issue. The bakery subsequently assigned the contract to a pastry chef in the same community. The pastry chef also had an excellent reputation in the community and was at least equally as skilled at making cupcakes as the bakery. The bakery told the wedding planner about this assignment, and the wedding planner did not object. When the pastry chef fully performed on the contract and delivered the cupcakes, which conformed to the contract requirements, the wedding planner refused to accept or pay for the cupcakes.

On these facts, has the wedding planner breached the contract?

Answers:

A) No, because the bakery breached the contract first by assigning the contract to another party.
B) No, because the wedding planner only had a duty to accept performance by the bakery.
C) Yes, because the assignment of the contract was permitted and the pastry chef properly and fully performed.
D) Yes, because the bakery told the wedding planner about the assignment of the contract and the wedding planner did not object.

Answer 17

C) Yes, because the assignment of the contract was permitted and the pastry chef properly and fully performed.

Question 18

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?

Answers:

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.

Answer 18

B) The collector’s acceptance of the owner’s offer was not timely.

Question 19

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?

Answers:

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.

Answer 19

D) The seller, because the oral agreement on February 3 waived the February 20 delivery date.

Question 20

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?

Answers:

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.

Answer 20

A) No, because the caterer behaved appropriately after rightfully rejecting the eggs.

Question 21

A wheat farmer contacted an agricultural services company in May to inquire about hiring workers for a five-day period toward the beginning of the summer-long harvest season to assist the farmer in harvesting his wheat crop. After some negotiations, the farmer entered into a written contract with the company “to provide five workers for a five-day period starting in the first week of June for a cost of $5,000.” On May 31, the company’s workers went on strike. On June 9, the strike ended, and the company’s workers began harvesting wheat on the farmer’s farm for the next five days. The farmer subsequently refused to pay the company, claiming that the company’s delay in performance excused his obligation to pay.

Is the farmer’s obligation to pay excused?

Answers:

A) No, because the delay did not deprive the farmer of the substantial benefit of the bargain.
B) Yes, because starting in the first week of June was an express condition of the contract.
C) Yes, because substantial performance does not excuse a breach for commercial contracts.
D) Yes, because the delay was a material breach as the harvesting season had already begun.

Answer 21

A) No, because the delay did not deprive the farmer of the substantial benefit of the bargain.

Question 22

A general contractor learned that a company was accepting bids for a lucrative construction project involving a high-rise building. The general contractor contacted a number of subcontractors and informed them that he would be accepting bids for the electrical work on the project for the next week. After receiving a number of bids from subcontractors, the general contractor selected a bid from a young subcontractor, which was the lowest bid but still within a reasonable range of the other bids. The general contractor used that sub-bid in calculating his overall bid on the construction project.

Soon after submitting his sub-bid to the general contractor and after the general contractor had submitted his overall bid to the company, the young subcontractor realized that he could have charged more for his services based on their market value. The company ended up choosing the general contractor’s bid for the project, and later that same day, the young subcontractor told the general contractor that he was revoking his sub-bid for the electrical work. As a result, the general contractor had to use a different subcontractor to perform the work at a cost $3,000 higher than the young subcontractor’s bid.

In a suit to recover the $3,000 from the young subcontractor, is the general contractor likely to prevail?

Answers:

A) No, because the young subcontractor’s sub-bid was an offer that could be freely revoked.
B) No, because the young subcontractor’s sub-bid was lower than the market value of similar services.
C) Yes, because an enforceable contract was formed when the general contractor used the young subcontractor’s sub-bid in his overall bid on the project.
D) Yes, because the general contractor detrimentally relied on the young subcontractor’s sub-bid.

Answer 22

D) Yes, because the general contractor detrimentally relied on the young subcontractor’s sub-bid.

Question 23

A refrigeration-unit manufacturer contracted with a kitchen appliance store to sell and deliver 100 refrigeration units to the store at a price substantially lower than market value. The written and signed contract included the term “F.O.B. kitchen appliance store, on or before March 30.” The shipping company that the manufacturer normally used to deliver its refrigeration units experienced an unforeseen strike at the end of March. As a result, the manufacturer personally delivered the units to the store on April 18. The store suffered no material harm due to the delay. The refrigeration appliance industry generally allows appliance manufacturers a 30-day leeway for any contractually specified time of delivery, unless such leeway is expressly prohibited by the contract.

If the store brings suit against the manufacturer for breach of contract, which of the following facts provides the manufacturer with the strongest defense to the store’s claim?

Answers:

A) The delay was caused by an unforeseeable strike.
B) The manufacturer believed that due to the price at which it offered the refrigeration units, the store would accept a late delivery.
C) The store suffered no material harm from the delay.
D) There is evidence of a trade usage in the refrigeration appliance industry allowing a 30-day leeway for appliance deliveries.

Answer 23

D) There is evidence of a trade usage in the refrigeration appliance industry allowing a 30-day leeway for appliance deliveries.

Question 24

A chemistry professor offered to sell her colleague an autographed first edition of a novel for $1,000. The professor provided her colleague with a signed written statement specifying the terms of the offer and stating that the offer would remain open for one week. Two days later, the colleague learned that the professor had sold the book to someone else in their department. The next day, the colleague showed up at the professor’s office with $1,000, asking to purchase the book. The professor apologized, saying that the book had already been sold.

Is the colleague likely to succeed in an action for breach of contract?

Answers:

A) No, because an option contract is not valid unless the offeror is a merchant.
B) No, because the colleague learned that the book had been sold before accepting the offer.
C) Yes, because the professor did not revoke the offer prior to the colleague’s acceptance.
D) Yes, because the offer was contained in a signed writing and thus could not be revoked.

Answer 24

B) No, because the colleague learned that the book had been sold before accepting the offer.

Question 25

On October 1, a retail sporting equipment store telephoned a shoe manufacturer and offered to buy a minimum of 50 and a maximum of 100 pairs of running shoes at $40 a pair to be delivered in 60 days. The manufacturer orally accepted the offer and then immediately faxed a signed letter to the store. The letter contained the following language: "This letter confirms our agreement by telephone on October 1 to sell you 50 pairs of running shoes for 60-day delivery." Sixty days later, the manufacturer delivered 100 pairs of conforming running shoes to the store. However, the store rejected all 100 pairs of shoes because it had found the same shoes from another seller for $30 a pair. Due to lack of demand, the manufacturer cannot resell the 100 shoes without suffering an economic loss. Can the manufacturer enforce a contract against the store? Answers: A) No, because the manufacturer did not state the agreed-upon price term in the faxed letter. B) No, because the store did not sign the faxed letter. C) Yes, for the sale of 50 pairs of shoes, because the manufacturer's faxed letter stated that quantity term. D) Yes, for the sale of 100 pairs of shoes, because the store wrongfully rejected that quantity of properly delivered and conforming shoes.

Answer 25

C) Yes, for the sale of 50 pairs of shoes, because the manufacturer's faxed letter stated that quantity term.

Question 26

A tenant rented a small cabin from a landlord. The lease provided that the tenant was permitted to make structural improvements to the cabin but that the tenant must pay for such improvements. Relying on this clause in the contract, the tenant contacted a contractor to install a loft in the cabin for $10,000. The tenant and the contractor agreed in a writing signed by both parties that payment would be due 30 days after the loft was completed. The contractor knew that the tenant was renting the cabin and sent the landlord a letter informing him of the impending construction on his property. The landlord received the letter and did not reply. The contractor completed the loft, which increased the market value of the cabin by $6,000. Ten days later and three months before the end of her lease, the tenant vacated the cabin and disappeared. Thirty days after the loft was completed, the contractor's bill remained unpaid. If the contractor has no remedy quasi in rem under the jurisdiction's mechanic's lien statute, which of the following will give the contractor the best chance of recovery in personam against the landlord? Answers: A) An action as a third-party beneficiary to the lease. B) An action based on an implied-in-fact contract. C) An action based on promissory estoppel. D) An action in quasi-contract for the benefit conferred on the landlord.

Answer 26

D) An action in quasi-contract for the benefit conferred on the landlord.

Question 27

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? Answers: 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.

Answer 27

B) No, because his sub-bid was never accepted.

Question 28

On November 1, the owner of a yacht posted a flyer at a local coffee shop reading, "Yacht for Sale: Make me an offer!" The flyer also included the owner's phone number. A buyer called the owner on November 3 to ask how much the owner wanted for the yacht. The owner said, "Well, I'd hate to part with it for less than $55,000, but if you can pay me $50,000 by November 20, I'd sell it to you. I'll hold onto the yacht for you until then." Elated, the buyer took steps to obtain a loan by November 20. On November 15, a second buyer called the owner and offered to buy the yacht for $60,000. The owner immediately accepted, and the second buyer picked up the yacht the next day. On November 20, having obtained a loan, the first buyer went to the owner's home and presented the owner with a check for $50,000. The first buyer then learned the owner had already sold the yacht. Can the first buyer bring a successful suit against the owner for breach of contract? Answers: A) No, because the owner's statement to the first buyer was only an invitation to deal. B) No, because the second buyer offered more money for the yacht than the first buyer agreed to pay. C) Yes, because the owner promised to keep the offer open for a specific period of time. D) Yes, because the owner's offer to the first buyer was still outstanding on November 20.

Answer 28

D) Yes, because the owner's offer to the first buyer was still outstanding on November 20.

Question 29

On April 1, a buyer and a seller executed a written contract for the sale of an antique car for $40,000, delivery on May 1. The contract contains a clause indicating that it is a total integration of the parties' agreement. As they each signed the contract, the buyer orally reminded the seller that the buyer's duty to purchase the car was conditioned on his ability to get approval for a loan by April 20 to fund the purchase. The seller orally agreed, though the condition was not noted in the written contract. When the seller contacted the buyer to execute the sale on May 1, he discovered that the buyer had attempted but failed to get a loan and could not afford to purchase the car. The buyer refused to honor the contract. If the seller sues the buyer for breach of contract, will the court likely admit the evidence of the oral condition regarding the buyer's approval for a loan? Answers: A) No, because the oral agreement contradicts the terms of the written contract. B) No, because the written contract is a complete integration of the agreement between the parties. C) Yes, as proof of a condition precedent to the buyer's obligation under the contract. D) Yes, because the oral agreement was a distinct and separate contract.

Answer 29

C) Yes, as proof of a condition precedent to the buyer's obligation under the contract.

Question 30

A manufacturer of T-shirts contracted with a brand-new clothing store to sell the store 1,000 T-shirts per month for a period of two years. The clothing store's signature color for its clothing was an orange-tinted red color, called coquelicot, which is very difficult to replicate on a consistent basis. The final, written contract specified that any T-shirts that were not coquelicot could be returned, but it was silent with regard to the return of T-shirts for other reasons. One year into the contract, the store decided to switch to coquelicot-colored baseball caps instead of T-shirts. As a result, the store returned the most recent shipment of coquelicot-colored T-shirts to the manufacturer and demanded a refund. The manufacturer refused to grant the refund, and the store sued the manufacturer for damages. At trial, the manufacturer introduced the contract, which clearly stated that T-shirts that were not coquelicot could be returned. The store then attempted to introduce evidence that it had returned coquelicot-colored T-shirts to the manufacturer over the past year without objection and received a refund. Is this evidence admissible? Answers: A) No, because evidence regarding the return of the T-shirts violates the parol evidence rule. B) No, because the express term in the contract regarding the return of T-shirts takes precedence over the course of performance. C) Yes, because the evidence can reasonably establish the parties' course of dealing on this issue. D) Yes, because the evidence is relevant to show that the manufacturer had accepted the return of coquelicot-colored T-shirts in the past.

Answer 30

D) Yes, because the evidence is relevant to show that the manufacturer had accepted the return of coquelicot-colored T-shirts in the past.

Question 31

A grocery chain whose main customer base was families with young children contacted a cereal manufacturer. After various discussions regarding the cereal and the box, the two parties entered into a written contract whereby the grocery chain agreed to purchase 10,000 boxes of children's cereal on a monthly basis for $5,000, due upon delivery. The contract further stated that the cereal would be shaped like donuts, and each piece of cereal would be one of the seven colors of the rainbow. Finally, in listing the primary ingredients, the contract stated that the cereal would contain high-fructose corn syrup as a sweetener. When the first shipment arrived, the grocery chain refused to pay the $5,000 and repudiated the contract. The cereal manufacturer sued the grocery chain for damages and introduced the contract between the two parties into evidence. The grocery chain then attempted to offer evidence regarding the discussions that occurred between the two parties prior to the execution of the contract. It claimed that the cereal manufacturer had orally agreed to use evaporated cane juice, not high-fructose corn syrup, as the sole sweetener and that the cereal manufacturer would also include a small prize in each cereal box at a cost of a penny a box. In deciding whether to admit evidence of the oral agreement, how will the court likely rule? Answers: A) Neither the evidence regarding the use of evaporated cane juice as a sweetener nor the evidence regarding the small prize in each cereal box is admissible. B) Only the evidence regarding the use of evaporated cane juice as a sweetener is admissible. C) Only the evidence regarding the small prize in each cereal box is admissible. D) Both the evidence regarding the use of evaporated cane juice as a sweetener and the evidence regarding the small prize in each cereal box are admissible.

Answer 31

C) Only the evidence regarding the small prize in each cereal box is admissible.

Question 32

A widow offered to sell her small business, together with all of the business's assets, to a nonprofit organization. The organization accepted, and on June 1, it signed and executed a contract providing for the sale of the business for $25,000 at the end of the month. When the organization's agent signed the contract, she orally informed the widow that the organization's duty to purchase the business was conditioned on obtaining approval from a local zoning board to convert the business's primary office into an affordable-healthcare clinic. A week later, the woman received another offer to purchase her business for $35,000. At the end of the month, seeking to accept the other offer, the widow refused to honor the contract with the organization because it had neglected to request the necessary approval from the zoning board. The organization sued the widow for breach of contract. The organization presented clear evidence that it had the necessary funds to perform on the contract at the end of the month, and that the zoning board would have routinely approved the organization's plans for the office. Is the organization likely to prevail in its action against the widow? Answers: A) No, because the express condition of the zoning board's approval had not occurred by the end of the month. B) No, because the organization's failure to seek approval from the zoning board was a repudiation of the contract. C) Yes, because the condition of approval by the zoning board has been waived by the organization. D) Yes, because the condition of approval by the zoning board was not included in the written contract.

Answer 32

C) Yes, because the condition of approval by the zoning board has been waived by the organization.

Question 33

In January, a local farmer contracted with a chef to sell the chef a specified amount of local organic tomatoes to be delivered on August 1. On June 15, the farmer called the chef to tell him that part of his crop was infested with tomato fruitworms and he was unsure that he would be able to deliver the full amount requested by August 1. The chef told the farmer that it was absolutely essential that he receive those tomatoes on time to make organic tomato sauce for a restaurant scheduled to open in late August. The farmer assured the chef that he would do his very best to save the crop and deliver by August 1. Does the chef have valid legal grounds to cancel the contract and order tomatoes from another source? Answers: A) No, because the farmer did not state unequivocally that he could not deliver the tomatoes on time. B) No, because the farmer still had more than 30 days to deliver the tomatoes. C) Yes, because the farmer committed an anticipatory repudiation of the contract by causing the chef to feel insecure about the farmer's performance. D) Yes, because the farmer failed to provide adequate assurances to the chef.

Answer 33

A) No, because the farmer did not state unequivocally that he could not deliver the tomatoes on time.

Question 34

A farmer owned a tractor and offered his brother the chance to purchase it. The farmer told the brother that he had to decide whether he wanted to purchase the tractor within "six months of today's date." The brother paid the farmer $200 that day to keep the option open. The agreement was reduced to writing, signed by both men, and dated May 15. The farmer died on July 1. On August 15, the brother notified the executor of the farmer's estate that he wanted to accept the offer to buy the tractor. The executor refused to sell, and the brother filed suit for the enforcement of the contract. Is the brother likely to prevail? Answers: A) No, because at the time of the farmer's death, the tractor went to his estate. B) No, because the offer terminated on July 1. C) Yes, because the brother made an enforceable contract to buy the tractor on May 15. D) Yes, because the brother paid $200 to keep the option open.

Answer 34

D) Yes, because the brother paid $200 to keep the option open.