Homework answers / question archive / 1)On December 15, 2010, Cal, the owner of Cal’s Café, entered into a written contract with Dan, owner of Dan’s Pastries, under which Cal agreed to purchase his pastry requirements for the calendar year 2011

1)On December 15, 2010, Cal, the owner of Cal’s Café, entered into a written contract with Dan, owner of Dan’s Pastries, under which Cal agreed to purchase his pastry requirements for the calendar year 2011

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1)On December 15, 2010, Cal, the owner of Cal’s Café, entered into a written contract with Dan, owner of Dan’s Pastries, under which Cal agreed to purchase his pastry requirements for the calendar year 2011. The contract provided that “Cal will have no obligation to receive any specified quantity of pastries, but only his daily requirements” and Dan “agrees to supply such requirements” at the fixed price per dozen specified in the contract, “cash on delivery.” During 2010, Cal’s requirements of pastries for his café averaged approximately 40 dozen per week. Early in 2011, Dan experienced a significant increase in his costs and decided that he could no longer afford to supply Cal’s requirements at the price set in their agreement. If Dan asserts that the agreement is not binding on him because of a lack of consideration, will Dan prevail?

a. Yes, because requirements contracts lack mutuality of obligation.

b. Yes, because the contract provision stating that Cal had no obligation to receive any specified quantity made the contract unenforceable.

c. No, because requirements contracts do not need consideration to be enforceable.

d. No, because Cal’s agreement to buy his requirement was sufficient consideration for Dan’s agreement to supply those requirements.

2)Donald purchases a ticket from Promoter to enter a contest to win a trip, car or a list of other prizes. The back of the ticket contains some small print, and Donald does not have his glasses, so he doesn’t read it. The ticket refers Donald to a website where the rules of the contest are listed. But, after he reads an article in the news indicating that the contest was rigged, Donald, who did not win any of the big prizes, decides to sue Promoter. Promoter claims Donald is bound by the arbitration clause set forth in the rules. How is the court most likely to rule on the applicability of the arbitration clause?

a. Donald is not bound by the arbitration clause because he did not have a chance to read it.

b. Donald is not bound by the clause because it was imposed on him after he entered into the contract.

c. Donald is bound by the arbitration clause since he entered the contest on the Promoter’s terms

d. Donald is bound by the arbitration clause because it is fair.

3)In a letter Dad sent to his daughter Gena on her 16^th birthday, while she was away at boarding school, Dad promised to give Gena $150,000 for college if she “stayed clear of boys and drugs.” The letter said “Otherwise, you’re on your own as far as college.” Gena studiously stayed away from both drugs and boys until she graduated from the boarding school. When she called her Dad for the college money he said, “Honey, I decided to start a new business venture and I need every penny. Sorry, but I cannot give you the money.” Gena sued Dad for $150,000. How should the court rule?

a. There is no consideration for the promise, so it is unenforceable.

b. The contract is unenforceable due to the Statute of Frauds

c. The contract is unenforceable because there was no detriment to Gena.

d. The court should enforce the contract.

4)Al is injured in an accident between a car and bus, and Nan nurses him back to health over a period of several weeks. After Al recovers, Al writes a letter to Nan in which he expresses his appreciation for her kindness, and indicates that he will pay her expenses for taking time off of work for the two weeks Nan nursed him, because Al feels strongly that he has an obligation to reciprocate her kindness. After writing the letter, Al suffers complications from the accident and dies. Nan submits information regarding her expenses to the executor of Al’s estate but the executor refuses to pay. If Nan sues the estate, how should the court rule?

a. Al’s promise is unenforceable due to lack of consideration.

b. The doctrine of promissory estoppel renders Al’s promise enforceable.

c. The Statute of Frauds bars enforcement of the contract.

d. Al’s promise is enforceable under the moral obligation doctrine.

5)Mike entered into an agreement with Cliff, an architect, to supervise the construction of Mike’s restaurant and brewery. Cliff also operated a business that sold refrigeration equipment. When Cliff heard that Mike hired someone else to provide the refrigeration equipment for the restaurant and brewery, Cliff became angry and walked off the job. He returned to his position only after demanding a $5,000 bonus, which Mike reluctantly agreed to pay. Cliff drafted a contract modification requiring Mike to pay the $5,000 bonus, and Cliff and Mike both signed the written modification agreement. Later Mike reneged on his promise to pay the bonus, and Cliff sued. Is the modification enforceable?

a. The modification is unenforceable due to the pre-existing duty rule.

b. The modification is enforceable because no consideration is required.

c. The modification of the contract is unenforceable due to the Statute of Frauds.

d. The modification is enforceable because it is supported by consideration.

6)Farley verbally agrees with Kruse to work on a construction project in which Kruse will work as a general contractor at a salary of $9,000 per month. The project involves construction of an apartment complex with 90 units, and it will be built out in three phases. Although Farley and Kruse did not discuss the specific time frame for the project, Phase One is projected to take about nine months to complete. About three months into the project, Farley breaches by firing Kruse. Kruse sues to enforce the contract, and seeks damages. Farley asserts that the Statute of Frauds applies. What is the most likely outcome?

• The Statute of Frauds will not bar enforcement of the contract.
• The Statute of Frauds will bar enforcement of the contract because actual performance will likely take more than one year.

c. The Statute of Frauds will bar enforcement of the contract because it involves real property.

d. The Statute of Frauds will bar enforcement because the contract price exceeds $5,000.

7)Del calls Abe and places an order for 1,000 sweatshirts from Abe, to be silk-screened with the Abraham Lincoln University logo, for $25 per item, for delivery in 10 days. Del provides Abe with the logo via email to Abe. Abe sends a confirming email to Del, but mistakenly types in the wrong email address, so that Del never receives the email. Abe then purchases the sweatshirts and begins the work. A few days later, Abe is about half way through with production of the order. Abe calls Del to confirm that Abe is working on the order and lets Del know the status. Del tells Abe he wants to cancel the order. Abe insists that Del perform the contract because Abe already started production. Do the parties have an enforceable agreement?

a. Yes, the confirmatory memo binds Del, even though he did not receive the email.

b. Yes, because Abe told Del he started manufacture of the specialty goods before Del cancelled.

c. No, because Del did not receive the email from Abe.

d. No, because there is no writing binding Del.

8)Arden Co. manufactures and sells packing boxes for movers. Matt owns the starving law students' moving company, and is always looking for a good deal on moving boxes. Matt orders 5,000 boxes from Arden Co. for $2,000, for delivery in 30 days. When the boxes are delivered, Matt notices a rubber stamp in red ink on the confirmation stating: "Acceptance conditioned upon a $100 crating fee." Which of the following statements best describes the parties' relationship?

a. The confirmation is a counteroffer which Matt can accept or reject.

b. There is no contract between Matt and Arden, because the crating fee is material.

c. There is a valid contract that includes the crating fee.

d. There is a valid contract that does not include the crating fee.

 

 

9)All of the following are essential elements of consideration except:

a. Detriment to the promisee

b. Benefit to the promisor

c. Bargained for exchange

d. Equal exchange between promisor and promise

 

10)Which of the following statements is not true about consideration:

a. The consideration doctrine does not require the promises or performance exchanged be of equal value.

b. As long as a legal detriment has been suffered in exchange fort he promise, consideration is present

c. Courts will invalidate a contract on the ground that the consideration given for a promise is inadequate in relation to the value of the promise

d. Typically as long as parties have bargained for an exchange the courts will not upset that exchange on the basis of inadequate consideration

11)Fred owned an auto repair business in financial difficulty. He sought a loan from Bob. Bob required that Fred’s wife Wilma sign the loan documentation as well as a personal guarantee. Wilma refused. Fred threatened her, saying, “You aren’t leaving me with a lot of choices here, Wilma.” He locked her in a closet and nailed the door shut. She tried to get out and couldn’t budge the door. Finally, in desperation, Wilma agreed to sign the documents, in order to get out of the closet, as she suffered from claustrophobia, and thought she might lose her mind. Fred let Wilma out of the closet, and physically held her hand and forced her to sign the documents, then Fred gave the documents to Bob in exchange for the proceeds of the loan. Fred then took the proceeds of the loan and fled for the Cayman Islands. Bob sued Wilma on the note and guarantee. Wilma raised the defense of duress.

How should the court rule?

a. Wilma's defense will fail because Bob did not cause the duress.

b. Wilma's defense will fail since Bob did not improperly threaten Wilma.

c. Wilma's defense will succeed, and the contract is void.

d. Wilma's defense will fail because she had a reasonable alternative to signing the documents.

12)Lynn, a student, leased an apartment from Art. During the negotiations, Lynn asked who else lived in the building, and Art told Lynn that students had always rented his apartments, since they were near the college. Lynn proceeded to tell Art that she was nervous about getting the apartment, as it would be her first time living on her own. Art knew that there was one tenant who was not a student, Sam. Art was aware that Sam had been charged with assault on a female student, and expelled from the school, but Art did not tell Lynn, who proceeded to sign a one year lease including an "as-is" clause. After Lynn moved in, one of the other tenants told her about Sam's expulsion. Lynn confronted Art and demanded to be excused from the lease. “I just don’t feel safe here, knowing about Sam,” she said. Art refused, declaring Lynn should have investigated further before moving into the apartment. Lynn moved out and refused to pay the rent.

 

If Art sues Lynn for breach of the lease, who should prevail?

a. Art will prevail based on the "as-is" clause.

b. Art will prevail because the doctrine of caveat emptor applies.

c. Lynn will prevail because the contract is voidable.

d. Lynn will prevail by showing negligent misrepresentation.

13)Owen owned five jewelry stores in five shopping malls in the greater Los Angeles area for the past 15 years. Owen wanted to open a sixth store at a shopping mall near a local university, and Les, the Landlord of the shopping mall, told him that the mall had excellent traffic even during the summer months. Les provided detailed financial information on the revenues of the stores located in the mall over the past five years, as reported to Les pursuant to his leases with the storeowners. Owen studied the information and also had his accountant and lawyer take a look at it. Owen also talked with several owners of small retail shops in Les’s mall, to get an idea of variations in customer volume, and two other store owners complained about the slow summers. Then Owen and Les, through their lawyers, negotiated a five year lease for Owen’s jewelry store. The store performed poorly, and sales were not sufficient to support the lease, so Owen ultimately decided to close the store. Les sued Owen for breach of the lease, and Owen claimed that the lease was induced by Les’s misrepresentations, since the customer traffic in the mall declined significantly in the summer months.

 

What is the most likely result?

a. Les will prevail, since Owen did not reasonably rely on the representations made by Les, but completed his own investigation.

b. Les will prevail since any misrepresentation by Les was negligent, not intentional.

c. Owen will prevail, because Owen reasonably relied on Les's representations, to his detriment.

d. Owen will prevail since Les falsely represented the customer traffic in the mall in order to induce Owen into entering into the lease.

14)Joe and Sue enter into a contract for the sale of handmade greeting cards. Sue agrees to make the cards and to deliver 1,000 greeting cards per week to Joe for six months at a price of $1.00 per card. The written contract between Joe and Sue provides that it may not be modified except by a signed writing. Both Joe and Sue signed the contract. After Joe realizes that he is not able to sell 1,000 cards per week in his store, he and Sue verbally modify the agreement, reducing the quantity to 750 cards per week. Sue changes her mind about the modification, and sues Joe to enforce the original deal.

 

What is the most likely result?

 

a. The modification is enforceable because it is supported by consideration.

b. The modification is enforceable because Joe detrimenally relied upon the modification.

c. The modification is enforceable because a writing is not required for a contract modification under the UCC.

d. The modification is unenforceable because there is no signed writing by Sue and Joe reflecting the reduced quantity.

15)Pia is employed by Dave, an accountant, as a receptionist at Dave’s office. Pia signed an arbitration agreement at the time Dave hired her. Part of the agreement waived Pia’s right to a jury trial and another part of the agreement required her to keep confidential any resolution of a dispute with Dave in arbitration. After Pia went on pregnancy leave, Dave hired a new receptionist for his firm, and told Pia her job was no longer available. Pia sued Dave for discrimination, and Dave moved to compel Pia to arbitrate her claims.

 

What is the most likely outcome?

a. The court will hold the entire arbitration agreement unconscionable.

b. The court will find the jury trial waiver unconscionable, but require arbitration.

c. The court will find both the jury trial waiver and the confidentiality clause unconscionable, but will enforce the rest of the agreement.

d. The court will find the confidentiality clause unconscionable, but will enforce the rest of the agreement.

16)Tim is employed as a sales representative by Eco Purpose, an Outdoor Sports Store. Tim was the only employee of the store who drove to work. Out of concern for the environment, all the other employees rode to work by bike. One day, the manager of the store told Tim that she would fire Tim unless he signed an agreement in which he promised to ride a bike to work instead of driving. Tim protested, pointing out that his employment contract specified that he could only be fired for good cause, and driving to work was not good cause. The manager disagreed. She told Tim that she had consulted the store’s lawyer, who had researched the question and had advised her that she would be entitled to dismiss an employee for this reason. Because of a recession, other employment opportunities were scarce and Tim did not wish to lose his job, so he signed the agreement. He later found out that the manager had never consulted the store’s lawyer on this question and that she would not have been legally entitled to dismiss him for refusing to sign the agreement requiring him to ride his bike to work.

 

Which of the following is true:

a. These facts indicate that Tim may have grounds to avoid the agreement for fraud, but not for duress.

b. These facts indicate that Tim may have grounds to avoid the agreement for duress, but not for fraud.

c. These facts indicate that Tim does not have grounds to avoid the agreement for either duress or fraud.

d. These facts indicate that Tim may have grounds to avoid the agreement for either duress or fraud.

17)Bill, a contractor, entered into a contract with Susan to remodel the master bathroom in Susan’s home for $15,000. The remodeling required the complete demolition and rebuilding of the master bathroom. After the contract was executed, Bill went to a contractor’s convention. From what he heard at the convention, he realized that most contractors made a much higher profit on their jobs than he did. He realized he had been undercharging for bathroom remodels and should have charged Susan $25,000 to remodel her master bathroom. The contract between Bill and Susan states a firm price of $15,000 for the completed job. Nevertheless, Bill told Susan that he would not do the remodeling job unless she agreed to a $10,000 price increase. Susan reluctantly agreed.

 

Which of the following is true:

a. Owner is probably bound by the contract modification.

b. Owner is probably not bound by the contract modification on grounds of duress.

c. Owner is probably not bound by the contract modification on grounds of fraud.

d. Owner probably cannot avoid the modification on grounds of duress, but it is likely invalid for lack of consideration.

18)Jason and Jane, both medical doctors, entered into an agreement under which Jason employed Jane as a general practitioner in his medical practice. The employment agreement contained a non-competition provision that barred Jane from practicing medicine in the same city for two years after leaving Jason’s medical practice. The state’s rules governing the professional conduct of medical professionals states that a doctor shall not participate in a partnership or employment agreement that restricts the right of a doctor to practice medicine.

 

Which of the following is true:

 

a. The non-competition provision is enforceable because it was fairly bargained and protects Jason’s legitimate interest in preventing Jane from poaching his patients.

b. The non-competition provision is unenforceable under the in pari delicto rule.

c. The non-competition provision is unenforceable under the rules of professional conduct governing medical professionals.

d. The non-competition provision is unenforceable unless the restraint satisfies the “rule of reason.”

19)Bernice, a genius, developed a gaming application when she was 15 years old. Just before her 16th birthday, she sold the application to a company in Silicon Valley for $1.5 million, which she was paid upon execution of the contract. This was a fair price for the application. Three months later, she changed her mind and wished to avoid the contract. The age of majority in the state is 18.

 

Which of the following is true:

a. Bernice may not avoid the contract because she has already received the $1.5 million payment for the application.

b. Bernice may not avoid the contract because she received a fair price for the program and was not exploited.

c. Bernice may not avoid the contract because she is a genius and had the sophistication necessary to enter into the transaction.

d. Bernice may avoid the contract

20)A proper remedy for fraudulent misrepresentation under contract law is:

a. The contact is void

b.The contract is voidable

c.The contract is voidable and the plaintiff/victim may recover punitive damages

d.The contract is unenforceable