Contracts Problems 2

•.  Stirrup, a rancher, and Equinox, a fancier of horses, signed the following writing: "For​ $5,000, Stirrup will sell to Equinox a gray​ horse that Equinox may choose from among​ the grays on Stirrup's ranch."​  Equinox refused to accept delivery of a gray​ horse timely tendered by Stirrup or to choose​ among those remaining, on the ground that​ during their negotiations Stirrup had orally​ agreed to include a saddle, worth $100, and​ also to give Equinox the option to choose a​ gray or a brown horse.  Equinox insisted on​ one of Stirrup's brown horses, but Stirrup​ refused to part with any of his browns or with​ the saddle as demanded by Equinox.  If Equinox sues Stirrup for damages and the court finds that the writing is a partial integration, the court probably will​

•(A) admit the evidence as to both the saddle​ and the option to choose a brown horse.​

•(B) admit the evidence as to the saddle but​ not the option to choose a brown horse.​

•(C) admit the evidence as to the option to​ choose a brown horse but not the​ promise to include the saddle.​

•(D) not admit any of the evidence.

B

•.  During negotiations, the seller of a boat promises the buyer that the engine was warranted to be free of defects for a period of two years.  The parties then sign a written agreement that contains a warranty term with standard disclaimers of express and implied warranties, followed by language stating that "seller warrants that the engine will be free of defects for a period of one year."  After 14 months, the engine develops problems because of a defect.  A court finds that the writing is a partial integration and that the promise was actually made.  Is the seller liable under the warranty?

•A) Yes, because the parties did not intend their writing to be final as to the warranty.

•B) Yes, because the oral promise does not contradict the terms of the writing.

•C) No, because the writing was a final expression of their agreement as to the warranty.

•D) No, because the buyer would have a claim even under the written warranty.

C

•.  During negotiations between two friends over the sale of a boat, the seller tells the buyer that the engine was warranted to be free of defects for a period of two years. The parties finally sign a written agreement that contains no warranty terms.  After 14 months, the engine develops problems because of a defect.  A court finds that the writing is a partial integration and that the promise was actually made.  Is the seller liable under the warranty?

•A) Yes, because the gap fillers will supply an implied warranty.

•B) Yes, because the oral promise does not contradict the terms of the writing.

•C) No, because the writing was a final expression of their agreement as to the warranty.

•D) No, because the buyer would have a claim even under the written warranty.

B

•.  During negotiations, the seller of a boat promised the buyer that the engine was warranted to be free of defects for a period of two years.  The parties eventually signed a written agreement that contained no express warranty terms. Fourteen months after the purchase, the engine developed problems because of a defect.  A court found that the writing is a complete and exclusive statement of the terms of agreement.  Is the seller liable under the oral warranty?

•A) It remains to be determined as a question of fact whether the promise was made.

•B) Yes, because the oral promise does not contradict the terms of the writing.

•C) No, because the writing was a complete and exclusive expression of their agreement.

•D) No, because the buyer would have a claim even under the written warranty.

C

•The Kernel Corporation, through its president, Gritz, requested from Vault Finance, Inc., a short-term loan of $100,000.  On April 1, Gritz and Vault’s loan officer agreed orally that Vault would make the loan on the following terms: (1) The loan would be repaid in full on or before the following July 1 and would carry interest at an annual rate of 5%; and (2) Gritz would personally guarantee repayment.  The loan was approved and made on April 5.  The only document evidencing the loan was a memorandum, written and supplied by Vault and signed by Gritz for Kernel, that read in its entirety:

–“April 5

–In consideration of a loan advanced on this date, Kernel Corporation hereby promises to pay Vault Finance, Inc., $100,000 on September 1.

–Kernel Corporation

–By /s/ Demeter Gritz

–Demeter Gritz, President”

•Kernel Corporation did not repay the loan on or before July 1, although it had sufficient funds to do so.  On July 10, Vault sued Kernel as principal debtor and Gritz individually as guarantor for $100,000, plus 5% interest from April 5.  At the trial, can Vault prove Kernel’s oral commitment to repay the loan on or before July 1?

•(A) Yes, because the oral agreement was supported by an independent consideration.

•(B) Yes, because the evidence of the parties’ negotiations is relevant to their contractual intent concerning maturity of the debt.

•(C) No, because such evidence is barred by the preexisting duty rule.

•(D) No, because such evidence contradicts the writing and is barred by the parol evidence rule.

D

•Filmore purchased a Miracle color television set from Allison Appliances, an authorized dealer, for $499.  The written contract contained the usual one-year warranty as to parts and labor as long as the set was returned to the manufacturer or one of its authorized dealers.  The contract also contained an effective disclaimer of any express warranty protection, other than that which was included in the contract.  It further provided that the contract represented the entire agreement and understanding of the parties.  Filmore claims that during the bargaining process Surry, Allison’s agent, orally promised to service the set at Filmore’s residence if anything went wrong within the year.  Allison has offered to repair the set if it is brought to the service department, but denies any liability under the alleged oral express agreement.  Which of the following would be the best defense for Allison to rely upon in the event Filmore sues?

•(A) The Statute of Frauds.

•(B) The parol evidence rule.

•(C) The fact that all warranty protection was disclaimed other than the express warranty contained in the contract.

•(D) There was no consideration given for the oral agreement.

B

•.  In late January, the manager of a grocery store announced via flyers and in the local newspaper that he would award a $700 in-store gift certificate to any shopper who generated more than $3,000 in sales on his or her store credit card for goods purchased in the store in the month of February.  A woman with a large family who regularly shopped at the store decided that she had a good chance to win the contest.  As a result, she bought a large freezer for $300 so she could buy food in bulk and store it at home.  She then began buying large quantities of food and racking up purchases on her store credit card that were substantially higher than her usual monthly expenditures.  About two weeks later, the store manager realized that, although a few customers had increased their spending in an effort to win gift certificates, receipts for the month thus far had not increased enough to justify the cost of awarding gift certificates, so he again put up flyers and took out an ad in the local newspaper, this time to announce that the contest was canceled.  Although the woman saw the flyers, she continued to make larger than normal purchases at the store.  At the end of the month, she had totaled more than $3,000 in purchases on her store credit card, but the store manager declined to give her the gift certificate.  If the woman sues for breach of contract, will she prevail?

•A.  No, because the revocation was made in the same manner as the offer and, therefore, was effective.

•B.  No, because the woman knew that the offer had been revoked.

•C.  Yes, because she accepted the offer by purchasing the freezer.

•D.  Yes, because the offer could not be revoked as to the woman once she had begun to perform.

D

•.  At the end of his first year of law school, Lex sold his contracts casebook to a classmate for $50.  Lex only sells his books after he has used them to recoup some of his expenses.  Which of the following is true?

•(a) Lex is not in the business of dealing with law books, so the UCC does not apply to this transaction.

•(b) This transaction is not a sale of goods because the book has no value as a physical object consisting of nothing more than paper.  Its true value is in its content, which is intellectual property—an intangible right and not a "good."

•(c) This transaction is a sale of goods subject to the UCC.

•(d) This transaction is a sale of goods, but Article 2 does not apply because Lex is an occasional seller and not a merchant.

C

•Arlene posts this advertisement on a website that provides news and information to citizens of a certain city: "Leather handbag lost on downtown city bus; $100 reward for its return."  The ad included Arlene’s mailing address, telephone number, and email address.  Jack lives in the city but has not seen Arlene's posting.  Riding the downtown city bus, he finds the handbag.  In it, he discovers a writing that shows Arlene's home address, to which he then travels.  Finding no one at the home, he leaves the handbag in Arlene's mailbox.  Is Jack entitled to the $100 reward?

•A) Yes, because the advertisement was an offer for a unilateral contract.

•B) No, because he failed to deliver the handbag personally.

•C) No, because he acted without knowledge of the advertisement.

•D) No, if he was motivated to return the handbag as a Good Samaritan.

C

•.  On July 15, in a writing signed by both parties, Fixtures, Inc., agreed to deliver to Druggist on August 15 five storage cabinets from inventory for a total price of $5,000 to be paid on delivery.  On August 1, the two parties orally agreed to postpone the delivery date to August 20.  On August 20, Fixtures tendered the cabinets to Druggist, who refused to accept or pay for them on the ground that they were not tendered on August 15, even though they otherwise met the contract specifications.  Assuming that all appropriate defenses are seasonably raised, will Fixtures succeed in an action against Druggist for breach of contract?

•A.  Yes, because neither the July 15 agreement nor the August 1 agreement was required to be in writing.

•B.  Yes, because the August 1 agreement operated as a waiver of the August 15 delivery term.

•C.  No, because there was no consideration to support the August 1 agreement.

•D.  No, because the parol evidence rule will prevent proof of the August 1 agreement.

B

•Buyer, Inc. contracted in writing with Shareholder, who owned all of XYZ Corporation’s outstanding stock, to purchase all of her stock at a specified price per share.  At the time this contract was executed, Buyer’s contracting officer said to Shareholder, “Of course, our commitment to buy is conditioned on our obtaining approval of the contract from Conglomerate, Ltd., our parent company.”  Shareholder replied, “Fine.  No problem.”  Shareholder is willing and ready to consummate the sale of her stock to Buyer, but the latter refuses to perform on the ground (which is true) that Conglomerate has firmly refused to approve the contract.  If Shareholder sues Buyer for breach of contract and seeks to exclude any evidence of the oral condition requiring Conglomerate’s approval, the court will probably

•A.  admit the evidence as proof of a collateral agreement.

•B.  admit the evidence as proof of a condition to the existence of an enforceable obligation, and therefore not within the scope of the parol evidence rule.

•C.  exclude the evidence on the basis of a finding that the parties’ written agreement was a complete integration of their contract.

•D.  exclude the evidence as contradicting the terms of the parties’ written agreement, whether or not the writing was a complete integration of the contract.

B

•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?

•A.  The custom of the trade controls, and the buyer is entitled to take a 2% discount if he pays within 10 days.

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

•C.  The seller’s retraction of his prior waiver controls, and the buyer is entitled to no discount.

•D.  The written contract controls, and the buyer is entitled to no discount because of the parol evidence rule.

B

•A widget seller negotiates with a buyer for the purchase of 100 widgets for $10,000, with delivery 30 days from the signing of the agreement.  After the parties sign the agreement, which contains a merger clause, the buyer asks the seller if delivery could be in 20 days and the seller says, "Yes, I promise we will do that."  The seller does not deliver until 30 days from signing.  The buyer sues the seller and the seller seeks to bar the evidence that the seller promised delivery in 20 days.  Will the evidence be excluded under the parol evidence rule?

•A.  Yes, because it contradicts a term of the written agreement.

•B.  Yes, because it supplements a written agreement that is complete and exclusive.

•C.  No, because it is offered for the purpose of interpreting the writing.

•D.  No, because it is offered on an issue of modification.

D

•.  The owner of a house put an ad for its sale in the paper.  Her neighbor saw the ad and told her that he wanted to buy the house but had to arrange for financing. The owner suggested that they write a contract for sale then and there so that they would not have to waste any time while he got his financing. They orally agreed that the contract would not become binding unless the neighbor obtained financing, but the written contract did not mention this and appeared to be a fully integrated document.  The neighbor could not obtain financing and the owner brings suit to enforce the written contract.  Who will prevail?

•A.  The owner, because the contract was a fully integrated writing.

•B.  The owner, because parol evidence is not allowed to contradict a writing.

•C.  The neighbor, because the oral agreement that the contract would not be binding if the neighbor did not get financing was made contemporaneous with the writing.

•D.  The neighbor, because obtaining financing was a condition precedent.

D

•The owner of a store in a small beach town contacted a manufacturer about buying 100 Adirondack chairs. The parties reduced their agreement to sell and buy the 100 chairs to a signed writing that contained all of the essen­tial terms, as well as a merger clause. When the chairs were delivered to the store owner, she discovered that they were not "Adirondack chairs," as she understood that term and as that term was commonly used, but a different style of chair altogether that was manufactured in the Adirondack region of New York. The store owner refused delivery, and the manufacturer sued the store owner for breach of contract, arguing that he complied with the terms of the contract.  Will the store owner be allowed to introduce evidence of the meaning of the term "Adirondack chair"?

•A.  Yes, because the parol evidence rule does not apply to subsequent modifications.

•B.  Yes, because of the dispute between the parties over the meaning of the term "Adirondack chair."

•C.  No, because the written agreement of the parties was a complete integration.

•D.  No, because the contract was for a sale of goods between merchants.

B

•.  After negotiations, a painting contractor agreed with a homeowner to paint the exterior of her house for $20,000.   The painter further agreed to use only top quality paint because the homeowner wanted the paint to last for many years.   The painter filled out his standard form contract, but deliberately did not include a brand name for the paint that he would use.   After telling the homeowner that the contract contained the terms agreed to, she signed without reading it.  On completion of the job, the homeowner saw some empty paint cans in the painter’s truck and realized that top quality paint had not been used.  If the homeowner sues the paint contractor for misrepresentation, any statements made by the painter before the contract was signed:

• A. Would be barred by the parol evidence rule.

• B. Would not be barred by the parol evidence rule.

• C. Would be admitted but only if the contract was proved to be an incomplete agreement of the parties.

• D. Would not be admitted because they occurred prior to the signing of the contract.

B

•.  Tune Corporation, a radio manufacturer, and Bill's Comex, Inc., a retailer, after extensive negotiations entered into a final, written agreement in which Tune agreed to sell and Bill's agreed to buy all of its requirements of radios, estimated at 20 units per month, during the period January 1, 1988, and December 31, 1990, at a price of $50 per unit.  A dispute arose in late December, 1990, when Bill's returned 25 undefective radios to Tune for full credit after Tune had refused to extend the contract for a second three-year period.  In an action by Tune against Bill's for damages due to return of the 25 radios, Tune introduces the written agreement, which expressly permitted the buyer to return defective radios for credit but was silent as to return of undefective radios for credit.  Bill's seeks to introduce evidence that during the three years of the agreement it had returned, for various reasons, 125 undefective radios, for which Tune had granted full credit.  Tune objects to the admissibility of this evidence.  The trial court will probably rule that the evidence proffered by Bill's is

•(A) inadmissible, because the evidence is barred by the parol evidence rule.

•(B) inadmissible, because the express terms of the agreement control when those terms are inconsistent with the course of performance.

•(C) admissible, because the evidence supports an agreement that is not within the relevant statute of frauds.

(D) admissible, because course-of-performance evidence, when available, is considered the best indication of what the parties intended the writing to

D

•Buyer and Seller deal in electrical equipment.  In its catalog, Seller lists the prices for some of its products, but not for #4 conducting wire.  On July 11, Buyer sends Seller this signed written message:  "We wish immediately to have 4,000 feet of your #4 conducting wire.  We do not see the price listed in your catalog, so we propose that the price be agreed on later.  Please ship."  On July 12, Seller responds with this signed writing:  "Thank you.  We will ship."  Have Buyer and Seller formed a contract?

•A. Yes, because where the goods are bought and sold between merchants, price is not a material term.

•B. Yes, because notwithstanding the open price term, their interaction reflects finality of agreement.

•C. No, because parties do not form a contract if they agree that a material term will be subject to future agreement.

•D. No, because a seller who declines to publish its price shows an intention not to sell.

B

•.  In early July, the owner of a toy store entered into a contract with a craftsman for the purchase of 25 hand-carved wooden rocking horses for the holiday sales season.  The agreement failed to state a delivery date for the horses.  After several months went by without any word from the craftsman, the owner forgot about the agreement.  On October 15, the owner ordered a quantity of mass-produced resin-based rocking horses to sell in his store for the upcoming holiday season. One week later, the craftsman arrived at the toy store with a truck carrying the horses and demanded payment, but the toy store owner refused, stating that he already had more than enough rocking horses to sell. The craftsman sued the owner for breach of contract.  May the craftsman enforce the contract? 

•A. No, because the contract was missing an essential term, the delivery date, at the time of formation.

•B. No, because so much time had passed without word from the craftsman that the toy store owner had reasonable grounds for insecurity and was entitled to cancel the contract and mitigate his damages.

•C. Yes, because the delivery date was reasonable given the nature of the goods.

•D. Yes, because the craftsman accepted the contract by completing the hand-carved horses.

C

•Which of the following requirements must be met for modification of a sales contract under the Uniform Commercial Code?

•(A) There must be consideration if the contract is between merchants.

•(B) There must be consideration if either party is a non-merchant.

•(C) The modification must satisfy the Statute of Frauds if the contract as modified is within its provisions.

•(D) The parol evidence rule applies and thus a writing is required.

C

•Carl goes to a store to buy a television.  At the store, there's a television playing.  Carl thinks the picture and sound on that television are good, so he buys the same model.  He takes it home, plugs it in, and finds that the picture and sound, while reasonably good, aren't as good as what he saw in the store.  He sues for breach of warranty.  If he wins, it will be because

•A. there's a failure of consideration.

•B. there's a breach of the warranty of fitness for a particular purpose.

•C. the demonstration of the model constituted a warranty that proved false.

D. there's a breach of the implied warranty of merchantability.

C

•A seller's form conspicuously states on the front page, "THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED."  Is that language sufficient to disclaim the implied warranty of merchantability?

•A. No, because it does not use the word "merchantability."

•B. No, because it is not conspicuous.

•C. No, because it is disclaimed only when the implied warranty of fitness for a particular purpose is disclaimed.

•D. Yes, because the disclaimer is in writing and conspicuous.

A

•3. John, a law student, is selling his car to Mary.  He says, "This car will get 25 miles per gallon around town.  Of course, I disclaim all express warranties."  The parties then enter into a partially integrated agreement that makes no mention of warranties or warranty disclaimers.  Has John given Mary a warranty that the car will get 25 miles per gallon around town?

•A.  No, because John is not a merchant seller.

•B.  No, because the statement is puffing.

•C.  No, because all express warranties are disclaimed.

•D.  Yes.

D

•. Tom wants to change the oil in his automobile, and to do so, he needs to purchase an oil filter.  He goes to the auto supply store and tells the clerk that he needs to change the oil in his vehicle and wants an appropriate oil filter for his make and model of vehicle.  The clerk recommends oil filter XYZ-2.  Tom purchases the oil filter, takes it home, and puts it on his vehicle.  The oil filter (which has no defects) isn't suited for the vehicle and, as a result, the vehicle is damaged.  Tom can sue the auto supply store successfully based on breach of

•A. implied warranty of fitness for a particular purpose.

•B. implied warranty of merchantability.

•C. implied warranty of merchantability and implied warranty of title.

D. implied warranty of title.

A

•A consumer is test-driving a car of a used car dealership.  She hears a sound under the car and asks the salesperson about it.  The salesperson says, "Don’t worry about that.  We stand behind the cars we sell.  If anything goes wrong in the next 60 days, we will fix it free of charge."  Relieved, the consumer agrees to buy the car.  Two days later, the transmission fails.  She brings it back to the dealer and tells the manager what the salesperson said.  The manager tells her that the salespeople aren’t allowed to negotiate terms and all the terms are found in the writing.  He points out that the writing effectively disclaims all warranties and conspicuously states that the car is sold "AS IS."  He also points out a merger clause that states that there are no promises or understandings other than those found in the writing. Is the consumer likely to recover?

•A) Yes, because the warranty of merchantability was not properly disclaimed.

•B) Yes, because the parol evidence rule does not apply to consumers.

•C) Yes, because the writing is not fully or partially integrated.

•D) No, because the writing is a full integration.

D

•A consumer goes to a jewelry store and points out to the clerk a particular watch on display that he wishes to purchase.  The clerk goes to the back of the store and emerges with a watch that he briefly shows to the consumer before wrapping it.  The consumer buys the watch.  When he gets home, the consumer discovers that the watch he purchased differs from the one that he pointed out in the display.  Does the consumer have a claim for breach of warranty?

•A.  Yes, because an express warranty was created by affirmation of fact or promise.

•B.  Yes, because an express warranty was created by sample or model.

•C.  No, because he had an opportunity to inspect the goods before purchase.

•D.  No, because there was no language of warranty.

B

•. At a country auction, P acquired an antique cabinet that he recognized as a "Morenci," an extremely rare and valuable collector’s item.  Unfortunately, P’s cabinet had several coats of varnish and paint over the original finish.  Its potential value could only be realized if these layers could be removed without damaging the original oil finish.  A professional restorer of antique furniture recommended that P use Restorall to remove the paint and varnish from the cabinet.  P obtained and read a sales brochure published by Restorall, Inc., which contained the following statement:  "This product will renew all antique furniture.  Will not damage original oil finishes."  P purchased some Restorall and used it on his cabinet, being careful to follow the instructions exactly.  Despite P’s care, the original Morenci finish was irreparably damaged.  When finally refinished, the cabinet was worth less than 20% of what it would have been worth if the Morenci finish had been preserved.  If P sues Restorall, Inc. to recover the loss he has suffered as a result of the destruction of the Morenci finish, will P prevail?

•A.  Yes, unless no other removal technique would have preserved the Morenci finish.

•B.  Yes, if the loss would not have occurred had the statement in the brochure been true.

•C.  No, unless the product was defective when sold by Restorall, Inc.

D.  No, if the product was not dangerous to persons.

B

•A woman went to her local department store and told the salesperson that she wanted a coat that was extremely warm.  The salesperson went into his stockroom and brought out four different styles of very warm coats.  The woman tried on each of the four but did not like the way any of them looked.   While walking around the store, however, the woman saw a coat she did like and told the salesperson to bring one in her size.   The salesperson brought her the coat and he said that it was made of the finest cashmere and would probably last for years.  The woman tried on the coat and told the salesperson that she would take it and paid him.  After wearing the coat twice, however, she decided it was not warm enough for her climate.   She took the coat back to the department store and demanded her money back.  The store refused.  If the woman sues to get her money back, under which theory would she most likely prevail?

• A. Breach of the implied warranty of fitness for particular purpose.

• B. Breach of the implied warranty of merchantability.

• C. Breach of express warranty.

• D. None of the listed warranties.

D

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

•A)   Both parties are in breach, and each is entitled to damages, if any, from the other. 

•(B)  Only Karp is in breach and liable for Manor's damages, if  any.

•(C)  Only Manor is in breach and liable for Karp’s damages, if any.

•(D)  Both parties took reasonable positions and neither is in breach.

B

•2.  Alpha and Beta made a written contract pursuant to which Alpha promised to convey an apartment house to Beta in return for Beta’s promise (1) to convey a farm to Alpha and (2) to pay Alpha $20,000 in cash six months after the exchange of the apartment house and the farm.  Which of the following statements concerning the order of performances is LEAST accurate?

•(A) Alpha’s tendering of good title to the apartment house is a condition precedent to Beta’s duty to convey good title to the farm.

•(B) Beta’s tendering of good title to the farm is a condition precedent to Alpha’s duty to convey good title to the apartment house.

•(C) Beta’s tendering of good title to the farm is a condition subsequent to Alpha’s duty to convey good title to the apartment house.

•(D) Alpha’s tendering of good title to the apartment house and Beta’s tendering of good title to the farm are concurrent conditions.

C

•ABC Corp hires Sarah as corporate counsel.  The employment contract states that Sarah's employment will terminate automatically if she fails to pass the state bar examination within twelve months of her start date.  Her passing the bar is best classified as what type of contractual term?

•A.  A condition precedent to the initial formation of the employment contract.

•B.  A concurrent condition of employment.

•C.  A condition subsequent that will extinguish ABC Corp’s duty to continue employing Sarah.

•D.  An express warranty regarding Sarah’s professional qualifications.

C

•Albert engaged Bertha, an inexperienced actress, to do a small role in a new Broadway play for a period of six months at a salary of $800 a week.  Bertha turned down another role in order to accept this engagement.  On the third day of the run, Bertha was hospitalized with influenza and Helen was hired to do the part.  A week later, Bertha recovered, but Albert refused to accept her services for the remainder of the contract period.  Bertha then brought an action against Albert for breach of contract.  Which of the following is Bertha’s best legal theory?

•(A) She was never told that an illness might jeopardize her continued employment as an actress.

•(B) Her performance of the literal terms of the contract was physically impossible.

•(C) Her reliance on the engagement with Albert by declining another acting role created an estoppel against Albert.

•(D) Her failure to perform for one week was not a material failure so as to discharge Albert’s duty to perform.

C

•.  Green contracted in a signed writing to sell Greenacre, a 500-acre tract of farmland, to Farmer.  The contract provided for exchange of the deed and purchase price of $500,000 in cash on January 15.  Possession was to be given to Farmer on the same date.  On January 15, Green notified Farmer that because the tenant on Greenacre wrongfully refused to quit the premises until January 30, Green would be unable to deliver possession of Greenacre until then, but he assured Farmer that he would tender the deed and possession on that date.  When Green tendered the deed and possession on January 30, Farmer refused to accept either, and refused to pay the $500,000.  Throughout the month of January, the market value of Greenacre was $510,000, and its fair monthly rental value was $5,000.  Will Green probably succeed in an action against Farmer for specific performance?

•(A) Yes, because the court will excuse the delay in tender on the ground that there was a temporary impossibility caused by the tenant's holding over.

•(B) Yes, because time is ordinarily not of the essence in a land-sale contract.

•(C) No, because Green breached by failing to tender the deed and possession on January 15.

•(D) No, because Green's remedy at law for monetary relief is adequate.

B

•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?

•(A) No, because substantial performance is a constructive condition to the landowner’s duty to pay at the contract rate.

•(B) No, because the builder’s cessation of performance without legal excuse was a willful breach of the contract.

•(C) Yes, because the contract is divisible, and the landowner will be required to bring a separate claim for the builder’s failure to complete the other two structures.

•(D) 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.

D

•A sporting goods shop contracted with a publisher to buy, for sale in its store, 1,200 posters featuring a professional golfer.  During production, the image of the golfer was inadvertently reversed and the right-handed golfer appeared to be left-handed.  When the posters were delivered on the date provided in the contract, the sporting goods shop noticed the discrepancy, which had no provable significant impact on the effectiveness of the poster.  In the opinion of the shop management, however, the posters did not look as good as they had in the catalog from which the shop had ordered them.  Is the sporting goods shop legally entitled to reject the posters?

•(A)   No, because the nonconformity does not materially alter the value of the posters to the sporting goods shop.

•(B)   No, because the publisher must be given an opportunity to cure the nonconformity before the sport­ing goods shop can reject the posters.

•(C) Yes, because the posters do not conform to the contract.

•(D)   Yes, because the publisher has breached an implied warranty of fitness for a particular purpose.

C

•A buyer orders 100 widgets for $10,000.  When the widgets arrive, he discovers that one of them is broken in the box.  He has found another source that will sell him 100 widgets for $9,600, so he figures he can reject the widgets, buy them from the other source, and still come out ahead.  He asks you for advice.  Can he rightfully reject the widgets?

•A.  Yes, because the goods fail to conform to the contract.

•B.  Yes, because the seller has materially breached.

•C.  No, because the seller did not breach.

•D.  No, because his rejection would not be in good faith.

D

•9.  A commercial buyer receives a shipment of goods from a seller and stores them without inspecting them.  Three months later, the buyer discovers a defect in the goods. The buyer immediately informs the seller that it is rejecting the goods and sends them back.  Is the rejection a rightful rejection?

•A.  Yes, because the buyer had a reasonable time to conduct an inspection.

•B.  Yes, because the buyer could revoke its acceptance.

•C.  No, because the buyer had accepted the goods.

•D.  No, because the buyer has waived its right to recover damages from the seller.

C

•.  A farmer ordered a complex irrigation pump system from a seller.  When the pump arrived, the farmer installed it and found that it did not work properly.  The farmer continued to try to get the pump to work and notified the seller of his efforts.   Finally, after the farmer had the pump for two weeks, he returned it to the seller.  The seller sued the farmer, claiming the attempted rejection was wrongful. Did the farmer wrongfully reject the pump?

•A.  Yes, because he had accepted it by keeping it for two weeks.

•B.  Yes, because the goods did not fail to conform to the contract.

•C.  No, because he had a reasonable period of time to inspect the goods.

•D.  No, because there was a material breach by the seller.

C

•.  A seller agrees to deliver 1,000 widgets by June 1.  The widgets are not tendered until June 8.  The buyer accepts delivery of the widgets and then informs the seller that it is seeking damages for the late delivery.  Assuming the buyer suffered some loss, is the buyer entitled to damages?

•A.  Yes, because the seller did not tender the widgets in conformity with the contract.

•B.  No, because the breach was immaterial.

•C.  No, because time is not of the essence.

•D.  No, because the buyer waived its rights by accepting the late delivery.

A

•Fixtures, Inc., in a signed writing, contracted with Apartments for the sale to Apartments of 50 identical sets of specified bathroom fixtures, 25 sets to be delivered on March 1, and the remaining 25 sets on April 1.  The agreement did not specify the place of delivery, or the time or place of payment.  Which of the following statements is correct?

•A.  Fixtures must tender 25 sets to Apartments at Apartments place of business on March 1, but does not have to turn them over to Apartments until Apartments pays the contract price for the 25 sets.

•B.  Fixtures has no duty to tender the 25 sets on March 1 at Fixtures place of business unless Apartments tenders the contract price for the 25 sets on that date.

•C.  Fixtures must deliver 25 sets on March 1, and Apartments must pay the contract price for the 25 sets within a reasonable time after their delivery.

D.  Fixtures must deliver 25 sets on March 1, but Apartments payment is due only upon the delivery of all 50 sets. 

B

•Same facts as the prior slide, but for this question only make the following assumptions.  On March 1, Fixtures tendered 24 sets to Apartments and explained, “One of the 25 sets was damaged in transit from the manufacturer to us, but we will deliver a replacement within 5 days.”  Which of the following statements is correct?

•A.  Apartments is entitled to accept any number of the 24 sets, reject the rest, and cancel the contract both as to any rejected sets and the lot due on April 1.

•B.  Apartments is entitled to accept any number of the 24 sets and to reject the rest, but is not entitled to cancel the contract as to any rejected sets or the lot due on April 1.

•C.  Apartments must accept the 24 sets but is entitled to cancel the rest of the contract.

D.  Apartments must accept the 24 sets and is not entitled to cancel the rest of the contract. 

D (no subst impairment)

•1.  Developer entered into a contract to purchase a large tract of commercial land from Owner.  The contract contained the following condition precedent: “Developer’s obligation to close is conditioned upon the city council granting a commercial zoning variance for the parcel by December 1.” In November, fearing a downturn in the real estate market, Developer secretly lobbied the city council to reject the variance, offering financial incentives to council members to vote against it.  Consequently, the city council denied the variance on November 20.  Developer now seeks to rescind the contract, claiming failure of a condition precedent.  Owner sues for breach of contract.  How should the court rule regarding the zoning variance condition?

•A. The condition is not excused because Developer had a First Amendment right to lobby the local government regardless of any private contractual obligations.

•B. The condition is not excused because the city council possessed absolute discretion to grant or deny the variance, meaning the non-occurrence of the condition was ultimately independent of Developer's actions.

•C. The condition is excused under the prevention doctrine because Developer wrongfully and in bad faith caused the non-occurrence of the condition precedent.

•D. The contract is rendered voidable by mutual mistake because neither party anticipated that the city council would reject the commercial variance application.

C

•T, the manager of a state fair, contracted with S, a renowned hog breeder, to exhibit S’s world champion animal, Megahawg, for three weeks of the annual fair, at the conclusion of which S would receive an honorarium of $300.  Two days before the opening of the fair, Megahawg took sick with boarsitus, a communicable disease among swine and, under applicable state quarantine laws, very probably could not be exhibited for at least a month.  Upon learning this, T can legally pursue which of the following courses of action with respect to his contract with S?

•A.  Suspend his own performance, demand assurances from S, and treat a failure by S to give them as an actionable repudiation.

•B.  Suspend his own performance and recover damages from S for breach of contract unless S at once supplies an undiseased hog as a substitute for Megahawg.

•C.  Terminate his own performance and treat Megahawg’s illness as discharging all remaining duties under the contract.

•D.  Terminate the contract, but only if he (T) seeks promptly to obtain for the exhibit a suitable substitute for Megahawg from another hog owner.

C

•The owner of a summer house entered into a written agreement with a plumber.  The contract contained a clause requiring all plumbing work to be completed by noon on June 1 and provided that the homeowner would pay the plumber $1,200 for his work.  The plumber began working on the job on May 28.  When he quit working for the day on the afternoon of May 29, half of the job was completed.  Later that evening, the house was swept away in a flash flood.  Which of the following best describes the obligations of the plumber and the homeowner after the flood?

•A.  Neither the plumber nor the homeowner is discharged from their obligations under the contract.

•B.  The homeowner is obliged to pay the plumber $1,200.

•C.  The plumber is discharged from his obligation but is entitled to recover from the homeowner the fair value of the work he performed prior to the flood.

•D.  Neither the plumber nor the homeowner has any further obligations.

C

•A builder contracted to build a house for a newly married couple.  Terms of the contract provided that the builder would receive the contract price when the building was fully completed.  Just when the builder had completed one-half of the structure, a tornado struck the area and demolished the building.  What is the builder entitled to recover from the couple under the contract?

•A.  Nothing.

•B.  One-half of the contract price.

•C.  One-half of the fair market value of what remains of the house.

•D. Cost of materials and reasonable labor costs.

A

•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?

•(A) No, because the engineer offered a reasonable substitute by offering to serve as an off-site consultant.

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

•(C) Yes, because the engineer breached the contract by disappointing the owner’s expectations.

•(D) Yes, because the engineer’s duty to perform was personal and absolute.

B

•Zeller contracted in writing to deliver to Baker 100 bushels of wheat on August 1 at $3.50 per bushel.  Because his suppliers had not delivered enough wheat to him by that time, Zeller on August 1 had only 95 bushels of wheat with which to fulfill his contract with Baker.  If Zeller tenders 95 bushels of wheat to Baker on August 1, and Baker refuses to accept or pay for any of the wheat, which of the following best states the legal relationship between Zeller and Baker?

•A.  Zeller has a cause of action against Baker because Zeller has substantially performed his contract.

•B.  Zeller is excused from performing his contract because of impossibility of performance.

•C.  Baker has a cause of action against Zeller for Zeller’s failure to deliver 100 bushels of wheat.

•D.  Baker is obligated to give Zeller a reasonable time to attempt to obtain the other five bushels of wheat.

C

•Computers, Inc. contracted in writing with Bank to sell and deliver to Bank a mainframe computer using a new type of magnetic memory, then under development but not perfected by Computers, at a price substantially lower than that of a similar computer using current technology.  The contract’s delivery term was “F.O.B. Bank, on or before July 31.”  After making the contract with Bank, Computers discovered that the new technology it intended to use was unreliable and that no computer manufacturer could yet build a reliable computer using that technology.  Computers thereupon notified Bank that it was impossible for Computers or anyone else to build the contracted-for computer “in the present state of the art.”  If Bank sues Computers for failure to perform its computer contract, the court will probably decide the case in favor of

•A.  Computers, because its performance of the contract was objectively impossible.

•B.  Computers, because a contract to build a machine using technology under development imposes only a duty on the builder to use its best efforts to achieve the result contracted for.

•C.  Bank, because the law of impossibility does not apply to merchants under the applicable law.

•D.  Bank, because Computers assumed the risk, in the given circumstances, that the projected new technology would not work reliably.

D

•.   A wins a prize, giving him free entry to next week’s NFL game between the Saints and the Titans.  A decides to travel to New Orleans to watch the game.  He purchases a non-refundable ticket from American Airlines.  Unfortunately, the game is cancelled due to a hurricane.  A no longer needs his ticket and therefore claims that his contract with American Airlines has been frustrated.  Which one of the following statements most accurately summarizes the legal position between A and American Airlines?

•A.  The contract has been frustrated on grounds of impossibility because there is no game for A to attend. 

•B.  The contract has been frustrated because A's sole purpose of entering the contract, which is to watch the game, has been destroyed. 

•C.  The contract has not been frustrated because the game does not form the common purpose of the parties. 

•D.  The contract has been frustrated on grounds of commercial impracticability because there is no game for A to attend. 

B

•A producer hired a violinist to play in an orchestra that was to leave on a 10-week tour.  The violinist turned down another job opportunity in order to accept the producer’s job offer.  One week after the start of the tour, the violist was hospitalized with a bad back and was unable to perform.  The producer hired another musician to take her part in the orchestra.  Four days later, the violinist recovered but the producer refused to allow her to rejoin the orchestra or to complete the tour.  She then sued the producer for breach of contract.  Which of the following is the violinist’s best legal theory?

•A. Her reliance on the job offered by the producer by declining another job opportunity created an estoppel against the producer.

•B. Her failure to perform with the orchestra for four days was not a material failure so as to discharge the producer’s duty to perform.

•C. Her performance with the orchestra for the four-day period was physically impossible.

•D. She was never told that an injury might jeopardize her continued employment with the orchestra.

B

•On August 1, Geriatrics, Inc., operating a "lifetime care" home for the elderly, admitted Ohlster, who was 84 years old, for a trial period of two months.  On September 25, Ohlster and Geriatrics entered into a written lifetime care contract with an effective commencement date of October 1. The full contract price was $20,000, which, as required by the terms of the contract, Ohlster prepaid to Geriatrics on September 25. Ohlster died of a heart attack on October 2.  In a restitutionary action, can the administrator of Ohlster's estate, a surviving sister, recover on behalf of the estate either all or part of the $20,000 paid to Geriatrics on September 25?

•(A) Yes, because Geriatrics would otherwise be unjustly enriched at Ohlster's expense.

•(B) Yes, under the doctrine of frustration of purpose.

•(C) No, because Ohlster's life span and the duration of Geriatrics' commitment to him was a risk assumed by both parties.

•(D) No, but only if Geriatrics can show that between September 25 and Ohlster's death it rejected, because of its commitment to Ohlster, an application for lifetime care from another elderly person.

C

•.  On June 1, Seller and Buyer contracted in writing for the sale and purchase of Seller’s cattle ranch (a large single tract), and to close the transaction on December 1.   For this question only, assume the following facts.  On October 1, Buyer told Seller, “I’m increasingly unhappy about our June 1 contract because of the current cattle market, and do not intend to buy your ranch unless I’m legally obligated to do so.”  If Seller sues Buyer on October 15 for breach of contract, Seller will probably

•A.  win, because Buyer committed a total breach by anticipatory repudiation on October 1.

•B.  win, because Buyer’s October 1 statement created reasonable grounds for Seller’s insecurity with respect to Buyer’s performance.

•C.  lose, because the parties contracted for the sale and conveyance of a single tract, and Seller cannot bring suit for breach of such a contract prior to the agreed closing date.

D.  lose, because Buyer’s October 1 statement to Seller was neither a repudiation nor a present breach of the June 1 contract

D

•.  Same facts as the prior slide, but for this question only, assume the following facts.  Buyer unequivocally repudiated the contract on August 1.  On August 15, Seller urged Buyer to change her mind and proceed with the scheduled closing on December 1.  On October 1, having heard nothing further from Buyer, Seller sold and conveyed his ranch to Rancher without notice to Buyer.  On December 1, Buyer attempted to close under the June 1 contract by tendering the full purchase price to Seller.  Seller rejected the tender.  If Buyer sues Seller for breach of contract, Buyer will probably

•A.  win, because Seller failed seasonably to notify Buyer of any pending sale to Rancher.

•B.  win, because Seller waived Buyer’s August 1 repudiation by urging her to retract it on August 15.

•C.  lose, because Buyer did not retract her repudiation before Seller materially changed his position in reliance thereon by selling the ranch to Rancher.

•D.  lose, because acceptance of the purchase price by Seller was a concurrent condition to Seller’s obligation to convey the ranch to Buyer on December 1.     

C

•.  On March 31, Selco and Byco entered into a written agreement in which Selco agreed to fabricate and sell to Byco 10,000 specially designed brake linings for a new type of power brake manufactured by Byco. The contract provided that Byco would pay half of the purchase price on May 15 in order to give Selco funds to "tool up" for the work; that Selco would deliver 5,000 brake linings on May 31; that Byco would pay the balance of the purchase price on June 15; and that Selco would deliver the balance of the brake linings on June 30.  On May 10, Selco notified Byco that it doubted that it could perform because of problems encountered in modifying its production machines to produce the brake linings. On May 15, however, Selco assured Byco that the production difficulties had been overcome, and Byco paid Selco the first 50 percent installment of the purchase price. Selco did not deliver the first 5,000 brake linings on May 31, or at any time thereafter; on June 10, Selco notified Byco that it would not perform the contract.  Which of the following correctly states Byco’s rights and obligations immediately after receipt of Selco’s notice on May 10?

•A.  Byco could treat the notice as an anticipatory repudiation, and had a cause of action on May 10 for breach of the entire contract. 

•B.  Byco could treat the notice as an anticipatory repudiation, and could sue to enjoin an actual breach by Selco on May 31.

•C.  Byco had no cause of action for breach of contract, but could suspend its performance and demand assurances that Selco would perform.

•D.  Byco had no cause of action for breach of contract, and was required to pay the installment of the purchase price due on May 15 to preserve its rights under the contract.

C

• Same facts as the prior slide. Which of the following is NOT a correct statement of the parties’ legal status immediately after Selco’s notice on June 10?

•A.  Byco has a cause of action for total breach of contract because of Selco’s repudiation, but that cause of action will be lost if Selco retracts its repudiation before Byco changes its position or manifests to Selco that Byco considers the repudiation final.

•B.  Byco can bring suit to rescind the contract even if it elects to await Selco’s performance for a commercially reasonable time.

•C.  Byco can await performance by Selco for a commercially reasonable time, but if Byco awaits performance beyond that period, it cannot recover any resulting damages that it reasonably could have avoided.

•D.  Byco has a cause of action for breach of contract that it can successfully assert only after it has given Selco a commercially reasonable time to perform.

D

• On September 1, Team and Legs form a contract under which Legs will play basketball for Team during the months January to April of the following year, and Team will pay Legs a salary of $1 million monthly, on the thirtieth day of each such month.  On September 15, Legs announces to Team that he will not, under any condition, play for Team, and that he will not report to work in January.  Team takes no action in response.  On January 1, Legs reports for play as required by his contract, announcing that he has changed his mind and that he will honor it after all.  Team Owner advises Legs that he is not welcome to play, that he will not be paid a sal­ary and that he is "fired."  Which party has an action against which party?

•A.  Team has an action against Legs for total breach, arising from the anticipatory repudiation Legs made on September 15.

•B.  Legs has an action against Team arising from Team Owner's declaration, on January 1, that Legs was "fired."

•C.  Each party has an action against the other because each has manifested an intention not to honor the relevant contractual obligations.

•D.  Neither party has an action against the other because each has behaved improperly as to the other.

B

•.  Same facts as the prior slide.  Assume that in response to Legs's September 15 announcement, Team, on December 31, hires another player to replace Legs.  On the next day, January 1, Legs reports for play as required by his contract.  Team Owner advises Legs that he is not welcome to play, that he will not be paid a salary and that he is "fired."  Which party has an action against which party?

•A.  Team has an action against Legs for total breach.

•B.  Legs has an action against Team for total breach.

•C.  Each party has an action against the other for total breach.

•D.  Neither party has an action against the other for breach.

A

•In March, a homeowner contracted with a buyer to sell his house for $280,000, with the purchase price to be paid and the deed to be delivered on July 1.  On May 1, the buyer wrote the homeowner a letter, stating that she has had second thoughts about buying the house, and she "won't pay the amount of money unless you repaint the house and fix up the yard."  If the homeowner wishes to treat the contract as breached:

•A. He may sue the buyer upon receipt of the letter.

•B. He must wait until July 1 to sue the buyer, the date on which the purchase price is to be paid.

•C. He must make a written demand to the buyer seeking adequate assurance of performance and wait a reasonable time for a response prior to filing suit.

•D. He cannot sue the buyer because the parties’ promises are executory at this stage.

A

•A homeowner and a local builder entered into a written contract that called for the builder to build a second story on to the top of the homeowner's one-story residence.  When scheduling conflicts arose, the builder asked the homeowner if they could substitute his buddy, an out-of-town builder who had comparable experi­ence and skills, to perform the local builder's part of the contract.  All of the parties agreed to the substitution.  Unfortunately, the out-of-town builder made a major blunder that will be quite expensive to correct.  Is the local builder liable to the homeowner for the cost of correcting the defect?

•A.  Yes, because the substitution in and of itself does not relieve the local builder of liability on the underlying contract.

•B.  Yes, because the local builder did not give any consideration on which to base a release.

•C.  No, because the local builder delegated his duties to the out-of-town builder.

•D.  No, because the local builder was discharged through a novation.

D

•.  A large wholesaler of European clothing sent out a circular to all of its customers advertising fine quality coats for sale at a price of $300 each when purchased in lots of 100 coats.  The circular also stated that payment for each lot was to be made in three $10,000 installments, the first payment due within 10 days of delivery and the subsequent installments within 40 and 70 days of delivery, respectively.  The day after receiving the circular, a retailer sent the wholesaler a standard order form with price, quantity, and delivery date terms filled in by the retailer, clearly indicating that the retailer was ordering one lot of 100 coats.  The wholesaler shipped the coats to the retailer, and they arrived on September 10.  The retailer accepted delivery of the coats and, on September 11, mailed to the wholesaler a check for $29,400.  The retailer enclosed a letter with the check stating, in relevant part, "By cashing the enclosed check in the amount of $29,400, we assume that you accept our standard policy of taking a 2% discount for early payment."  The wholesaler received the check on September 13, read the letter, and cashed the check the next day.  What is the legal effect of the wholesaler's cashing of the retailer's check?

•A.  The entire debt is discharged, because there has been an accord and satisfaction.

•B.  The entire debt is discharged because both parties are merchants.

•C.  The retailer remains liable for the unpaid portion of the debt, because the discount provision was never accepted as part of the contract.

•D.  The retailer remains liable for the unpaid portion of the debt because the check did not state "payment in full" or words to that effect.

A

•A nephew owed his uncle $19,000, which was due on January 1.  On January 15, the nephew offered to pay the uncle $18,000 if he would agree to accept the amount in full satisfaction of the $19,000 debt.  The uncle agreed and the nephew paid him the $18,000.  If the uncle then sues the nephew for $1,000, the uncle will:

•A. Win, because the nephew had an obligation to pay $19,000 on January 1.

•B. Lose, because of the uncle’s agreement to accept $18,000.

•C. Lose, because there was an accord and satisfaction.

•D. Lose, because the uncle agreed to the $18,000 after the January 1 due date.

A

•Jenny, a general contractor, advertised in a trade publication that she planned to bid on the construction of a new building to be located in the Civic Mall.  The advertisement welcomed bids from subcontractors to perform various functions, such as plumbing, electrical work, and masonry.  The lowest plumbing bid was from Plunger, who bid $10,000.  Jenny used Plunger's bid in preparing her general bid.  At 2 p.m. on June 22, Jenny submitted her general bid. At 3 p.m. Plunger called her and said, “I'm sorry, Jenny, but I made a mistake on that bid I submitted to you; I can't possibly do that plumbing work for a dime less than $12,000.”  Jenny told him, “Look, you've done a lot of good work for me in the past and we all make mistakes.  I'll just forget you ever made that $10,000 bid.”  Plunger effusively thanked Jenny.  Jenny then hired Flusher to do the plumbing work for $12,000.  She then sued Plunger for damages. Jenny will:

•A.  Win, because there was no additional consideration to support a release.

•B.  Win, because the Statute of Frauds applies to the agreement.

•C.  Lose, because a mutual rescission has taken place.

•D.  Lose, because Plunger detrimentally relied on the release.

C

•Alpha and Beta entered into a written agreement in which Alpha agreed to sell and Beta agreed to buy a tract of land.  After they signed the agreement but before closing, they got into an argument.  Alpha decided the price was too low and Beta decided the price was too high.  As a result, they both decided to cancel the contract.  Later Beta changed his mind and decided he would pay Alpha the contract price for the property.  He contacted Alpha who refused to sell to him at any price.  If Beta brings suit against Alpha for specific performance, Alpha’s best defense is that

•(A) Beta did not give consideration for the original agreement.

•(B) Beta did not retract his waiver before any detrimental reliance by Alpha.

•(C) The contract was discharged by intervening illegality.

(D) The contract was discharged by mutual rescission.

D

•.  A farmer orally agreed to lease a tractor from a company for $500.  However, when the company’s secretary put the agreement into writing she accidentally typed in a charge of $300.  Both the company and the farmer signed the contract without noticing the mistake in the price.  When it came time for payment, the farmer refused to pay more than $300 for the rental of the tractor.  If the company brings an action for the difference between the payment as orally agreed and as memorialized in the contract, which of the following, if proved, would most benefit the company:

• A. The parties made a mistake in integration.

• B. The writing was only a partial integration.

• C. The writing was intended as a sham.

• D. The contract is unconscionable.

A

•.  On April 1, Owner offered Buyer the right to purchase Greenacre for $100,000; Owner promised to hold the offer open for 30 days.  On April 20, Owner, having received no communication from Buyer, sold and conveyed Greenacre to Citizen for $120,000.  On April 21, Owner received a letter from Buyer stating, "I am hereby accepting your offer to sell Greenacre and am prepared to close whenever you’re ready." Assume that Buyer prevails in a suit against Owner.  Which of the following is Buyer entitled to recover?

•A.  Nominal damages only, because the remedy of specific performance was not available to Buyer.

•B.  The fair market value, if any, of an option to purchase Greenacre for $100,000.

•C.  $100,000, which represents the contract price.

•D.  The amount, if any, by which the fair market value of Greenacre on the date of Owner’s breach exceeded $100,000.

D

•.  Kontractor agreed to build a power plant for a public utility.  Subbo agreed with Kontractor to lay the foundation for $200,000.  Subbo supplied goods and services worth $150,000, for which Kontractor made progress payments aggregating $100,000 as required by the subcontract.  Subbo then breached by refusing unjustifiably to perform further.  Kontractor reasonably spent $120,000 to have the work completed by another subcontractor.  Subbo sues Kontractor for the reasonable value of benefits conferred, and Kontractor counterclaims for breach of contract.  Which of the following should be the court’s decision?

•A.  Subbo recovers $50,000, the benefit conferred on Kontractor for which Subbo has not been paid.

•B.  Subbo recovers $30,000, the benefit Subbo conferred on Kontractor minus the $20,000 in damages incurred by Kontractor.

•C.  Kontractor recovers $20,000, the excess over the contract price that was paid by Kontractor for the performance it had bargained to receive from Subbo.

•D.  Neither party recovers anything, because Subbo committed a material, unexcused breach and Kontractor received a $50,000 benefit from Subbo for which Subbo has not been paid.

C

•A popular singer expressed interest in performing in a theater producer’s musical production.  The producer and the singer agreed that there would be no enforceable contractual obligations between them until they had entered into a final, signed contract.  They then began negotiating the terms of the contract.  While the parties were negotiating, the producer began to spend money on the production.   When the parties were unable to agree on the terms of a final contract, the producer made reasonable but unsuccessful efforts to hire another singer before abandoning the production.  If the producer sues the singer, what will he likely recover?

•A.  Expectation damages in the form of the profits that the production would have made if it had been performed.

•B.  Reliance damages in the form of the actual expenses the producer incurred while negotiating with the singer.

•C.  Restitution for any harm done to the producer’s reputation when the production was abandoned.

•D.  Nothing, because it was not reasonable for the producer to expect to be reimbursed for expenses incurred when he knew that the singer was not obligated until there was a final, signed agreement.

D

•.  A contractor spends $10,000 preparing to build a deck for a homeowner in reliance on a contract.   The homeowner breaches before work begins.  If the homeowner proves with reasonable certainty that the contractor would have suffered a $4,000 net loss had the contract been fully performed (i.e., a losing contract), what is the contractor's maximum recovery for reliance damages?

•A) $14,000

•B) $10,000

•C) $6,000

D) $0

C

•Which of the following is an incorrect interpretation of the Uniform Commercial Code (UCC) when a term is left open in a contract for the sale of goods?

•A. The place for delivery is the seller's place of business if the contract has no provision addressing the place for delivery.

•B. A "reasonable price" can be supplied at the time of delivery for a contract with an open price provision.

•C. Payment is due at the time and place at which the buyer is to receive the goods if the payment terms are missing from the contract.

•D. A "reasonable quantity" shall be sold and delivered to the buyer at the time and place the contract specifies for delivery.

D

•.  Pursuant to a contract between them, a seller ships a widget to the buyer.  The contract price of the widget is $10,000.  After inspection, the buyer determines that the widget appears to be defective.  The buyer incurs expenses of $500 in hiring an expert to inspect the widget, and after receiving the expert’s report that the widget is damaged beyond repair, the buyer incurs an expense of $300 shipping it back to the seller.  The buyer then pays a commission of $200 to a broker to find a replacement widget, and buys one at the cost of $11,000.  Which of the expenses can the buyer not recover as incidental damages?

•A) The $500 expense to have an expert inspect the widget.

•B) The $300 expense of shipping the widget back to the seller.

•C) The $200 expense of paying a broker to find a replacement widget.

•D) The $1,000 difference between the price of the original widget and the replacement widget.

D

•Seller is a homeowner who has a boat for sale.  Buyer 1 contracts to buy the boat for $12,587.  Before the date for delivery, Buyer 1 breaches.  Seller puts an ad in the paper and a week after the breach, Seller is able to sell the boat to Buyer 2 for $12,587.  Of the following expenses incurred by Seller, which one is not recoverable as incidental damages?

•A) $20 for the ad in the paper.

•B) $250 to consult an attorney about Buyer 1’s breach.

•C) $10 for insurance costs between the time of the breach and the resale.

•D) $20 for storage costs between the time of the breach and the resale.

B

•Swatter, a baseball star, contracted with the Municipal Symphony Orchestra, Inc., to perform for $5,000 at a children's concert as narrator of "Peter and the Wolf."  Shortly before the concert, Swatter became embroiled in a highly publicized controversy over whether he had cursed and assaulted a baseball fan.  The orchestra canceled the contract out of concern that attendance might be adversely affected by Swatter's appearance.  Swatter sued the orchestra for breach of contract.  His business agent testified without contradiction that the cancellation had resulted in Swatter's not getting other contracts for performances and endorsements. The trial court instructed the jury, in part, as follows: "If you find for the plaintiff, you may award damages for losses which at the time of contracting could reasonably have been foreseen by the defendant as a probable result of its breach.  However, the law does not permit recovery for the loss of prospective profits of a new business caused by breach of contract."  On Swatter's appeal from a jury verdict for Swatter, and judgment thereon, awarding damages only for the $5,000 fee promised by the orchestra, the judgment will probably be

•A.  affirmed, because the trial court stated the law correctly.

•B.  affirmed, because the issue of damages for breach of contract was solely a jury question.

•C.  reversed, because the test for limiting damages is what the breaching party could reasonably have foreseen at the time of the breach.

•D.  reversed, because under the prevailing modern view, lost profits of a new business are recoverable if they are established with reasonable certainty.

D

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

•A.  Time was not of the essence in the Mechanic-Textiles contract.

•B.  Mechanic had no reason to foresee on March 1 that Knitwear would suffer consequential damages in the amount of $25,000.

•C.  By entering into the Knitwear contract while knowing that its knitting machine was being repaired, Textiles assumed the risk of any delay loss to Knitwear.

•D.  In all probability, the liquidated damages paid by Textiles to Knitwear are not the same amount as the actual damages sustained by Knitwear in consequence of Textiles’ late delivery of the cloth.

B

•A company agreed to employ a businesswoman for two years as a vice president at a salary of $250,000 per year.  After six months, the company, without cause, fired the businesswoman.  Which of the following statements best describes the businesswoman's rights after being fired?

•(A) She can recover the promised salary for the remainder of the two years if she remains ready to work.

•(B) 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.

•(C) She can recover the promised salary for the remainder of the two years regardless of her efforts to mitigate damages.

•(D) She can get specific performance of her right to serve as a vice president of the company for two years.

•

•If the businesswoman spent $300 traveling to an interview for a comparable job but was not chosen for that job, could she recover the $300 in addition to her other damages?

•

•If the company hired the businesswoman as a vice president but did not agree to a two-year term, what damages could she recover?

B

yes. incidental

none

•.  A builder contracted with a landowner to construct a house on the landowner’s property for a contract price of $100,000.  The landowner committed a total breach of the contract at a time when the builder had already incurred costs of part performance of $30,000 and would have to spend an additional $60,000 to finish the job.  The builder is entitled to recover expectation damages in the amount of:

•A) $10,000.

•B) $30,000.

•C) $40,000.

•D) $60,000.

C

•The owner of an apartment building contracted with a painter to paint the porches of the apartments for $5,000. The contract was specifically made subject to the owner’s good faith approval of the work. The painter finished painting the porches. The owner inspected the porches and believed in good faith that the painter had done a bad job. The painter demanded payment, but the owner told him that the paint job was poor and refused to pay. The painter pleaded that he was desperately in need of money. The owner told the painter that she would pay him $4,500, provided he repainted the porches. The painter reluctantly agreed, and the owner gave the painter a check in the amount of $4,500. The painter went to his bank, indorsed the check “under protest” and signed his name, then deposited the check in his account. He never returned to repaint the porches.  The painter sues the owner for $500, which he believes is still owed to him on his contract to paint the porches. Will he prevail?

•A) Yes, because he indorsed the check “under protest.”

•B) Yes, but only if he repaints the porches.

•C) Yes, because he performed the contract by painting the porches the first time.

•D) No, even if he repaints the porches.

D

•.  The proprietor of a food brokerage entered into oral negotiations with a manufacturer of gourmet food products for restaurants and select retail outlets. The proprietor wished to secure an exclusive distributorship for the manufacturer’s products in the six New England states. At the end of the first stage of oral negotiations, the parties had come to an agreement on the major points, and only a few minor points of disagreement remained.  Both, however, were anxious to begin distribution of the food products in New England, and the manufacturer assured the proprietor, “Don’t worry about it; we’ll work these things out.”  Assuming from this that he would be the New England distributor for the food products, the proprietor leased larger facilities, bought a number of trucks, and hired new workers.  Shortly thereafter, the manufacturer informed the proprietor that another distributor, and not the proprietor, would receive the New England distributorship.  If the proprietor prevails in a suit against the manufacturer, it will most likely be because the court applies which of the following theories?

•A)  Implied-in-fact contract.

•B)  Promissory estoppel.

•C)  Unjust enrichment.

•D)  Quasi-contract.

B

•S and B enter into a final, fully integrated contract whereby B agrees to purchase 10,000 widgets from S.  If a dispute over the contract arises and litigation ensues, which of the following types of extrinsic evidence is LEAST likely to be admitted by the court?

•A.  Evidence of an oral agreement the parties reached prior to signing the contract.

•B.  Evidence of the parties’ understanding of the meaning of an ambiguous term.

•C.  Testimony concerning a condition precedent to the contract.

•D.  Testimony concerning the parties’ performance of similar contracts over the past five years.

A

•Mural, a wallpaper hanger, sent Gennybelle, a general contractor, this telegram: “Will do all paperhanging on new Doctors’ Building, per owner's specs, for $14,000 if you accept within reasonable time after main contract awarded.” /s/ Mural.  Three other competing hangers sent Gennybelle similar bids in the respective amounts of $18,000, $19,000, and $20,000.  Gennybelle used Mural's $14,000 figure in preparing and submitting her own sealed bid on Doctors' Building.  Before the bids were opened, Mural truthfully advised Gennybelle that the former's telegraphic sub-bid had been based on a $4,000 computational error and was therefore revoked.  Shortly thereafter, Gennybelle was awarded the Doctors' Building construction contract and subsequently contracted with another paperhanger for a price of $18,000.  Gennybelle now sues Mural to recover $4,000.  Which of the following, if proved, would best support Mural's defense?

•(A) Gennybelle gave Mural no consideration for an irrevocable sub-bid.

•(B) Mural's sub-bid expressly requested Gennybelle's acceptance after awarding of the main contract.

•(C) Even after paying $18,000 for the paperhanging, Gennybelle would make a net profit of $100,000 on the Doctors‘ Building contract.

•(D) Before submitting her own bid, Gennybelle had reason to suspect that Mural had made a computational mistake in figuring his sub-bid.

D

•Ven owned Goldacre, a tract of land, in fee simple.  Ven and Pur entered into a written agreement under which Pur agreed to buy Goldacre for $100,000, its fair market value.  The agreement contained all the essential terms of a real estate contract to sell and buy, including a date for closing.  The required $50,000 down payment was made.  The contract provided that in the event of Pur’s breach, Ven could retain the $50,000 deposit as liquidated damages.  Before the date set for the closing on the contract, Pur died.  On the day that Addy was duly qualified as administrator of the estate of Pur, which was after the closing date, Addy made demand for return of the $50,000 deposit.  Ven responded by stating that he took such demand to be a declaration that Addy did not intend to complete the contract and that Ven considered the contract at an end.  Ven further asserted that Ven was entitled to retain, as liquidated damages, the $50,000.  The reasonable market value of Goldacre had increased to $110,000 at that time. Addy brought an appropriate action against Ven to recover the $50,000.  In answer, Ven made no affirmative claim but asserted that he was entitled to retain the $50,000 as liquidated damages as provided in the contract.  In such lawsuit, judgment should be for

•A.  Addy, because the provision relied upon by Ven is unenforceable.

•B.  Addy, because the death of Pur terminated the contract as a matter of law.

•C.  Ven, because the court should enforce the express agreement of the contracting parties.

•D.  Ven, because the doctrine of equitable conversion prevents termination of the contract upon the death of a party.

A

•The Balboa Custom Furniture Company sells fine custom furniture.  It has been encountering difficulties lately with some customers who have breached their contracts after the furniture they have selected has been customized to their order or the fabric they have selected has been cut or actually installed on the piece of furniture purchased.  The company therefore wishes to resort to a liquidated damages clause in its sales contract to encourage performance or provide an acceptable amount of damages.  Regarding Balboa‘s contemplated resort to a liquidated damages clause, which of the following is correct?

•A.  Balboa may not use a liquidated damages clause since it is a merchant and is the preparer of the contract.

•B.  Balboa can simply take a very large deposit which will be forfeited if performance by a customer is not made for any reason.

•C. The amount of the liquidated damages stipulated in the contract must be reasonable in light of the anticipated or actual harm caused by the breach.

•D.  Even if Balboa uses a liquidated damages clause in its sales contract, it will nevertheless have to establish that the liquidated damages claimed did not exceed actual damages by more than 10%. 

C

In an action by plaintiff, who was struck in a crosswalk by a car driven by defendant, plaintiff wishes to offer evidence that defendant is a wealthy person.  Which of the following statements is most likely correct?

A.The evidence might be relevant if plaintiff's action is brought on an intentional tort theory and plaintiff seeks punitive damages.

B.Because a wealthy person is not likely to be concerned about the potential financial impact of a tort judgment against her, the evidence is relevant if plaintiff's action is brought on a negligence theory.

C.Regardless of the substantive theory supporting plaintiff's action, the evidence is relevant.

D.Regardless of the substantive theory supporting plaintiff's action, the evidence is irrelevant.

A

•.  While driving his pickup truck with a friend riding in the open bed, the driver swerved, throwing his friend to the pavement.  The friend sustained severe injuries.  The friend had often ridden in the open bed of the truck, and on some of those occasions the driver had swerved to frighten his friend.  The friend sued the driver to recover both compensatory damages for his injuries and punitive damages.  Which cause of action would NOT permit the friend to recover punitive damages?

•A.  Assault.

•B.  Battery.

•C.  Negligence.

D.  Recklessness.

C

•.  Paul is a law student and needs some extra cash.  He puts up posters saying that he wants to sell his skis.  Dorothy agrees to buy them for $200.  She never comes up with the money, so she breaches their contract.  How much is Paul most likely to recover, assuming the contract price is essentially the same as the fair market value and that it is not too hard to sell skis this time of year?

•A. $200.

•B. $200, with a possibility of large punitive damages for willful breach.

•C. Paul will probably be limited to specific performance.

•D. Probably close to nothing.

D

•The owner of a seaside cottage had leased the cottage to a renter for the past three summers.  Last year, on October 1, the owner sent the renter a letter stating: "Because you have been such a great tenant, I will rent you the seaside cottage on the same terms as last year.  I need your answer by June 1."  The renter, uncertain as to when he would be taking his annual seaside vacation, decided to put the letter aside for the time being, intending to respond to it by June 1.  On May 15, the owner received an offer from the renter's cousin to rent the seaside cottage at a higher price than the renter paid the prior year.  The owner accepted.  On May 20, the renter telephoned the owner and said, "My cousin tells me that he has rented the seaside cottage from you.  However, you said that I had until June 1 to decide, and even though your rents are too high, I have decided I want the cottage for the summer.”  The owner replied that he had already rented the cottage to the cousin.  The renter filed a lawsuit seeking to enforce the contract.  Will the renter succeed in his enforcement lawsuit?

•A.  Yes, because the renter relied on the owner's statement that he needed an answer by June 1.

•B.  Yes, because the renter contacted the cottage owner on May 20.

•C.  No, because the renter’s response was not the mere image of the offer and constituted a counter-offer.

•D.  No, because the owner had already rented the cottage to a different tenant and the renter was aware of this fact before he attempted to accept the offer.

D

•The owner of a personal watercraft put an ad for its sale in the paper. Her neighbor saw the ad and told her that he wanted to buy the watercraft but had to arrange for financing. The owner suggested that they write a contract for sale then and there so that they would not have to waste any time while he got his financing. They orally agreed that the contract would not become binding unless the neighbor obtained financing, but the written contract did not mention this and appeared to be a fully integrated document.  The neighbor could not obtain financing and the owner brings suit to enforce the written contract.  Who will prevail?

•A.  The owner, because the contract was a fully integrated writing.

•B.  The owner, because parol evidence is not allowed to contradict a writing.

•C.  The neighbor, because the oral agreement that the contract would not be binding if the neighbor did not get financing was made contemporaneous with the writing.

•D.  The neighbor, because obtaining financing was a condition precedent.

D

•A licensed doctor saw an unconscious pedestrian bleeding and lying on the shoulder of a highway. Two years earlier, she had witnessed a similar scene and failed to stop. The earlier pedestrian had wound up dying, and the doctor had promised that victim's wife that if she ever came upon a similar victim, she would stop to help. True to her word, the doctor stopped her car, dashed to the pedestrian's side, and frantically (yet competently) rendered emergency medical care. The pedestrian was stabilized because of the doctor's quick actions and survived. He eventually made a full recovery. The best argument for the doctor recovering the reasonable cost of her medical care from the pedestrian is: 

•A.  There was an implied-in-fact contract.

•B.  There was an implied-in-law contract.

•C.  The doctor acted under extreme duress.

•D.  The doctor had a preexisting duty to a third party.

B

•.  Kontractor agreed to build a power plant for a public utility.  Subbo agreed with Kontractor to lay the foundation for $200,000.  Subbo supplied goods and services worth $150,000, for which Kontractor made progress payments aggregating $100,000 as required by the subcontract.  Subbo then breached by refusing unjustifiably to perform further.  Kontractor reasonably spent $120,000 to have the work completed by another subcontractor.  Subbo sues Kontractor for the reasonable value of benefits conferred, and Kontractor counterclaims for breach of contract.  Which of the following should be the court’s decision?

•A.  Subbo recovers $50,000, the benefit conferred on Kontractor for which Subbo has not been paid.

•B.  Subbo recovers $30,000, the benefit Subbo conferred on Kontractor minus the $20,000 in damages incurred by Kontractor.

•C.  Kontractor recovers $20,000, the excess over the contract price that was paid by Kontractor for the performance it had bargained to receive from Subbo.

•D.  Neither party recovers anything, because Subbo committed a material, unexcused breach and Kontractor received a $50,000 benefit from Subbo for which Subbo has not been paid.

•

•If Kontractor reasonably spent only $75,000 to have the work completed by another subcontractor, how much could Subbo recover as restitution?

C

25,000 received

•Ozzie owned and occupied Blackacre, which was a tract of land improved with a one-family house.  His friend, Victor, orally offered Ozzie $50,000 for Blackacre, the fair market value, and Ozzie accepted.  Because they were friends, they saw no need for attorneys or written contracts and shook hands on the deal.  Victor paid Ozzie $5,000 down in cash and agreed to pay the balance of $45,000 at an agreed closing time and place.  Before the closing, Victor inherited another home and asked Ozzie to return his $5,000.  Ozzie refused, and, at the time set for the closing, Ozzie tendered a good deed to Victor and declared his intention to vacate Blackacre the next day.  Ozzie demanded that Victor complete the purchase. Victor refused.  In an action by Victor against Ozzie to recover his $5,000 down payment, Victor will

•(A) prevail because the agreement was oral.

•(B) lose because Ozzie may keep the $5,000 as liquidated damages.

•(C) prevail because Victor unexpectedly inherited another home.

•(D) lose because Ozzie tendered a good deed to Victor on the day set for closing.

A

•.  Seller and Buyer execute an agreement for the sale of real property.  Buyer dies before closing.  As a result, Seller informs Buyer’s estate that the contract is now terminated.  Which of the following is correct?

•(A) Buyer’s heirs may specifically enforce the agreement.

•(B) Seller has the right to return the down payment and cancel the contract.

•(C) Death terminates the agreement.

•(D) Buyer’s estate has the right to recover the down payment and cancel the contract.

A

•A seller agrees to sell a buyer a particular Rembrandt painting that the buyer intends to hang in her living room.  The seller breaches and the buyer sues for specific performance.  Is specific performance available to the buyer under Article 2?

•A.  Yes, because the goods are unique.

•B.  Yes, because this is an example of “other proper circumstances.”

•C.  No, because the buyer can find another Rembrandt on the market.

•D.  No, because this is not an Article 2 transaction as the buyer is not a merchant.

A

•.  A distributor of electric toy trains and a hobby shop owner entered into a written contract providing that the distributor will tender to the shop owner four dozen of a popular electric train set at a price of $100 apiece, to be delivered no later than October 31, to take advantage of the holiday shopping season. The shop owner chose to order from this distributor because its price for the train set was lower than that of other distributors. Shortly after the shop owner placed his order, the distributor raised its prices due to a sudden surge in popularity of that train set. Because the distributor did not have enough train sets to accommodate everyone due to the surge of orders, it decided to deliver train sets only to those buyers who had ordered them at the increased price.  The distributor notified the shop owner that it would not deliver the train sets it ordered.  The shop owner filed an action to force the distributor to deliver the train sets at the agreed-upon price.  Will the court compel the distributor to deliver the train sets to the shop owner?

•A. No, because a contract for the sale of goods is not subject to specific performance.

•B.  No, because the shop owner can buy them from another distributor.

•C.  Yes, because the shop owner will not be able to buy them from another source at the contract price.

•D.  Yes, because time is of the essence.

B

•A homeowner contracted with a local builder, a sole proprietorship, for the builder to personally build a wooden deck onto the back of her house.  The contract called for half of the contract price of $20,000 to be paid to the contractor before he began work and the other half to be paid to him when the job was completed.  The contractor began the work but, partway through the job, he got an offer for a rush job that paid better and abruptly quit.  The homeowner sues the contractor for specific performance.  Will she prevail?

•A.  Yes, because there has been a novation.

•B.  Yes, because the contract between the parties was valid and the contractor had no legal justification for abruptly quitting.

•C.  No, because by not paying the contractor for the second half of the job, the homeowner has not satisfied all of her conditions under the contract.

•D.  No, because the contract is for personal services.

D

•.  One Saturday, the owner of an art gallery and her friend were discussing art after the friend had helped the owner move some furniture in her home. The friend mentioned that he was very fond of a particular artist. The gallery owner asked her friend if he would like to buy a painting by the artist, entitled "Tears of a Clown," recently consigned to the gallery. The friend said that he would love it, but he only had $2,700. The gallery owner told her friend that she would let him have the painting for that price. The friend knew that the painting was priced at $7,000. He immediately wrote out a check for $2,700 and gave it to the gallery owner, who told him to visit the gallery on Monday to pick up the painting. On Sunday, a salesperson at the gallery sold "Tears of a Clown" to a gallery customer. Neither the sales­person nor the customer knew of the agreement between the gallery owner and her friend. The customer took the painting with him on Sunday. When the friend arrived at the gallery on Monday, the painting was gone.  Can the friend obtain specific performance from the gallery owner?

•A.  Yes, because there was a bargained-for exchange of promises between the friend and the gallery owner.

•B.  Yes, because the friend's assistance to the gallery owner in moving her furniture should be considered part of the quantum of adequate consideration.

•C.  No, because the painting was sold to a bona fide purchaser for value and enforcement against the gallery owner is no longer feasible.

•D.  No, because the gallery owner's promise was essentially a gift to her friend that she was free to revoke.

C

•.  A large dairy regularly supplied milk to local grocery stores.  A large grocery store located in the same city as the dairy had not previously done business with the dairy.  It sent a written order to the dairy for 50 cases of homogenized whole milk at the wholesale market price of $10 per case for prompt shipment.  The warehouse clerk at the dairy facility negligently shipped 50 cases of low-fat milk instead of the grade that was ordered.  When the milk is delivered at the grocery store by a common carrier, which of the following is the most appropriate statement of the parties' rights and duties?

•A.  The store must accept the delivery, even though it is nonconforming, because a contract was formed when the dairy shipped it.

•B.  A contract was formed but breached by the dairy when it shipped nonconforming goods, which the store has no obligation to accept.

•C.  Because the goods are nonconforming, the store can treat the delivery as a counteroffer and refuse acceptance.

•D.  The dairy's shipment of the milk is a counteroffer, but the store is under an obligation to reship it to the dairy at the dairy's expense if it decides not to accept the delivery.

B

.  A manufacturer of electronic game cartridges for use with other manufacturers' electronic game systems received a letter from a buyer for a large toy store chain ordering two 100-unit lots of a particular game cartridge from the manufacturer's catalog.  The buyer's letter stated that the cartridges must be compatible with two specified game systems.  The manufacturer made no warranties of any type regarding the compatibility of the cartridges with any game systems, but both parties reasonably believed that the cartridges were compatible with both game systems.  On receiving the shipment, the buyer discovered that the cartridges did not work with one of the game systems.  The buyer has made full payment to the manufacturer.  Which of the following is the most appropriate remedy for the buyer?

•A.  Specific performance of the contract, requiring the manufacturer to ship two 100-unit lots of cartridges compatible with both game systems.

•B.  Rescission of the contract.

•C.  Restitution of the purchase price of the two lots.

•D.  Both B and C.

D

•A student offered to pay a piano teacher $200 for 10 one-hour lessons.  The piano teacher responded, "I accept; however, you must give me 24 hours' notice if you intend to cancel a lesson or you will be charged for that lesson."  What effect does the teacher's inclusion of the cancellation policy have on the student's offer?

•A) The teacher's inclusion of the cancellation policy constitutes an acceptance of the student's offer.

•B) The teacher's inclusion of the cancellation policy constitutes a rejection of the student's offer and the making of a new offer.

•C) The effect of the teacher's inclusion of the cancellation policy will depend on whether, in light of all of the facts and circumstances, the inclusion of the cancellation policy materially altered the offer.

•D) The teacher's inclusion of the cancellation policy constitutes an acceptance of the student's offer and will be effective provided the student does not expressly object to the policy's inclusion.

B