Contracts Nelson Spring 2026

In January, a teacher contracted with a summer camp to serve as its head counselor at a salary of $10,000 for 10 weeks, from the first of June to the middle of August. In March, the camp notified the teacher that it had hired someone else as head counselor and that the teacher’s services would not be needed. In April, the teacher spent $200 traveling to interview at the only other nearby summer camp for a position as its head counselor. The teacher was not chosen for that job. The teacher then took a position teaching in a local summer school at a salary of $6,000 for the same 10-week period. How much is the teacher entitled to recover as damages in a breach-of-contract action against the camp?

$4,200

A lumber supplier agreed to sell to a furniture manufacturer all the lumber that the manufacturer required over a two-year period. The sales contract provided that payment was due 60 days after delivery, but that a 3% discount would be allowed if the manufacturer paid within 10 days of delivery. During the first year of the contract, the manufacturer regularly paid within the 10-day period and received the 3% discount. Fifteen days after the supplier had made its most recent lumber delivery to the manufacturer, the supplier had received no payment from the manufacturer. At this time, the supplier became aware of rumors from a credible source that the manufacturer’s financial condition was precarious. The supplier called the manufacturer, demanding assurances regarding the manufacturer’s financial status. The manufacturer immediately mailed to the supplier its latest audited financial statements as well as a satisfactory credit report prepared by the manufacturer’s banker. The rumors proved to be false. Nevertheless, the supplier refused to resume deliveries. The manufacturer has sued the supplier for breach of contract. Will the manufacturer likely prevail?

Yes, because the credit report and audited financial statements provided adequate assurance of due performance under the contract

A landowner and a contractor entered into a written contract under which the contractor agreed to build a building and pave an adjacent sidewalk for the landowner for $200,000. Later, while construction was proceeding, the landowner and the contractor entered into an oral modification under which the contractor was not obligated to pave the sidewalk but still would be entitled to $200,000 upon completion of the building. The contractor completed the building. The landowner, after discussions with his landscaper, demanded that the contractor pave the adjacent sidewalk. The contractor refused. Has the contractor breached the contract?

Yes, because there was no consideration for the discharge of the contractor’s duty to pave the sidewalk.

During negotiations to purchase a used car, a buyer asked a dealer whether the car had ever been in an accident. The dealer replied: “It is a fine car and has been thoroughly inspected and comes with a certificate of assured quality. Feel free to have the car inspected by your own mechanic.” In actuality, the car had been in a major accident, and the dealer had repaired and repainted the car, successfully concealing evidence of the accident. The buyer declined to have the car inspected by his own mechanic, explaining that he would rely on the dealer’s certificate of assured quality. At no time did the dealer disclose that the car had previously been in an accident. The parties then signed a contract of sale. After the car was delivered and paid for, the buyer learned that the car had been in a major accident. If the buyer sues the dealer to rescind the transaction, is the buyer likely to succeed?

Yes, because the dealer’s statement was intentionally misleading and the dealer concealed evidence of the accident.

On January 5, a creditor loaned $1,000 to a debtor under a contract calling for the debtor to repay the loan at the rate of $100 per month payable on the first day of each month. On February 1, at the debtor’s request, the creditor agreed to permit payment on February 5. On March 1, the debtor requested a similar time extension and the creditor replied, “Don’t bother me each month. Just change the date of payment to the fifth of the month. But you must now make the payments by cashier’s check.” The debtor said, “Okay,” and made payments on March 5 and April 5 by cashier’s check. On April 6, the creditor sold the loan contract to a bank but did not tell the bank about the agreement permitting payments on the fifth of the month. On April 6, the bank wrote to the debtor: “Your debt to [the creditor] has been assigned to us. We hereby inform you that all payments must be made on the first day of the month.” Can the debtor justifiably insist that the payment date for the rest of the installments is the fifth of each month?

Yes, because the creditor could assign to the bank only those rights the creditor had in the contract at the time of the assignment

A buyer entered into a written contract to purchase from a seller 1,000 sets of specially manufactured ball bearings of a nonstandard dimension for a price of $10 per set. The seller correctly calculated that it would cost $8 to manufacture each set. Delivery was scheduled for 60 days later. Fifty-five days later, after the seller had completed production of the 1,000 sets, the buyer abandoned the project that required the specially manufactured ball bearings and repudiated the contract with the seller. After notifying the buyer of his intention to resell, the seller sold the 1,000 sets of ball bearings to a salvage company for $2 per set. The seller then sued the buyer for damages. What damages should the court award to the seller?

$8 per set, representing the lost profits plus the unrecovered cost of manufacture.

A bakery offered a chef a permanent full-time job as a pastry chef at a salary of $3,000 per month. The chef agreed to take the position and to begin work in two weeks. In her employment application, the chef had indicated that she was seeking a permanent job. One week after the chef was hired by the bakery, a hotel offered the chef a position as a restaurant manager at a salary of $3,500 a month. The chef accepted and promptly notified the bakery that she would not report for work at the bakery. Is the bakery likely to prevail in a lawsuit against the chef for breach of contract?

No, because a contract for permanent employment would be interpreted to mean that the chef could leave at any time

A debtor owed a lender $1,500. The statute of limitations barred recovery on the claim. The debtor wrote to the lender, stating, “I promise to pay you $500 if you will extinguish the debt.” The lender agreed. Is the debtor’s promise to pay the lender $500 enforceable?

Yes, because the debtor’s promise to pay part of the barred antecedent debt needs no consideration to be enforceable

A car dealer owed a bank $10,000, due on June 1. The dealer subsequently sold a car to a buyer at a price of $10,000, payable at $1,000 per month beginning on June 1. The dealer then telephoned the bank to ask whether the bank would accept payments of $1,000 per month for 10 months beginning June 1, without interest, in payment of the dealer’s debt to the bank. The bank agreed to that arrangement, and the dealer then asked the buyer to make his car payments directly to the bank. When the buyer tendered the first payment to the bank, the bank refused the payment, asserting that it would accept payment only from the dealer. On June 2, the bank demanded that the dealer pay the debt in full immediately. The dealer refused to pay, and the bank sued the dealer to recover the $10,000. In this suit, which of the following arguments best supports the bank’s claim for immediate payment?

The dealer gave no consideration for the agreement to extend the time of payment.

A bottling company sent a purchase order to a wholesaler that stated, “Ship 100,000 empty plastic bottles at the posted price.” Two days after receipt of this purchase order, the wholesaler shipped the bottles and the bottling company accepted delivery of them. A week after the bottles were delivered, the bottling company received the wholesaler’s acknowledgment form, which included a provision disclaiming consequential damages. After having used the wholesaler’s bottles in its bottling operations for two months, the bottling company discovered a defect in the bottles that caused liquids to leak from them. The bottling company recalled 10,000 of the bottles that had been filled, incurring lost profits of $40,000. Assuming that all appropriate defenses are timely raised, will the bottling company likely succeed in recovering $40,000 in consequential damages from the wholesaler?

Yes, because the wholesaler’s acknowledgment did not alter the terms of an existing contract between the parties.

A seller and a buyer have dealt with each other in hundreds of separate grain contracts over the last five years. In performing each contract, the seller delivered the grain to the buyer and, upon delivery, the buyer signed an invoice that showed an agreed-upon price for that delivery. Each invoice was silent in regard to any discount from the price for prompt payment. The custom of the grain trade is to allow a 2% discount from the invoice price for payment within 10 days of delivery. In all of their prior transactions and without objection from the seller, the buyer took 15 days to pay and deducted 5% from the invoice price. The seller and the buyer recently entered into a contract for a single delivery of wheat at a price of $300,000. The same delivery procedure and invoice were used for this contract as had been used previously. The seller delivered the wheat and the buyer then signed the invoice. On the third day after delivery, the buyer received the following note from the seller: “Payment in full in accordance with signed invoice is due immediately. No discounts permitted. s/Seller.” Which of the following statements concerning these facts is most accurate?

The parties’ course of dealing controls, and the buyer is entitled to take a 5% discount if he pays within 15 days

A mother whose adult son was a law school graduate contracted with a tutor to give the son a bar exam preparation course. “If my son passes the bar exam,” the mother explained to the tutor, “he has been promised a job with a law firm that will pay $55,000 a year.” The tutor agreed to do the work for $5,000, although the going rate was $6,000. Before the instruction was to begin and before any payment was made, the tutor repudiated the contract. Although the mother or the son reasonably could have employed, for $6,000, an equally qualified instructor to replace the tutor, neither did so. The son failed the bar exam, and the law firm refused to employ him. It can be shown that had the son received the tutor’s instruction, he would have passed the bar exam. If the mother and the son join as plaintiffs and sue the tutor for breach of contract, how much, if anything, are they entitled to recover?

$1,000, because all other damages could have been avoided by employing another equally qualified instructor

A landowner entered into a single contract with a builder to have three different structures built on separate pieces of property owned by the landowner. Each structure was distinct from the other two, and the parties agreed on a specific price for each. After completing the first structure in accordance with the terms of the contract, the builder demanded payment of the specified price for that structure. At the same time, the builder told the landowner that the builder was “tired of the construction business” and would not even begin the other two structures. The landowner refused to pay anything to the builder. Is the builder likely to prevail in a suit for the agreed-upon price of the first structure?

Yes, because the contract is divisible, but the landowner will be able to deduct any recoverable damages caused by the builder’s failure to complete the contract.

In financial straits and needing $4,000 immediately, a nephew asked his uncle for a $4,000 loan. The uncle said that he would lend the money to the nephew only if the nephew’s mother would “guarantee” the loan. At the nephew’s suggestion, the uncle then telephoned the nephew’s mother, told her about the loan, and asked if she would guarantee it. She replied, “Yes. Lend my son the $4,000, and I’ll repay it if he doesn’t.” The uncle then lent $4,000 to the nephew, and the nephew orally agreed to repay that amount in six weeks. The next day, the nephew’s mother wrote to him and concluded her letter with the words, “Son, I was happy to do you a favor by promising your uncle I would repay your six-week $4,000 loan if you don’t. /s/ Mother.” Neither the nephew nor his mother repaid the loan when it came due, and the uncle sued the mother for breach of contract. In that action, the mother raised the statute of frauds as her only defense. Will the mother’s statute-of-frauds defense likely be successful?

No, because the mother’s letter satisfies the statute-of-frauds requirement

On May 1, an uncle mailed a letter to his adult nephew that stated: “I am thinking of selling my pickup truck, which you have seen and ridden in. I would consider taking $7,000 for it.” On May 3, the nephew mailed the following response: “I will buy your pickup for $7,000 cash.” The uncle received this letter on May 5 and on May 6 mailed a note that stated: “It’s a deal.” On May 7, before the nephew had received the letter of May 6, he phoned his uncle to report that he no longer wanted to buy the pickup truck because his driver’s license had been suspended. Which of the following statements concerning this exchange is accurate?

There was a contract as of May 6.

A seller and a buyer entered into a contract obligating the seller to convey title to a parcel of land to the buyer in exchange for $100,000. The agreement provided that the buyer’s obligation to purchase the parcel was expressly conditioned upon the buyer’s obtaining a loan at an interest rate no higher than 10%. The buyer was unable to do so but did obtain a loan at an interest rate of 10.5% and timely tendered the purchase price. Because the value of the land had increased since the time of contracting, the seller refused to perform. The buyer sued the seller. Is the buyer likely to prevail?

Yes, because the buyer’s obtaining a loan at an interest rate no higher than 10% was not a condition to the seller’s duty to perform

An innkeeper, who had no previous experience in the motel or commercial laundry business and who knew nothing about the trade usages of either business, bought a motel and signed an agreement with a laundry company for the motel’s laundry services. The agreement was for a term of one year and provided for “daily service at $500 a week.” From their conversations during negotiation, the laundry company owner knew that the innkeeper expected laundry services seven days a week. When the laundry company refused to pick up the motel’s laundry on two successive Sundays and indicated that it would never do so, the innkeeper canceled the agreement. The laundry company sued the innkeeper for breach of contract. At trial, clear evidence was introduced to show that in the commercial laundry business “daily service” did not include service on Sundays. Is the laundry company likely to succeed in its action?

No, because the laundry company knew the meaning the innkeeper attached to “daily service,” and therefore the innkeeper’s meaning will control.

A carpenter contracted with a homeowner to remodel the homeowner’s home for $10,000, the contract price to be paid on completion of the work. On May 29, relying on his expectation that he would finish the work and have the homeowner’s payment on June 1, the carpenter contracted to buy a car under the following terms: “$10,000 in cash, if payment is made on June 1; if payment is made thereafter, the price is $12,000.” The carpenter completed the work according to specifications on June 1 and demanded payment from the homeowner on that date. The homeowner, without any excuse, refused to pay. As a result, the carpenter became very excited, suffered a minor heart attack, and incurred related medical expenses of $4,000. The reasonable value of the carpenter’s services in remodeling the homeowner’s home was $13,000. In an action by the carpenter against the homeowner, which of the following should be the carpenter’s measure of recovery?

$10,000, the contract price

A fugitive was wanted for murder. The authorities offered the following reward: “$20,000 to anyone who provides information leading to the arrest and conviction of this fugitive.” A private detective knew of the reward, located the fugitive, and brought him to the authorities, who arrested him. The authorities then determined that while the fugitive had, in fact, committed the crime, he had been directed to commit the crime by his boss. The authorities and the fugitive then agreed that in exchange for the fugitive’s testimony against his boss, all charges against the fugitive would be dropped. The fugitive testified and was released. The authorities refused to pay the reward to the private detective on the ground that the fugitive was never convicted. Would the private detective be likely to prevail in a breach of contract action against the authorities?

Yes, because the authorities themselves prevented the conviction of the fugitive.

A buyer and a seller entered into a contract for the sale of 10,000 novelty bracelets. The seller had the bracelets in stock. The contract specified that the seller would ship the bracelets by a third-party carrier. However, the contract did not specify either who was to pay the costs of carriage or the place of tender for the bracelets. On the above facts, when would the risk of loss of the bracelets pass to the buyer?

When the bracelets were delivered to a carrier and a proper contract for their carriage was made

In a written contract, an architect agreed to draw up the plans for and to supervise construction of a client’s new house. In return, the client agreed to pay the architect a fee of $10,000 to be paid upon the house’s completion. After completion, the client claimed erroneously but in good faith that the architect’s plans were defective. The client orally offered to pay the architect $7,500 in full settlement of the claim for the fee. The architect orally accepted that offer despite the fact that the reasonable value of his services was in fact $10,000. The client paid the architect $7,500 pursuant to their agreement. The architect subsequently sued the client for the remaining $2,500. In a preliminary finding, the trier of fact found that there were no defects in the architect’s plans. Will the architect be likely to prevail in his action against the client for $2,500?

No, because the architect’s promise to accept $7,500 became binding when the client made the payment.

On June 1, a seller agreed to sell an antique car to a buyer for $20,000, in a writing signed by both the seller and the buyer. At the time, the car was on display in a museum in a different city and was to be delivered to the buyer on August 1. On July 15, before the risk of loss had passed to the buyer, the car was destroyed by fire without fault of either party. Subsequent to the contract but before the fire, the car had increased in value to $30,000. The seller sued the buyer for the contract price of $20,000, and the buyer counterclaimed for $30,000. What is the likely outcome of this suit?

Both claims will fail.

A homeowner and a contractor entered into a contract for the construction of a home for $300,000. The contractor was to earn a profit of $10,000 for the job. After the contractor had spent $45,000 on labor and materials, including $5,000 on oak flooring not yet installed, the homeowner informed the contractor that the homeowner had lost his job and could not pay for any services. The homeowner told the contractor to stop working immediately. The reasonable market value of the labor and materials provided by the contractor at that point, including the oak flooring, was $40,000. The contractor used the oak flooring on another job. In an action by the contractor against the homeowner for damages, which of the following would be the largest amount of damages recoverable by the contractor?

$50,000, the contractor’s construction costs of $45,000 plus the $10,000 profit minus the $5,000 saved by reusing the oak flooring on another job

While waiting in line to open an account with a bank, a customer read a poster on the bank’s wall that said, “New Customers! $25 FOR 5 MINUTES. If you stand in line for more than five minutes, we will pay you $25! We like happy customers!” The customer started timing his wait and just as five minutes was about to pass, the bank manager tore the poster down and announced, “The $25 stand-in-line promotion is over.” The customer waited in line for 10 more minutes before being served. Does the customer have a claim against the bank for $25?

Yes, because the bank could not revoke its offer once the customer had commenced performance.

On June 1, a seller received a mail order from a buyer requesting prompt shipment of a specified computer model at the seller’s current catalog price. On June 2, the seller mailed to the buyer a letter accepting the order and assuring the buyer that the computer would be shipped on June 3. On June 3, the seller realized that he was out of that computer model, shipped a different computer model to the buyer, and mailed a separate notice of accommodation. On June 5, the buyer received the seller’s June 2 letter and the different computer model, but not the notice of accommodation. On June 5, which of the following is a correct statement of the parties’ legal rights and duties?

The buyer can either accept or reject the different computer model and, in either event, recover damages, if any, for breach of contract.

On May 1, a seller and a buyer entered into a written contract, signed by both parties, for the sale of a tract of land for $100,000. Delivery of the deed and payment of the purchase price were scheduled for July 1. On June 1, the buyer received a letter from the seller repudiating the contract. On June 5, the buyer bought a second tract of land at a higher price as a substitute for the first tract. On June 10, the seller communicated a retraction of the repudiation to the buyer. The buyer did not tender the purchase price for the first tract on July 1 but subsequently sued the seller for breach of contract. Will the buyer likely prevail?

Yes, because the buyer bought the second tract as a substitute for the first tract prior to the seller’s retraction

A debtor’s liquidated and undisputed $1,000 debt to a creditor was due on March 1. When the debt was still unpaid on March 15, the creditor told the debtor that if the debtor promised to pay the $1,000 on or before December 1, then the creditor would not sue to collect the debt. The debtor orally agreed. On April 1, the creditor sued the debtor to collect the debt that had become due on March 1. The debtor moved to dismiss the creditor’s complaint. Should the court grant the debtor’s motion?

No, because there was no consideration to support the creditor’s promise not to sue.

On March 1, a homeowner contacted a builder about constructing an addition to the homeowner’s house. The builder orally offered to perform the work for $200,000 if his pending bid on another project was rejected. The homeowner accepted the builder’s terms, and the builder then prepared a written contract that both parties signed. The contract did not refer to the builder’s pending bid. One week later, upon learning that his pending bid on the other project had been accepted, the builder refused to perform any work for the homeowner. Can the homeowner recover for the builder’s nonperformance?

No, because the builder’s duty to perform was subject to a condition

A buyer ordered a new machine from a manufacturer. The machine arrived on time and conformed in all respects to the contract. The buyer, however, rejected the machine because he no longer needed it in his business and returned the machine to the manufacturer. The manufacturer sold many such machines each year, and its factory was not operating at full capacity. In an action by the manufacturer against the buyer for breach of contract, which of the following is NOT a proper measure of the manufacturer’s damages?

The contract price of the machine

An insurance company issued an insurance policy to a homeowner. The policy failed to contain certain coverage terms required by a state insurance statute. When the homeowner suffered a loss due to a theft that was within the policy’s terms, the insurance company refused to pay, claiming that the policy was unenforceable because it violated the statute. Will the homeowner likely succeed in an action against the insurance company to recover for the loss?

Yes, because the homeowner belongs to the class of persons intended to be protected by the statute.

Under the terms of a written contract, a builder agreed to construct a garage for a homeowner for $10,000. Nothing was stated in the parties’ negotiations or in the contract about progress payments during the course of the work. After completing 25 percent of the garage according to the homeowner’s specifications, the builder demanded $2,000 as a reasonable progress payment. The homeowner refused, and the builder abandoned the job. If each party sues the other for breach of contract, which of the following will the court decide?

Only the builder is in breach and liable for the homeowner’s damages, if any

A collector bought from a gallery a painting correctly described in the parties’ signed contract as a “one-of-a-kind self-portrait” by a famous artist who had recently died. The contract price was $500,000 in cash, payable one month after a truck carrier delivered the painting to the collector. The painting was damaged in transit. The collector timely rejected it after inspection, immediately notified the gallery of the rejection, and told the gallery that the painting would be available for pickup. The gallery then sold the painting to a third party. It informed the collector that it would pick up the painting within a couple of weeks. Two weeks later, before the gallery picked up the painting, the collector sold and delivered the painting to an art admirer for $550,000 cash, after notifying the admirer about the damage. The collector sent no money to the gallery. If the collector’s sale of the painting was NOT an acceptance of the goods, what is the maximum amount that the gallery is entitled to recover from the collector?

$550,000 (damages for conversion)

On March 1, an excavator entered into a contract with a contractor to perform excavation work on a large project. The contract expressly required that the excavator begin work on June 1 to enable other subcontractors to install utilities. On May 15, the excavator requested a 30-day delay in the start date for the excavation work because he was seriously behind schedule on another project. When the contractor refused to grant the delay, the excavator stated that he would try to begin the work for the contractor on June 1. Does the contractor have valid legal grounds to cancel the contract with the excavator and hire a replacement?

No, because the excavator did not state unequivocally that he would delay the beginning of his work

An accountant and a bookkeeper, as part of a contract dissolving their accounting business, agreed that each would contribute $100,000 to fund an annuity for a clerk who was a longtime employee of the business. The clerk’s position would be terminated at the dissolution, and he did not have a retirement plan. The accountant and the bookkeeper informed the clerk of their plan to fund an annuity for him. The clerk, confident about his financial future because of the promised annuity, purchased a retirement home. The accountant later contributed his $100,000 to fund the annuity, but the bookkeeper stated that he could afford to contribute only $50,000. The accountant agreed in writing that the bookkeeper should contribute only $50,000. Does the clerk have a valid basis for an action against the bookkeeper for the unpaid $50,000?

Yes, because the clerk’s reliance on the promised annuity prevented the parties from changing the terms of the contract.

On March 1, a mechanic contracted to repair a textile company’s knitting machine by March 6. On March 2, the textile company contracted to manufacture and deliver specified cloth to a customer on March 15. The textile company knew that it would have to use the machine then under repair to perform this contract. Because the customer’s order was for a rush job, the customer and the textile company included in their contract a liquidated damages clause, providing that the textile company would pay the customer $5,000 for each day’s delay in delivery after March 15. The mechanic was inexcusably five days late in repairing the machine, and, as a result, the textile company was five days late in delivering the cloth to the customer. The textile company paid $25,000 to the customer as liquidated damages and then sued the mechanic for $25,000. Both the mechanic and the textile company knew when making their contract on March 1 that, under ordinary circumstances, the textile company would sustain few or no damages of any kind as a result of a five-day delay in the machine repair. Assuming that the $5,000-per-day liquidated damages clause in the contract between the textile company and the customer is valid, which of the following arguments will serve as the mechanic’s best defense to the textile company’s action?

The mechanic had no reason to foresee on March 1 that the textile company would suffer consequential damages in the amount of $25,000

A seller and a buyer entered into a written agreement providing that the seller was to deliver 1,000 cases of candy bars to the buyer during the months of May and June. Under the agreement, the buyer was obligated to make a selection by March 1 of the quantities of the various candy bars to be delivered under the contract. The buyer did not make the selection by March 1, and on March 2, the seller notified the buyer that because of the buyer’s failure to select, the seller would not deliver the candy bars. The seller had all of the necessary candy bars on hand on March 1 and made no additional sales or purchases on March 1 or March 2. On March 2, after receiving the seller’s notice that it would not perform, the buyer notified the seller of its selection and insisted that the seller perform. The seller refused. If the buyer sues the seller for breach of contract, is the buyer likely to prevail?

Yes, because the delay of one day in making the selection did not have a material effect on the seller.

Before putting her home up for sale, a homeowner painted the living room ceiling to conceal major water damage caused by a leaking roof that had not yet been repaired. On the first day the home was offered for sale, the homeowner gave a buyer a personal tour. The homeowner made no statements at all regarding the water damage or the roof. Without discovering the water damage or the leaking roof and without consulting a lawyer, the buyer immediately agreed in writing to buy the home for $200,000. Before the closing date, the buyer discovered the water damage and the leaking roof. The cost of repair was estimated at $22,000. The buyer has refused to go through with the purchase. If the homeowner sues the buyer for breach of contract, is the homeowner likely to prevail?

No, because the homeowner concealed evidence of the water damage and of the leaking roof

A wholesaler contracted in a signed writing to sell to a bakery 10,000 pounds of flour each week for 10 weeks, the flour to be delivered to the bakery on Mondays and payment to be made on Wednesdays of each week. The bakery did all of its weekly bread baking on Tuesdays. On Monday morning of the first week, the wholesaler tendered delivery of 8,000 pounds of flour to the bakery, and the bakery accepted it on the wholesaler’s assurance that the remaining 2,000 pounds would be delivered later that evening, which it was. The bakery paid for both deliveries on Wednesday. On Monday of the second week, the wholesaler tendered delivery of 5,000 pounds of flour to the bakery and said that the remaining 5,000 pounds could not be delivered on Monday but would be delivered by Wednesday. The bakery rejected the tender. Was the bakery legally justified in rejecting the tender of the 5,000 pounds of flour?

Yes, because the tender was a substantial impairment of that installment and could not be cured

An engineer entered into a written contract with an owner to serve in the essential position of on-site supervisor for construction of an office building. The day after signing the contract, the engineer was injured while bicycling and was rendered physically incapable of performing as the on-site supervisor. The engineer offered to serve as an off-site consultant for the same pay as originally agreed to by the parties. Is the owner likely to prevail in an action against the engineer for damages resulting from his failure to perform under the contract?

No, because the engineer’s physical ability to perform as on-site supervisor was a basic assumption of the contract.

An experienced rancher contracted to harvest his neighbor’s wheat crop for $1,000 “when the crop [was] ripe.” In early September, the neighbor told the rancher that the crop was ripe. The rancher delayed because he had other customers to attend to. The neighbor was concerned that the delay might cause the crop to be lost, for hailstorms were common in that part of the country in the fall. In fact, in early October, before the crop was harvested, it was destroyed by a hailstorm. Is the rancher liable for the loss?

Yes, because at the time the contract was made, the rancher had reason to foresee the loss as a probable result of his breach.

A niece had worked in her aunt’s bookstore for many years. The bookstore business, which was housed in a building that the aunt leased, was independently appraised at $200,000. The aunt decided to retire. She wrote to the niece, expressing her affection for the niece and offering to sell her the bookstore business for $125,000 if the landlord would agree to a transfer of the lease. The letter also specified when the aunt would transfer the business. The niece wrote back accepting her aunt’s offer. In a phone call to the niece, the aunt stated that the landlord had approved the transfer of the lease and that she would now ask her attorney to draft a written contract so that there would be a record of the terms. Before the attorney had finished drafting the document, the aunt changed her mind about selling the business and informed the niece of her decision. In an action for breach of contract brought by the niece against her aunt, is the niece likely to prevail?

Yes, because the document being drafted by the attorney was merely a record of an agreement already made, not a condition to it

An actor straight out of drama school and an agent entered into a one-year written contract that described the services the agent would provide. Because he was eager for work, the actor agreed, in the contract, to pay the agent 15% of his yearly earnings. At the end of the year, the actor was so pleased with his many roles that he gave the agent 20% of his earnings. After the first contract had expired, the actor and the agent decided to continue working together. They photocopied their old contract, changed the date, and signed it. At the end of the year, a dispute arose as to what percentage of earnings the actor owed. It is a trade practice in the acting profession for actors to pay their agents 10% of their yearly earnings, payable at the end of the year. What percentage of the actor’s earnings is a court most likely to award the agent?

15%, because it was an express term of the contract.

A bank agreed to lend a merchant $10,000 for one year at 8% interest. The loan proceeds were to be disbursed within two weeks. The merchant intended to use the loan proceeds to purchase a specific shipment of carpets for resale at an expected profit of $5,000 but said nothing about these plans to the bank. The bank failed to disburse the proceeds and refused to assure the merchant that it would do so. The merchant was able to secure a loan from another lender at 10% interest for one year. However, by the time the merchant started the application process for a substitute loan, it was too late to pursue the opportunity to buy the shipment of carpets. In an action against the bank for breach of contract, which of the following amounts is the merchant likely to recover?

The difference in cost over time between a loan at 10% and a loan at 8%

A buyer sent a seller an offer to buy 50 tons of cotton of a specified quality. The offer contained no terms except those specifying the amount and quality of the cotton. The seller then sent an acknowledgment by fax. The acknowledgment repeated the terms of the buyer’s offer and stated that shipment would occur within five days. Among 12 printed terms on the acknowledgment was a statement that any dispute about the cotton’s quality would be submitted to arbitration. Neither the buyer nor the seller said anything further about arbitration. The seller shipped the cotton, and it was accepted by the buyer. A dispute arose between the buyer and the seller as to the quality of the cotton, and the seller asserted that the dispute had to be submitted to arbitration. The buyer instead sued the seller in court. In that suit, which of the following arguments best supports the seller’s position that the buyer must submit the dispute to arbitration?

The provision for arbitration did not materially alter the parties’ contract.

A janitorial service contracted in writing with a hospital for a one-year term. Under the terms of the contract, the janitorial service agreed to clean the hospital daily in accordance with the hygiene standards of the city’s health code. Because the janitorial service did not clean a patient’s room in accordance with the required hygiene standards, the patient contracted an infection that required continued hospitalization. In addition to suing the hospital, the patient sued the janitorial service for breach of contract. Which of the following statements is most accurate with respect to the breach of contract claim against the janitorial service?

The patient has no claim for breach of contract against the janitorial service, because she is an incidental beneficiary

A developer contracted in writing to sell to a buyer a house on a one-acre lot for $100,000. The developer told the buyer that the lot abutted a national park and that the water for the house came from a natural artesian spring. The developer knew that both of these representations were important to the buyer and that both were false. The buyer moved into the house and eight months later learned that a private golf course was being constructed on the adjacent land and that the water for his house was piped in from the city reservoir. The buyer immediately sued the developer to avoid the contract. The construction of the golf course will probably increase the market value of the buyer’s property, and the water from the city reservoir exceeds all established standards for drinking water. Is the buyer likely to prevail?

Yes, because the buyer retained the power to avoid the contract due to fraud

A lawn service company agreed in writing to purchase from a supplier all of its requirements for lawn care products during the next calendar year. In the writing, the supplier agreed to fulfill those requirements and to give the company a 10% discount off its published prices, but it reserved the right to increase the published prices during the year. After the parties had performed under the agreement for three months, the supplier notified the company that it would no longer give the company the 10% discount off the published prices. Does the company have a viable claim against the supplier for breach of contract?

Yes, because the company’s agreement to buy all of its lawn care products from the supplier made the agreement enforceable.

On June 1, a general contractor and a subcontractor entered into a contract under which the subcontractor agreed to deliver all of the steel joists that the general contractor required in the construction of a hospital building. The contract provided that delivery of the steel joists would begin on September 1. Although the general contractor had no reason to doubt the subcontractor’s ability to perform, the general contractor wanted to be sure that the subcontractor was on track for delivery in September. He therefore wrote a letter on July 1 to the subcontractor demanding that the subcontractor provide assurance of its ability to meet the September 1 deadline. The subcontractor refused to provide such assurance. The general contractor then immediately obtained the steel joists from another supplier. If the subcontractor sues the general contractor for breach of contract, is the subcontractor likely to prevail?

Yes, because the subcontractor’s failure to provide assurance was not a repudiation since there were no reasonable grounds for the general contractor’s insecurity.

A seller entered into a contract to sell to a buyer a house for a price of $150,000. The contract contained the following clause: “This contract is conditional on the buyer’s securing bank financing at an interest rate of 7% or below.” The buyer did not make an application for bank financing and therefore did not secure it, and refused to proceed with the purchase. The seller sued the buyer for breach of contract. Is the seller likely to prevail?

Yes, because a court will imply a term imposing on the buyer a duty to use reasonable efforts to secure bank financing.

A computer retail outlet contracted to service a bank’s computer equipment for one year at a fixed monthly fee under a contract that was silent as to assignment or delegation by either party. Three months later, the retail outlet sold the service portion of its business to an experienced and well-financed computer service company. The only provision in the agreement between the retail outlet and the computer service company relating to the outlet’s contract with the bank stated that the outlet “hereby assigns all of its computer service contracts to [the computer service company].” The computer service company performed the monthly maintenance required under the service contract. Its performance was defective, however, and caused damage to the bank’s operations. Whom can the bank sue for damages arising from the computer service company’s defective performance?

Either the retail outlet or the computer service company, because the bank has not released the outlet and the bank is an intended beneficiary of the outlet’s agreement with the computer service company.

A farmer contracted to sell 100,000 bushels of wheat to a buyer. When the wheat arrived at the destination, the buyer discovered that the farmer had delivered only 96,000 bushels. The buyer sued the farmer for breach of contract. At the trial of the case, the court found that the written contract was intended as a complete and exclusive statement of the terms of the agreement. The farmer offered to prove that in the wheat business, a promise to deliver a specified quantity is considered to be satisfied if the delivered quantity is within 5% of the specified quantity. The buyer objected to the offered evidence. Is the court likely to admit the evidence offered by the farmer

Yes, because the offered evidence explains or supplements the agreement by usage of trade.

The mother of a son and a daughter was dying. The daughter visited her mother in a hospice facility and said, “You know that I have always been the good child, and my brother has always been the bad child. Even so, you have left your property in the will to us fifty-fifty. But it would be really nice if you would sell me the family home for $100,000.” “I don’t know,” said the mother. “It is worth a lot more than that—at least $250,000.” “That is true,” said the daughter. “But I have always been good and visited you, and my brother has never visited you, so that ought to be worth something. And besides, if you won’t sell me the house for that price, maybe I won’t visit you anymore, either.” “Oh, I wouldn’t want that,” said the mother, and she signed a contract selling the house to her daughter for $100,000. Shortly thereafter, the mother died. When her son found out that the house had been sold and was not part of his mother’s estate, he sued to have the contract avoided on behalf of the mother. On what ground would the contract most likely be avoided?

Undue influence

A borrower owed a lender $50,000 due on March 1. On January 10, the lender telephoned the borrower and said that he would discharge the debt if the borrower would promise to pay the lender $45,000 by January 15. The borrower responded, “I will attempt to get the money together.” On January 11, the lender again telephoned the borrower and said that he had changed his mind and would expect the borrower to make full payment on March 1. On January 15, the borrower tendered $45,000 as full payment, which the lender refused to accept. On March 1, the borrower refused the lender’s demand for $50,000, and the lender sued for that amount. Which of the following statements best supports the lender’s position?

The borrower’s January 10 statement was not a return promise, and therefore the lender effectively revoked his offer on January 11.

A seller entered into an agreement to sell a machine to a buyer for $5,000. At the time of the order, the buyer gave the seller a down payment of $1,000. The buyer then built a foundation for the machine at a cost of $250. The seller failed to deliver the machine. The buyer made reasonable efforts to find a similar machine and bought one for $5,500 that did not fit on the foundation. The buyer sued the seller for breach of contract. Which of these amounts claimed by the buyer, if any, could best be described as restitution?

The $1,000 down payment

A restaurant supplier sent a letter to a regular customer offering to sell the customer an industrial freezer for $10,000. Two days later, the customer responded with a letter that stated: "I accept your offer on the condition that you provide me with a warranty that the freezer is merchantable." In response to the customer's letter, the supplier called the customer and stated that the offer was no longer open. The supplier promptly sold the freezer to another buyer for $11,000. If the customer sues the supplier for breach of contract, is the customer likely to prevail?

Yes, because the customer's letter was an acceptance of the supplier's offer, since the warranty of merchantability was already implied in the sale

A seller sent an email to a potential buyer, offering to sell his house to her for $150,000. The buyer immediately responded via email, asking whether the offer included the house's front porch swing. The seller emailed back: "No, it doesn't." The buyer then ordered a front porch swing and emailed back to the seller: "I accept your offer." The seller refused to sell the house to the buyer, claiming that the offer was no longer open. Is there a contract for the sale of the house?

Yes, because the buyer's initial email merely asked for information

In a telephone conversation, a jewelry maker offered to buy 100 ounces of gold from a precious metals company if delivery could be made within 10 days. The jewelry maker did not specify a price, but the market price for 100 ounces of gold at the time of the conversation was approximately $65,000. Without otherwise responding, the company delivered the gold six days later. In the meantime, the project for which the jewelry maker planned to use the gold was canceled. The jewelry maker therefore refused to accept delivery of the gold or to pay the $65,000 demanded by the company. Is there an enforceable contract between the jewelry maker and the company?

No, because the parties did not put their agreement in writing

A man sent an email to a friend that stated: "Because you have been a great friend to me, I am going to give you a rare book that I own." The friend replied by an email that said: "Thanks for the rare book. I am going to give you my butterfly collection." The rare book was worth $10,000; the butterfly collection was worth $100. The friend delivered the butterfly collection to the man, but the man refused to deliver the book. If the friend sues the man to recover the value of the book, how should the court rule?

For the man, because there was no bargained-for exchange to support his promise.

A farmer who wanted to sell her land received a letter from a developer that stated, "I will pay you $1,100 an acre for your land." The farmer's letter of reply stated, "I accept your offer." Unbeknownst to the farmer, the developer had intended to offer only $1,000 per acre but had mistakenly typed "$1,100." As both parties knew, comparable land in the vicinity had been selling at prices between $1,000 and $1,200 per acre. Which of the following states the probable legal consequences of the correspondence between the parties?

There is a contract formed at a price of $1,100 per acre

A buyer and a seller entered into a written contract for the sale of a copy machine, using the same form contract that they had used a number of times in the past. The contract stated that payment was due 30 days after delivery and provided that the writing contained the complete and exclusive statement of the parties' agreement. On several past occasions, the buyer had taken a 5% discount from the contract price when paying within 10 days of delivery, and the seller had not objected. On this occasion, when the buyer took a 5% discount for paying within 10 days, the seller objected because his profit margin on this particular machine was smaller than on his other machines. If the seller sues the buyer for breach of contract, may the buyer introduce evidence that the 5% discount was a term of the agreement?

Yes, because evidence of course of dealing is admissible even if the writing contains the complete and exclusive agreement of the parties.

A buyer purchased a new car from a dealer under a written contract that provided that the price of the car was $20,000 and that the buyer would receive a "trade-in allowance of $7,000 for the buyer's old car." The old car had recently been damaged in an accident. The contract contained a merger clause stating: "This writing constitutes the entire agreement of the parties, and there are no other understandings or agreements not set forth herein." When the buyer took possession of the new car, she delivered the old car to the dealer. At that time, the dealer claimed that the trade-in allowance included an assignment of the buyer's claim against her insurance company for damage to the old car. The buyer refused to provide the assignment. The dealer sued the buyer to recover the insurance payment. The dealer has offered evidence that the parties agreed during their negotiations for the new car that the dealer was entitled to the insurance payment. Should the court admit this evidence?

Yes, because the merger clause does not bar evidence to explain what the parties meant by "trade-in allowance."

A buyer agreed in writing to purchase a car from a seller for $15,000, with the price to be paid on a specified date at the seller's showroom. The contract provided, and both parties intended, that time was of the essence. Before the specified date, however, the seller sold the car to a third party for $20,000. On the specified date, the buyer arrived at the showroom but brought only $10,000. When the seller did not appear at the showroom, the buyer called the seller and asked whether the seller would accept $10,000 for the car immediately and the remaining $5,000 in six weeks. The seller told the buyer that he had sold the car to the third party. If the buyer sues the seller for breach of contract, will the buyer be likely to prevail?

No, because the buyer was not prepared to tender her performance on the specified date

A mill and a bakery entered into a written contract that obligated the mill to deliver to the bakery 1,000 pounds of flour every Monday for 26 weeks at a specified price per pound. The mill delivered the proper quantity of flour in a timely manner for the first 15 weeks. However, the 16th delivery was tendered on a Tuesday, and amounted to only 800 pounds. The mill told the bakery that the 200-pound shortage would be made up on the delivery due the following Monday. The late delivery and the 200-pound shortage will not significantly disrupt the bakery's operations. How may the bakery legally respond to the nonconforming tender?

Accept the 800 pounds tendered, but notify the mill that the bakery will deduct from the price any damages for losses due to the nonconforming tender.

A buyer agreed to purchase a seller's house for $250,000 "on condition that the buyer obtain mortgage financing within 30 days." Thirty days later, the buyer told the seller that the buyer would not purchase the house because the buyer had not obtained mortgage financing. The seller asked the buyer where the buyer had tried to obtain mortgage financing, and the buyer responded, "I was busy and didn't have time to seek mortgage financing." If the seller sues the buyer for breach of contract, is the court likely to find the buyer in breach?

Yes, because a promise was implied that the buyer had to make reasonable efforts to obtain mortgage financing.

A producer contracted to pay an inexperienced performer a specified salary to act in a small role in a play the producer was taking on a six-week road tour. The contract was for the duration of the tour. On the third day of the tour, the performer was hospitalized with a stomach disorder. The producer replaced her in the cast with an experienced actor. One week later, the performer recovered, but the producer refused to allow her to resume her original role for the remainder of the tour. In an action by the performer against the producer for breach of contract, which of the following, if proved, would be the producer's best defense?

The actor was the only replacement the producer could find, and the actor would accept nothing less than a contract for the remainder of the six-week tour.

A businesswoman sold her business to a company for $25 million in cash pursuant to a written contract that was signed by both parties. Under the contract, the company agreed to employ the businesswoman for two years as a vice president at a salary of $150,000 per year. After six months, the company, without cause, fired the businesswoman. Which of the following statements best describes the businesswoman's rights after the discharge?

She can recover the promised salary for the remainder of the two years if no comparable job is reasonably available and she does not take another job.

On June 15, a teacher accepted a contract for a one-year position teaching math at a public high school at a salary of $50,000, starting in September. On June 22, the school informed the teacher that, due to a change in its planned math curriculum, it no longer needed a full-time math teacher. The school offered instead to employ the teacher as a part-time academic counselor at a salary of $20,000, starting in September. The teacher refused the school's offer. On June 29, the teacher was offered a one-year position to teach math at a nearby private academy for $47,000, starting in September. The teacher, however, decided to spend the year completing work on a graduate degree in mathematics and declined the academy's offer. If the teacher sues the school for breach of contract, what is her most likely recovery?

$3,000, the full contract amount less the amount the teacher could have earned in the teaching position at the academy

A produce distributor contracted to provide a grocer with eight crates of lettuce at the distributor's listed price. The distributor's shipping clerk mistakenly shipped only seven crates to the grocer. The grocer accepted delivery of the seven crates but immediately notified the distributor that the delivery did not conform to the contract. The distributor's listed price for seven crates of lettuce was 7/8 of its listed price for eight crates. The distributor shipped no more lettuce to the grocer, and the grocer has not yet paid for any of the lettuce. How much, if anything, is the distributor entitled to collect from the grocer?

The listed price for the seven crates of lettuce, minus the grocer's damages, if any, for the distributor's failure to deliver the full order.

A seller borrowed $5,000 from a bank. Soon thereafter the seller filed for bankruptcy, having paid nothing on his debt to the bank. Five years after the debt had been discharged in bankruptcy, the seller contracted to sell certain goods to a buyer for $5,000. The contract provided that the buyer would pay the $5,000 to the bank "as payment of the $5,000 the seller owes the bank." The only debt that the seller ever owed the bank is the $5,000 debt that was discharged in bankruptcy. The seller delivered the goods to the buyer, who accepted them. If the bank becomes aware of the contract between the seller and the buyer, and the buyer refuses to pay anything to the bank, is the bank likely to succeed in an action against the buyer for $5,000?

Yes, because the bank was an intended beneficiary of the contract between the buyer and the seller.

A builder borrowed $10,000 from a lender to finance a small construction job under a contract with a homeowner. The builder gave the lender a writing that stated, "Any money I receive from the homeowner will be paid immediately to the lender, regardless of any demands from other creditors." The builder died after completing the job but before the homeowner paid. The lender demanded that the homeowner pay the $10,000 due to the builder directly to the lender. The homeowner refused, saying that he would pay directly to the builder's estate everything that he owed the builder. Is the lender likely to succeed in an action against the homeowner for $10,000?

No, because the writing the builder gave to the lender did not transfer to the lender the right to receive payment from the homeowner.

A bowler signed a written contract with a coach to take 10 bowling lessons from the coach. The lessons were to begin one month from when the contract was signed. Two weeks after signing the contract, the bowler died of a heart attack. The coach asked the bowler’s estate to pay for the 10 lessons, but the estate has refused. The coach has sought your advice regarding her entitlement to payment from the estate for the lessons. The coach was at all times willing and ready to perform her obligations under the contract. Should you advise the coach that she is entitled to payment from the estate? Select one

No, because the bowler’s death excused the bowler’s performance obligations.

Your client is a builder who agreed to construct a metal storage shed for a business owner for $10,000. The parties agreed that the price would increase by the amount that the cost of metal for the shed exceeded the then-current cost of $20 per square foot. The business owner drafted the written contract and included a merger clause but mistakenly failed to include the priceescalation clause relating to the cost of the metal. Both parties signed the writing without noticing the omission. When the builder purchased metal for the job, the price had risen to $30 per square foot. The builder submitted a final bill that included the increased price of the metal, but the business owner refused to pay the increased price on the ground that the price-escalation clause was missing from the written contract. If further negotiations fail, the builder would like to sue the business owner to recover the additional cost. Should you advise the builder that the builder would have a good chance of success in such an action? Select one

Yes, because both parties were mistaken as to the content of the writing.

A homeowner wanted to add a rental unit to her home. She contacted your client, a builder, who informed her that, before beginning work, the builder would need to obtain several permits from the city on the homeowner’s behalf. The homeowner and the builder entered into a written professional-services contract for the project’s preliminary stage. The contract stated that in return for $1,500, the builder was to “complete a blueprint and a master plan for the project and use best efforts to obtain all necessary permits for the project.” The builder submitted a blueprint and master plan to the city. Despite his best efforts, however, the city denied one of the necessary permits. Because of this outcome, the homeowner refused to pay the builder. The builder has sought your advice about obtaining the $1,500 payment from the homeowner. Should you advise the builder that he is likely to get the payment? Select one.

Yes, because the homeowner breached the contract by not paying.

While waiting in line to use a treadmill, a gym member read a poster on the gym’s wall that stated, “Members! If you wait more than 10 minutes to use any piece of gym equipment, we will give you a free yearlong gym membership worth $1,500!” The member started timing her wait, and just as 10 minutes was about to pass, the owner of the gym removed the poster and announced, “The free gym membership promotion is over.” The member waited five more minutes before being able to use the treadmill. The member has contacted your law firm for advice about whether she is entitled to the free gym membership. Should you advise the member that she is entitled to the free gym membership? Select one.

Yes, because the gym could not revoke its offer once the member commenced performance.

A retailer and a contractor entered into a contract setting out the contractor’s agreement to repair water damage to the retailer’s store in exchange for $100,000. The contractor anticipated a profit of $10,000 on the work. After the contractor had spent $45,000 on labor and materials, including $5,000 on floor tile not yet installed, the retailer told the contractor that the retailer could not make any payments. The retailer told the contractor to stop working immediately. The contractor was able to use the floor tile on another job. On behalf of the contractor, you have sued the retailer for breach of contract. Which of the following would be the largest amount of damages you could recover for the contractor? Select one.

$50,000, the contractor’s costs of $45,000 plus the $10,000 anticipated profit less the $5,000 saved by using the tile on another job.

On May 1, a caterer and a couple entered into a written contract for the caterer to serve food and beverages that the couple had purchased from a local restaurant at the couple’s mid-July wedding reception for $2,000. The contract stated that the couple would pay the caterer in full on July 1. On June 1, the couple received a letter from the caterer repudiating the contract. On June 5, the couple contracted with the restaurant to serve the food and beverages at the wedding reception for $2,500. On June 10, the couple received a letter from the caterer retracting the repudiation. The couple did not tender payment to the caterer on July 1. The couple has contacted you for advice. If you file a claim on the couple’s behalf to recover the difference in price from the caterer, will the couple be likely to prevail? Select one.

Yes, because the couple made the contract with the restaurant to cover for the caterer’s repudiation before the caterer retracted the repudiation.

A homeowner discovered an active wasp nest on her porch. She reviewed the websites of several local exterminators for service and hourly rate information. The homeowner called one of the exterminators and asked him to remove the nest. The exterminator responded, “Okay, I’ll be there tomorrow at 10.” The next day, the exterminator removed the nest and gave the homeowner an invoice that reflected the hourly rate for his services as posted on his website. The homeowner refused to pay the invoice amount, asserting that the exterminator’s hourly rate was higher than other local exterminators’ rates. The homeowner offered to pay him the average of those rates. The exterminator demanded payment of the invoiced amount. The exterminator has sought your advice regarding what compensation he is entitled to receive from the homeowner. What should you advise the exterminator that he is entitled to receive? Select one.

The invoiced price, because the hourly rate posted on the exterminator’s website supplied the price term.

In a written contract, an architect agreed to design an addition to a homeowner’s house. In return, the homeowner agreed to pay the architect a fee of $30,000 when construction of the addition was completed. When the architect asked for the fee after construction was completed, the homeowner claimed erroneously but in good faith that the architect’s plans were defective. The homeowner orally offered to pay the architect $23,000 in full settlement of the architect’s claim for the fee. The architect orally accepted the offer, even though the reasonable value of the architect’s services was in fact $30,000. The homeowner paid the architect $23,000 pursuant to their oral agreement. The architect has consulted you for advice about whether she would likely prevail in a claim against the homeowner for the remaining $7,000. Is the architect likely to prevail in such a claim? Select one.

No, because the architect’s promise to accept $23,000 became binding when the homeowner made the payment.

Your law firm represents a sports team that has orally agreed to employ a coach for the coach’s lifetime. The parties negotiated and have agreed to all aspects of the employment except for the coach’s salary, on which they remain several hundred thousand dollars apart. The coach has sent a signed letter to the team confirming the terms to which the parties have orally agreed while acknowledging that the salary has yet to be set. The team has not responded to the confirmation letter. A partner in the firm has asked you to determine whether the parties have an enforceable contract at this point. Should you advise that the parties have an enforceable contract? Select one.

No, because the agreement is too indefinite to be enforced.

On February 1, a graphic design firm entered into a written contract with a sports team to design a new team logo. The parties’ contract required the firm to complete the work by April 1 to enable selected manufacturers to print products with the new logo before the beginning of the team’s season. On March 15, the firm requested a 30-day delay in the completion date because it was behind schedule on another project. When the team refused to agree to the delay, the firm stated that it would try to complete the work by April 1. The team has consulted you to discuss its legal options. At this point, should you advise the team that it has legal grounds to cancel the contract with the firm and hire a replacement? Select one.

No, because the firm did not state unequivocally that it would be unable to complete the work by April 1.

Under the terms of a written contract, an interior designer agreed to remodel a vacation home for an owner for $20,000. Nothing was stated during the parties’ negotiations or in the written contract about progress payments during the course of the work. After completing 25% of the work according to the owner’s specifications, the designer demanded $5,000 as a reasonable progress payment. When the owner refused, the designer abandoned the job. The owner sued the designer for breach of contract, and the designer filed a counterclaim against the owner for breach of contract. You are a law clerk working for the judge before whom the action is pending. The judge has asked you to write a bench memo advising which party, if either, is in breach. How should you advise the judge? Select one.

Only the designer is in breach.

On March 1, a singer contacted a contractor about building a recording studio. The contractor orally offered to perform the work for a specified price if the contractor’s pending bid on another project was not accepted. The singer agreed to the contractor’s terms, and the contractor then prepared a written agreement that both parties signed. The agreement contained a merger clause and did not refer to the contractor’s pending bid on the other project. One week after signing the agreement, the contractor learned that the bid on the other project was accepted, so the contractor told the singer that he would not be able to build the recording studio. The singer sued the contractor for breach of contract. You represent the contractor and are in settlement discussions. The singer’s attorney asserts that the court will not consider evidence of the parties’ oral agreement that the contractor would only perform if the contractor’s pending bid on another project was not accepted. Is the court likely to allow the evidence? Select one.

Yes, because the parol evidence rule does not bar evidence of a condition on a party’s duty to perform.

An accountant and a bookkeeper, as part of a contract dissolving their accounting business, agreed that each would

contribute $100,000 to fund an annuity for a clerk who was a longtime employee of the business. The clerk’s position would be terminated at the dissolution, and he did not have a retirement plan. The accountant and the bookkeeper informed the clerk of their plan to fund an annuity for him. The clerk, confident about his financial future because of the promised annuity, purchased a retirement home. The accountant later contributed his $100,000 to fund the annuity, but the bookkeeper stated that he could afford to contribute only $50,000. The accountant agreed in writing that the bookkeeper should contribute only $50,000.

 

Does the clerk have a valid basis for an action against the bookkeeper for the unpaid $50,000?

Yes, because the clerk’s reliance on the promised annuity prevented the parties from changing the terms of the

contract.