CONTRACTS II SPRING 2026

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

(A) $4,000.

(B) $4,200.

(C) $10,000.

(D) $10,200.

(B) $4,200.

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

(A) No, because the contract was unenforceable, since the manufacturer had not committed to purchase a definite quantity of lumber.

(B) No, because the supplier had reasonable grounds for insecurity and was therefore entitled to cancel the contract and refuse to make any future deliveries.

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

(D) Yes, because the supplier was not entitled to condition resumption of deliveries on the receipt of financial status information.

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

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

(A) No, because the oral modification was in good faith and therefore enforceable.

(B) Yes, because a discharge of a contractual obligation must be in writing.

(C) Yes, because the parol evidence rule bars proof of the oral modification.

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

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

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

(A) No, because the buyer had the opportunity to have the car inspected by his own mechanic and declined to do so.

(B) No, because the dealer did not affirmatively assert that the car had not been in an accident.

(C) Yes, because the contract was unconscionable.

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

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

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

(A) No, because a contract modification is not binding on an assignee who had no knowledge of the modification.

(B) No, because although the creditor waived the condition of payment on the first of the month, the bank reinstated it.

(C) Yes, because although the creditor waived the condition of payment on the first of the month, the creditor could not assign to the bank his right to reinstate that condition.

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

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

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

(A) $2 per set, representing the difference between the cost of manufacture and the price the buyer agreed to pay.

(B) $6 per set, representing the difference between the cost of manufacture and the salvage price.

(C) $8 per set, representing the lost profits plus the unrecovered cost of manufacture

(D) Nominal damages, because the seller failed to resell the goods by public auction.

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

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

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

(B) No, because the position the chef took with the hotel was not substantially comparable to the one she had agreed to take with the bakery.

(C) Yes, because the chef’s acceptance of a permanent position meant that she agreed to leave the bakery only after a reasonable time.

(D) Yes, because the chef’s failure to give the bakery a chance to match the salary offered by the hotel breached the implied right of first refusal.

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

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

(A) No, because the debtor made no promise not to plead the statute of limitations as a defense.

(B) No, because there was no consideration for the debtor’s promise.

(C) Yes, because the debtor’s promise provided a benefit to the lender.

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

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

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

(A) The agreement to extend the time for payment was not in writing.

(B) The dealer could not delegate its duty to pay to the buyer.

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

(D) The dealer’s conduct was an attempted novation that the bank could reject

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

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

(A) No, because buyers are generally not entitled to recover consequential damages.

(B) No, because the bottling company’s acceptance of the goods also constituted an acceptance of the terms included in the wholesaler’s acknowledgment.

(C) Yes, because the disclaimer of consequential damages is unconscionable.

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

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

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

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

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

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

(B) $55,000, because damages of that amount were within the contemplation of the parties at the time they contracted.

(C) Nominal damages only, because the mother was not injured by the breach and the tutor made no promise to the son.

(D) Nothing, because neither the mother nor the son took steps to avoid the consequences of the tutor’s breach.

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

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

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

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

(A) No, because the amount of the loan was less than $5,000.

(B) No, because the mother’s letter satisfies the statute-of-frauds requirement.

(C) Yes, because the mother’s promise to the uncle was oral.

(D) Yes, because the nephew’s promise to the uncle was oral.

(B) No, because the mother’s letter satisfies the statute-of-frauds requirement.

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

(A) There was a contract as of May 3.

(B) There was a contract as of May 5.

(C) There was a contract as of May 6.

(D) There is no contract.

(C) There was a contract as of May 6.

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

(A) No, because an express condition will be excused only to avoid forfeiture.

(B) No, because the contract called for a loan at an interest rate not to exceed 10% and it could not be modified without the consent of the seller.

(C) Yes, because the buyer detrimentally changed position in reliance on the seller’s promise to convey.

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

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

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

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

(B) No, because the parties attached materially different meanings to “daily service,” and therefore no contract was formed.

(C) Yes, because the parol evidence rule will not permit the innkeeper to prove the meaning he attached to “daily service.”

(D) Yes, because the trade usage will control the interpretation of “daily service.”

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

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

(A) $10,000, the contract price.

(B) $14,000, the contract price plus $4,000 for the medical expenses incurred because the homeowner refused to pay.

(C) $12,000, the contract price plus $2,000, the bargain that was lost because the carpenter could not pay cash for the car on June 1.

(D) $13,000, the amount the homeowner was enriched by the carpenter’s services.

(A) $10,000, the contract price.

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

(A) No, because the private detective failed to notify the authorities that he had accepted the reward offer.

(B) No, because the express conditions set out in the reward offer were not met.

(C) Yes, because the authorities’ agreement with the fugitive was against public policy.

(D) Yes, because the authorities themselves prevented the conviction of the fugitive.

(D) Yes, because the authorities themselves prevented the conviction of the fugitive.

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

(A) When the contract was made.

(B) When the bracelets were identified to the contract by the seller, assuming that the goods conformed to the contract.

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

(D) When the bracelets were unloaded on the buyer’s premises by the carrier.

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

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

(A) Yes, because payment of $7,500 cannot furnish consideration for the architect’s promise to surrender his claim.

(B) Yes, because the oral agreement to modify the written contract is not enforceable.

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

(D) No, because the architect’s acceptance of partial payment constituted a novation.

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

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

(A) Both claims will fail.

(B) Only the seller’s claim will succeed.

(C) Only the buyer’s claim prevails.

(D) Both claims will succeed, and the buyer will recover $10,000

(A) Both claims will fail.

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

(A) $40,000, the reasonable value of the services the contractor had provided.

(B) $40,000, the contractor’s construction costs.

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

(D) $55,000, the contractor’s construction costs of $45,000 plus the $10,000 profit.

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

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

(A) No, because the bank withdrew its offer before the customer completed the requested performance.

(B) No, because the bank’s statement was a nonbinding gift promise.

(C) Yes, because the bank could not revoke its offer once the customer had commenced performance

(D) Yes, because the customer’s presence in line served as notice to the bank that he had accepted.

(C) Yes, because the bank could not revoke its offer once the customer had commenced performance

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

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

(B) The buyer can either accept or reject the different computer model, but if he rejects it, he will thereby waive any remedy for breach of contract.

(C) The seller’s prompt shipment of nonconforming goods constituted an acceptance of the buyer’s offer, thereby creating a contract for the sale of the different computer model.

(D) The seller’s notice of accommodation was timely mailed, and his shipment of the different computer model constituted a counteroffer

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

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

(A) No, because the seller retracted the repudiation prior to the agreed time for performance.

(B) No, because the buyer’s tender of the purchase price on July 1 was a constructive condition to the seller’s duty to tender a conveyance.

(C) Yes, because the seller’s repudiation was not retractable after it was communicated to the buyer.

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

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

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

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

(B) No, because there was no consideration to support the debtor’s promise to pay $1,000 on December 1.

(C) Yes, because a promise to allow a debtor to delay payment on a past debt is enforceable without consideration.

(D) Yes, because the debtor bargained for the creditor’s forbearance

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

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

(A) No, because efficiency principles justify the builder’s services being directed to a higher-value use.

(B) No, because the builder’s duty to perform was subject to a condition.

(C) Yes, because the builder’s attempt to condition his duty to perform rendered the contract illusory.

(D) Yes, because the parol evidence rule would bar the builder from presenting evidence of oral understandings not included in the final writing

(B) No, because the builder’s duty to perform was subject to a condition.

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

(A) The contract price of the machine.

(B) The difference between the contract price and the market price of the machine.

(C) The difference between the contract price and the price obtained from a proper resale of the machine.

(D) The profit the manufacturer would have made on the sale of the machine to the buyer.

(A) The contract price of the machine.

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

(A) No, because the insurance policy is not a divisible contract.

(B) No, because the insurance policy violated the statute.

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

(D) Yes, because the insurance policy will be strictly construed against the insurance company as the drafter.

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

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

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

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

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

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

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

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

(A) $550,000 (damages for conversion).

(B) $500,000 (the collector-gallery contract price).

(C) $50,000 (the excess of the market price over the contract price).

(D) Only the allowance of lost profit to the gallery as a volume dealer.

(A) $550,000 (damages for conversion).

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

(A) Yes, because the excavator committed an anticipatory repudiation of the contract by causing the contractor to feel insecure about the performance.

(B) Yes, because the excavator breached the implied covenant of good faith and fair dealing.

(C) No, because the excavator would be entitled to specific performance of the contract if he could begin by June 1.

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

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

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

(A) No, because the clerk was bound by the modification of the contract made by the accountant and the bookkeeper.

(B) No, because the clerk was only a donee beneficiary of the contract between the accountant and the bookkeeper and had no vested rights.

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

(D) Yes, because the promise to establish the annuity was made binding by consideration from the clerk’s many years of employment.

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

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

(A) Time was not of the essence in the contract between the mechanic and the textile company.

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

(C) By entering into the contract with the customer while knowing that its knitting machine was being repaired, the textile company assumed the risk of any delay loss to the customer.

(D) In all probability, the liquidated damages paid by the textile company to the customer are not the same amount as the actual damages sustained by the customer in consequence of the late delivery of the cloth.

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

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

(A) No, because a contract did not exist until the buyer selected the specific candy bars, and the seller withdrew its offer before selection.

(B) No, because the buyer’s selection of the candy bars by March 1 was an express condition to the seller’s duty to perform.

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

(D) Yes, because upon the buyer’s failure to make a selection by March 1, the seller had a duty to make a reasonable selection.

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

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

(A) No, because no contract was formed since the buyer did not have a real opportunity to understand the essential terms of the contract.

(B) No, because the homeowner concealed evidence of the water damage and of the leaking roof.

(C) Yes, because the homeowner made no affirmative statements of fact about the water damage or the leaking roof.

(D) Yes, because the buyer acted unreasonably by failing to employ an inspector to conduct an independent inspection of the home.

(B) No, because the homeowner concealed evidence of the water damage and of the leaking roof.

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

(A) Yes, because the bakery was legally entitled to reject any tender that did not conform perfectly to the contract.

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

(C) No, because the tender was not a substantial impairment of the entire contract, and the wholesaler had given assurance of a cure.

(D) No, because by accepting the first 8,000 pounds on Monday of the first week, the bakery had waived the condition of perfect tender and had not reinstated it.

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

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

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

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

(A) No, because no time for performance was established in the contract.

(B) No, because the neighbor failed to tell the rancher that the crop might be destroyed by a hailstorm.

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

(D) Yes, because a party who undertakes a contractual obligation is liable for all the consequences that flow from his breach.

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

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

(A) No, because the motivation for the transfer of the business was the aunt’s affection for her niece, not the price.

(B) No, because the promised consideration was inadequate in light of the market value of the business.

(C) Yes, because the condition concerning the landlord’s assent to the transfer of the lease was beyond the control of either party.

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

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

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

(A) 20%, because course of dealing is given greater weight than trade usage.

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

(C) 10%, because trade usage is the applicable default rule.

(D) Nothing, because the contract is too indefinite

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

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

(A) Nothing, because lost opportunities are not foreseeable.

(B) Nothing, because the parties failed to tacitly agree that the merchant would be entitled to damages in the event of a breach by the bank.

(C) The difference in cost over time between a loan at 10% and a loan at 8%.

(D) $5,000, the merchant’s foreseeable loss.

(C) The difference in cost over time between a loan at 10% and a loan at 8%. Correct. The presumed wide availability of credit limits a borrower’

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

(A) Arbitration is a more efficient method of resolving disputes than resolving them in court.

(B) The provision for arbitration did not contradict any term in the buyer’s offer.

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

(D) The seller’s acknowledgment containing a provision for arbitration constituted a counteroffer that was accepted by the buyer when it accepted delivery of the cotton.

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

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

(A) The janitorial service is liable to the patient as a matter of public policy, because it violated the city’s health code.

(B) The patient is an intended third-party beneficiary under the contract, because the janitorial service’s promise was intended to benefit all hospital patients.

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

(D) The patient cannot sue on the contract, because she was not named in the contract.

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

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

(A) No, because eight months exceeds a reasonable time for contract avoidance.

(B) No, because the developer’s misstatements caused no economic harm to the buyer.

(C) Yes, because the contract was void ab initio.

(D) Yes, because the buyer retained the power to avoid the contract due to fraud.

(D) Yes, because the buyer retained the power to avoid the contract due to fraud.

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

(A) Yes, because part performance of the agreement by both parties made it enforceable for the full year.

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

(C) No, because the supplier could, and did, revoke its offer with respect to future deliveries.

(D) No, because the absence of a minimum quantity term rendered the company’s promise illusory

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

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

(A) No, because the subcontractor anticipatorily repudiated the contract when it failed to provide adequate assurance.

(B) No, because the contract failed to specify a definite quantity.

(C) Yes, because a demand for assurance constitutes a breach of contract when the contract does not expressly authorize a party to demand assurance.

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

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

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

(A) No, because the buyer did not secure bank financing.

(B) No, because the contract did not expressly impose on the buyer any obligation to apply for bank financing.

(C) Yes, because a court will excuse the condition to avoid a disproportionate forfeiture.

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

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

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

(A) The retail outlet only, because the computer service company made no promises to the bank.

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

(C) Either the retail outlet or the computer service company, because since each has the right to enforce the bank’s performance of its contract with the retail outlet, mutuality of remedy renders either potentially liable for the defective performance.

(D) The computer service company only, because it is a qualified and a financially responsible supplier of computer services.

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

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

(A) No, because the offered evidence is inconsistent with the express language of the agreement.

(B) No, because the written contract was totally integrated.

(C) Yes, because the offered evidence demonstrates that the farmer substantially performed the contract.

(D) Yes, because the offered evidence explains or supplements the agreement by usage of trade

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

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

(A) Duress.

(B) Inadequate consideration.

(C) Mistake.

(D) Undue influence

(D) Undue influence.

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

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

(B) The January 10 telephone conversation between the lender and the borrower created an executory accord and therefore did not operate as a discharge of the $50,000 debt.

(C) The lender’s offer to discharge the debt was a gift promise and therefore was not binding on the lender.

(D) The lender’s promise to discharge the $50,000 debt was not enforceable because it was not in writing.

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

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

(A) The $250 cost of the foundation.

(B) The $500 difference in price.

(C) The $1,000 down payment.

(D) None of the claimed amounts.

(C) The $1,000 down payment.

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

(A) No, because the customer's letter added a term, making it a counteroffer.

(B) No, because the subsequent sale to a bona fide purchaser for value cut off the claims of the customer.

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

(D) Yes, because the supplier's letter was a firm offer that could not be revoked for a reasonable time.

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

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

(A) No, because the buyer's initial email was a counteroffer.

(B) No, because the offer lapsed before the buyer accepted.

(C) Yes, because the buyer relied on the offer by ordering the swing.

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

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

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

(A) No, because the parties did not agree on a price term.

(B) No, because the parties did not put their agreement in writing.

(C) Yes, because the absence of a price term does not defeat the formation of a valid contract for the sale of goods where the parties otherwise intended to form a contract.

(D) Yes, because the company relied on an implied promise to pay when it delivered the gold.

(B) No, because the parties did not put their agreement in writing.

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

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

(B) For the man, because the consideration given for his promise was inadequate.

(C) For the friend, because she gave the butterfly collection to the man in reliance on receiving the book.

(D) For the friend, because she conferred a benefit on the man by delivering the butterfly collection.

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

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

(A) There is no contract, because the parties attached materially different meanings to the price term.

(B) There is no enforceable contract, because the developer is entitled to rescission due to a mutual mistake as to a basic assumption of the contract.

(C) There is a contract formed at a price of $1,000 per acre.

(D) There is a contract formed at a price of $1,100 per acre.

(D) There is a contract formed at a price of $1,100 per acre.

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

(A) No, because the seller timely objected to the buyer's proposal for different terms.

(B) No, because the writing contained the complete and exclusive agreement of the parties.

(C) Yes, because a modification made in good faith does not require consideration.

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

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

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

(A) No, because the dealer's acceptance of the old car bars any additional claim by the dealer.

(B) No, because the merger clause bars any evidence of the parties' prior discussions concerning the trade-in allowance.

(C) Yes, because a merger clause does not bar evidence of fraud.

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

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

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

(A) No, because the contractual obligations were discharged on the ground of impossibility.

(B) No, because the buyer was not prepared to tender her performance on the specified date.

(C) Yes, because the buyer's breach was not material.

(D) Yes, because the seller anticipatorily repudiated the contract when he sold the car to the third party.

(B) No, because the buyer was not prepared to tender her performance on the specified date.

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

(A) Accept the 800 pounds tendered, but notify the mill that the bakery will cancel the contract if the exact amount is not delivered on the following Monday.

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

(C) Reject the 800 pounds tendered, but notify the mill that the bakery will accept delivery the following Monday if it is conforming.

(D) Reject the 800 pounds tendered, and notify the mill that the bakery is canceling the contract.

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

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

(A) No, because the buyer's performance was subject to a condition that did not occur.

(B) No, because the promise was illusory since the buyer was not obligated to do anything.

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

(D) Yes, because a reasonable interpretation of the agreement is that the buyer had an obligation to purchase the house for $250,000 in 30 days.

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

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

(A) The actor, by general acclaim, was much better in the role than the performer had been.

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

(C) The producer offered to employ the performer as the actor's understudy for the remainder of the six-week tour at the performer's original salary, but the performer declined.

(D) Both the producer and the performer knew that a year earlier the performer had been incapacitated for a short period of time by the same kind of stomach disorder.

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

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

(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 rescind the contract of sale and get back her business upon tender to the company of $25 million.

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

(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.

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

(A) $50,000, the full contract amount.

(B) $30,000, the full contract amount less the amount the teacher could have earned in the counselor position offered by the school.

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

(D) Nothing, because the school notified the teacher of its decision before the teacher had acted in substantial reliance on the contract.

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

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

(A) Nothing, because the tender of all eight crates was a condition precedent to the grocer's duty to pay.

(B) The reasonable value of the seven crates of lettuce, minus the grocer's damages, if any, for the distributor's failure to deliver the full order.

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

(D) The listed price for the seven crates of lettuce.

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

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

(A) No, because the buyer's promise to pay the bank was not supported by consideration.

(B) No, because the seller's debt was discharged in bankruptcy.

(C) Yes, because the bank was an intended beneficiary of the contract between the buyer and the seller

(D) Yes, because no consideration is required to support a promise to pay a debt that has been discharged in bankruptcy.

(C) Yes, because the bank was an intended beneficiary of the contract between the buyer and the seller

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

(A) No, because the builder's death terminated the lender's right to receive payment directly from the homeowner.

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

(C) Yes, because the builder had manifested an intent that the homeowner pay the $10,000 directly to the lender.

(D) Yes, because the lender is an intended beneficiary of the builder-homeowner contract

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

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

A. No, because an offer lapses on the death of an offeror or an offeree.

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

C. Yes, because the bowler’s remaining alive was a constructive condition to performance.

D. Yes, because the coach is not at fault for the bowler’s inability to perform.

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

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

A. No, because the builder’s sole remedy for mistake is to avoid the contract.

B. No, because the parol evidence rule will bar evidence of the price-escalation clause.

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

D. Yes, because the written contract will be construed against the business owner, who drafted it.

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

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

A. No, because an express condition to the homeowner’s obligation to pay did not occur.

B. No, because the builder breached the contract by failing to obtain the necessary permits.

C. Yes, because the failure of an express condition to the homeowner’s obligation to pay the builder was excused by government action.

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

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

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

A. No, because the gym revoked its offer before the member completed the requested performance.

B. No, because the gym’s statement was a nonbinding gift promise.

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

D. Yes, because the member’s presence in line served as notice to the gym that she had accepted the gym’s offer

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

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

A. $100,000, the amount that the contractor expected to be paid.

B. $55,000, the contractor’s costs of $45,000 plus the $10,000 anticipated profit.

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

D. $40,000, the contractor’s costs of $45,000 less the $5,000 saved by using the tile on another job.

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

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

A. No, because the caterer retracted the repudiation before the agreed time for performance.

B. No, because the couple’s tender of payment to the caterer on July 1 was a constructive condition to the caterer’s duty, and that condition was not satisfied.

C. Yes, because the caterer’s repudiation was not retractable after it was communicated to the couple.

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

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

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

A. The average rate, because the parties had no meeting of the minds on price.

B. The invoiced price, because the agreement implicitly gave the exterminator the right to set the price in good faith.

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

D. The reasonable value of his services, because courts can supply a reasonable price if the parties have not agreed to a price.

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

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

A. No, because the architect’s acceptance of partial payment constituted a novation.

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

C. Yes, because the homeowner’s payment of $23,000 cannot furnish consideration for the architect’s promise to surrender the fee claim.

D. Yes, because the oral agreement to modify the written contract is not enforceable.

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

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

A. No, because the agreement is subject to the statute of frauds, and the confirmation letter fails to satisfy the statute.

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

C. Yes, because the agreement is not subject to the statute of frauds, and the parties must negotiate the coach’s salary in good faith.

D. Yes, because the confirmation letter satisfies the statute of frauds and evidences the parties’ intent to be bound.

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

An art collector paid a gallery $1,000 to purchase a framed drawing from the gallery's collection. The price included shipping by the gallery to the collector's home. The gallery's owner used inadequate materials to wrap the drawing. The frame broke during shipment and scratched the drawing, reducing the drawing's value to $300. The collector complained to the gallery owner, who told the collector to take the drawing to a specific art restorer to have the drawing repaired. The collector paid the restorer $400 to repair the drawing, but not all of the scratches could be fixed. The drawing, after being repaired, was worth $700. The gallery owner subsequently refused to pay either for the repairs or for the damage to the drawing. In an action by the collector against the gallery owner for damages, which of the following awards is most likely?

(A) Nothing.

(B) $300.

(C) $400.

(D) $700.

(D) $700.

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

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

B. No, because the team did not act in good faith when it refused the firm’s reasonable request for a modification of the completion date.

C. Yes, because the firm breached the implied covenant of good faith and fair dealing.

D. Yes, because the firm caused the team to feel insecure about the firm’s performance, which constituted an anticipatory repudiation of the contract.

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

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

A. Both parties are in breach.

B. Only the designer is in breach.

C. Only the owner is in breach.

D. Neither party is in breach.

B. Only the designer is in breach.

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

A. No, because evidence that the contractor did not have an obligation to perform would render the contract illusory.

B. No, because the parol evidence rule bars evidence of oral understandings not included in the final writing.

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

D. Yes, because the parol evidence rule does not bar evidence offered to interpret a written agreement.

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

What are the four forms of improper means of assent? In no more than two sentences, explain one of those forms. MUDU

Misrepresentation

Undue Influence: Taking advantage of someone who isn’t capable of forming the intent to agree to a contract (infancy, Mental incompetents; Intoxicated individuals)

Duress

Unconscionability

In no more than three sentences, explain the role good faith plays in contracts. IRAC

-implied covenant

-requires party to carry out their contractual obligations honestly

-avoid actions that undermine the other party’s ability to benefit from the contract

-cannot be used to rewrite or avoid express terms of a valid contract

In no more than two sentences explain in what situations the UCC governs versus when the Restatement of Contracts governs.

UCC-contracts regarding the sale of tangible goods

Restatement-contracts regarding services, real estate, and intangible rights

What does the Statute of Frauds require of certain contracts? In no more than two sentences, explain one type of contract where the Statutes of Frauds applies.

-needs to be in writing, formal or informal as long as it contains the essential terms of the agreement

-leases b/c they are transfers of real property

-real property transfers must be in writing to avoid misunderstandings and issues regarding possessory rights

What are the six elements required to create a valid contract? COMACL

consideration

offer

acceptance

mutual assent

capacity

legality

In three sentences or less, describe what things a lawyer might look for in a situation where their client is claiming Promissory Estoppel.

relied on the promise to a detriment

-out of pocket costs ($ spent that they would not have spent had the promise not been made)

-opportunity costs (turned down other lucrative opportunities because they relied on the defendant’s promise)

-major life or business alterations (leaving a job, moving, destroying a building)

You are an attorney for a client claiming that the other party made an oral modification to the contract. In no more than two sentences, describe how you could prove that the oral modification was made.

-affidavit: sworn testimony

-performance: performing according to the oral agreement instead of the written agreement

In no more than three sentences, give one example where the power dynamic between the parties might vitiate or impair consent.

-employer/employee

-may threaten to terminate or demote

-employee relies on the job for their livelihood, no reasonable alternative except to comply

In no more than two sentences, give an example of an unlawful object or purpose of a contract.

-seggs work (Marvin v. Marvin)

-baby buying (child trafficking)

In no more than three sentences, discuss why you should not leave terms open ended or ambiguous in a contract that you create for a client. In no more than three sentences, give an example of an ambiguity in a contract that could lead to problems.

-the judge may decide what the contract means instead of the parties themselves

-court usually decides against the person who wrote the unclear language

-expensive lawsuits

-no termination/end date: client stuck paying fees endlessly or suddenly being dropped from a deal, no long-term stability

The Krusty Krab has just hired a new worker to work side by side with SpongeBob and Squidward. As the attorney for the Krusty Krab, explain, in no more than three sentences, what specific terms you would ensure the new worker signed in agreement before that employee was shown how to make a Krabby Patty.

-NDA: formula is a protected trade secret

-would prohibit the worker from sharing

-include financial penalties/termination for leaking