Blaw Chapter 12

(True/False)
People make promises all the time, so promises have little to do with contract law.
False

At a given point in time, contract law does NOT reflect which of the following?
A.) Our Physical well-being
B.) Our interests
C.) Our social values
D.) Our expectations
A.) Our Physical well-being

(True/False)
Promises that involve moral obligations for the basis of contract law.
False

A contract is …
a promise or agreement that can be enforced in court.

the actions that potentially involve contractual relationships that the courts might enforce:
-Buying a house
-Buying insurance
-Buying the services of a lawyer

Promisee
A person to whom a promise is made

Promisor
A person who makes a promise.

Contract
An agreement that can be enforced in court, formed by two or more parties, each of whom agrees from preforming some act now or in the future.

(True/False)
The objective theory of contracts tells us that a party’s intention to enter a legally binding agreement belief of at least one of the parties.
False

Requirements for a valid contract do NOT include…
a fair price

When a court examines the objective facts surrounding contract formation, which of the following does it NOT examine?
A.) The circumstances surrounding the transaction.
B.) What the party said when entering into the contract.
C.) If the party had the flu while negotiating.
C.) If the party had the flu while negotiating.

The four requirements for a valid contract:
Consideration, legality, agreement, contractual capacity

The Two major defenses to enforceability of an otherwise valid contract:
form, voluntary consent

Contract Formation
– Bilateral, Unilateral
– Formal, Informal
– Express, Implied

Bilateral
a promise for a promise

Unilateral
a promise of an act (acceptance is the completed performance of the act.)

Formal
Requires a special form for creation

Informal
Requires no special form for creation

Express
Formed by words (oral,written, or a combo)

Implied
Formed by the conduct of the parties

(True/False)
If the offeree can accept simply by promising to perform, then the contact is unilateral.
False

Assume that Eva tells Maria that she will buy Maria a new dress if Maria reads a book by Friday night. Maria begins reading but has a chapter left to finish when Eva says she has changed her mind and will not pay for the new dress. Under the modern approach to contracts, Eva and Maria:
A.) Formed a unilateral contract as soon as Maria began reading the book.
B.) have no contract until Maria finishes reading the book.
C.) formed a bilateral contract as soon as Maria began reading the book.
A.) Formed a unilateral contract as soon as Maria began reading the book.

(True/False)
An implied contract differs from an express contract in that the conduct the parties created and defines the terms of the contract.
True

Which of the following is Not a requirement for an implied contract?
The defendant had no chance to reject the services of property.

Pete calls A-1 Towing when his car won’t start. He tells the dispatcher the location of the car, but does not ask for a price and leaves before the tow truck arrives. He obviously does not talk to the driver and does not sign any documents. Therefore, Pete
owes A-1 for towing his car under an implied contract.

Executed Contract
A contract that has been completely performed by both parties.

Executory Contract
A contract that has not as yet been fully performed.

Valid Contract
A contract that has the necessary contractual elements: agreement, consideration, legal capacity of the parties and the legal purpose.

Enforceable Contract
A valid contract that can be enforced because there are no legal defenses against it.

Voidable Contract
A party has the option of avoiding or enforcing the contractual obligation.

Unenforceable Contract
A contract exists, but it cannot be enforced because of a legal defense.

Void Contract
No contract exists, or there is a contract without legal obligations

You tell your roommate that you will sell him your six-month old Samsung tablet device. You accurately specify its technical details and state that the price is $100. Your roommate accepts your offer, so you two will have a(n)
Express Contract

You tell the gas station attendant to fill up your car with regular and he does so. At this point, the contract between the gas station and you is:
A.) executed because the gas station attendant did what you asked.
B.) executed because you have a full tank of gas.
C.) executory because you have yet to pay the attendant.
C.) executory because you have yet to pay the attendant.

(True/False)
Contracts for the sale of kidneys are void because it is illegal to sell human body parts.
True

(True/False)
Implied contracts and quasi contracts are the same.
False

(True/False)
Because courts impose quasi-contract obligations as if the parties had entered into an actual contract, these are equitable rather than legal contracts.
True

The Latin phrase meaning “as mush as he or she deserves” is:
A.) quid pro quo
B.) quantum meruit
C.) caveat emptor.
B.) quantum meruit

(True/False)
You pay for a trial three-month subscription to a magazine. You do not renew, but continue to receive another year’s issues. The magazine company sues you, but you owe nothing.
True

(True/False)
Generally, the doctrine of quasi contract cannot be used when there is an actual contract.
True

(True/False)
Courts seek out the most sophisticated meanings of terms in contracts in order to interpret them.
False

A court will consider a contract to be unclear in which of the following situations:
A.) When the intent of the parties can be determined form the contract’s language.
B.) When a term is susceptible to more than one interpretation.
C.) When there is no uncertainty about any of the provisions of the contract.
B.) When a term is susceptible to more than one interpretation.

(True/False)
The law does NOT allow courts to examine extrinsic evidence in order to interpret ambiguities in a contract because the law does not allow it.
False

In the rules that courts use in interpreting contractual terms:
– A reasonable and lawful meaning will be given to a contract’s terms
– A contract will be interpreted as a whole.
– Terms subject to separate negotiation will be given greater consideration than standardized terms.
– A word is given its ordinary meaning.
– Specific and exact wording will be given great consideration than general language.
– Written (or typewritten) terms prevail over preprinted ones.

(True/False)
When the language has more than one meaning, it will be interpreted against the party who drafted the contract.
True

Assume that the quarterback has a valid employment contract with the football team, how would it be determined whether or not the team may, without liability, fire the quarterback for running around with his pants down?
A.) Since it is an employment contract, the team may hire or fire him for any or for no reason.
B.) Since most people would agree that this is conduct unbecoming to a public figure, the team could fire him.
C.) The team would need to see if the plain meaning of the contract to determine if this behavior was in violation of the contract.
D.) The team would be able to fire the quarterback only if the board of directors of the corporation voted to do so.
C.) The team would need to see if the plain meaning of the contract to determine if this behavior was in violation of the contract.

Can the team charge the $100,000 fine as was suggested by one of the team owners?
A.) Only if it was allowable in the contract.
B.) Only if it reasonable as related to the quarterback’s behavior.
C.) Only if it is a reasonable amount of money.
D.) Only if the quarterback makes more than that per month.
A.) Only if it was allowable in the contract.

Suppose the contract had a clause that required a player to exhibit “good behavior” when in the public eye. Would the team’s owner be able to bring in evidence stating that they during the contract negotiation, told the quarterback that being nude in public would be an example of not exhibiting good behavior?
A.) Yes, since anything stated in the negotiation process of a contract is allowable in a breach of contract action.
B.) Yes, but only if the term “good behavior” was ambiguous.
C.) Yes, but only if the term “good behavior” was not ambiguous.
D.) No, they could only bring in that evidence if the term good behavior was specifically defined in the contract.
B.) Yes, but only if the term “good behavior” was ambiguous.

(True/False)
Agreement normally is evidenced by an offer and an acceptance.
True

Three Elements Necessary for Any offer to be Effective:
1. The Offeror must have a serious intention to become bound by the offer.
2. The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract.
3. There offer must be communicated to the offeree.

(True/False)
An effective offer does require that a reasonable price be related to market value.
False

Pascal’s new Mercedes won’t start one morning and he screams to his passenger, “For a thousand bucks, I’d get rid of this car.” The passenger normally CANNOT buy the car for $1,000:
because a reasonable person would know that a serious offer was not being made.

Olivia says to Jim, “I think I’ll sell my new digital camera for $100 because I’m never going to use it.” This statement constitutes:
a statement of future intent

Which of the following statements could be a valid offer?
An auction without reserve.

Jake chooses a pair of new running shoes from an online catalog. He is informed via e-mail that those shoes are sold out. Now he can
look somewhere else because the online catalog did not make an effective offer

In an auction, the auctioneer acts as the
offeree

The Definiteness of Terms:
1. The identification of the parties.
2. The identification of the object of subject matter of the contract.
3. The consideration to be paid.
4. The time of payment, delivery, or performance.

(True/False)
The requirement that an offer be properly communicated to the offeree means that the offeror must inform the offeree about the offer in some effective way.
True

The Methods by Action of the Parties for Termination of an Offer:
1. Revocation- Unless the offer is irrevocable, it can be revoked at any time before acceptance without liability.
2. Rejection- Accomplished by words or actions that demonstrate a clear intent not to accept the offer; not effective until received by the offeror or the offeror’s agent.
3. Counteroffer- A rejection of the original offer and the making of a new offer.

The Methods by Operation of Law for Termination of an Offer:
1. Lapse of time- The offer terminates at the end of the time period specified in the offer or, if no time period is stated in the offer, at the end of a reasonable time period.
2. Destruction of the subject matter- When the specific subject matter of the offer is destroyed before the offer is accepted, the offer automatically terminates.
3. Death of Imcompetence of the offeror of offeree- If the offeror or offeree dies or becomes incompetent, this offer terminates (unless the offer is irrevocable)
4. Supervening illegality- When a statute of court decision makes the proposed contract illegal, the offer automatically terminates.

Which of the following occurrences will NOT terminate an offer?
A.) Rejection
B.) Revocation
C.) Acceptance
C.) Acceptance

(True/False)
An acceptance must match the terms of the offer exactly in order to be valid. This is known as the mailbox rule.
False

(True/False)
The mailbox rule means that once an acceptance is sent or otherwise communicated to the offeror by an authorized means, the acceptance is effective.
True

You receive a letter telling you that you will start receiving a box of fresh fruit each month and that if you don’t want them, you have to reply within seven days. You ignore the offer. Your silence
does not constitute an acceptance of the offer.

(True/False)
An acceptance sent by means not expressly or impliedly authorized normally is not effective until it is received by the offeror.
True

The requirements for an e-Contract:
agreement, consideration, contractual capacity, legality

Pick the one item in the list below that typically is NOT included in an online offer:
A.) Disclaimer
B.) Dispute resolution
C.) Privacy policy
D.) Payment
E.) Limitation on remedies
F.) Future discount polices
G.) Acceptance of terms
H.) Return policy
F.) Future discount polices

Two typical dispute settlement provisions that are included in online offers:
-forum-selection clause
-choice-of-law clause

(True/False)
Because individuals rarely read the underlying language in a click-on agreement, they are always invalid.
False

What terms are typically presented in a shrink-wrap agreement:
– Warranties
– Remedies
– Issues associated with the use of the product

(True/False)
When deciding questions about the enforceability of terms in shrink-wrap agreements, one important factor courts take into account is whether the buyer learned of the shrink-wrap terms before or after the parties entered into the contract.
True

_________ do not require Internet users to assent to the terms before downloading certain software.
Browse-wrap terms

(True/False)
As a Texas resident, when you are dissatisfied with video games you buy on the Internet, you typically can sue in Texas state courts.
False

E-signatures typically do NOT include:
Signatures on original paper documents.

The act that provides that no contract, record, or signature may be denied legal effect solely because it is an electronic form is the:
E-SIGN Act

Contracts and documents that are exempt from the Electronic signatures in Global and National Commerce Act:
Court papers, divorce decrees, evictions, foreclosures, wills

(True/False)
One way online sellers and buyers can prevent disputes over e-contract signatures is to form a partnering agreement.
True

The primary purpose of the Uniform Transaction Act (UETA):
is to remove barriers to e-commerce by giving the same legal effect to electronic records and signatures as is given to paper documents and signatures.

(True/False)
A record is information that is inscribed on a tangible medium or stored in an electronic retrievable file.
True

(True/False)
The UETA covers only electronic records and signatures relating to transactions.
True

To what type of transaction does the UETA NOT apply?
A.) Transactions for which the parties have not previously agreed to conduct by electronic means.
B.) The electronic records and signatures relating to a transaction.
C.) Transactions that have been negotiated for a contract via e-mail.
A.) Transactions for which the parties have not previously agreed to conduct by electronic means.

The UETA is Not _________ by the E-SIGN Act if a state has enacted the UETA without modification.
preempted

The UETA is enacted WITHOUT Modifcations
State law governs

The UETA is enacted WITH Modifications
State Law Governs if—
– The State’s procedures or requirements are consistent with the E-SIGN Act.
– The State does not give priority to one type of technology.
– The state law was enacted after the E-Sign Act and refers to it.

The E-SIGN Act governs if—
– The modifications are inconsistent with the E-SIGN Act/

A person enters her or his name at the bottom of an e-mail purchase order, so that name would qualify:
A.) nothing
B.) as a valid signature
C.) as an invalid signature
B.) as a valid signature

(True/False)
Once an electronic record leaves the control of the sender or comes under the control of the recipient, it has been sent.
True

Which of the following treaties is NOT relevant to e-contracts?
A.) The United Nations Convention on the Use of Electronic Communications in International Contracts.
B.) The International Convention on Trademark Disputes.
C.) The Hague Convention on the Choice of Court Agreements.
B.) The International Convention on Trademark Disputes.

Suppose that Jack and Sophia and Hal enter to close on the business without the non-competition agreement. Jack states that he would probably sign the non-competition agreement if they included an extra $100,000. A month later, Hal and Sophia bring Jack $100,000. What is the result?
A.) If Jack does not accept the $100,000, there is no valid contract for the sale of the business or for the non-competition agreement.
B.) If Jack does not accept the $100,000, there is a valid contract for the sale of the business, without a non-competition clause.
C.) If Jack does not accept the $100,000, he may not sell the frozen food, but only for a reasonable amount of time.
D.) Jack cannot change his mind, since he stated that he would probably accept $100,000 additional for the non-competition agreement.
B.) If Jack does not accept the $100,000, there is a valid contract for the sale of the business, without a non-competition clause.

Suppose at the end of the meeting that Jack agrees to offer the restaurant buyout, including the non-competition agreement. Prior to Jack and Sophia agreeing to the offer, however, Jack changes his mind. Can he do so?
A.) No, once an offer is made, it can never be revoked.
B.) No, unless the offer states that it is revocable.
C.) Yes, as long as he actually communicates the revocation to Hal and Sophia (or their agent) prior to acceptance.
D.) Yes, and there is no need to actually communicate the revocation to Hal and Sophia (or their agent) prior to acceptance.
C.) Yes, as long as he actually communicates the revocation to Hal and Sophia (or their agent) prior to acceptance.

Suppose that Jack states that he would sell the restaurant with the non-competition agreement for an extra $100,000. Hal and Sophia say they will buy the restaurant, but only pay an extra $75,000 for the non-competition agreement. Jack says no to that. Hal and Sophia, then agree to the $100,000. Do they now have a valid contract?
A.) Yes, but only for sale of the restaurant, without the non-competition agreement.
B.) Yes, for the sale of the restaurant with the non-competition agreement for the extra $100,000.
C.) Yes, for the sale of the restaurant with non-competition agreement for the extra $75,000.
D.) There would be no valid contract.
D.) There would be no valid contract.

Suppose that Jack makes an offer to sell the restaurant on July 10th. Hal and Sophia decide to think it over. On July 15th they mail a letter of acceptance to Jack. On July 16th Hal and Sophia change their mind and call Jack stating that they did not want to purchase the business. On July 20th, Jack receives the letter of acceptance. Would there be a valid contract?
A.) Yes, a valid contract was formed on July 15th when the letter of acceptance was sent.
B.) Yes, a valid contract was formed on July 20th when the letter of acceptance was received.
C.) Yes, a valid contract was at the time that Jack opens the letter and actually reads it.
D.) No, because Hal and Sophia informed Jack that they did not want to buy the business prior to Jack receiving the letter of acceptance.
A.) Yes, a valid contract was formed on July 15th when the letter of acceptance was sent.

Ignoring issues of the Statute of Frauds, is there a contract for the sale of Vinny’s Celica?
A.) Yes, between Vinny and Oscar for $4,000 now and 1,000 in a month.
B.) Yes, between Vinny and Oscar for $5,000 cash since that was the first offer accepted.
C.) Yes between Vinny and Maria for $5,500 since Maria gave the highest offer.
D.) Yes, between Vinny and Oscar, if Oscar is willing to pay $5,500.
B.) Yes, between Vinny and Oscar for $5,000 cash since that was the first offer accepted.

If Vinny and Maria had an otherwise valid contract, can she avoid her obligations if it does not have air conditioning?
A.) Yes, it is implied that she can test drive the car before a contract was formed.
B.) Yes, since most people prefer cars with air conditioning.
C.) Yes, she wanted a car with air conditioning so she could later say she meant for it to be in the contract.
D.) No, the only condition in her acceptance was that it pass a smog inspection.
D.) No, the only condition in her acceptance was that it pass a smog inspection.

Consideration can be defined as…
something of value given in exchange for a promise.

The Elements of Consideration:
Consideration is the value given in exchange for a promise. A contract cannot be formed without sufficient consideration.
1. Legal Value- Something of legally sufficient value must be given in exchange for a promise. This may consist of a promise, a performance, or a forbearance.
2. Bargained-for exchange- There must be a bargained-for exchange.

Something of legally suffcient value may consist of a promise to do something that one has no ______ legal duty to do so.
prior

Something of legally value may consist of the performance of an action that one is otherwise not ______ to undertake.
obligated

Something of legally sufficient value may consist of the ______ from an action that one has a legal right to undertake. (called a forbearance.)
refraining

(True/False)
Carmen agrees to cook 20 dinners for Hal. In exchange, Hal will repair all of the plumbing in Carmen’s house. Carmen has offered legally sufficient consideration because Carmen has promised something of value.
True

The second element of consideration is that it must provide the basis for the bargain, so the item of value must be given or promised by the promisor in return for the promisee’s:
promise, performance, or promise of performance.

Dewitt tells his daughter that, “In consideration of the fact that you are not as wealthy as your sisters, I’m going to give you $100,000.” Is the element of bargain-for exchange evident here?
No, because in fact no consideration has been given.

(True/False)
Something does not have to be of direct economic or financial value to be considered legally sufficient consideration.
True

Shockingly inadequate consideration can indicate the existence of:
– undue influence
– duress
– fraud

Two ways in which a preexisting duty might exist:
– the duty imposed previous contract
– a duty imposed by law

An award is posted by a private group for information leading to the arrest of a criminal. Who of the following CANNOT claim such a reward:
A.) Senior Citizens
B.) Residents with work visas
C.) Emancipated minors
D.) Sheriffs
E.) Nonresidents
D.) Sheriffs

(True/False)
Jenkins agrees to repaint Celia’s apartment in exchange for her used tablet device. When he is three-fourths finished, he says he will not continue unless she also gives him her used smartphone. His legal position is such that he can receive the smartphone in exchange for finishing the job because he has given good and fair consideration in exchange.
False

In the interest of fairness and equity, the courts may allow an exception to the preexisting duty rule when
contract performance involves unforeseen difficulties.

Past Consideration
Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain.

Rescission
A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made.

(True/False)
Past consideration is the equivalent of no consideration.
True

The law recognizes that two parties can mutually agree to cancel their contract to the extent that it is
Executory

(True/False)
If two parties substitute a new contract for an old one and the court finds that there was a preexisting duty, then the new contract will be invalid because there was no consideration.
True

Constance tells Jill, her best employee, that, “Your work is so good, if I like what you do over the next six months, I’ll give you a $1,000 bonus.” Constance does not give Jill the bonus so Jill sues. Most likely:
Jill will not win because this is an illusory promise without consideration

Sergio contracts to hire Belinda to work for him at $3,000 per month, reserving the right to cancel the contract at any time. Two days before Belinda is scheduled to start work, Sergio exercises his option-to-cancel clause. Will Belinda be successful in a lawsuit against Sergio?
No, because the promise was illusory and therefore unenforceable.

Liquidated Debt
A debt that is due and certain in amount.

Unliquidated debt
A debt that is uncertain in amount.

When a debtor offers to pay, and a creditor accepts, a lesser amount than the creditor originally claimed was owed, the agreement is called:
A.) an accord and satisfaction
B.) an accord
C.) a satisfaction
A.) an accord and satisfaction

(True/False)
A basic rule is that there can be no satisfaction unless there is first an accord.
True

(True/False)
An accord and satisfaction can be used to settle any contract dispute with respect to any type of debt.
False

You owe monthly payments on a car loan at fixed interest. After making 11 payments, you go to the bank and ask it to make an accord and satisfaction for a lessor amount. Will you succeed?
No, because your debt is a liquidated and therefore is not a dispute.

Francisca collides with Wyatt’s car. Francisca writes Wyatt a letter offering to pay Wyatt $10,000 if he agrees to forfeit all of his rights to pursue a lawsuit. If Wyatt agrees and signs the letter, Wyatt will have agreed to a(n):
release

In most states, a legally binding release does NOT require:
the signature of an attorney or notary

An agreement to substitute a contractual obligation for another legal action is called a
covenant not to sue

Promissory estoppel does NOT require:
A.) an indefinite promise
B.) that justice be better served by enforcement of the promise
C.) a signed writing explained the promise
A.) an indefinite promise

(True/False)
If a promise is made without consideration, it can never be enforced.
False

The Elements That Are Required for the Promissory Estoppel Doctrine to Be Applicable:
1. There must be a clear and definite promise.
2. The promisor should have expected that the promise would rely on the promise.
3. The promisee reasonably relied on the promise by acting or refraining from some act.
4.The promisee’s reliance was definite and resulted in substantial detriment.
5. Enforcement of the promise is necessary to avoid injustice.

When all of the requirements are met to state a claim under the doctrine of promissory estoppel, the promisor will be ________ from asserting the lack of consideration as a defense.
estopped

(True/False)
Promissory estoppel and the doctrine of quasi contract are equivalent.
False

(True/False)
Yolanda’s parents tell her that if she builds a house with her own funds on land that they own, they will give her the land. If they refuse to do so after Yolanda finishes the house, she will NOT be able to use the doctrine of promissory estoppel because it does not apply to family disputes.
False

(True/False)
A debtor who promises to pay a previous debt even though recovery is barred by the statute of limitations makes an enforceable promise that does not need consideration.
True

A charitable subscription is NOT a promise to make a donation to:
A.) a religious organization
B.) Alcoholic’s Anonymous
C.) a college or university
D.) the Human Society
E.) United Fund
F.) the US Treasury
F.) the US Treasury

Lila tells her friend, Joanne, that she will give her $10,000 towards the purchase of a new car. Lila later changes her mind, and Joanne tells her that she will sue to enforce the contract. A court would likely find that this agreement is
A.) enforceable because the $10,000 is the consideration for the agreement.
B.) unenforceable because their agreement was not in writing.
C.) enforceable because Lila made a promise to Joanne, which is the same as a contract.
D.) unenforceable because there is no bargained-for exchange.
D.) unenforceable because there is no bargained-for exchange.

Wes agrees to install a new hard drive and modem in Mary’s computer in exchange for four of her used textbooks. After he installs the hard drive, Wes says he won’t install the modem unless Mary gives him two more books. What legal position are the parties in now?
a. Wes can receive the extra books in exchange for doing more work, as he has given good and fair consideration in exchange.
b. Mary can sue for breach of contract, because Wes had a preexisting duty to do all of the work.
c. Wes will only get one more book, because two is too many more to be fair.
d. Mary must give Wes the additional books.
b. Mary can sue for breach of contract, because Wes had a preexisting duty to do all of the work.

Kevin is harmed in Allister’s store. Kevin claims his injuries have resulted in $12,000 worth of medical expenses, plus another $12,000 for emotional distress. Allister offers to pay Kevin $16,000 in exchange for his promise not to file a lawsuit against her for his injuries. Kevin accepts Allister’s offer. Kevin and Allister have
a. a covenant not to compete.
b. no contract.
c. a release of suit.
d. a covenant not to sue.
d. a covenant not to sue.

Frank is driving his car when he collides with Peter’s car. Frank writes Peter a letter in which he offers to pay Peter $5,000 if Peter will agree to forfeit all of his rights to pursue a lawsuit against Frank for this accident. If Peter agrees and signs the letter, they will have a
a. release.
b. concerted satisfaction.
c. delimited accord.
d. covenant not to sue.
a. release.

Chuck tells Mia that he is looking for a rare edition of The Shining for his book collection, and would pay up to $500 if she were to find him a copy of the book in good condition. Mia is able to locate a copy of the book and pays $450 for it at an auction. She presents the book to Chuck and he refuses to pay her, stating that he was only joking. What are Mia’s options?
a. Mia may recover the $450 from Chuck because consideration is not necessary in an implied contract.
b. Mia may not recover the $450 from Chuck because there was no bargained-for exchange.
c. Mia may recover the $450 from Chuck because she reasonably and substantially relied on Chuck’s promise.
d. Mia may not recover the $450 from Chuck because she did not have a contract with Chuck by formally accepting his offer.
c. Mia may recover the $450 from Chuck because she reasonably and substantially relied on Chuck’s promise.

(True/False)
Courts generally assume the existence of contractual capacity.
True

Emancipation
In regard to minors, the act of being freed from parental control; occurs when a child’s parents or legal guardian relinquishes the legal right to exercise control over the child.

Age of majority
The age at which an individual is considered legally capable of conducting himself or herself responsibly.

Disaffirmance
The legal avoidance, or setting aside, of a contractual obligation.

(True/False)
When a minor who has entered into a contract opts to avoid that contract, she or he can choose the particular portions of the contract to disaffirm.
False

Espinoza is sixteen, but looks much older. She purchases a diamond bracelet, but decides nine months later that it was unwise to spend the money, so she:
A.) Can disaffirm this contract only if she has turned 18.
B.) Can return the bracelet and get all of her money back.
C.) Can return the bracelet, but will only receive 50 percent of what she paid for it.
B.) Can return the bracelet and get all of her money back.

(True/False)
Adults who enter into contracts with minors can also avoid their contractual duties just as the minor can do so.
False

Courts in a growing number of states place additional duties on the minor when the minor disaffirms.
Three of those additional duties:
– The minor is responsible for damages to the property returned.
– The minor is responsible for the ordinary wear and tear for the returned property.
– The minor is responsible for the depreciation of that returned property.

Hineki buys an expensive tablet device to celebrate his seventeenth birthday. Two weeks later, his father insists that he return it. Hineki’s attempt to return the tablet will:
A.) be unsuccessful because he waited too long.
B.) be successful, because he acted within a reasonable time.
C.) be unsuccessful unless he obtains court approval.
B.) be successful, because he acted within a reasonable time.

Exceptions to Basic Rules of Disaffirmance:
1. Misrepresentation of age (or fraud)- In many jurisdictions, misrepresenation of age prohibits the right of disaffirmance.
2. Necessaries [Rollover definition- Necessities required for life, such as food, shelter, clothing, and medical attention; may include whatever is believed to be necessary to maintain a person’s standard of living or financial and social status]– minors remain liable for the reasonable value of necessaries (goods and services).
3. Ratification [Rollover definition- The act of accepting and giving legal force to an obligation that previously was not enforceable.] — After reaching the age of majority, a person can ratify a contract that he or she formed as a minor, thereby becoming fully liable for it.

Generally, when minors act on their own, their parents are…
not liable for contracts made by their minor children.

Contracts by Intoxicated Persons:
General Rules
– If a person was sufficiently intoxicated to lack the mental capacity to comprehend the label consequences of entering into the contract, the contract may be voidable at the option of the intoxicated person.
Diaffirmance
– An intoxicated person may disaffirm the contract at any time while intoxicated and for a reasonable time after becoming sober but must make full restitution. Contracts for necessaries are voidable, but the intoxicated person is liable for the reasonable value of the goods or services.
Ratification
– After becoming sober, a person can ratify a contract that she or he formed while intoxicated, thereby becoming fully liable for it.

Sven goes to a bar, drinks eight shots of bourbon, and then goes to an electronics store where he buys a large flat-screen TV for $2,500. If he later wants to void the contract based on his intoxication when he bought it, he will need to prove that:
A.) the store clerk knew that he was intoxicated.
B.) he lacked the mental capacity to enter into the contract.
C.)his capacity to act would be classified as “legally unstable.”
B.) he lacked the mental capacity to enter into the contract.

Contracts by Mentally Incompetent Persons:
Void
– If a court has declared a person to be mentally incompetent and has appointed a legal guardian, any contract made by that person is void from the outset.
Voidable
– If a court has not declared a person mentally incompetent, but that person lacked the capacity to comprehend the subject matter, nature, and consequences of the agreement, then the contract is voidable at the person’s option
Valid
– If a court has not declared a person mentally incompetent and that person was able to understand the nature and effect of the contract at the at the time it was formed, then the contract is valid and enforceable.

Maya sincerely believes that she was born on another planet. She goes to a car dealership and buys a KIA Sorrento, telling the salesperson that she is going to beam the car back to her home planet. Later, if she wants to avoid her contract she must:
A.)prove that a court had previously judged her to be incompetent.
B.) prove that she lacked adequate mental capacity when she bought the car.
C.) prove that the salesperson talked her into buying the car.
B.) prove that she lacked adequate mental capacity when she bought the car.

Any contract to commit a crime is in ____________ of a statute and therefore unenforceable.
violation

A contract to sell illegal drugs in is ________ because it is a crime.
unenforceable

A contract to smuggle undocumented workers into the U.S. for an employer is _______ and therefore unenforceable.
illegal

A usurious contract involves…
an illegally high rate of interest.

(True/False)
All gambling contracts in the United States are illegal?
False

(True/False)
Gambling is the creation of risk for the purpose of assuming it?
True

Jeff takes all his savings and asks his broker to purchase seven different stocks. When they all fall in value, he attempts to avoid the contract by claiming that “betting” on prices of stocks is the equivalent to gambling. He will:
not have legal recourse.

Which professionals do NOT need to be licensed to engage in legal and enforceable contracts:
tarot card readers.

Marte hires Pilar to represent her in a lawsuit. Pilar is not a licensed attorney, although she claims to be one, so the contract between Marte and Pilar
will not be enforced.

(True/False)
Contracts to commit an immoral act, such as selling a child, and contracts that prohibit marriage are contrary to public policy.
True

Which of the following is NOT among the types of contracts and clauses that are often held to be contrary to public policy?
A.) An exculpatory clause.
B.) A contract in restraint of trade.
C.) A divisible, or severable, contract.
C.) A divisible, or severable, contract.

Reformation
A court-ordered correction of written contracts of a written contract so that it reflects the true intentions of the parties.

Covenant not to compete
A contractual promise to refrain from competing with another party for a certain period of time and within a certain geographic area.

(True/False)
All covenants not to compete are contrary to public policy and therefore illegal.
False

A restaurant owner requires new employees to sign a covenant not to compete in the restaurant business in the entire United States for five years. Such a covenant will:
A.) Be deemed against public policy because the restaurant business is not competitive.
B.) Be deemed contrary to public policy because of excessive duration and unreasonable geographic restriction.
C.) Be deemed not contrary to public policy.
B.) Be deemed contrary to public policy because of excessive duration and unreasonable geographic restriction.

(True/False)
Courts frequently engage in employment contract reformation.
False

(True/False)
Because persons are assumed to be reasonably intelligent, courts rarely come to their aide just because they have made foolish bargains.
True

When bargains are so oppressive that the court decides to relieve innocent parties of their duties, such bargains are deemed
Unconscionable

Unconscionability
– Procedural Unconscionability
– Substantive Unconscionability

Procedural Unconscionability
Occurs if a contract is entered into or term becomes part of the contract, because of a party’s lack of knowledge of understanding of the contract of the terms.

Factors that courts consider:
– Is the print inconspicuous?
– Is the language unintelligible
– Did one party lack an opportunity to ask question about the contract?
– Was there a disparity of bargaining power between the parties?

Substantive Unconscionability
Exists when a contract, or one of its terms, is oppressive or overly harsh.

Factors that courts consider:
– Does a provision deprive one party of the benefits of the agreement?
– Does a provision leave one party without a remedy for nonperformance by the other?

(True/False)
Exculpatory clauses release a party from liability in the event of monetary or physical injury no matter who is at fault.
True

Which of the following would NOT be considered an exculpatory clause that a court would hold was contrary to public policy and therefore unenforceable?
A.) Exculpatory clauses found in rental agreements for commercial property.
B.) Exculpatory clauses in bungee jumping contracts.
C.) Exculpatory clauses in contracts with employees.
D.) Exculpatory clauses in residential property leases.
B.) Exculpatory clauses in bungee jumping contracts.

Four examples of businesses whose exculpatory clauses to limit their liability are often enforced by courts:
– Racetracks
– Skiing Facilities
– Skydiving organizations
– Golf-cart Concessions

In most illegal contracts, both parties are considered to be ________ at fault
equally

The courts are not concerned if one party to an illegal contract is unjustly___________ at the expense of the other.
enriched

A plaintiff who suffers a loss because of an illegal bargain will presumably be ______________ from entering into similar illegal bargains in the future.
deterred

(True/False)
When one party has no reason to know that the contract is illegal, that party can often recover any benefits conferred in a partially executed contract.
True

(True/False)
If any insurance company violates a statute when selling insurance, the purchaser can still enforce the policy and recover from the insurer.
True

Suppose that Jack and Hal and Sophia enter in to a contract for the sale of the business. Jack however was drunk at the time that the negotiations took place and at the time of the signing of the contract. Please decide.
A.) The contract is valid unless Jack did not know he was entering into the contract or lacked the mental capacity to comprehend its nature.
B.) The contract is voidable by any party.
C.) The contract is voidable only if Jack’s intoxication was involuntary.
D.) The contract is void.
A.) The contract is valid unless Jack did not know he was entering into the contract or lacked the mental capacity to comprehend its nature.

Assume that the contract was voidable due to Jack’s intoxication. Two years later Jack sues to undo the contract for the sale. Which of the following would be Hal and Sophie’s best defense against this action?
A.) That Jack was voluntarily intoxicated at the time of the negotiations and signing of the contract.
B.) That the contract is void.
C.) That Jack, by waiting two years ratified the contract.
D.) That Jack was intoxicated very often.
C.) That Jack, by waiting two years ratified the contract.

Assume that a contract was entered into for the sale of the restaurant, and that the sale included the covenant not to compete. Which of the following is true?
A.) The contract would be void, as covenants not to compete are a restraint of trade.
B.) The contract would be void as covenants not to compete are only valid when they are part of a valid employment contract.
C.) The contract for the sale of the business would be valid, but the covenant not to compete will be void.
D.) The covenant not to compete must be reasonable in geographic scope to be valid.
D.) The covenant not to compete must be reasonable in geographic scope to be valid.

Suppose that Jack and Hal and Sophia enter in to a contract for the sale of the restaurant. Hal and Sophia inventory the restaurant and they find that there was a case of bald eagle meat in the refrigerator, which is illegal to possess. This was unknown to them at the time of the agreement. Which of the following is true?
A.) The contract would be void due to illegality.
B.) The contract would be void since the parties are in pari delicto.
C.) The contract would likely sever the illegal part of the contract and allow for the contract for the sale of the business to be enforced.
D.) The contract would likely be voidable by Jack.
C.) The contract would likely sever the illegal part of the contract and allow for the contract for the sale of the business to be enforced.

Heather is sixteen but looks much older. She goes into a jewelry store and buys a diamond bracelet with the money she has been saving for college. If Heather realizes a year later that it was unwise to spend the money on the bracelet, she
A.) Cannot return the bracelet, because she has kept it too long.
B.) Can return the bracelet, but she will only get 50 percent of what she paid for it.
C.) Can return the bracelet and get her money back.
D.) Can disaffirm this contract only is she has turned eighteen.
C.) Can return the bracelet and get her money back.

Paul goes to a bar, has seven shots of whiskey, and then goes to an electronics store and buys a $2,500 stereo system. If he later wants to avoid the contract based on his intoxication when he bought it, he will need to prove that
A.) the store clerk knew he was intoxicated.
B.) a reasonable person would have known that he was intoxicated.
C.) his capacity to act would be classified as “legally unstable.”
D.) he lacked the mental capacity to enter into the contract.
D.) he lacked the mental capacity to enter into the contract.

Elisa truly believes that she is a space alien from the planet Zelnor. She walks into a car dealership and buys a new Volkswagen Jetta, telling the salesperson that she needs a sample of Earthling transportation to beam back to her home planet. If Elisa wants the option to avoid her contract later she must
A.) prove that a court had previously judged her to be mentally incompetent.
B.) prove that the salesperson talked her into buying the car.
C.) prove that the car dealership did not take adequate precautions to prevent sales to mentally disturbed individuals.
D.) prove that she lacked adequate mental capacity when she bought the car.
D.) prove that she lacked adequate mental capacity when she bought the car.

Amjed sues Larry, a landowner on whose property Amjed was injured. Larry believes that Craig is a lawyer and hires Craig to defend him in the lawsuit. Craig is not a lawyer, so the contract between Larry and Craig
A.) will not be enforced.
B.) will be enforced despite Craig’s winning or losing.
C.) will be enforced unless Craig loses the case.
D.) will be enforced only if Craig wins.
A.) will not be enforced.

(True/False)
An otherwise valid contract maybe unenforceable if the parties have not genuinely agreed to its terms.
True

Generally a party who demonstrates that he or she did not truly agree to the terms of a contract does NOT have one of the following choices:
A.) Sue under the statute of limitations.
B.) Carry out the contract.
C.) Rescind (cancel) the contract.
A.) Sue under the statute of limitations.

Contract law allows a contract to be _______ on the basis of mistake.
avoided

Only a mistake of ______ makes a contract voidable.
fact

The mistake must involve some __________ fact.
material

Unilateral Mistake
A mistake made by only one of the parties. Generally, the mistaken party is bound by the contract, unless the other party knows or should have known the mistake, or the mistake is an inadvertent mathematical error in addition, subraction, or the like that is committed without gross negligence

Bilateral Mistake
A mistake made by both parties. If both parties are mistaken about a material fact, such as the identity of the subject matter, either party can avoid the contract. If the mistake relates to the value or quality of the subject matter, either party can enforce the contract.

When one party makes a mistake, that party can:
do nothing because the contract is enforceable.

Alicia offers to sell a purebred cat for $200. Neither Alicia nor the buyer discusses the cat’s ancestry, but the buyer believes that it comes from a championship line and agrees to the price. Upon discovering that the cat is only worth $50, can the buyer rescind the contract based on her mistake?
probably not, because the buyer made a mistake about the cat’s value, not a mistake about a material fact.

Blake purchases a mare from Childs, who says that the mare is healthy and should make a good brood mare when a little older. After two years, the horse has not foaled. A veterinarian tells Blake that the horse is incapable of breeding. If Blake sues to rescind the contract with Childs it is:
likely that a court will allow the recession based on a mistake of material fact.

(True/False)
Even when a unilateral mistake of fact was made, a contract may be enforceable if the other party to the contract knows or should have known that a mistake of fact was made.
True

As a general rule, a unilateral mistake does not give the mistaken party any right to relief from the contract, except under one of the following situations:
A.) There was an error due to a substantial mathematical mistake that was made inadvertently and without extreme negligence.
B.) The contract was not carefully examined by one of the parties.
C.) The mistake occurred because one of the parties did not print out a page in the contract.
A.) There was an error due to a substantial mathematical mistake that was made inadvertently and without extreme negligence.

When both parties are mistaken about a material fact, ______ party can avoid the contract.
either

In a bilateral mistake situation, if the mistake relates to the value or quality of the subject matter, either party can _______ the contract.
enforce

If the parties to a contract attach material different meanings to a term, a court may allow the contract to be __________ because there has been no true “meeting of the minds.”
rescinded

(True/False)
When parties form a contract, their agreement establishes the value of the object of their transaction, not only for the moment, but for several years in the future.
False

(True/False)
When an innocent party is fraudulently induced to enter into a contract, the contract normally can be avoided because that party has not voluntarily consented to its terms.
True

When a party is fraudulently induced into a contract, that party can…
rescind the contract.

In the list below, pick out which is NOT an element of fraud.
Intent to improve one’s bargaining position.

Misrepresentations of a material fact can be made by:
words or actions

Misrepresentation by conduct involves:
a seller preventing a buyer from learning of some fact that is material.

When a naive purchaser relies on the opinion of an expert, the innocent party maybe entitled to…
rescission or reformation

(True/False)
The law will not come to the aid of one who simply makes an unwise bargain.
True

(True/False)
Misrepresentation of law ordinarily does not entitle a party to relief from a contract.
True

Those in the following professions are suppose to have greater knowledge of the law than the average citizen possess, EXCEPT:
A.) Attorneys
B.) real estate brokers
C.) licensed psychologists
C.) licensed psychologists

Senso offers to sell his car and knows that it has been in an accident. If the purchaser asks Senso if the car has had body work and Senso lies, he will have committed a(n)
fraudulent misrepresentation

(True/False)
The presence of termites qualifies as a latent defect.
False

(True/False)
Ordinarily, any party to a contract has a duty to come forward and disclose facts that the other party does not know about.
False

One party’s intent to deceive the other party to a contract is known as:
scienter

Beatrice sells Claudia an exotic bird that Beatrice knows is on the endangered species list, but tells Claudia that it isn’t. When the federal government confiscates the bird and fines her, Claudia sues Beatrice for:
fraudulent misrepresentation

Scienter does NOT exist when:
a party makes a statement that she of he sincerely believes is true.

(True/False)
Scienter occurs if a party says or implies that a statement is made on some basis, such as personal knowledge or personal investigation, when it is not.
True

Negligent Misrepresentation
Any manifestation through words or conduct that amounts to an untrue statement of fact made in circumstances in which a reasonable person would not have done (failed to do) that which led to the misrepresentation.

Innocent Misrepresentation
A false statement of fact or an act made in good faith that deceives and causes harm or injury to another.

(True/False)
When an innocent misrepresentation has occurred, the aggrieved party cannot rescind the contract, but usually can seek damages.
False

In most states, negligent misrepresentation is equal to ________ making a misrepresentation.
knowingly

An element of fraud is that the deceived party must have had a ___________ reason for relying on the misrepresentation.
justifiable

If defects would be ______ on inspection, the buyer cannot justifiably rely on the seller representations.
obvious

To recover damages caused by fraud, proof of ______ is universally required.
harm

(True/False)
A contract entered into under excessive or undue influence lacks voluntary consent and is therefore voidable.
True

Which of the following classes of individual are NOT usually susceptible to undue influence.
a. Those under the care of psychiatrists
b. Those under guardianships
c. Those under the care of physicians
d. Mentally incompetent people
e. Those attending community college
f. Elderly people
g. Those under the care of psychologists
h. Minors
e. Those attending community college

If a contract enriches the dominate party, the courts will often _______ undue influence.
presume

Jed tells his ailing mother that unless she lends him money for a business investment he will never see her again. She agrees but later changes her mind and asks for her money back. Jed claims that they have formed a binding contract. Why might the contract be voidable?
A.) Because of undue influence.
B.) Because of duress.
C.) Because of unilateral mistake.
A.) Because of undue influence.

(True/False)
Duress is both a defense to the enforcement of a contract and a ground for the rescission of a contract.
True

To establish duress, there must be proof of a threat to do something that the __________ party has no right to do.
threatening

Generally for duress to occur, the threatening act must be wrongful or illegal and it must render the person _______ of exercising free will.
incapable

A threat to exercise a legal right, such as the ______ to sue someone, ordinarily does not constitute duress.
right

(True/False)
Economic need is usually sufficient to constitute duress.
False

Lehman is fighting the IRS, and uses the services of Morgan, a CPA. The day before Lehman must file a response to the IRS, Morgan says she will not give him the final calculations unless he pays her double what she had agreed to before. Lehman pays, but later sues. A court might find that the agreement was unenforceable because of:
A.) undue influence.
B.) economic duress.
C.) fraudulent misrepresentation.
B.) economic duress.

In a typical adhesion contract,…
a seller takes advantage of a buyer.

(True/False)
Most adhesion contracts are standard-form contracts that contain fine print provisions that shift a risk ordinarily born by one party to the other.
True

Which of the following types of contracts are NOT usually standard-form contracts:
Babysitting agreements

Which provision of the Uniform Commercial Code allows the courts to refuse to enforce a contract or clause on the basis of unconscionability:
Section 2-302

Assuming an otherwise valid offer, which of the following would be the Melnick’s best rationale in trying to enforce a contract for the sale of three peppers for two cents?
A.) A unilateral mistake does not relieve the party who made the mistake from contract liability.
B.) A mistake of value usually relieves the liability under a contract.
C.) A mutual mistake relieves liability under a contract.
D.) The mistake was immaterial.
A.) A unilateral mistake does not relieve the party who made the mistake from contract liability.

Assuming a court did find there was a valid offer, if there was an action brought against the store, would Vinny’s mistake of giving the newspaper the wrong price relieve the store of liability?
A.) No, because it is a unilateral mistake, and therefore whoever made the mistake cannot use it as a defense.
B.) No, because it is a mutual mistake between Vinny and the newspaper, therefore any contract could be rescinded.
C.) Yes, because a unilateral mistake always allows contracts to be rescinded by either party.
D.) Yes, since the mistake would be obvious to a reasonable person.
D.) Yes, since the mistake would be obvious to a reasonable person.

If Joe were to introduce himself as Dr. Early to sell to Gensol, knowing that people would assume that he was a medical doctor, but never tell anyone that he was, would contracts entered into be considered to be fraudulent?
A.) Probably because he would have scienter.
B.) Probably not because he would have scienter.
C.) Probably not because there is no statement of a material fact since he did not say he was a medical doctor.
D.) Probably since he is giving his opinions of the merits of Gensol.
C.) Probably not because there is no statement of a material fact since he did not say he was a medical doctor.

If a court were to address whether or not Joe (or Pharzime) committed fraud in inducement to their contracts, which of the following elements would not need to be proven?
A.) damages
B.) scienter
C.) false representation
D.) justifiable reliance
A.) damages

If a court were to find that Joe (or Pharzime) committed fraud in inducement to their contracts, to what remedy or remedies is the aggrieved party entitled?
A.) ratification of the contract
B.) rescission
C.) rescission and damages, if out of pocket expenses were incurred as a result of the fraud
D.) restitution
C.) rescission and damages, if out of pocket expenses were incurred as a result of the fraud

AJ agrees to buy Harry’s pickup truck so he can pull his trailer. Both AJ and Harry believe that the truck is big enough to do the job. After they complete the deal, AJ finds that the truck is not strong enough to handle the trailer. The contract between AJ and Harry can be rescinded because of
A.) a beveled mistake.
B.) an allowable mistake
C.) unilateral mistake.
D.) mutual mistake.
D.) mutual mistake.

Sophie buys a tropical bird from Henry’s bird store. Henry says, “It is extremely rare.” Sophie asks if the bird is on the endangered species list. Henry knows it is on the list, but he tells her it is not. Government officials later tell Sophie that she purchased a bird that individuals may not own, the bird is confiscated, and she is fined for possessing it. To recover the price of the bird and the cost of fines, Sophie can sue Henry for
A.) undue influence.
B.) fraudulent misrepresentation.
C.) negligence.
D.) mistake, which allows he contract to be rescinded.
B.) fraudulent misrepresentation.

Laura, a widow, just sold a piece of property. She will live off that money during her retirement. Laura dotes on her son, Chris, who asks her to invest her money in his restaurant, which is faltering. He tells her that if she does not lend him the money she will never see him again. She is afraid of being alone and agrees to his request, but soon changes her mind and asks for her money back. Chris claims they have formed a binding contract. In fact, the contract may be voidable, because it was formed as a result of
A.) duress.
B.) unilateral mistake.
C.) fraudulent misrepresentation.
D.) undue influence.
D.) undue influence.

Dawn’s stepson Tony tells Dawn that he is going to lock her in a closet for a week unless she gives him a check for $20,000. Dawn is old and feeble. If she gives Tony the check and then has second thoughts about having done so, she can
A.) reclaim the money, as it was a gift; there was no consideration.
B.) seek to avoid the contract on the basis of undue influence.
C.) claim that she was defrauded.
D.) seek to avoid the contract on the basis of duress.
D.) seek to avoid the contract on the basis of duress.

Margaret signs a contract to purchase a new car, and on the back side of the agreement in fine print too small to read, Margaret agrees to waive her right to a jury trial and requires mandatory arbitration with Margaret paying all of the costs of arbitration in the event of a dispute. Margaret files suit over the condition of the vehicle, and the dealer files a motion to compel arbitration. The court will likely
A.) require Margaret to pay all of the costs of arbitration.
B.) refuse to enforce the mandatory arbitration provision.
C.) allow Margaret to return the vehicle to the dealer in return for the monies paid to the dealer.
D.) enforce the mandatory arbitration provision.
B.) refuse to enforce the mandatory arbitration provision.

(True/False)
Every state has a statute specifying what types of contracts must be in writing and we refer to such a statute as the Statute of Frauds.
True

(True/False)
An exchange of e-mails that evidences the parties’ agreement usually is sufficient to satisfy the writing requirement.
True

The primary purpose of the writing requirement is to prevent harm to _________ by requiring written evidence of agreements concerning important transactions.
innocent parties

The Statute of Frauds covers all of the following EXCEPT contracts for the sale of:
A.) land.
B.) a new car.
C.) a new college textbook.
C.) a new college textbook.

The Types of Contracts Generally Required to Be in Writing:
– Contracts involving interests in land.
– Contracts that cannot by their terms be performed within one year from the day after the date of formation.
– collateral , or secondary, contracts, such as promises to answer for the debt or duty of another.
– Promises made in consideration of marriage.
– Under the Uniform Commercial Code, contracts for the sale of goods priced at $500 or more.

(True/False)
The Statute of Frauds operates as a defense to the enforcement of an oral contract for the sale of land.
True

After a night of drinking, Bob tells his neighbor, Steve, that he can have a right-away to drive across Bob’s land to get to a fishing pond. A month later, while Steve is driving across Bob’s land, he hears Bob yell, “Get off my property, you trespasser!” Steve has…
no enforceable contract.

The reasoning behind the one-year rule under the Statute of Frauds is that:
a. the parties’ memory of their contract terms is not reliable for longer than a year.
b. because of the Statute of Frauds, there is no objective theory of contracts.
c. most contracts are invalid if they last for more than a year.
a. the parties’ memory of their contract terms is not reliable for longer than a year.

The One-Year Rule
Date of Contract formation
– If the contract can possibly be preformed within a year, the contract does not have to be in writing to be enforceable.

One Year from the Day after the Date of Contract Formation
– If performance cannot possibly be completed within a year, the contract must be in writing to be enforceable.

Dillon hires Rhonda to tutor him. They discuss Rhonda’s fee and hours and agree that the arrangement will last for the entire school year. Under the Statute of Frauds, this contract:
A.) does not need to be in writing.
B.) must be in writing based on the one-year rule.
C.) must be in writing under the Uniform Commercial Code (UCC).
A.) does not need to be in writing.

(True/False)
A collateral promise is one made by a third party to assume the debts or obligations of a primary party to a contract if the primary party does not perform.
True

(True/False)
A primary obligation and a collateral promise are the same.
False

(True/False)
A collateral promise and a secondary obligation are the same.
True

You ask your friend to loan you $2,000 for the down payment on a new car. He agrees only if he is repaid in six months and your father agrees to pay him back if you fail to do so. Does this arrangement have to be in writing to be enforceable?
Yes, because it is a collateral promise.

An oral promise to answer for the debt of another is covered by the Statute of Frauds unless:
a guarantor’s main purpose in incurring a secondary obligation is to secure a personal benefit.

(True/False)
Your uncle says to your boyfriend that he will pay him $30,000 if he marries you. Such a promise must be in writing to be enforceable.
True

(True/False)
Prenuptial agreements must be in writing to be enforceable.
True

What act requires that a contract for the sale of goods priced at $500 or more must be in writing to be enforceable?
The UCC

(True/False)
Sometimes courts enforce oral contracts that should be in writing when partial performance is an unmistakable indication that one party believes that there is a contract.
True

Oral contracts for the sale of land fall under the Statute of Frauds, but under what circumstance might a court enforce such a contract?
A.) If the buyer promised to make payment on the contract next year.
B.) If the buyer is a minor.
C.) If the buyer paid part of the price, taken possession, and made permanent improvements to the land.
C.) If the buyer paid part of the price, taken possession, and made permanent improvements to the land.

(True/False)
If a party against whom enforcement of an oral contract admits that a contract for the sale was made, the contract will still be unenforceable.
False

Which of the following conditions does NOT have to exist for the doctrine of promissory estoppel to preclude the need for a writing?
a. There must be no way to avoid injustice except to enforce the promise.
b. The reliance must have been foreseeable to the person making the promise.
c. The promisee must have justifiably relied on the promise to his or her detriment.
d. The potential damages must be less than $500.
d. The potential damages must be less than $500.

Promissory estoppel and the doctrine of partial performance both require…
reasonable reliance

(True/False)
Under the Uniform Commercial Code, oral contracts for customized goods may be enforced in certain circumstances.
True

Under the common law, a memorandum evidencing an oral contract must include…
essential terms only

A writing can consist of anything in the following list EXCEPT a(n):
a. e-mail.
b. phone conversation.
c. invoice.
d. sales slip.
e. order confirmation.
f. check.
g. fax.
b. phone conversation.

(True/False)
The written contract need not consist of a single document in order to constitute an enforceable contract.
True

Business Contracts and the Writing Requirement:
– Business Contracts that must be in Writing to be Enforceable
– Contracts for the sale of goods priced at $500 of more

Exceptions:
– Customized goods
– Admissions (quantity)
– Partial performance
– Merchants confirmed in writing

A memorandum evidencing an oral contract must give some indication that the parties _________ agreed to the terms.
voluntarily

Under most state laws, the writing must also name the parties and identify the ________, the consideration, and the essential terms with reasonable certainty.
subject matter

Contracts for the sale of land often are required to indicate the price and describe the property with sufficient ________ to allow them to be determined without reference to outside sources.
clarity

Parol Evidence Rule
A substantive rule of contracts under which a court will not receive into evidence the parties prior negotiations, prior agreements, or contemporaneous oral agreements if that evidence contradicts or varies the terms of the parties written contract.

Integrated Contract
A written contract that constitutes the final expression of the parties’ agreement. If a contract is integrated, evidence extraneous to the contract that contradicts or alters the meaning of the contract in any way is inadmissible.

Under the parol evidence rule, when the terms of a written contract are ambiguous,
a. additional evidence is not admissible to show the meaning of the terms.
b. additional evidence is admissible to show the meaning of the terms.
c. the court will conclude that the contract is legally defective.
b. additional evidence is admissible to show the meaning of the terms.

Exceptions to the Parol Evidence Rule
– Evidence of any subsequent modification (oral or written) of a written contract can be introduced in court.
– Note, though, that oral modifications may not be enforceable under the Statute of Frauds .
– Oral evidence can be introduced in all cases to show that the contract was voidable or void .
– When the terms of a written contract are ambiguous and require interpretation , evidence is admissible to show the meaning of the terms.
– When the written contract is incomplete in that it lacks one or more of the essential terms, the courts allow additional evidence to “fill in the gaps.”
– Parol evidence is admissible to correct an obvious typographical error.

Under the Uniform Commercial Code (UCC), evidence of _________ can be used as evidence for interpreting an otherwise valid written contract.
Prior dealing

(True/False)
Under the Uniform Commercial Code, courts allow the introduction of practices and customs generally allowed in a particular industry to shed light on the meaning of certain contract provisions.
True

Many contracts contain an integration clause, which means that:
a. evidence from outside the contract is excluded.
b. only prior dealings can be used to supplement the written contract.
c. only the buyer can dispute the contract.
a. evidence from outside the contract is excluded.

(True/False)
If a contract is partially integrated, evidence of consistent additional terms is admissible to supplement the written agreement.
True

The Parol Evidence Rule:
Written Contract:
Fully Integrated
– Intended to be a complete and final embodiment of the terms of the parties’ agreement
Parol Evidence Inadmissible
-For example, evidence of a prior negotiation that contradicts a term of the written contract would not be admitted.

Not Fully Integrated
– Omits an agree-on term that is consistent an agreed-on term that is consistent with the parties’ agreement
Parol Evidence Admissible
-For example, if the contract is incomplete and lacks one of more of the essential terms, parol evidence may be admitted.

England, the nation that created the original Statute of Frauds in 1677:
a. has repealed all of the statute except the provisions relating to collateral promises and land transfers.
b. has repealed all of the statutes except the provisions relating to the one-year rule.
c. repealed the statute entirely.
a. has repealed all of the statute except the provisions relating to collateral promises and land transfers.

(True/False)
The Convention on Contracts for the International Sale of Goods (CISG) incorporates the original Statute of Frauds provisions.
False

Assume at the end of the meeting between Jack and Hal and Sophia, they orally agree to enter into three separate contracts. One is for the sale of the intellectual property of the restaurant itself for $1,000,000.
The second contract is for the sale of the building that the restaurant is in for $250,000. The third is for the original sign that was outside the restaurant that Jack had in his garage for $400. Which of these agreements violates the Statute of Frauds?
A.) The sale of the building only.
B.) The sale of the building and the intellectual property.
C.) The sale of the intellectual property and the sign.
D.) All of the agreements violate the Statute of Frauds.
A.) The sale of the building only.

Assume that Jack and Hal and Sophia enter into a written contract for the sale of the restaurant, the building and all of its contents. Jack orally tells Hal and Sophia he wants to keep a certain mounted fish that is hanging on the wall of the restaurant. The contract contains an integration clause. Jack later goes to get the fish, but Hal and Sophia claim that it was part of the sale. Jack sues. What is the likely result?
A.) Jack can bring in the evidence of the oral agreement because of the parol evidence rule.
B.) Jack cannot bring in the evidence of the oral agreement because of the parol evidence rule.
C.) Jack could likely rescind the entire contract if Hal and Sophia do not turn over the fish.
D.) The parol evidence rule would not apply since it is an integrated contract.
B.) Jack cannot bring in the evidence of the oral agreement because of the parol evidence rule.

Assume that Jack and Hal and Sophia orally enter into an agreement for the purchase of the restaurant for $1,000,000. The written contract incorrectly has the price term of $100,000 and the contract contains an integration clause. Hal and Sophia pay $100,000 stating that is what the contract states. Jack sues for $900,000. Which of the following is correct?
A.) Jack will be able to bring in parol evidence of the oral terms even though this is a fully integrated contract because of the typographical error.
B.) Jack will be able to bring in parol evidence of the oral terms even though this is a fully integrated contract because the price term is ambiguous.
C.) Jack will be able to bring in parol evidence of the oral terms because this is a fully integrated contract.
D.) Jack will not be able to bring in parol evidence of the oral terms even though this is a fully integrated contract because of the typographical error.
A.) Jack will be able to bring in parol evidence of the oral terms even though this is a fully integrated contract because of the typographical error.

Dillon struggles with his algebra class and, in August, decides that he needs to get a tutor for the next school year. He persuades Vonda to tutor him beginning in September. They discuss Vonda’s fee and hours, and agree that the arrangement will last for the entire school year. Under the Statute of Frauds, this contract
a. must be in writing based on the one-year rule.
b. does not need to be in writing.
c. must be in writing under the Uniform Commercial Code (UCC).
d. must be in writing because it is collateral.
b. does not need to be in writing.

Sandy guarantees to pay Lester any debts Albert incurs with Lester. Sandy makes this guarantee because she knows that if she does not, Albert will run up a large debt with Lester and be forced to declare bankruptcy. Albert would then most likely be unable to pay Sandy what he owes her. Does this contract have to be in writing?
a. No, under the nuptial rule.
b. Yes, under the first-definer rule.
c. Yes, under the evidentiary rule.
d. No, under the main purpose rule.
d. No, under the main purpose rule.

James tells Jennie that if she can find him an original painting by G. Harvey signed with a No. 1, he will reimburse her up to $2,500. If Jennie finds such a print, presents it to James, and he refuses, to pay, she can recover under the doctrine of
a. promissory estoppel.
b. admission.
c. partial performance.
d. parol evidence
a. promissory estoppel.

If Juan is buying a tract of land from Ken, which of the following would not constitute a contract containing the legal description?
a. the legal description written on a separate piece of paper not attached to the contract, but in the same envelope.
b. the legal description written on a separate piece of paper, attached to the contract with a paperclip.
c. the legal description written in the contract itself.
d. the legal description written on a separate piece of paper and mailed separate from the contract.
d. the legal description written on a separate piece of paper and mailed separate from the contract.

Susan agrees to work for Dominic for one year in his law office. Dominic writes an employment contract stating that Susan will earn $20 per hour and will work 40 hours per week. Dominic terminates Susan’s employment after six months. Susan sues to recover what she claims are her losses. At trial, both parties discover that the contract says that Susan’s hourly wage is $0.20 per hour. What can Susan and Dominic do about the error?
a. They can ask the court to rewrite the contract.
b. They are bound by the writing under the Statute of Frauds.
c. They can offer evidence of the consideration that supported their contract.
d. They can offer parol evidence to clarify the clerical error.
d. They can offer parol evidence to clarify the clerical error.

Traditionally, only parties to a contract had rights and liabilities under the contract and this was known as….
Privity of contract

Delegation
The transfer of a contractual duty to a third party. The party Delegating the duty (the delegator) to the third party (the delegatee) is still obliged to perform on the contract should the delegatee fail to perform.

Assignment
The act of transferring to another all or part of one’s rights arising under a contract.

(True/False)
When you take out a mortgage loan to buy a house, the financial institution from which you obtained the mortgage will always be the place to where you send your mortgage checks.
False

Obligor
One who owes an obligation to another.

Assignee
The person to whom contract rights are assigned.

Obligee
One to whom an obligation is owed.

Assignor
The person who assigns contract rights.

Yuhko unconditionally assigns to Heller her rights to receive payment from Acer. Acer can now…
Pay Heller.

(True/False)
The assignee’s rights are subject to the defenses that the obligor has against the assignor—the assignee obtains only those rights that the assignor originally had.
True

An assignment must be in what form?
a. oral or written
b. oral only
c. written only
a. oral or written

(True/False)
All assignments of an interest in land can be either oral or written.
False

Rights that cannot be assigned:
– The assignment is prohibited by statute .
-The contract is personal in nature.
-The assignment significantly changes the risk or duties of the obligor.
-The contract prohibits assignment.

Zack contracts with Alfredo to give him classical guitar lessons for six months. After two months, Alfredo assigns the contract to Vasquez. This assignment is:
a. valid because Vasquez is just as good a teacher as Alfredo.
b. is invalid because no consideration was given for the contract assignment.
c. is not valid because the contract is for personal services from Alfredo.
c. is not valid because the contract is for personal services from Alfredo.

(True/False)
You have an insurance policy covering your 2014 Toyota Camry. You assign your insurance contract to your good friend Ochea so that his car can be insured. The assignment is effective.
False

(True/False)
When there is an anti-assignment clause in a contract, then ordinarily the contract cannot be assigned.
True

These Are Situations in Which a Contract Cannot Have an Anti-Assignment Clause:
– A contract cannot prevent an assignment of the right to receive funds. This exception exists to encourage the free flow of funds and credit in modern business settings.
– The assignment of rights in real estate often cannot be prohibited because such a prohibition is contrary to public policy in most states.
– The assignment of negotiable instruments cannot be prohibited.
– In a contract for the sale of goods, the right to receive damages for breach of contract or payment of an account owed may be assigned even though the sales contract prohibits such an assignment.

The term alienation refers to:
a. transferring personal property to foreigners.
b. transferring the ownerships of land.
c. moving from one state to another.
b. transferring the ownerships of land.

Giving notice is not legally necessary to establish the validity of an assignment because it is effective immediately.
The two major problems that arise when notice of the assignment is not given to the obligor:
– When the same right is assigned to two persons there is a priority issue.
– There is the potential for discharge by performance to the wrong party.

Delegatee
One to whom contract duties are delegated by another.

Delegator
One who delegates his or her duties under a contract to another.

(True/False)
Duties cannot be assigned, but they can be delegated.
True

Delegation is ineffective:
-when the duties are personal in nature.
-when performance by a third party will vary materially from that expected by the obligee.
-when the contract prohibits delegation.

Jerry contracts with top-model Carolyn to attend three evening parties at his house. After the first party, Jerry assigns Carolyn’s duties to his friend, Stan. Such an assignment will:
a. not be allowed because it involves personal services.
b. be allowed because it is an assignment rather than a delegation.
c. be allowed because it involves professional, not personal, services.
a. not be allowed because it involves personal services.

(True/False)
A valid delegation of duties does not relieve the delegator of obligations under the contract.
True

(True/False)
Courts normally construe “assignments of all rights” as implying both an assignment of rights and a delegation of duties of performance.
True

Which of the following duties CANNOT be delegated without consent.
a. A duty to transport printer paper by truck within a city.
b. A duty to supply ice to a concession stand.
c. A duty to perform brain surgery.
c. A duty to perform brain surgery.

Incidental Beneficiaries
A third party who incidentally benefits from a contract but benefits was not the reason the contract was formed; an incidental beneficiary has no rights in a contract and cannot sue to have the contract enforced.

Intended Beneficiary
A third party for whose benefit a contract is formed; an intended beneficiary can sue the promisor if such a contract is breached.

Third Party Beneficiary
One for whose benefit a promise is made in a contract but who is not a party to the contract.

Dustin’s father, Forest, enters into a life insurance contract that gives Dustin $100,000 when Forest dies. Dustin is a(n):
a. a third-party delegator.
b. third-party intended beneficiary.
c. third-party assignor.
b. third-party intended beneficiary.

Russell promises to pay Jenine $5,000 for a purebred dog. Russell discovers that he does not have this money, so Lawrence promises Russell that he will pay Jeanine the $5,000. In this situation, Jeanine is the….
a creditor beneficiary

(True/False)
Allowing a third party to sue the promisor directly circumvents the “middle person” (the promisee) and thus reduces the burden on the courts.
True

(True/False)
When a contract is made for the expressed purpose of giving a gift to a third party, the third party, called the donee beneficiary, can sue the promisor directly to enforce the promise.
True

Dali pays Standard Insurance every year for a life insurance policy, with his wife as the beneficiary. When he dies, Standard refuses to pay. Dali’s wife has:
a. recourse because she is a donee beneficiary, and therefore an intended beneficiary.
b. no recourse because she is an incidental beneficiary.
c. no recourse because of lack of privity of contract.
a. recourse because she is a donee beneficiary, and therefore an intended beneficiary.

When the Rights of Third Parties Vest:
1. The third party materially changed his or her position in justifiable reliance on the promise.
2. The third party brings a lawsuit on the promise.
3. The third party demonstrates her or his consent to the promise at the request of the promisor of promisee.

You own vacant land next to a large parcel the owner of which has told you that he is going to develop a shopping center. You know that the value of your land will then triple. He decides not to build the shopping center, so you sue him. In this situation, you are..
an incidental beneficiary

Contract that benefits a third party:
Intended Beneficiary:
– To whom performance is rendered directly and/or
– Who has the right to control the details of the performance or
– Who is designated a beneficiary in the contract
= Can sue to enforce the contract

Incidental Beneficiary
– Who benefits from a contract but whose benefit was not the reason for the contract and/or
– Who has no rights in the contract
= Cannot sue to enforce the contract

Assume that Jack and Hal and Sophia enter into an agreement for the sale of the restaurant. Hal and Sophia get a loan from the Fourth National Bank to pay for it. When their first payment is due, however, they get a letter from Bank of North America stating that they bought the loan from Fourth National Bank. Which of the following is true?
A.) Fourth National Bank made an assignment.
B.) Fourth National Bank made a delegation.
C.) Bank of North America became an intended third party beneficiary.
D.) Bank of North America became an incidental third party beneficiary.
A.) Fourth National Bank made an assignment.

Assume that Jack and Hal and Sophia enter into an agreement for the sale of the restaurant. Hal and Sophia get a loan from the Fourth National Bank to pay for it. When their first payment is due, however, they get a letter from Bank of North America stating that they bought the loan from Fourth National Bank. If Hal and Sophia were to default on the loan, who would have rights under the contract to sue Hal and Sophia for non-payment?
A.) Fourth National Bank only.
B.) Bank of North America only.
C.) Fourth National Bank or Bank of North America, but not both together.
D.) Bank of North America and Fourth National Bank acting jointly and severally.
B.) Bank of North America only.

Assume that Jack and Hal and Sophia enter into an agreement for the sale of the restaurant. Part of the contract calls for Jack to clean the outside of the restaurant within fifteen days of the closing. Instead of doing it himself, Jack hires Spray-Wash, a cleaning company to do it for him. Which of the following is true?
A.) Jack has made an assignment.
B.) Jack has made a delegation.
C.) Hal and Sophia became intended third party beneficiaries.
D.) Hal and Sophia became incidental third party beneficiaries.
B.) Jack has made a delegation.

ssume that Jack and Hal and Sophia enter into an agreement for the sale of the restaurant. Part of the contract calls for Jack to clean the outside of the restaurant within fifteen days of the closing. Instead of doing it himself, Jack hires Spray-Wash, a cleaning company to do it for him. Which of the following is true?
A.) Hal and Sophia can refuse the service from Spray-Wash for any reason because they are under no obligation to accept a delegation.
B.) Hal and Sophia can refuse service from Spray-Wash because their expectations are materially altered.
C.) If Spray-Wash does not do the job, Hal and Sophia may not recover from Jack, but only from Spray-Wash.
D.) If Spray-Wash does not do the job, Hal and Sophia can recover from both Spray-Wash and Jack.
D.) If Spray-Wash does not do the job, Hal and Sophia can recover from both Spray-Wash and Jack.

Assume that the bet placed in between Oscar and Vinny is legal in the state in which they live. What is Maria (or the Fresh Air Fund’s) relationship to the contract?
A.) Maria (or the Fresh Air Fund) is an intended or done third party beneficiary.
B.) Maria (or the Fresh Air Fund) is an incidental third party beneficiary.
C.) Maria (or the Fresh Air Fund) is unrelated to the contract.
D.) Maria (or the Fresh Air Fund) is in privity of contract.
A.) Maria (or the Fresh Air Fund) is an intended or done third party beneficiary.

Assume that the bet placed in between Oscar and Vinny is legal in the state in which they live. Can Maria (or Fresh Air Fund) collect on the contract from Vinny?
A.) No, since she is not in privity of contract.
B.) Yes, since she is in privity of contract.
C.) Yes, because she is an incidental third party beneficiary.
D.) Yes, because she is an intended or donee third party beneficiary.
D.) Yes, because she is an intended or donee third party beneficiary.

Freddie and his publisher require Michelle’s expertise in writing a chapter of a book that will be published under Freddie’s name. They sign a contract in which Michelle agrees to write the chapter. If Michelle then delegates her obligation to write the chapter to Daphne, the delegation
a. will probably be effective even though the duty involves personal services.
b. will probably not be effective, because the duty involves personal services.
c. is not a delegation at all; it is an assignment.
d. will be allowed based on the doctrine of alienation.
b. will probably not be effective, because the duty involves personal services.

Jose contracts with Lindsey to paint her house. Without Lindsey’s approval, Jose then delegates his duties to Travis, who Jose knows could use the work. If Travis fails to paint the house, Lindsey
a. Can only hold Travis liable
b. Cannot hold anyone liable
c. Can hold Jose, Travis, or both liable
d. Can only hold Jose liable
c. Can hold Jose, Travis, or both liable

Nate’s father, Felix, enters into a life insurance contract that gives Nate $75,000 when Felix dies. Nate is a
a. third-party delegator.
b. third-party intended beneficiary.
c. third-party assignor.
d. third-party substantial performer.
b. third-party intended beneficiary.

Becky owns a vacant lot. For years, it has produced nothing but weeds. She has considered selling it, but it has decreased in value, and she does not want to sell it at a loss. Jorge owns the adjoining land and has planned to build a shopping center on the land. This would cause Becky’s land to triple in value. Jorge now says that he may not build the shopping center. Becky threatens to sue if he does not go ahead with his original plans. In this situation, Becky is
a. an incidental beneficiary, who has no right to sue Jorge.
b. a creditor beneficiary, who has a right to sue Jorge.
c. a vested beneficiary, who has a right to sue Jorge.
d. a donee beneficiary, who has no right to sue Jorge.
a. an incidental beneficiary, who has no right to sue Jorge.

(True/False)
In most contracts, promises of performance are not expressly conditioned or qualified; instead, they are absolute promises.
True

Condition
A possible future event, the occurrence or nonoccurence of which will trigger the legal obligation or terminate an existing obligation under a contract.

Discharge
A termination of an obligation. In contract law, discharge occurs when the parties have fully performed their contractual obligations or when events, conduct of the parties, or operation of the law releases the parties from performance.

Performance
In contract law, the fulfillment of one’s duties arising under a contract with another.

The most common way to terminate contractual duties is by:
a. novation.
b. rescission.
c. performance.
c. performance.

The duty to perform under a contract
may be conditional.

Condition precedent
A condition in a contract that must be met before a party’s promise becomes absolute.

Condition Subsequent
A condition in a contract that operates to terminate a party’s absolute promise to perform.

Concurrent Conditions
Conditions in a contract that must occur or be performed at the same time; they are mutually dependent. No conditions are simultaneously performed.

The condition precedent precedes the ________ duty to perform.
absolute

the three possible situations in which a condition precedent is typically part of a contract:
– life insurance contracts
– contracts for the purchase of very expensive paintings
– for the purchase of race horses

(True/False)
Conditions subsequent typically operate to terminate a party’s absolute promise to perform.
True

General Plastics agrees by contract to sponsor Phyllis in the next local marathon foot race, provided she loses 20 pounds by one week before the race. This is called a:
a. condition subsequent.
b. condition precedent.
c. condition consequent.
a. condition subsequent.

(True/False)
Generally, conditions precedent are common, and conditions subsequent are rare.
True

Happy Animals, Inc., agrees to hire Lenna as a veterinarian provided she passes the required state exams. Their contract contains a..
condition subsequent

When are concurrent conditions NOT present?
When one party will perform her or his duties after the other party.

Francine wants to buy Enrique’s expensive antique watch. She knows Enrique is not quite ready to sell it, so she tells him that she will pay him anytime he delivers it to her office. Their agreement contains:
concurrent conditions

two additional ways that conditions may be classified:
expressed and implied

(True/False)
Courts may imply conditions from the purpose of the contract or from the intent of the parties.
True

(True/False)
The great majority of contracts are discharged by fulfilling conditions subsequent.
False

Breach of Contract
The failure, without legal excuse of a promisor to perform the obligations of a contract.

Tender
An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so.

Anticipatory Repudiation
An assertion or action by a party indicating that he or she will not preform an obligation that the party is contractually obligated to perform at a future time.

A buyer who offers to pay for goods has tendered payment and can therefore ______ delivery of the goods.
demand

The two basic types of performance are:
a. future and past.
b. remote and local.
c. complete and substantial.
c. complete and substantial.

Most contracts require that all aspects be completed as expressly stated in the contract. Any deviation from strict performance breaches the contract and _________ the other party’s obligations to perform.
discharges

The Basic Requirements for Performance to Qualify as Substantial Performance:
1. The party must have performed in good faith intentional failure to comply with the contract terms is a breach of the contract.
2. The performance must not vary greatly from the performance promised in the contract. An omission, variance or defect in performance is considered minor if it can easily be remedied by compensation (monetary damages).
3. The performance must create substantially the same benefits as those promised in the contract.

(True/False)
If performance is substantial, the other party’s duty to perform is mitigated.
False

Power Construction builds a new house for Sonja. In the contract, all of the windows must be made by Pella. Power, unable to find all the Pella windows needed, installs comparable windows from a competing window company. If Sonja refuses to pay Power, a court might decide that:
a. Sonja would only have to pay half of the contract price.
b. Sonja would have to pay the contract price in full because Power acted in good faith and its performance was substantial.
c. Sonja is not required to pay Power because performance deviated from the contract.
b. Sonja would have to pay the contract price in full because Power acted in good faith and its performance was substantial.

(True/False)
Because substantial performance is not perfect, the other party is entitled to damages equal to the cost to bring the object of the contract into compliance with its terms. Under all circumstances the latter statement is always correct.
False

Kristin contracts with Dr. Helpern to reshape her eyes. Helpern assures her that she will be completely satisfied. After the surgery, she is not satisfied. In this situation,
a. she only has to pay half of the contract price.
b. she must pay Dr. Helpern the full contract price.
c. she is not obligated to pay Dr. Helpern.
c. she is not obligated to pay Dr. Helpern.

Some contracts specify that the contract need to be performed to the satisfaction of another. The “other” is typically a(n)
reasonable person

In the case of a material breach of contract,
a. the nonbreaching party has the right to sue for damages resulting from the breach.
b. the breaching party has a cause of action to sue for damages resulting from the breach.
c. the parties must cancel the contract and create a new one.
a. the nonbreaching party has the right to sue for damages resulting from the breach.

(True/False)
Once a minor breach has been cured, the nonbreaching party must resume performance of the contractual obligations.
True

(True/False)
Only a material breach discharges the nonbreaching party from the contract.
True

Anticipatory repudiation can occur when:
a. a discharge by agreement is fully accepted.
b. sharp fluctuations in market prices make it extremely difficult to perform as promised.
c. one party experiences a sudden increase in business that makes it worthwhile to drop an existing, valid contract.
b. sharp fluctuations in market prices make it extremely difficult to perform as promised.

Rafael agrees to buy 20 acres of farmland from Tina. Two weeks before the deal is to close, Rafael calls her and says, “The deal is off.” In this situation, Rafael’s actions constitute
anticipatory repudiation of the contract

(True/False)
If no time for performance is stated in the contract, a reasonable time is implied.
True

Mutual Recsission
when the parties make another agreement that also satisfies the legal requirements for a contract when going through the rescission process. Must be an offer, and acceptance, and consideration. If one party has fully performed, an agreement to cancel the original contract normally will not be enforceable, unless there is additional consideration.

Novation
occurs when both of the parties to a contract agree to substitute a third party for one of the original parties. Expressly or impliedly revokes and discharges a prior contact.

Discharge in bankruptcy
a proceeding that attempts to allocate the debtor’s assets to the creditors in a fair and equitable fashion. Once assets have been allocated, a debtor receives a…
(Ordinarily prevents the creditors from enforcing most of the debtor’s contracts.

the three legal requirements for mutual rescission to take place.
offer, acceptance, consideration

(True/False)
Agreements to rescind only affect executed contracts.
False

Agreements to rescind contracts involving transfers of realty:
a. must be evidenced by writing a record.
b. must be done orally only.
c. can be done orally or in writing.
a. must be evidenced by writing a record.

The requirements for a novation:
1) a previous valid obligation was made.
2) an agreement by all parties to a new contract.
3) extinguishing the old obligation (discharge the prior party)
4) a new contract that is valid.

Aidan and Oscar form a contract under which Oscar performs house-cleaning services for Aidan for two years. Six months later, Aidan’s mother becomes ill and requires housekeeping services. Aidan, Aidan’s mother, and Oscar agree that Oscar will now take care of Aidan’s mother’s house for the remainder of the contract. The new contract
is a novation

(True/False)
If the parties do not expressly discharge the old contract when writing up a novation, it will be impliedly discharged if the new contract’s terms are inconsistent with the old contract’s terms.
True

Which of the following is NOT a type of discharge by agreement?
a. Discharge by rescission
b. Discharge by accord and satisfaction
c. Discharge by settlement agreement
d. Discharge by novation
e. Discharge by court order
e. Discharge by court order

Commercial Impracitiblilty
when it becomes much more difficult or expensive than the parties originally contemplated at the time the contract was formed. To invoke this, the anticipated performance must become significantly difficult or costly. Added burden of performing must not only must be extreme, but also must not have been known by the parties when the contract was made.

Frustration of purpose
a contract will be discharged if supervening circumstances make it impossible to attain the purpose both parties had in mind when they made the contract. The supervening event must not have been reasonably foreseeable at the time the contract was formed. Usually involves events that decrease the value of what a party receives under the contract.

Impossibility of performance
after a contract has been made, supervening events may make performance impossible in an objective sense. Applies only when the parties could not have reasonably foreseen, at the time the contract was formed, the event that rendered performance impossible.

Which of the following is NOT a type of discharge by operation of law?
Novation

Erica agrees to paint Jim’s barn for $10,000. The contract states that the work must be completed within 30 days after they sign the contract. Two days later, the barn burns to the ground. The contract is discharged by:
Operation of law

The Three Basic Types of Situations Related to Impossibility of Performance.
1) when one of the parties to a personal contract dies or becomes incapacitated prior to performance
2) when the specific subject matter of the contract is destroyed
3) when a change in law renders performance illegal

(True/False)
In situations of commercial impracticability, the added burden of performing not only must be extreme, but also must not have been known by the parties when the contract was made.
True

(True/False)
Frustration of purpose typically involves an event that increases the cost or difficulty of performance.
False

When an occurrence or event makes performance temporarily impossible, what usually happens?
a. The contract is reformed by the courts.
b. Performance is suspended until the temporary impossibility ceases.
c. The contract is rescinded.
b. Performance is suspended until the temporary impossibility ceases.

Assume that Jack and Hal and Sophia enter into a contract for the sale of the restaurant. However, Hal and Sophia, for their own protection, put a clause in the contract that the sale is contingent upon an independent appraisal that states that the restaurant is worth at least $700,000. This clause is known as:
A.) a condition precedent.
B.) a condition subsequent.
C.) a concurrent condition.
D.) a condition mandate.
A.) a condition precedent.

Assume that Jack and Hal and Sophia enter into a valid contract for the sale of the restaurant and for the covenant not to compete. The contract calls for Hal and Sophia to pay $300,000 now, and 10% of the gross proceeds of the restaurant and frozen food to Jack for the next ten years. There is a clause in the contract that states if the revenue from the proceeds of the gross sales dips below $50,000 per year, that Jack would then get back the rights to sell the frozen food himself. That clause is:
A.) a condition precedent.
B.) a condition subsequent.
C.) a concurrent condition.
D.) a condition mandate.
B.) a condition subsequent.

Assume that Jack and Hal and Sophia enter into a valid contract for the sale of the restaurant for $1,000,000. Part of the contract called for Jack to clean the outside of the restaurant prior to the closing. The day before the closing Hal alerted Jack that the restaurant was not cleaned. This is most likely:
A.) a material breach of the contract by Jack.
B.) a substantial breach of contract by Jack.
C.) complete performance by Jack.
D.) substantial performance by Jack.
D.) substantial performance by Jack.

Assume that Jack and Hal and Sophia enter into a contract for the sale of the restaurant for $1,000,000. Part of the contract called for Jack to clean the outside of the restaurant prior to the closing. The day before the closing Hal alerted Jack that the restaurant was not cleaned. Which of the following is true?
A.) Hal and Sophia could back out of the deal since the contract was not fully performed.
B.) Hal and Sophia would still have a duty to perform on the contract, and would be out the amount that it cost them to clean the restaurant.
C.) Hal and Sophia would still have a duty to perform on the contract, but could then sue Jack for the cost of the cleaning.
D.) Hal and Sophia would still have a duty to perform on the contract, but could then sue Jack for three times the cost of the cleaning.
C.) Hal and Sophia would still have a duty to perform on the contract, but could then sue Jack for the cost of the cleaning.

Assume that Jack and Hal and Sophia enter into a valid contract for the sale of the restaurant and for the covenant not to compete, and the deal would close in one year. Six months prior to the closing, Jack notifies Hal and Sophia that he changed his mind and that he would not go through with the sale. Which of the following is true?
A.) Jack has the right to do so, since the sale has not yet taken place.
B.) Jack has anticipatorily repudiated the contract, but Hal and Sophia must wait until the date of the closing to consider the contract to be breached.
C.) Jack has anticipatorily repudiated the contract and Hal and can immediately consider the contract to be breached.
D.) Jack has anticipatorily repudiated the contract and therefore the courts treat the contract as a mutual rescission.
C.) Jack has anticipatorily repudiated the contract and Hal and can immediately consider the contract to be breached.

Antonio owns property on which a gasoline station once stood. Josh agrees to buy the land so that he can build an office on it. They include language in the contract making the purchase contingent on a determination that there are no environmental problems with the property. The contingency represents
a. an implied condition.
b. a concurrent condition.
c. a condition subsequent.
d. a condition precedent.
d. a condition precedent.

If Trey signs a simple contract agreeing to pay Kaylynn $50 when she details his truck, their contract contains a provision relating to performance known as a
a. concurrent condition.
b. condition novatis.
c. condition subsequent.
d. condition precedent.
a. concurrent condition.

Jim contracted with United Technologies to install 5,000 feet of Rocketfish Cat-5e network cable in his new office building. United installed 5,000 feet of Dynex Cat-5e network cable instead. When Jim sued for breach of contract, and a court found that United’s actions constituted
a. complete performance.
b. incomplete performance.
c. material breach.
d. substantial performance.
d. substantial performance.

Nico and Oscar form a contract under which Oscar is to perform gardening services for Nico for one year. For six months, Oscar performs the services, and Nico pays him. Nico’s mother, Madison, becomes ill and is unable to care for her garden. The three agree that Oscar will no longer care for Nico’s garden but instead will care for Madison’s garden for the remainder of the year. The new contract
a. has been substantially performed.
b. is a reformation.
c. is not valid.
d. is a novation.
d. is a novation.

If a person who has signed a contract to provide a service dies before the service can be performed, the
a. buyer is out of luck, because the contract is discharged by objective impossibility.
b. estate (or successor) of the service provider may sue for the profits that would have been earned had the contract been fulfilled.
c. estate (or successor) of the service provider must make a good faith effort to provide a timely replacement.
d. buyer can sue the estate of the deceased to recover the cost of obtaining a replacement or for other particular costs incurred.
a. buyer is out of luck, because the contract is discharged by objective impossibility.

When one party breaches a contract, the nonbreaching party can choose one or more of several __________ .
remedies

A remedy is the relief provided by the _________ party when the other party has breached the contract.
innocent

Today, the remedy at law for breach of contract is normally _________ damages.
monetary

Usually a court will not award an equitable remedy unless the remedy at law is _______ .
inadequate

Compensitory damages
A money award equivalent to the actual value of injuries or damages sustained by the aggrieved party.

Consequential damages
Special damages that compensate for a loss that is not direct or immediate (for example, lost profits). The special damages must have been reasonably foreseeable at the time the breach or injury occurred in order for the plaintiff to collect them.

Incidental Damages
Expenses that are caused directly by a breach of contract, such as those incurred to obtain performance from another source.

Nominal Damages
A small monetary award (often one dollar) granted to a plaintiff when no actual damage was suffered or when the plaintiff is unable to show such loss with sufficient certainty.

(True/False)
Compensatory damages replace what was lost because of what the breaching party did and for this reason are often said to “make the person whole.”
True

Kipp agrees to sell Lucio 500 copies of a book for $3.50 each. Kipp does not deliver the books. At the time of the breach, the books are available at $4.50 each. Lucio’s damages are
$500

(True/False)
Compensatory damages are reduced by any loss that the nonbreaching party has avoided.
True

Suppose that a buyer breaches a contract for the sale of goods that have not yet been produced. In such a situation, expenses incurred to obtain performance from another source are known as
Incidental damages

Leslie contracts with Remodel, Inc., to redo her living room, but she changes her mind and breaches the contract before Remodel can begin work. As a remedy for the breach, Remodel can seek:
expected profits from the contract.

In a majority of states, when a seller of a parcel of land breaches the contract and has sold the real property to someone else, the measure of consequential damages is:
The difference between the contract price and the market price of the land

When the cost of repairing or completing the performance as required by the contract greatly outweighs the benefit to the owner, ________________ occurs.
economic waste

Which of the following examples would NOT be classified as consequential damages?
a. Lost profits to a factory when parts to a broken machine are not delivered at the time specified in the contract.
b. Cost of reimbursement of ticket sales when a music group does not show.
c. Loss of profits for goods that the buyer planned to resell immediately, but did not receive.
d. The difference between the contract price and the market price of land that was sold to someone else.
d. The difference between the contract price and the market price of land that was sold to someone else.

(True/False)
Punitive damages are generally awarded in lawsuits for breach of contract.
False

(True/False)
Punitive damages are generally awarded in lawsuits for breach of contract.
False

Mitigation of damages
A rule requiring the plaintiff to have done whatever was reasonable to minimize the damages caused by the defendant.

Penalty
A sum inserted into a contract, not as a measure of compensation for its breach but rather a punishment for a default.

Liquidated damages
An amount, stipulated in the contract, that the parties to a contract believe to be a reasonable estimation of the damages that will occur in the event of breach

The enforceability of a liquidated damages clause normally requires a yes answer to the following two questions:
1. When the contract was entered into, was it apparent that damages would be difficult to estimate in the event of a breach?
2. Was the amount set as damages in a reasonable estimate and not excessive?

Which of the following types of contracts typically do NOT include a liquidated damage clause?
a. Professional athlete contracts
b. Construction contracts
c. Professional singer contracts
d. Contracts for college tutoring services
e. Professional contracts for TV talk show hosts
f. Professional dancer contracts
d. Contracts for college tutoring services

Equitable remedies do NOT include one of the following:
a. Restitution.
b. Rescission.
c. Specific performance.
d. Reformation.
e. Monetary damages.
e. Monetary damages.

Restitution
An equitable remedy under which a person is restored to his or her original position part two loss or injury or placed in the position here she would have been an had to breach not occurred.

Reformation
A court ordered correction of a written contract so that it reflect the true intentions of the parties.

Specific performance
An equitable remedy requiring the breaching party to perform as promised under the contract.

Sometimes monetary damages are _________ for a breach of contract.
inadequate

In these situations, the nonbreaching party may ask the court for a(n) _______ remedy.
equitable

Equitable remedies are typically based on __________.
fairness .

Unilateral rescission is NOT available for one of the following:
a. Mistake.
b. Undue influence.
c. Fraud.
d. Misrepresentation.
e. Minor clerical errors.
f. Lack of capacity to contract.
g. Duress.
e. Minor clerical errors.

(True/False)
Restitution might be available when there has been misconduct by a party in a confidential or other special relationship.
True

Which of the following is NOT one of the reasons that specific performance is an attractive remedy to the nonbreaching party?
a. It avoids arranging another contract.
b. It avoids problems of collecting the judgment.
c. It provides the exact bargain promised in the contract.
d. No judge has to be involved.
e. Actual performance may be more valuable than monetary damages.
d. No judge has to be involved.

(True/False)
Contracts for the sale of goods usually qualify for specific performance.
False

Why is specific performance rarely granted for personal service contracts?
a. Because there are rarely any lawsuits for breach of such contracts.
b. Because courts rarely want to monitor contracts for personal services, which usually require the exercise of personal judgment or talent.
c. Because most personal service contracts contain a not-to-sue clause.
b. Because courts rarely want to monitor contracts for personal services, which usually require the exercise of personal judgment or talent.

(True/False)
When the parties have completely and exactly expressed their agreement in writing, the equitable remedy of reformation is available.
False

Which of the following is typically NOT present when the courts order reformation of a contract?
Duress

Louis contracts with Greenfield to buy several of Greenfield’s dairy cows. Greenfield deliveries the cows, but Louis doesn’t pay for them. Greenfield may be able to have his cows returned if he seeks the remedy of:
Restitution

Rhena contracts with Darrel to buy two show dogs. They agree that she will pay $2,000 for each dog. When they draw up the contract, the sales price is inadvertently changed to read “$40,000” rather than “$4,000.” They can seek the remedy of
Reformation

The Remedies for Breach of Contract:
-Damages
(Compensatory, Consequential, Punitive , Nominal, Liquidated)
– Recission and restitution
– specific performance
– reformation

(True/False)
Legal obligations arise under the doctrine of quasi contract because the law considers that the party accepting the benefits has made an implied promise to pay for them.
True

What are the circumstances under which a court will NOT use the doctrine of quasi contract?
a. As an alternative to suing for damages.
b. When justice requires that the party receiving the benefit pay the reasonable value for it.
c. When a well-written contract is executed.
d. When one party has partially performed under a contract that is otherwise unenforceable.
c. When a well-written contract is executed.

To recover under the theory of quasi contract, the party seeking recovery must show the following:
– The party has conferred a benefit on the other party.
– The party conferred the benefit with the reasonable expectation of being paid.
– The party did not act as a volunteer in conferring the benefit.
– The party receiving the benefit would be unjustly enriched if allowed to retain the benefit without paying for it.

Olga and Chenoa orally agree that Olga will replace Chenoa’s bathroom fixtures in exchange for which Chenoa agrees to cut Olga’s hair every six weeks for the next three years. Olga performs her side of the bargain but then Chenoa sells the house and moves away. Olga may seek recovery based on:
Quasi Contract

A knowing relinquishment of a legal right is called a:
waiver

(True/False)
A waiver erases a past breach, and the contract continues as if that breach had never occurred.
True

(True/False)
There are rarely any good reasons to waive a breach of contract.
False

Carmen contracted with Stevenson to replace the carpets in her house, but Stevenson damaged some of the walls in so doing. Carmen does not pursue a claim against Stevenson and her actions are known as
Waiver of breach

Normally a waiver does not extend to subsequent defective performance. Under what circumstances will a waiver in fact extend to future defective performance?
a. When the new breach is completely unrelated to the previous breach.
b. When a pattern of conduct that waives a number of successive breaches occurs.
c. When the contract specifies that no breach can occur.
b. When a pattern of conduct that waives a number of successive breaches occurs.

(True/False)
A waiver prevents the nonbreaching party from declaring that the contract has terminated or been rescinded.
True

(True/False)
Many contracts have provisions that state that the only remedy for breach is replacement, repair, or refund of the purchase price.
True

two possible contract provisions that limit remedies:
-exculpatory clauses
-limitation of liability clauses

Normally a provision excluding liability for fraudulent or _____ injury will not be enforced.
intentional

A clause ________ liability for illegal acts will not be enforced.
excluding

A clause excluding acts that are contrary to _______ policy will not be enforced.
public

Clauses excluding liability for _________ of law will not be enforced.
violations

Can Spud avoid his obligations under the contract because of this emergency job?
A.) Yes, emergencies allow cancellation of the contract in all cases.
B.) Yes, since he has an offer where he can make more money.
C.) No, an emergency never affords relief under a contract.
D.) No, since the emergency did not make performance impossible, he must finish the job.
D.) No, since the emergency did not make performance impossible, he must finish the job.

Vinny asks if he should force Spud to finish. Could Oscar get a court order requiring Spud to actually build the display?
A.) Yes, he was under contract to finish it so a court would order him to specifically perform.
B.) No, specific performance is an equitable remedy, and equitable remedies are never allowed in contract actions.
C.) No, specific performance is not allowed in this case because Spud has another job.
D.) No, specific performance is not allowed in this case because money damages are available.
D.) No, specific performance is not allowed in this case because money damages are available.

Since Spud cancelled on short notice, can Oscar get punitive damages from him?
A.) No, since breaching a contract is usually held to be a business decision (not an act of moral turpitude) punitive damages are very rarely awarded in contract cases.
B.) Yes, punitive damages are designed to punish, and would be available.
C.) Yes, if Oscar can show that Spud made more money on the other job.
D.) Yes, unless Spud can prove that the other job was an emergency.
A.) No, since breaching a contract is usually held to be a business decision (not an act of moral turpitude) punitive damages are very rarely awarded in contract cases.

If Vinny finishes the job, and it costs more money than the original contract with Spud, who is liable for the difference in cost to Oscar?
A.) Spud, if Oscar can prove Spud will make more money on his other job.
B.) Oscar, since he is in privity of contract with Vinny.
C.) Spud, since Oscar is trying to mitigate his damages.
D.) Oscar, since the damages would not be mitigated.
C.) Spud, since Oscar is trying to mitigate his damages.

What are Oscar’s compensatory damages in this case?
A.) The money he already paid Spud in advance.
B.) The cost to finish the job.
C.) Advertising expenses that he already paid.
D.) All of these choices are correct.
D.) All of these choices are correct.

If the display does not get built, and the sale does not happen, can Oscar recover the $3,000 profit he is going to lose?
A.) No, that would be consequential damages which are not allowed in contract cases.
B.) No, lost profits are never allowed to be recovered because they are speculative.
C.) Yes, if Oscar can show that this loss was a reasonably foreseeable result of the breach, and $3,000 is a good estimate of the loss.
D.) Yes, but only if Oscar can show that Spud’s breach was not due to a true emergency.
C.) Yes, if Oscar can show that this loss was a reasonably foreseeable result of the breach, and $3,000 is a good estimate of the loss.

Assume that Jack and Hal and Sophia enter into a valid contract for the sale of the restaurant and for the covenant not to compete. Part of the agreement states that prior to the closing Jack will have an addition to the dining room built on to the building. In order to make sure that Jack does this timely, Hal and Sophia put a clause into the contract that states that for every day past October 15th that the addition is not finished, Hal and Sophia are entitled to reduce the purchase price by $500. This clause is:
A.) a liquidated damages provision.
B.) a mitigation provision.
C.) a specific performance provision.
D.) a waiver provision.
A.) a liquidated damages provision.

Assume that Jack and Hal and Sophia enter into a valid contract for the sale of the restaurant and for the covenant not to compete. Part of the agreement states that prior to the closing Jack will have an addition to the dining room built on to the building. In order to make sure that Jack does this timely, Hal and Sophia put a clause into the contract that states that for every day past October 15th that the addition is not finished, Hal and Sophia are entitled to reduce the purchase price by $500. In order for the clause to be enforceable:
A.) at the time that the contract was entered into, it must be hard to estimate the damages for a breach.
B.) the amount set as damages is a reasonable estimate of the actual damages and not a penalty.
C.) Both “at the time that the contract was entered into, it must be hard to estimate the damages for a breach” and “the amount set as damages is a reasonable estimate of the actual damages and not a penalty” are correct.
D.) Neither “at the time that the contract was entered into, it must be hard to estimate the damages for a breach” and “the amount set as damages is a reasonable estimate of the actual damages and not a penalty” are correct.
C.) Both “at the time that the contract was entered into, it must be hard to estimate the damages for a breach” and “the amount set as damages is a reasonable estimate of the actual damages and not a penalty” are correct.

Assume that Jack and Hal and Sophia enter into a valid contract for the sale of the restaurant and for the covenant not to compete for five years. After three years Jack starts selling frozen foods in violation of the covenant not to compete. Hal and Sophia sue, and the judge feels that the time restraint in covenant not to compete was too long and therefore unreasonable. Which of the following would likely be an appropriate remedy?
A.) Rescission and restitution.
B.) Specific performance.
C.) Reformation.
D.) Quasi contract.
C.) Reformation.

Allison contracts with Jackson to have him remodel the kitchen in her home. Allison changes her mind and breaches the contract before Jackson can begin work. As a remedy for the breach, Jackson can seek
a. expected profits from the contract.
b. nothing, because she breached the contract before Jackson began work and he suffered no loss.
c. the contract price.
d. the contract price plus interest.
a. expected profits from the contract.

Velma contracts with Gordon, who agrees to build a stone retaining wall and French drain on her property. The wall and drain are necessary to prevent erosion of her land, which is falling into the creek on her property at a rapid rate. If Gordon breaches the contract by failing to get to work, Velma is under a legal obligation to
a. do nothing, because she is the innocent party and thus has no legal duties.
b. wait until Gordon is prepared to build the wall and drain.
c. mitigate her damages.
d. absorb all of the costs associated with the property erosion caused by Gordon’s breach.
c. mitigate her damages.

Brandon contracts with Starcross to buy several of Starcross’s dairy cows. Starcross delivers the cows, but Brandon doesn’t pay for them. Starcross may be able to have his cows returned if he seeks the remedy of
a. restitution.
b. specific performance.
c. reformation.
d. novation.
a. restitution.

Max and Starla orally agree to a contract in which Max will replace the fixtures in Starla’s bathroom. In exchange, Starla agrees to cut Max’s hair every six weeks for the next three years. Max performs his side of the bargain, and Starla cuts his hair on schedule for six months. Then she sells her house and moves 2,000 miles away. Max can seek recovery based on
a. attenuation.
b. quasi contract.
c. specific performance.
d. reformation.
b. quasi contract.

Sadie contracted with Sean, who agreed to replace the carpets in her house. Sean damaged some of the walls when he installed the carpets. Sadie did not pursue a claim against Sean for his defective performance of the contract. Sadie’s actions are known as
a. a penalty.
b. a waiver of breach.
c. an exculpatory clause.
d. a breach.
b. a waiver of breach.

Kevin buys a new Volkswagen and signs a contract with Volkswagen saying that he will never sue the company for any personal injuries he may receive as a result of a faulty car. In exchange, Volkswagen reduces the price of the automobile by $6,500. This type of contract provision is
a. a valid liquidated damages clause.
b. a dormant commerce clause.
c. a revisionary clause.
d. an exculpatory clause.
d. an exculpatory clause.

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