Learn: Example problems for B Law 243 exam

Ironman Inc. sponsors a triathlon race and

advertises a prize of $50,000 to the winner.

Bruce enters the competition and wins, but

Ironman Inc. only pays him $10,000. Did

Ironman breach a valid contract with Bruce?

A. Yes B. No

Yes

Oleg needs an accountant to complete his tax

return. He visits the office of an accountan

explains his situation, and asks her fee. He does

not ask her to complete his return, but he returns not ask her to complete his return, but he returns

the next day, says nothing, but drops a large stack

of tax related documents and receipts on the

accountant's desk. Oleg then leaves.Has Oleg entered into an implied contract to pay the accountant her usual fee if she completes the tax return? Yes/No?

Yes

Ann makes water heaters. Bill owns a water heater delivery and installation service. Bill forms a contract with Ann to purchase a water heater. Bill picks up the water heater from Ann's water heater store and delivers and installs the water heater in a building owned by Cindy. Bill never pays Ann for the water heater. Cindy has been unjustly enriched. Can Ann sue Cindy for breach of contract or breach of quasi contract (ie. will the court impose a quasi-contract on the parties so Ann can recover against Cindy under a theory of unjust enrichment)? A. Yes B. No

No Ann would sue Bill not Cindy

Janine is brought into the hospital unconscious The hospital ordered 24 hour nursing care from Nursing Services, Inc. Janine remained unconscious and under nursing care for 10 days. When she awoke, Janine stated that she would not pay the bill for her nursing care. Which of the following is the court likely to determine exists:

A. Implied-in-fact Contract

B. Quasi-contract (implied law)

Quasi Contract it is implied

Sally purchased a music download from the iTunes website. Before she downloaded the song, the iTunes website asked Sally to click a box that indicated she had read and agreed to iTunes's terms and conditions. Sally did not read the terms and conditions, but she clicked the box. The terms and conditions expressly stated that music downloaded was not to be used for any purpose other than the personal use of the purchaser. Sally used the song she downloaded as background music for her publicly available website. iTunes discovered their music on Sally's website and has sued Sally for breach of contract. Can Sally claim that she did not read iTunes terms and conditions as a defense to the lawsuit? No/Yes?

No she did not read the terms but accepted it, that is on her

Sally is building a house. She has asked

contractors to submit bids for the work. Which

of the following statements is correct?

A. Sally's invitation to contractors to submit

bids is valid offer, and the first contractor to

submit a bid will be deemed to have

accepted her offer;

B. The bids each contractor submits are

offers, and Sally can bind a contractor to a

bid by accepting a contractor's offer

B: the bids are offers in which sally can review and look over before accepting one.

Most advertisements are treated as

"invitations to negotiate" and, as such, are

NOT considered "offers."

A. True

B. False

True they are not formal offers

Mary offers to babysit for Ron's children for

2 hours at a rate a $10 per hour. Ron states

he wants Mary to babysit for 2 hours and will

pay $12 an hour. Ron's statement is an

example of a

A. Acceptance;

B. Counteroffer

Counteroffer he changed the rate of pay from 10-12 an hour

Spencer offers to paint Marianna's

house for $5000. Marianna sends

Spencer an e-mail that states, "I

accept. Please send a written

contract."

Has Marianna accepted the contract?

A.A. Yes

B.B. No

Yes written commitment with no counteroffer

Spencer offers to paint Marianna's

house for $5000. Marianna sends

Spencer an e-mail that states, "I

accept, IF you send a written

contract."

Has Marianna accepted the contract?

A.A. Yes

B.B. No

No she states IF

On Oct. 1, Max offers to sell Jonas 25 guitar lessons for 400 bucks, Max does not speciify the method by which Jonas should accept the offer. Jonas places a written acceptance in the mail on oct.17th, Max recieves the acceptance on Oct.20th as of which date is the contract valid?

A. Oct. 17 when Jonas SENDS the

acceptance

B. Oct. 20 when Max RECEIVES the

acceptance?

A : when Jonas sends the acceptance it under the mail box rule

On Oct. 1, Max offers to sell Jonas 25 guitar lessons for

$400.Max's offer states Jonas must accept by written letter sent via fedex24hr delievery, On Oct. 15, Jonas

telephones Max and leaves a phone message acceptance.To be safe, on Oct. 17 Jonas also sends a written acceptance letter via DHS 24-hour delivery, and Max

receives this written acceptance on Oct. 20. AssumingMax will only accept a written letter, as of which date is the contract valid?

A. Oct. 15 when Jonas telephones; or

B. Oct. 17 when Jonas mails the DHS letter; or

C. Oct. 20 when Max RECEIVES the DHS letter; or

D. Never, Jonas's phone call terminates Max's offer;

C: when max recieves the written letter

When you pay for and download an iTunes song or a

software program you are (choose the correct

answer):

A. Purchasing a good

B. Purchasing a service

C. Purchasing a license to use the product

C: license to use product

Online University advertised that candidates who earned a doctorate in psychology through its online program would be qualified to apply for a job as a clinical psychologist in the U.S. military. Student who wished to become a psychologist in the U.S. military saw the advertisement and enrolled in Online University's psychology program. Student completed her enrollment online. The online enrollment "Terms and Conditions" stated, "In the event a dispute about enrollment in the program arises between Online University and Student, parties agree to enter arbitration in San Diego, California." The enrollment application webpage also include a "click-on" box that stated, "By clicking 'I agree,' applicant agrees (s)he has read, understood, and agreed to rights and responsibilities set forth in the application." If student filed a lawsuit in New York and Online University filed a motion that asks to dismiss who wins?

Online Univeristy because student clicked "I agree" also arbirtration is in San Diego

Bill sent Mary a written offer via the USPS. Mary

"accepted" by scanning the document and adding a

digitized version of her signature. Mary and Bill had

not discussed exchange of electronic signatures.

Under E-SIGN, if Bill fails to fulfill his promises

under the offer, can Mary sue Bill for breach of

contract? (ie. Have Bill and Mary entered into a valid

contract?)

A. Yes

B. No

No Bill never consented to a contract digitally

Seller promises to ship 1000 plastic cups. Buyer

promises to pay $200.

Does "consideration" exist to support a contract

between buyer and seller?

A. Yes

B. No

Yes consideration is always included in a contract

Father states to his son, " In consideration of the fact

that your 18th birthday is next week, I will buy you a

car."

Have the father and son entered into an enforceable

contract? (Has valid consideration been given? Is

there any "bargained-for" exchange?)

A. Yes

B. No

No- It is a gift from the Dad

Kara's car is damaged in an accident caused by

Raoul's negligence. Raoul offers to give Kara

$3000 IF she will release him from all further

liability. Kara accepts the $3000 and signs a

release, but later learns that her repairs will cost

$4200.

In most states, can Kara collect the additional

$1200 from Raoul?

A. Yes

B. No

No- she accepted the 3,000 and signed the release

When Cassie was 17, she entered into a

contract with Dan to purchase a computer. It

is now one week after Cassie's 18th birthday.

Can Cassie disaffirm her contract with Dan?

A.Probably yes;

B.No

A: prob yes she was a minor when she made the contract

Reily, an adult entered into a lease of band

equipment (guitars, drums, amps, etc.) with agroup of musicians, all of whom were 15 years old.

Reilly, however, has just learned about problemsassociated with contracts with minors, and Reilly

wants to disaffirm the contract. Would a court permit Reilly to disaffirm the contract? A: Yes or B: No

No- minor has privilege to disaffirm the contract

Joe bought a car from Stan's Toyota dealership. Joe has

never been declared incompetent, but at the time hepurchased the car, Stan noticed Joe was talking to "friends"

in his head. Joe also seemed to carry on conversationswith invisible entities, struck out violently with his hand

aiming at nothing, and appeared agitated and "odd." Joe was later diagnosed with schizophrenia. Is it likely that

Stan's contract with Joe is voidable? Yes or No?

Yes- because of Joes mental capacity

The state where Julie lives requires that all

contractors obtain licenses from the state. The purpose of the licensing requirement is to protect

the citizens of the state from faulty construction. Julie hired Sam to construct her house. Sam

claimed he was a licensed contractor, but was not. If Julie tries to rescind the contract before Sam

begins work and Sam sues her in court, will a court enforce the contract?

A.Yes B. No

No- because Sam was not licensed from the start

Xin intends to sell her motor home for $17,500. She sends

Devam an e-mail offering her motor home for sale, but she

mistakenly types $15,700 as her price. (This is the first time

Xin has supplied Devam with information on the sale price.)

Devam reads Xin's e-mail and immediately accepts. Is Xin

bound to the contract (is the contract enforceable)?

A. Yes

B. No

Yes- mistake by one party does not make it voidable, but Devam for an exception should have noticed mistake that Xin made

Dru is a contractor. He has submitted a bid to Candace

for the construction of a pool, but he made a few

mathematical errors when he totaled his estimated

costs. Because of these errors, Dru's bid is about

$75,000 lower than his actual estimated costs. If

Candace accepts Dru's offer, can Dru later rescind the

contract?

A. Yes

B. No

Yes- The mathematical calculation error resulted in a bid that was $75,000 lower than Dru's actual costs. Enforcing a bid with such a severe, non-negligent mathematical error would work a gross injustice and cause unconscionable hardship to the contractor.

Joe is selling his home "FSBO" ("For sale by owner"). Mitsy is

interested in purchasing the home. The roof of the home has

missing shingles, has obviously rotted sections, and the interior

walls and ceiling of the home are water stained beneath the areas

where the roof is in disrepair. Joe knows the roof has leaked, but

Mitsy never asks Joe about water leakage or roof issues, and Joe

does not mention the leak to her. If Mitsy buys the home and later

learns of the leaky roof, could she claim Joe's silence constituted

fraudulent misrepresentation and avoid/rescind the contract?

A. Yes

B. No

No- joe's silence does not mean fruadulent misrep, it was open and obvious and Mitsy could have seen this and exercise basic dilligence

oe is selling his home "FSBO" ("For sale by owner"). Mitsy is

interested in purchasing the home. During their negotiations,

Mitsy SPECIFICALLY asks Joe if the roof has ever leaked. Joe

KNOWS the roof leaks, BUT he responds, "No, the roof has

never leaked." If Mitsy buys the home and later learns of the

leaky roof, could she claim Joe's answer constituted fraudulent

misrepresentation and avoid/rescind the contract?

A. Yes

B. No

Yes: Joe lied to Mitsy about the roof

Rupert is 95 years old, in a weakened mental state, and bedridden. He requires

assistance with most of his daily activities. Rupert's niece and nephew, with whom he

was never particularly close, have been living with him for the past 5 months and

have not permitted any of Rupert's actual family members to visit. Last week, Rupert

gave his niece and nephew a very large financial gift, changed his will and made

them his sole heirs, and gave them powers of attorney. Rupert was not represented

by legal counsel, and Rupert's grandchildren contest the actions Rupert has taken.

(The grandchildren were Rupert's heir under his "old" will.)

If Rupert's grandchildren challenge the gift to Rupert's niece and nephew, is it

likely that a court would hold that the niece and nephew exerted undue influence over

Rupert?

A. Probably Yes

B. Probably No

PROB YES, Rupert is in a depleted mental state and the niece and nephew did not let anyone visit for 5 months

Is the following scenario an example of duress?

If you do not sign this contract, I will disclose embarrassing

information about you to the press.

A. Yes

B. No

Yes- that is a threat

Is the following scenario an example of duress?

If you do not sign this settlement agreement, I will sue you in

court.

A. Yes

B. No

No - the threat is a legal right to pursue in court

On April 15, 2026, Chris speaks with the director of

Mountain Top Camp over the phone and agrees to send

her daughter Elizabeth to summer camp from July 5 -

17, 2026. Chris also agrees to pay Mountain Top no

later than June 15, 2026. Chris agrees to pay Mountain

Top $1500, and Mountain Top reserves a spot for

Elizabeth. If Chris backs out of this oral agreement, will

the Statute of Frauds bar Mountain Top from enforcing

the contract?

A. Yes, the Statute of Frauds applies to this contract.

B. No, this contract falls outside the Statute of Frauds.

No : this falls outside SOF, Under the Statute of Frauds, an oral contract is unenforceable only if performance cannot possibly be completed within one year from the date the contract is made.

On January 1, 2025, Jonas agrees with Piper to give

her guitar lessons from May 1, 2025 - February 1,

2026. In return, Piper agrees to pay for one lesson

per week at a cost of $30 per lesson for the period

stated in the contract. Does this contract fall

under/within the Statute of Frauds (ie. must this

agreement be in writing to be enforceable)?

A. Yes

B. No

Yes: it is in the one-year period for the Statute of Frauds is measured from the date the contract is formed (made), not from the date performance begins, until the date performance is fully completed.

The firm of Happy Valley Real Estate Developers orally

contracts with Serenity Landscaping to landscape all

future housing development projects "as long as Happy

Valley Real Estate is headquartered in State College."

The contract also contains definite payment terms.

If Happy Valley Real Estate Developers remain in State

College, but stop using Serenity Landscaping and hire

Rock Landscaping instead, can Serenity enforce their oral

agreement with Happy Valley?

A. Yes, the oral agreement is enforceable—the Statute of

Frauds does not apply;

B. No, the oral agreement is NOT enforceable—the

Statute of Fraud applies.

A. Yes, the oral agreement is enforceable—the Statute of

Frauds does not apply; For a contract to fall within the Statute of Frauds under the One-Year Rule, performance must be objectively impossible to complete within one year from the date the contract is formed.

On Aug. 1, 2026, Al and Ben enter into a contractual

agreement whereby musician Al agrees to play the piano

at Ben's birthday party on Nov. 5, 2026, and, in exchange,

Ben agrees to pay Al $1500 by Nov. 1, 2026. As a nice

gesture to help her son, Carol (Ben's mother) agrees to

pay Al the $1500 if Ben fails to pay.

Must Al and Ben's agreement be in writing (does the

Statute of Frauds apply to their agreement)?

A. Yes

B. No

No: because full performance takes place in far less than one year from the formation date, the One-Year Rule of the Statute of Frauds does not apply to their agreement.

On Aug. 1, 2026, Al and Ben enter into a contractual

agreement whereby musician Al agrees to play the piano

at Ben's birthday party on Nov. 5, 2026, and, in exchange,

Ben agrees to pay Al $1500 by Nov. 1, 2026. As a nice

gesture to help her son, Carol (Ben's mother) agrees to

pay Al the $1500 if Ben fails to pay.

Must Al and Carol's agreement be in writing (does the

Statute of Frauds apply to their agreement)?

A. Yes

B. No

Yes: Under the Statute of Frauds, a promise to pay the debt or fulfill the obligation of another person if that primary debtor defaults (a guaranty or suretyship agreement) must be in writing and signed by the promisor to be legally enforceable.

Gabby owns a factory that makes cameras. She buys

lenses for her cameras from Optics Group. Optics Group

purchases glass supplies to make lenses from Liquidia.

Optics Group has been struggling financially, and Liquidia

has threatened to sue Optics Group for unpaid bills.

Gabby has entered into an agreement with Liquidia to act

as a guarantor for Optics Group's debt. In return, Liquidia

has agreed to forestall litigation. Must the agreement

between Gabby and Liquidia be in writing to satisfy the

Statute of Frauds?

A. Yes, the Statute of Frauds applies and this agreement

must be in writing;

B. No, in this case, the "main purpose rule" operates as

an exception to the Statute of Frauds.

No, in this case, the "main purpose rule" operates as an exception to the Statute of Frauds. If the primary purpose (leading object) of the guarantor in making the promise is to secure a direct personal economic benefit for themselves, the oral agreement falls outside the Statute of Frauds and is fully enforceable without a writing.

Home Mortgage Lenders (HML) filed a suit against

Erica to foreclose on a mortgage. (Erica had used the

mortgage to secure a loan from HML for $50,000.

Under the terms of this agreement, if Erica failed to

repay the $50,000, HML could foreclose on the

mortgage and repossess her home.) HML had a

copy of the mortgage loan agreement identified Erica

as the party who owed the debt, but Erica had not

signed the document. If HML tries to sue Erica, will

the agreement be enforceable in court?

A. Yes

B. No

No- Erica never signed the document stating the details of the contract

Tina, a hair product manufacturer, has taken hair salon

owner Jimmy to court in an attempt to enforce an oral

agreement in which Tina claims Jimmy agreed to pay her

$10,000 for 7500 units of hair spray. Jimmy initially denies

the oral agreement, but in court he admits under oath that

he orally entered into an agreement to pay Tina $5,000 for

the hair spray.

Under the UCC, which is correct?

A. The court will not enforce the oral agreement because

it violates the statute of frauds;

B. The court will enforce the oral agreement for $10,000;

C. The court will enforce the oral agreement for $5,000

C: Jimmy admitted under oath to an agreement for $5,000 worth of hair spray. Therefore, the court will enforce the oral agreement up to the $5,000 amount admitted, but not for the $10,000 Tina originally claimed.

On Nov. 1, Susie borrowed $1,000 from Wes to purchase a

computer. Susie agreed to repay Wes the principal plus 5%

interest in equal installments over the next 6 months. On Nov 10,

Wes assigned his right to receive payment to Steve. Steve never

sent Susie notice of this assignment.

On Nov. 15, Wes assigned his right to receive payment to Kyle.

Kyle sent Susie notice of the assignment on Nov. 20.

As of Nov. 25, under the priority rule applicable in the majority of

jurisdictions, who has priority to receive payment from Susie?

A. Wes

B. Steve

C. Kyle

B: Steve: In the majority of U.S. jurisdictions, priority is given to the assignee who receives the assignment first in time, regardless of whether notice was given to the obligor. Once right was given to steve there was no obligation for Wes to give to Kyle.

On Nov. 1, Susie borrowed $1,000 from Wes to purchase a

computer. Susie agreed to repay Wes the principal plus 5%

interest in equal installments over the next 6 months. On Nov 10,

Wes assigned his right to receive payment to Steve. Steve never

sent Susie notice of this assignment.

On Nov. 15, Wes assigned his right to receive payment to Kyle.

Kyle sent Susie notice of the assignment on Nov. 20.

As of Nov. 25, under the priority rule applicable in the minority of

jurisdictions, who has priority to receive payment from Susie?

A. Wes

B. Steve

C. Kyle

C: Because Kyle was the first assignee to notify Susie of the assignment, Kyle acquires priority to receive the payments from Susie under the minority rule.

On Nov. 1, Susie borrowed $1,000 from Wes to purchase a

computer. Susie agreed to repay Wes the principal plus 5%

interest in equal installments over the next 6 months. On

Nov 10, Wes assigned his right to receive payment to

Steve. Steve never sent Susie notice of the assignment.

On Nov. 16th, Susie sent her monthly payment to Wes. Did

this payment discharge Susie's monthly obligation to Steve

under the assignment?

A. Yes

B. No

A: yes: Steve never notified Susie that Wes assigned his right to receive payments to him. Because Susie acted in good faith without knowledge of the assignment when she paid Wes on Nov. 16, her payment successfully discharges her monthly obligation.

On Nov. 1, Susie borrowed $1,000 from Wes to

purchase a computer. Susie agreed to repay Wes the

principal plus 5% interest in equal installments over

the next 6 months. Payment was due on the 10th of

each month. On Nov. 5, Susie delegated to Lauren the

duty to pay Wes. As of Nov. 12, Wes had not received

any payment. If Lauren fails to pay Wes, which answer

choice below best describes who Wes may sue?

A. Susie only;

B. Lauren only;

C. Susie AND/OR Lauren

C: Susie/Lauren Because both parties are legally responsible for the obligation once assumed—Susie by virtue of the original contract and Lauren by virtue of the delegation/assumption—Wes has the right to sue Susie, Lauren, or both to recover the unpaid debt.

Val's Foods signs a contract to buy 1500 pounds of

basil from Sun Farms, a small organic herb grower, as

long as an independent organization inspects the crop

and certifies it contains no pesticide or herbicide

residue.

The condition imposed by this contract is a

A. Condition Precedent

B. Condition Subsequent

C. Concurrent Condition

A: condition precedent is a contractual condition that must occur before a party is obligated to perform their duty under the contract.

Dana has a homeowner's insurance policy with Geico.

The policy states that the homeowner has 12 months

from the date of any loss to make a claim against

Geico. Dana's house is destroyed by fire. 13 months

later, Dana makes a claim against the Geico. Which of

the following correctly characterizes the type of

condition that appears in this contract?

A. Condition Precedent;

B. Condition Subsequent;

C. Concurrent Condition

B: condition subsequent is a contractual condition that, upon occurring (or failing to occur), terminates or discharges an existing duty to perform.

Peter agrees to sell his textbook to Eve for $20. Eve

agrees to buy the book for $20 on Friday when Peter

delivers the book.

Which of the following options correctly characterizes

the type of condition that appears in this contract?

A. Condition Precedent;

B. Condition Subsequent;

C. Concurrent Condition

C: Concurrent conditions exist when the parties' contractual duties to perform are mutually dependent and must occur simultaneously (at the exact same time).

Tim promises to fully restore Jane's antique car. The car includes

a flat spare tire. In exchange, Jane agrees to pay $12,000. Tim

restores and delivers the antique car but fails to fix the spare tire.

The cost of repair to the spare tire is $25. If Jane sues Tim for

breach of contract, is it likely that a court will determine that Tim

substantially performed his duties under the contract?

A. Yes, the breach was likely not material, and Tim substantially

performed his obligations imposed by the contract;

B. No, the breach was likely material, and substantial

performance cannot be invoked in the event of a material

breach.

A: Yes A party who performs in good faith and completes the vast majority of the contractual terms—conferring the essential benefit of the bargain—has substantially performed. Under substantial performance, the contract is discharged, though the non-breaching party is entitled to damages (an offset) for the minor deficiency. Tim substantially

performed his obligations imposed by the contract;

Tim promises to fully restore Jane's antique car. The car

includes a flat spare tire. In exchange, Jane agrees to pay

$12,000. Tim restores and delivers the antique car but fails

to fix the spare tire. The cost of repair to the spare tire is

$25. If Jane sues Tim for breach of contract and the court

determines Tim substantially performed his obligations

under the contract, what damages is Jane likely to be

awarded?

A. None. Tim substantially performed, so Jane is not

entitled to damages;

B. The cost of fixing the spare tire;

C. $12,000;

B: cost of the spare tire When a party substantially performs, the contract is not completely discharged without cost to the breaching party. Instead, the non-breaching party (Jane) remains obligated to pay the contract price, but is entitled to offset damages for the cost to complete or fix the minor defect. she will pay 11,975 instead of full 12,000

Andy agrees to paint a portrait of Brooke for $1500. The terms of

the agreement state that Brooke is only obligated to pay if she is

entirely satisfied with the portrait. Andy paints a portrait that is

highly acclaimed as a masterpiece by art critics, but Brooke does

not like the painting. Must Brooke accept and pay for the

painting?

A. Yes, Brooke must accept and pay for the painting because

the approval of art critics means that the painting satisfies

the objective "reasonable person" standard and Andy's

duties have been discharged.

B. No, Brooke is not required to accept and pay for the painting

because the subject matter of the contract is personal and

under the terms of the contract Brooke may reject the

painting if she is subjectively not satisfied.

B: No, Brooke is not required to accept and pay for the painting

because the subject matter of the contract is personal and

under the terms of the contract Brooke may reject the

painting if she is subjectively not satisfied.

Under the terms of a written contract, Zeke agrees to deliver a

shipment of beach umbrellas to Javier's beach resort, and Javier

agrees to pay for the delivery "if the work is done to the

satisfaction of Javier's resort manager Victoria." An independent

inspector concluded that Zeke did an excellent job, but Victoria is

not satisfied. If Javier fails to pay for the delivery and Zeke sues

Javier, which of the following statements would be the outcome

in the MAJORITY of jurisdictions?

A. The court will apply a reasonable person standard and likely

conclude that Zeke discharged his contractual duties—

Javier must pay;

B. The court will apply a subjective standard and conclude that

Javier's personal dissatisfaction means that Zeke did not

discharge his duties under the contract—Javier does not

have to pay Zeke.

A: The court will apply a reasonable person standard and likely

conclude that Zeke discharged his contractual duties—

Javier must pay;

Shasta Corp. manufactures computers. Shasta enters into

a contract with New Age retailers to manufacture and sell

100,000 computers to New Age. Delivery is to occur in two

months. One month passes, and several of Shasta's part

suppliers have dramatically raised prices. Shasta knows it

will lose $500,000 on the contract with New Age, so Shasta

writes to New Age and states that is cannot deliver the

computers at the current contract price. Which of the

following is correct:

A. If New Age want to sue Shasta, New Age must wait

until the original delivery date passes to give Shasta

time to cure the breach;

B. New Age may immediately sue Shasta

B. New Age may immediately sue Shasta, When an anticipatory repudiation takes place, the non-breaching party (New Age) is not required to sit idly by or wait until the scheduled date of performance. They have the immediate right to:

Treat the contract as breached and sue immediately for damages;

Wait until the date of performance to see if the repudiating party retracts and performs; or

Rescind the contract entirely.

Val's Foods signs a five-year contract to buy 1500 pounds

of basil per year from Sun Farms, a small organic herb

grower. A year later, Sun Farms agrees to sell its

operations to Happy Valley Farms. As part of the sale, Sun

Farms, Happy Valley Farms, and Val's Foods agree that

Happy Valley Farms will provide the basil as stated in the

original Val's Foods/Sun Farms contract. What is this type

of agreement called?

A. Novation;

B. Accord and Satisfaction;

C. Substitution;

D. Nomination

A: Novation: A novation occurs when all parties to an existing contract agree to substitute a new party for one of the original parties, creating a completely new agreement and completely discharging the obligations of the original party being replaced.

Val's Foods signs a contract to buy 1500 pounds of basil from

Sun Farms, a small organic herb grower. (Prior to harvest, Sun

estimates its entire crop this year will total 1500 pounds.) The

contract specifies the basil crop must be grown on Sun Farms'

land. The day before Sun Farms begins the harvest, a giant

hailstorm destroys half the crop. Sun Farms does not deliver the

basil. If Val's Foods sues Sun Farms in court for full performance

of the contract, which of the following arguments might Sun

Farms assert to claim its duties have been discharged by

operation of law?

A. Novation;

B. Commercial Impracticability;

C. Impossibility of Performance

C: Impossibility of Performance, Under contract law and UCC § 2-613, if a contract specifies that performance must come from a particular, identified source (here, the basil crop grown specifically on Sun Farms' land), the partial or total destruction of that specific subject matter without fault of either party discharges the seller's duty to perform due to objective impossibility. Applies when performance becomes literally impossible because the unique subject matter required by the contract (the specific crop from that specific land) was destroyed by an Act of God (the hailstorm). "No one can perform."

Val's Foods signs a contract to buy 1500 pounds of basil from Sun

Farms, a small organic herb grower. (Prior to harvest, Sun estimates its

entire crop this year will total 1500 pounds.) The contract does NOT

specify the basil crop must be grown on Sun Farms' land. The day

before Sun Farms begins the harvest, a giant hailstorm destroys half

the crop. Sun Farms attempts to purchase additional basil from other

farms, but this late in the season the cost is 4 times the normal market

price. Sun Farms does not deliver the basil. If Val's Foods sues Sun

Farms in court for full performance of the contract, which of the

following arguments might Sun Farms assert to claim its duties have

been discharged by operation of law?

A. Novation;

B. Commercial Impracticability;

C. Impossibility of Performance

B: Commericial Impracticability: Because performance remains physically possible through substitute purchasing but has become excessively and exorbitantly expensive due to an unexpected crop disruption, Sun Farms' best legal defense is Commercial Impracticability.

IF contract requires that work personally satisfy

another contract party or a third party ("X"), standard

for determining discharge depends on the subject

matter of the contract:

A. PERSONAL subject matter:

B. NON-PERSONAL subject matter: