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Business Law: Contracts Question Set
The Great Courses
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Law
Professional
05/17/2017

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Term
Susan and Jack had given each other birthday presents for many years. When Jack forgets her birthday, she sues for breach of an implied contract. Should she win?
Definition
No, the court would presume that birthday presents are not contractual but are gifts without consideration.
Term
To have a binding quasi-contract, must a party show some evidence of an intention to agree to terms?
Definition
No, a quasi-contract is imposed by courts out of considerations of fairness and requires no evidence of agreement.
Term
Under what doctrine will the courts sometimes enforce a simple promise or gift?
Definition
Courts may enforce promises of gifts under the doctrine of promissory estoppel.
Term
What are the basic legal requirements of a contract?
Definition
Agreement, Consideration, Capacity, Legality, and sometimes Form
Term
Jamal offers Howie a thousand dollars if Howie swims the English Channel. What type of contract is formed, and how would Howie accept?
Definition
This would be a unilateral contract, and Howie could accept only by actually swimming the Channel.
Term
After you enter a contract with your lawyer, you feel that it has been breached. Is this contract governed by the terms of the Uniform Commercial Code?
Definition
No, the U.C.C. does not apply to contracts for services.
Term
What is the practical difference between a void contract and a voidable contract?
Definition
A void contract has no legal effect, but a voidable contract is binding until the party chooses to exercise the option to void its terms.
Term
Margaret contractually agreed to serve as a surrogate mother for an infertile couple. After giving birth she sought to keep the baby. What argument should she make to try to escape the contract?
Definition
She could argue that the contract was void as contrary to fundamental public policy issues, if not actual law.
Term
William Tackaberry was an agent of Weichert Realtors. Tackaberry contacted Thomas Ryan about the sale of his property and informed Ryan that he would receive a ten percent commission at the closing of such a sale. Despite extensive discussions and Tackaberry’s efforts, Ryan never signed a letter that detailed the terms of the commission and contract for sale of the property. Ryan had sought to reduce the rate of commission, but Tackaberry refused to make any modifications. Meanwhile, Tackaberry negotiated and finalized a deal for the sale of the property, and Weichert sent Ryan a bill for ten percent of the purchase price, but Ryan refused to pay. Weichert then sued Ryan. Should Weichert recover and under what theory of contract law?
Definition

In this case, Weichert v. Ryan, 608 A.2d 280 (1992), the court held that Weichert could recover under the doctrine of quasi-contract. The court rejected Weichert’s claim that an implied contract was created, because Ryan’s conduct suggested that he did not agree to the terms submitted by Tackaberry. Substantial evidence proved that Tackaberry had obtained the deal, however, that the court found that justice required some compensation. Moreover, Ryan himself admitted that he had always intended to provide some compensation for the brokerage services. Consequently, Weichert is entitled to the fair value of its services, but not necessarily ten percent. This case was a relatively close call—a court might have reasoned that Weichert foolishly provided the services without first obtaining a contract and should bear the consequent risk.

Term

Samuel Nichols, Inc., a brokerage firm, signed an exclusive brokerage agreement with Molway to find a purchaser for Molway’s property within ninety days. Nichols would receive a commission for brokering a sale of the property within this time. Nichols began advertising the property and showing it to prospective buyers. Then, before the ninety days were up, Molway sought to cancel the agreement. Molway maintained that the contract was unilateral, that Nichols had not yet performed its act (finding a buyer), so the contract could be canceled. Nichols disagreed. What sort of contract was this, and did Molway lawfully cancel the contract?

Definition

In this case, Samuel Nichols, Inc. v. Molway, 515 N.E.2d 598 (1987), the court held that the contract was bilateral. The court reasoned that Nichols had promised to use its best efforts to market the property in exchange for Molway’s promise to give a ninety-day exclusive arrangement. Thus, the contract was binding for ninety days. Even if the contract had been deemed unilateral, the court might still have ruled for Nichols, because that company had acted in justifiable reliance on Molway’s promise.

Term
Janet offers an award for capture of her husband’s murderer. Unaware of the reward, Cecille captures the murderer. Is Cecille legally entitled to the reward?
Definition
No, because the reward offer was not communicated prior to acceptance.
Term
On January 1, Maurice sends Joel an offer, which is received on January 4. On January 3, Maurice sends a revocation of the offer, which was received on January 6. Before receiving the revocation, Joel sent an acceptance on January 5. Do Joel and Maurice have a binding contract?
Definition
Yes, the acceptance was effective on the 5th and formed a contract, and the revocation did not become effective until its receipt, which was on the 6th and too late because acceptance had already occurred.
Term
What are the legal requirements for an offer that may be accepted to form a contract?
Definition
A serious intention to be bound, reasonable definiteness of terms, and communication to the offeree.
Term
A buyer made a low offer to a car dealer, who rejected it. After extensive discussions, the dealer decided to accept the original offer, but now the buyer wants no deal. Can the dealer accept the offer?
Definition
No, the earlier rejection terminated the offer, which could no longer be accepted.
Term
Juan offered to sell real property to Julia and promised her she would have a thirty-day exclusive option on the property. After a week, Juan informed her that her time to accept was up. Can Julia insist on the full thirty days to decide?
Definition
No, not unless she paid for the thirty-day option. The offeror controls the offer and can revoke at any time, regardless of a contrary promise.
Term
Maggie seeks to buy land from Chris, who declares that he would not consider selling for less than $55,000. Maggie then states that she accepts at that price. Do they have a contract to transfer the land?
Definition
No, because Chris’s statement constitutes preliminary negotiations and does not sound as an offer.
Term
Under common law contracts for services, must the offeree accept the precise terms of the offer and why?
Definition
Yes, the offeree cannot accept and modify terms under the common law’s mirror-image rule.
Term
Ruth Ann offers Ed a job at minimum wage but agrees to sweeten the pot with a “fair share of the profits” if he does a good job. The business is successful, but Ruth Ann refuses to share the profits. Can Ed successfully claim a share of the profits?
Definition
No, because the phrase “fair share” is insufficiently definite and offers a court no method for determining the remedy.
Term

The Changs read an advertisement from First Colonial Bank regarding saving certificates. The advertisement stated that a depositor could deposit a certain amount, receive a gift, and receive a certain amount at the certificate’s maturity in three and one half years. The Changs made a deposit of $14,000 as the advertisement specified, and they received the promised gift. After maturity, however, the bank gave them only $18,823, rather than the $20,136 promised in the advertisement. First Colonial explained that the advertisement contained a typographical error, so that a $15,000 investment was required to receive the greater sum. The Changs filed suit to recover the difference, claiming that the parties had a binding contract. Explain whether the Changs should prevail on this claim.

Definition

In this case, Chang v. First Colonial Savings Bank, 410 S.E.2d 928 (1991), the court ruled for the Changs. Although an advertisement ordinarily does not constitute an offer that can be accepted for a binding contract, in this instance the advertisement was clear, definite, and explicit. The court also emphasized that the bank had not informed the Changs about the typographical error until after it had used their money for more than three years. In these circumstances, the court would hold the bank to fulfill the terms of the advertisement.

Term

Marino Consultants sent Delpaq Computer Corporation a purchase order for 100 computers at the advertised price, and this order made no mention of warranties. Delpaq responded with a confirmation that accepted the order and contained detailed terms, including one that stated that the company made “no warranties of any kind.” Marino representatives did not closely read the corporation and did nothing further. Soon after the purchase, twenty of the computers suffered major hard drive failures. Marino sought to recover damages, but Delpaq sought to rely on the absence of warranties. Did the parties have a contract, and if so, what are its terms?

Definition

Although Delpaq’s confirmation contained additional terms, this fact does not make it a counteroffer. Assuming that the parties intended to make a deal, there is a contract. The additional terms, including the disclaimer of warranties, presumptively become part of the contract, since Marino did not promptly object. However, such additional terms do not become part of the contract if they make a material alteration in the offer. Elimination of all warranties is so substantial that it would probably be held to be such an alteration, so the disclaimer would not become part of the contract. Thus, the contract contains no warranty term, but Marino may rely on the implied warranties contained in the Uniform Commercial Code.

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