Business Law 10-13

Article 2 of the UCC governs

the sale of goods.

Jennifer has offered to sell her laptop computer for $500 to Jack. She tells Jack that the computer is only six months old but, in fact, it is three years old, and does not work well. Jack agrees to buy the computer based on Jennifer's representations. This contract is a

voidable contract that Jack can void.

West was interviewing for a job as the CFO of a small start-up. After going through three rounds of interviews, West was on the phone talking to one of the vice presidents of the company, Tanesha. West said she hoped she would get the job, and Tanesha said, “You’ve got this! You don’t even need to wait for the official letter. Pack your bags—we want you as our CFO!” Based on this, West quit her job and ended her apartment lease. A week later, West received a letter in the mail stating that she did not get the job. What can West now do?

West can sue the company and argue promissory estoppel.

Hideo owns 200 acres of land. Hideo offers to sell the land to Ivan for $1,500 per acre. Ivan replies that he does not need 200 acres of land, but would like to buy 40 acres at $1,500 per acre. Hideo agrees to sell but does not identify which 40 acres. Later, Hideo refuses to sell any land to Ivan. What is the result?

Hideo wins; this agreement is too indefinite because it does not identify which 40 acres are to be sold.

India is a poor college student struggling to work and keep up with her studies. Jelani, her uncle, promises to pay India support of $200 per month for the next six months. Although Jelani didn't ask her to, India quits her job to focus on her studies for the next six months. Jelani makes one payment and then stops with no explanation. If India sues, what is the likely result?

India may win under the doctrine of promissory estoppel.

Jaime offered to buy Kevin's bike. Jaime is the

offeror.

Which of the following represents a unilateral offer?

"I will pay you $50 if you mow my lawn."

What element of a contract refers to both parties receiving some measurable benefit?

Consideration

Which of the following scenarios describes an offer?

Luther says to Consuela, "My son needs tutoring in Spanish. I'd like you to come to my home on Monday and Wednesday nights beginning next week for two-hour sessions, and I'll pay you $40 per hour. I'd like you to tutor him for the next three months."

Which of the following is NOT required to establish promissory estoppel?

A promise made by the plaintiff in response to the defendant's promise

Caelan tells Ray, “I will sell you my computer for $2,000, and you need to let me know by tonight” Ray does not give Caelan an answer immediately. Caelan goes home and opens the laptop and it does not work. Caelan calls Ray and tells Ray the computer is no longer for sale. Ray may

not force Caelan to sell the computer because Caelan revoked the offer.

When Aisha comes home from work one evening, she finds that her yard has been mowed and trimmed. Later, a man comes to collect for the yard work done. Aisha refuses to pay for the work because she did not hire him to do her yard work. Which of the following answers is most accurate?

Aisha would not have to pay for the yard work.

Camdyn offers to sell Cadence his 1955 Thunderbird convertible. Before Cadence can accept the offer, lightning strikes the car, and it is totally destroyed. Which of the following is true?

The offer is terminated by law due to the destruction of the agreement’s subject matter.

Drew is devastated when his dog, Loki, goes missing. Drew posts flyers offering a $100 reward for the return of Loki. Divit sees a flyer, goes to Drew’s home with the flyer, and tells Drew, “I am going to find Loki for you. I won’t rest until he is found. Give me the $100 reward.” Does Drew have to give Divit the $100?

No, because this is a unilateral contract that may only be accepted by performance.

JD mails an offer to Iris that states, "I offer to sell you my car for $2,000. If I don't hear from you in 10 days, I will assume you are willing to buy the car for the stated price." JD hears nothing by the deadline and assumes he has a deal. What is the result?

Iris is not bound. Generally, an offeree must say or do something to accept an offer.

Winter hires Frankie to pick up her daughter, Elliott, from school and take her to a local library for story time so Winter can attend ballet classes. At the end of the month, Winter does not tell Frankie to not pick up Elliott, so Frankie does so. Frankie continues to do this for an additional month. After four additional weeks of this, when Frankie drops off Elliott and asks for payment for the past month, Winter refuses. What would a court likely decide?

There is an implied contract, and Winter must pay Frankie.

The basic distinction between an executory contract and an executed contract is that

all parties have fulfilled their obligations in an executed contract.

Courts may award damages called quantum meruit, which means 

"as much as he deserves."

Iyana tells Jin, “I will sell you my laptop for $1,500, and you need to let me know by tonight.” Jin does not give Iyana an answer immediately. Iyana goes home and opens the laptop and realizes she needs to keep her computer. Iyana calls Jin and leaves him a voice mail message that the computer is no longer for sale. Without hearing the voice mail message, Jin texts Iyana that he accepts the offer. Which of these is true under the mailbox rule?

Jin accepted the offer, and there is now a valid contract.

If an offer specifies no time limit in which to accept, the

offeree has a reasonable period during which to accept.

Clay and Roan are negotiating the sale of Clay’s car to Roan. Roan tells Clay he needs a little time to consider the last offer Clay made. A week later, Roan emails Clay, “I accept your offer.” Clay and Roan

have a valid contract because Clay did not specify the method of acceptance and accepting via email a week later is reasonable.

An invitation to bargain

is not an offer.

Dorian breeds Scottish Fold kittens and informs Stevie that she is a cat breeder. Stevie says she is interested in purchasing one of her kittens. Dorian calls Stevie a month later and says Stevie’s kitten is ready for pickup and Stevie owes her $1,000. Stevie refuses, stating they did not have a valid contract. Dorian states they did have a valid contract. Who is correct?

Stevie. The terms of the offer were not definite.

Jerry offers to shovel the snow from Tyree's driveway for $35. Tyree replies "OK." This is an example of an

express, bilateral contract.

Travel Lines offered to sell 10 round-trip tickets to Elif. Travel Lines stated that the acceptance must be in writing by USPS next-day service. Which of the following acceptances will create a contract between Travel Lines and Elif?

Elif sends a letter by USPS next-day service to Travel Lines stating that she will buy the tickets.

Juan is devastated when his cat, Lufi, goes missing. Juan posts flyers offering a $75 reward for the return of Lufi. Jaslyn finds Lufi and returns him. Does Juan have to give Jaslyn the $75?

Yes, because this is a unilateral contract that is accepted by performance.

The courts will find an implied contract when

conduct of the parties indicates they intended an agreement.

What is the best definition of the mailbox rule?

Acceptance of an offer is generally effective upon dispatch; terminations are effective when received.

Javaris enters a dentist office and points to a damaged tooth. The dentist, Matt, treats the tooth. If Javaris refused to pay and Matt sued,

Matt would win; this is an implied contract.

Which term refers to whether an offeree accepts an offer by promising, by making a down payment, or by performing?

Manner of acceptance

Collector Antwon displays his beer can collection at the local swap meet. Jiao sees the collection and is interested in buying it. Antwon says he will sell the collection for $1,500. Jiao says she really likes the collection but is only willing to pay $1,000. Which of the following is correct?

Jiao's counteroffer terminates Antwon's offer of $1,500.

Which of the following types of property would be considered "goods" under the Uniform Commercial Code?

A computer

Jules and Corey are in an ethics class together. Jules tells Corey she will sell Corey her textbook. Corey assumes Jules means her ethics textbook because they are in that class together. Jules means her chemistry textbook. Corey agrees to buy Jules’ textbook. Do they have a valid contract?

No, because there is no meeting of the minds.

Tanner sent an email to Belinda offering to sell his car to her for $5,000. Belinda texted Tanner back offering to pay $4,000 for the car. A valid contract did not exist because

Belinda did not accept Tanner’s offer; she is still negotiating.

An agreement in which parties intend to form a valid bargain, but a court declares that some rule of law prevents enforcing it is called a(n)

unenforceable agreement.

Aiden made the following offer to Jeremy: "I will pay you $500 if you agree to paint my house." Jeremy replied that he would. At this point, the contract is an

executory, bilateral, express contract.

Sage and Daryl enter into a contract where Sage will make 10 items of jewelry per month, and Daryl will pay Sage $200 per month for the jewelry. Daryl hopes to sell the jewelry at local farmer’s markets. Daryl and Sage have a(n)

bilateral contract.

Val took her car to Dakota’s shop for maintenance. Val asked Dakota to change the oil, rotate the tires, and replace the timing belts. Val took a seat in the waiting area that had a window looking into the shop. Val noticed Dakota taking off her tires and replacing them with new ones. Val did not stop Dakota and remind him she did not ask for new tires. When Val paid for the work, Dakota included the charge for the new tires. Val told Dakota she did not request new tires. Dakota said he thought she had. Val said she had not, and she refused to pay for them. What can Dakota successfully argue that would require Val to pay for the tires?

Quasi-contract

An express contract

has both parties setting forth their intentions.

What are the two most common settings for legitimate non-compete agreements?

Sale of a business and employment relationship

Chao, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. Chao agrees to make monthly payments until the purchase price, plus interest, is paid in full. Which of the following is correct?

The contract is voidable by Chao.

A unilateral mistake occurs when

one party enters a contract under a mistaken assumption.

Which of these is NOT required for a non-compete clause to be valid?

Reasonable in price when ancillary to the sale of a business

Greg and Martin are drinking late one night after dinner. Greg becomes highly intoxicated and offers to sell Martin his collectible figurines worth $10,000 for $5,000. Martin knows Greg is having financial difficulties, so Martin assumes Greg is making this deal because he needs the money. Martin agrees. The next day, Martin comes to Greg’s house with a check and a suitcase to take the figurines home with him. Greg tells Martin he will not honor the agreement. Martin sues. The court will side with

Greg if he can show he was so intoxicated he could not understand the nature of the agreement he had made.

Which of the following can be characterized as an exculpatory clause?

Contractor is not liable for damage caused by its employees.

Lorraine and Darius are friends. Lorraine is engaged and wants to have the wedding of her dreams, but she cannot afford it. Darius wants to help with this, so he anonymously gives Lorraine $10,000. Lorraine is happy and does have the wedding of her dreams. A month later, Darius loses his job and asks Lorraine for the $10,000 back. Lorraine refuses. Darius sues Lorraine. The court will

not order Lorraine to pay Darius the money because valid consideration was not present.

Cristiane consults with an attorney about her divorce. After the consultation, Cristiane decides to hire the attorney. The attorney gives Cristiane many forms to sign. One form states, “If the attorney commits malpractice while representing the client, the client agrees to not sue the attorney for the malpractice.” This clause is 

an exculpatory clause.

When one person agrees to pay the debt of another as a favor to that debtor, it is called

a collateral promise.

Which of the following would suffice for a signature on a will or court order in many states?

A handwritten signature

Larson entered Forrester's Auto Mart to purchase a used car. Larson found a vehicle with a sales price of $11,000. After Forrester answered all of Larson's questions, Forrester and Larson agreed to a sale. As Larson was leaving to get the money to pay for the car, Forrester told Larson that he thought Brad Pitt formerly owned the car. Larson later learned that Brad Pitt had never owned the car. If Larson seeks to rescind the deal based on Forrester’s statement, Larson will

lose because he will not be able to prove reliance on the misrepresentation.

Neva consults with  an attorney about her divorce. After the consultation, Neva decides to hire the attorney. The attorney gives Neva many forms to sign. One form states, “If the attorney commits malpractice while representing the client, the client agrees to not sue the attorney for the malpractice.” This clause is

enforceable because professionals may limit their liability this way.

Nylah and Todd are friends. Nylah is engaged and wants to have the wedding of her dreams, but she cannot afford it. Todd wants to help with this, so he tells Nylah he will give her $10 ,000 today, and she can pay him back in monthly installments of $100 beginning next month when she returns from her honeymoon. Nylah agrees and does have the wedding of her dreams. A month later, Todd asks Nylah for the first installment of $100. Nylah refuses. Todd sues Nylah. The court will

order Nylah to pay Todd the money because there was consideration.

The Tavern's secret recipe for its pizza sauce would be considered

a trade secret, and an employment non-compete clause would be enforceable to protect it.

In order to satisfy the Statute of Frauds, a writing must be

signed by the defendant.

If Jasmine persuades Vanya to buy her horse by telling Vanya that the horse runs "like the wind," then Jasmine's statement is

puffery.

What is the time period of performance that requires contracts to be in writing?

If a contract cannot be performed within one year, it is unenforceable unless it is in writing.

A court is unlikely to enforce the non-compete agreement Kelly and Amber signed because of which of the following clauses?

Kelly agrees to go into a completely different line of work than Amber.

When a contract falls within the Statute of Frauds but is not in writing, the contract is

unenforceable.

Under a contract for the sale of land, the Statute of Frauds

requires the defendant to sign the agreement.

If Becky promises not to drink alcohol until she becomes a legal adult in exchange for Ben's promise of $1,000, the agreement is

not enforceable because Becky does not have a legal right to drink alcohol.

An exculpatory clause is generally unenforceable when

it involves public transportation.

To formally cancel a contract is to

rescind it.

Regarding consideration, an act occurs when a person

does something not legally required.

Which of the following terms designates the legal ability of a party to enter into a contract?

Capacity

Which of the following statements, if made by a seller who knows the statement to be untruthful, would NOT be misrepresentation of a material fact resulting in a cause of action for fraud?

"There is no better car in the world."

In a non-compete agreement, the term "ancillary" means that

the non-compete agreement must be part of a larger agreement.

Ethel's Exercise World plans to order three weight machines from Pete's Push, Pedal, and Pull Inc. for a total of $15,000. Pete demands that Ethel's friend, Charu, a wealthy independent businessperson (not connected with Ethel's business in any way) promise to pay Pete for the three machines if Ethel does not. Which of the promises in this problem must be in writing to be enforceable?

Both Charu's promise and Ethel's Exercise World's promise

Kathy announces her plans to enter law school in the fall and marry Rick in December. Kathy's father is afraid marriage during her first year in law school might cause her to fall behind in her studies or drop out of school. He calls Kathy and promises her $10,000 if she postpones her wedding until after her first year of law school. Kathy agrees and postpones the wedding for a year. Kathy successfully completes her first year of law school, but soon after, Kathy's father dies. The administrator of Kathy’s father's estate claims she is not entitled to the $10,000 because there was no consideration for her father's promise. If Kathy sues the estate, she will probably be

successful because there was consideration.

LaToya has been a children's day care provider for several years in the small town of Sallton, but she has decided to give it all up and move to a big city. LaToya sells her business to Ken, agreeing not to open a competing business within five miles of Sallton for a period of nine months. After five months of big city life, LaToya is broke and moves back to Sallton. LaToya opens a small day care business. Ken sues on the non-compete clause. What is the most likely result?

Ken wins. The agreement is enforceable.

The Uniform Electronic Transmission Act (UETA)

declares that a contract or signature may not be denied enforceability just because it is in electronic form.

Jerica is a CPA with an excellent reputation and client base. Jerica sells her tax preparation business to Kerem, and the sales contract includes a non-compete clause restricting Jerica from opening a similar business for one year within a 10-mile radius of her former office. If Jerica opens a tax preparation office five miles away after one year, a court would probably

grant an injunction barring her from operating the new office.

A person who is mentally impaired generally can create only

voidable contracts.

Does the statement, "The sale of goods will not be enforceable unless there is some writing, signed by the defendant, indicating that the parties reached an agreement," accurately reflect the basic rule of the UCC?

No, it should state that the contract must be for the sale of goods of $500 or more.

Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land. Because neither of them had any paper with them, Derek wrote the following on a napkin: "Abyan agrees to purchase from Derek a five-acre parcel located at the local address of 123 105th Street, St. Joseph, Minnesota, U.S.A. for the price of $4,500 per acre. Transfer of title, payment, and possession to take place on May 1, 2024." Abyan signed the napkin. On May 1, 2024, Derek was ready to close the deal and transfer title, but Abyan refused to pay the purchase price. If Derek sues Abyan for the price of the land, the most likely result will be

Derek will win because the writing is sufficient under the Statute of Frauds.

If Rudy offers Oscar $200 for his laptop valued at $600 and Oscar agrees, a court will probably

not set aside the agreement based on the adequacy of the consideration.

Ren's Imports sold a car to Lucia on credit for $30,000. Ren assigned to Maylin all of his rights to receive money from Lucia. Maylin did not inform Lucia of the assignment. Therefore, Lucia continued to make the next three payments directly to Ren. Shortly thereafter, Ren left the country with the money. If Maylin sues Lucia for the missing three payments,

Maylin will not be able to collect the money from Lucia.

Ashley hires Austin to lay new carpet in her bedroom. Austin does such a bad job that the only way to fix the carpet is to start over and lay the carpet again. Which of the following statements best describes this situation?

This is a material breach.

Alex and Serene enter into a contract. After performing the terms of the contract for six months, both Alex and Serene agree to cancel their contract. Alex and Serene have agreed to

rescind their contract.

Mohammed suffers a substantial financial loss when Olson Company breaches a contract. Under the statute of limitations, to receive damages Mohammed must file suit against Olson Company within

the time limit set by the state where he lives.

A donee beneficiary

usually does not give consideration in return for the gift.

An assignment is enforceable against an obligor from the moment the

obligor is notified of the assignment.

In which of the following cases would true impossibility NOT apply?

Reed agrees to purchase an expensive piece of jewelry for $25,000; a week later, he tells the jeweler that he simply does not have that kind of money.

Robert hired James, a CPA, to prepare his tax returns. James was too busy and delegated the work to Valentina, also a CPA. This delegation is

not enforceable, as Robert hired James to perform personal services.

Simon has an extensive collection of rare stamps. When Simon faces financial difficulties, he decides to sell a few of his beloved stamps. Sophie offers to buy a stamp and Simon accepts Sophie’s offer, but after Sophie pays Simon the agreed amount, Simon refuses to deliver the stamp and tries to return Sophie’s money to her. Sophie refuses to accept her money and instead tells Simon she wants the stamp. Which of the following statements is true?

Simon has to give Sophie the stamp if Sophie sues him and requests specific performance.

What does it mean if a party to a contract has been discharged?

It means that person is "finished" and has no more duties under the contract.

Susan took out a life insurance policy on herself, paying all of the premium payments. Susan named her daughter, Jessica, as the beneficiary under the policy. Jessica has not given anything in consideration for the policy. Jessica is a(n)

donee beneficiary who has rights to enforce the policy once Susan dies.

Lawrence took out a life insurance policy in which his daughter, Madeline, is named as a beneficiary. Madeline is a(n)

intentional beneficiary.

Terry is an owner of an apartment building. Shaniqua rents an apartment in the building. Shaniqua breaches her lease and moves out early. Before suing Shaniqua for damages, Terry must

try to rent the apartment to mitigate damages.

The concept that expectation interest is designed to put the injured party in the position they would have been in had both sides fully performed their obligations is found in

Hawkins v. McGee.

Carlos is hired to paint a house for $700. Before he starts, the person who hired him tells Carlos they do not want the job done after all. Carlos finds another house-painting job that afternoon, but it pays only $500. If Carlos sues for damages and is awarded $200, that amount is an example of

direct damages.

Which of the following duties can probably be delegated?

An agreement to paint a house

Abby and Scotty enter into a contract that requires Abby to build an office building for Scotty. The contract specifies that the building will include 16 plate glass windows. Abby includes only 14 windows in the completed building. As a result, Scotty refuses to pay Abby for the building. Which of the following statements is true?

Scotty will be required to pay Abby because Abby substantially performed.

Wright Company contracted with the city of St. Louis to train and employ disadvantaged youths. If Wright fails to fulfill the contract and is sued by a group of the disadvantaged youths, the group would

lose, as they are an incidental beneficiary.

Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job?

The cost of mailing résumés to prospective employers

The status of a third party is determined by

the intent of the contracting parties.

Tyron purchased a vacant lot and entered into a contract with BZ Inc. to construct a shopping center on the site. Douglas heard about this contract and built a restaurant on an adjoining piece of property because of the planned shopping center. Tyron was unable to raise the necessary capital and was unable to perform the contract with BZ, Inc. Douglas sued Tyron for breach of contract as a third party beneficiary. Douglas will probably

lose as a third party incidental beneficiary.

Makena hires Oakley to renovate her home and specifies that Oakley use Spiffy Painting for all the painting because of Spiffy's excellent reputation. In this case, Spiffy is a(n)

incidental beneficiary.

Donna and Juan enter into a contract where Juan will deliver ten laptops to Donna every month for Donna to sell in her retail store. In April, Juan does not deliver the laptops to Donna. As a result, Donna has to find a new supplier, and to do so, Donna travels to interview two potential new suppliers. In a lawsuit against Juan, Donna can receive reimbursement for the plane tickets she purchased to interview the new suppliers as

incidental damages.

Zoey and Drew enter into a contract that requires Drew to supply ten paintings per month to Zoey for her to sell in her art store. In March, Drew gives Zoey five paintings. As a result, Zoey has a substantial loss in profits. Zoey can sue Drew and receive reimbursement for the loss of her profits as

consequential damages.

A party who benefits from the contract although the contract was not designed for that party's benefit is a(n)

incidental beneficiary.