Contracts Hypos

Contracts Hypos (1) NBC offers Ashlee Simpson $25,000 to sing “Autobiography” on “Saturday Night Live.” THIS IS NOT A UNILATERAL CONTRACT. IT IS NOT EXPRESS. THE AGREEMENT INVOLVES A PERFORMANCE, BUT IT DOES NOT EXPRESSLY REQUIRE ONE. (2) (3) Conviser contracts with Mr. Garrison to lecture for BRI. Does Article 2 apply? Conviser agrees to buy Lucille Bluth’s Balboa Bay Club penthouse. Does Article 2 apply? Conviser contracts to buy Epstein's 1973 Cadillac for $400. Does Article 2 apply? This is a sale of Goods. Article 2 applies. It does not matter that it is between 2 people. It does not matter how much $ is involved. (4) (5) Under Conviser's agreement with Epstein to buy Epstein's car, Epstein is also obligated to give Conviser two lessons in parallel parking a 1973 Cadillac. Does Article 2 still apply? Article 2 Still applies because the MORE IMPORTANT PART OF THE DEAL is the sale of the deal. ALL OR NOTHING/MORE IMPORTANT PART Rule. (6) Conviser contracts to buy a new Duncan Glo-Yo yo-yo and receive ten lessons from Yo-Yo Ma for $40,000. Does Article 2 apply? Article 2 does NOT apply, because the most important part of the deal is the ten lessons. So this is Common Law. (7) Same facts as above except that contract provides that Conviser will pay $10 for the yo-yo and $39,990 for the lessons. We treat this like 2 separate deals. If the agreement provides for two separate payments, than common law applies to the services part, and article 2 applies to the goods part. (8) S "offers" to sell Blackacre to B. Nothing is said about price. Offer? NO. Not an offer. (9) S "offers" to sell her car to B. Nothing is said as to price. Offer? YES. Offer. If nothing is said about price, than a possible explanation is that the parties mean to have this filled in later. (10) S “offers” to sell her car to B for a fair price. Offer? NO. Vague and Ambiguous Term. They want to work out the price term, they just haven’t gotten there. (11) B “offers” to buy grits from S for five years. There is not a specific quantity term in the “offer”; instead it provides that B shall purchase all of its grits from S. Offer? YES, this is a requirement contract. (12) B buys 1,000 pounds of grits in each of the first three years of the agreement. B then orders 6,000 pounds the fourth year. What result? The new demand is substantially increased. This changes the line with prior demands.??? (13) During the break, I write in your notes that I will sell you my 1973 Cadillac for $400. The writing fails to indicate how long the offer will be kept open. Can you accept the offer five years from now? NO. Because this is not a REASONABLE TIME. 1 MONTH assume the offer is dead. (14) On January 15, I offer to sell Sharon Stone my 1973 Cadillac for $400. The next day, while standing in the shower, I exclaim, "I have changed my mind. I do not want to sell my Cadillac to Sharon Stone." Can Ms. Stone still accept the January 15th offer? YES. Because I did not communicate the termination to her. (15) On January 15, I offer to sell Sharon Stone my Cadillac for $400. The next day I sell my Cadillac to Conviser. Can Ms. Stone still accept the January 15th offer? YES. It does not matter if you sell it to someone else. She has contract law rights. The (16) Same facts as (15) except that Ms. Stone sees Conviser driving my Cadillac on January 16 and learns from him that he has bought it. Can she still accept the offer? NO. Offeree is now aware of the termination. (17) Same facts as (14) except Ms. Stone simply learns that I offered the car to Conviser but he has not yet accepted. Can she still accept the offer? YES. You need an unambiguous statement or conduct. (18) S offers to sell her car to B for $400. On Tuesday, S mails B a letter revoking the offer. The letter arrives on Thursday. When is the revocation effective? (19) S offers to sell his car to B for $400. B immediately accepts. Because B so quickly accepts, S decides that the car must be worth more than $400. Can S still revoke his offer? S offers to sell B her car for $400. B pays S $10 for S’s promise to keep the offer open for a week. Can S still revoke the offer? She cannot revoke for a week. (20) (21) S offers to sell her car to B for $400. S promises to keep the offer open for a week. Can S still revoke? Yes. Not paid for. (22) S, a used car dealer, offers to sell B 1973 Cadillac for $400. The offer is in writing, signed by S, and expressly promises it will be kept open for a week. Can S revoke? S cannot revoke for a week. (23) What if S's promise is oral? YES. (24) What if S promises by signed writing to keep the offer open for six months? THE CONTRACT IS IRREVOCABLE FOR ONLY 3 MONTHS (3 months is the ceiling). (25) What if S's promise by signed writing to keep the offer open does not state a time period? If the merchant promises not to revoke, without stating a time period, the Court will fix the time period- a reasonable time period- and not more than 3 months. (26) S Used Cars makes an offer by signed writing to B to sell a 1973 Cadillac for $400. May S revoke? YES. There is no promise not to revoke. There MUST be a Promise not to revoke. The Writing Must say that the offeror will not revoke. This is testing your reading skills. (27) S offers to sell B her house for $100,000, and the written offer promises that it can be accepted for the next 4 months. Firm Offer Rule ONLY applies if it is a sale of goods. (28) G is a general contractor who is biding on a contract to build a new hotel, using various subcontractors. S, a subcontractor, submits a bid to G to do the painting work for $100,000. G uses S's bid in making its bid and is awarded the hotel construction contract. Can S still revoke its bid? G is relying on S’s bid, because there is DETRIMENTAL RELIANCE THAT IS REASONABLY FORESEEABLE. If “bid”= offer. (29) O offers P $1,000 to paint O's house. O 's offer states that it can be accepted only by performance. P starts painting. Can O still revoke? Because it says, ONLY BY PERFORMANCE, than you know it is an unilateral contract. O cannot revoke, but P can get out, by not finishing- because need Completion of Performance to accept. (47). (30) O offers P $1,000 to paint O’s house. O’s offer states that it can be accepted only by performance. P orders paint. Does this trigger rule #4 so that O can not revoke?______ Does this trigger rule #3 so that O can not revoke?_______ Rule 4? No. Because it is a mere preparation. (If it is a close call.) (31) S offers Blackacre to B for $10,000. B responds, "I will only pay $9,000." S refuses to sell for $9,000. Can B later accept S's offer to sell for $10,000? Counteroffer. B cannot later accept S’s offer to sell. The Offer is dead. (32) S offers Blackacre to B for $10,000. B's response is "Will you take $9,000"? S refuses to sell for $9,000. Can B later accept S's offer? That is NOT a counter offer. That is bargaining, and the offer is not dead. If the response to an offer is a statement= counteroffer. If the response to an offer is a question= bargaining. Offer is still alive. (33) When a Memphis law firm calls to offer you a position as an associate, your response is that you accept provided that you do not get assigned to the tax team. Has a contract been formed?_____ If not, can you still call back and accept?_____ “Accept Provided that…” = counteroffer = offer is dead. A contract has not been formed and you can not call back and accept. (34) B sends S a purchase order for polyester pant suits. The purchase order makes no mention of arbitration of disputes. S sends an acknowledgment form that provides for arbitration of disputes and states "acceptance is expressly conditioned on this arbitration term as a part of the contract:" No further communications or actions. Is there an express contract? “On condition that…” = counteroffer= offer is dead. (35) L offers to lease a building to T, sending T a signed lease that is silent about arbitration of disputes. T adds a paragraph providing for arbitration of disputes and signs. Has T accepted L's offer creating a contract? NO. Mirror Image Rule= in order for a response to be an acceptance of an offer, it has to look exactly like the offer. (36) B sends S a signed purchase order for grits that is silent about arbitration of disputes. S responds by sending back a signed acknowledgment form providing for arbitration of disputes. Is there a contract? [compare with (34)] Sale of goods. THERE IS A CONTRACT under UCC 2-207. (see the difference between 34 & 36). In 34, S insists on Arbitration Clause. Any time the response makes the new term a deal-breaker. If by contrast, where the offeree adds something. “Expressly Conditioned”= insistence= counteroffer. (37) S, a used car dealer, faxes an offer to sell a 1973 Cadillac to B, another used car dealer, for $400. B faxes this response: “I accept. Deliver it on Saturday.” No further communications or actions. Is there a contract?_____ With Saturday delivery as a term of the contract?_____ Is Saturday a Material Change? Fact question- depends on all the facts. If it is a material change, than no an acceptance, rather a counteroffer. (38) Same facts as (37) but different fax. B's fax states, "I accept if the car is delivered on Saturday" Is there an express contract? “IF”= material change. (39) Epstein offers to sell his 1973 Cadillac to Conviser for $400. Conviser responds: "I accept. Deliver it on Saturday." No further communications or actions. Is there a contract?_____ With Saturday delivery as a contract term?_____ If both merchants, new term is part of the deal (as long as not material change). If one is not a merchant, than it is a proposal. (40) On 2/2, A sends B a written offer. A dies on 2/4. B, not knowing of A's death, mails his acceptance on 2/6. Is the acceptance effective? No, because A is dead. (41) I offer a $500 reward for whomever finds my lost dog. You find and return my dog, not knowing of the reward. Is that acceptance of my offer? No. You cannot get the reward. When you accepted the offer, you didn’t know about it. (42) I offer to sell you my 1973 Cadillac for $400. Can you sell the offer to Conviser so that he can accept the offer? NO. Because the offer was not made to you. (43) You pay me $10 for a ten-day option to buy my Cadillac for $400. Can you sell the option to Conviser so that he can now accept the offer? EXCEPTION: An option can be transferred. (44) Conviser offers Master Chief a payment of $1,000 to destroy The Covenant. Master Chief destroys The Covenant. Master Chief must notify Conviser. (45) O offers P $1,000 to paint his house. The offer is silent as to method of acceptance. P starts painting the house. Has P accepted O’s offer so that he is contractually obligated to continue painting O’s house? Bilateral offer. Start of performance of a bilateral offer is Acceptance. (if it expressly said “acceptance conditional on painting my house”, it would be a unilateral offer, and the start of performance would not have made it a contract, you need completion of performance.) (46) O offers P $1,000 to paint his house. O's offer states that it can be accepted only by performance, not by promising to perform. P starts painting O's house. Has P accepted O's offer so that he is contractually obligated to continue painting O’s house? [Compare with (45) and with (29)] Where an offer states it can only be accepted by performance, than it can be accepted only by the completion of performance. (47) B telefaxes an order for grits to S, requesting immediate shipment. Can S accept this offer by sending a telefax promising to ship the grits? Yes. Bilateral Contract. Offer can be accepted by a promise to perform. (48) Conviser receives a letter from Epstein offering to sell his 1973 Cadillac for $400. On January 10, Conviser mails his letter of acceptance. On January 11, Conviser receives a letter from Epstein revoking the offer. Is there a contract? Jan. 10th- sends acceptance Jan. 11th- revocation arrives. Acceptance of Offer! Because acceptance is effective when it is sent. Revocation (and all other communications) is effective when it is sent. (49) Conviser receives a letter from Phish inviting him to replace Trey in a new version of the group. On August 8, Conviser mails a letter to the group rejecting their offer. On August 9, he changes his mind and mails a letter of acceptance. What result if the rejection letter arrives first? _____ What if he telefaxes his acceptance and the telefax arrives before the letter? _____ Aug. 8- sends rejection Aug 9- sends acceptance Whichever arrives first takes. (51) B orders 100 red widgets. S sends 100 blue widgets with the explanation “out of red, can you use blue.” Epstein offers to sell his 1973 Cadillac to Conviser for $400. Conviser replies: "If you don't hear from me before Friday. We have a deal." If there is silence, you have a deal. This is the one time silence is an acceptance. It was not the offeror who made silence the acceptance, it was the offeree. (52) (53) L rents an apartment to T. One month before the lease expires, L promises T to renew the lease. T paints the apartment. Is T’s painting the apartment consideration for L’s promise to renew the lease? No Consideration. (Did L get any consideration?) No. In order to be consideration, it has to be ASKED FOR IN-EXCHANGE. L never told T to paint the apartment. L never said, I’ll renew the lease if you paint the apartment. L never asked for anything in exchange. (54) I make the following promise to you: “Stop listening to records by Kinky Friedman, for two months and I'll pay you $100.” Is there consideration, i.e., bargained-for legal detriment, supporting my promise to pay you $100? Yes. It would be a legal detriment to refrain from doing something. Even if you couldn’t give a rats ass about Kinky Friedman. A person not doing something they have a right to do is a legal detriment. (55) B promises to buy S’s house and S promises to sell his house to B. Is there consideration for B’s promise to buy? _____ Is there consideration for S’s promise to sell? _____ Is there consideration fro S’s promise to buy? Yes- B’s promise to sell. A vice versa. (56) B promises to buy S’s house. S promises to sell unless she changes her mind. Is there consideration for B’s promise to buy? No Consideration. ILLUSORY PROMISE (Exception). (57) Apu saves Lisa's life. Homer is so grateful that he promises to pay Apu $3,000. Homer later changes his mind. Is his promise legally enforceable? NO. Stuff that has happened before the promise is NEVER legally enforceable. (58) Homer sees Lisa in danger and asks Apu to save her, knowing that Apu would expect to be paid. After Apu saves Lisa, Homer promises to pay Apu $3,000. Is this promise legally enforceable? Yes. Because Homer knew he would be paid. (59) Kinky Friedman contracts with Lil Jon to perform as the opening act at a crunk show at Town Hall for $15,000. Notwithstanding the contract, the Kinkster refuses to sing unless he is paid $20,000, not $15,000. Lil Jon promises to pay Kinky $20,000. Kinky performs. Lil Jon only pays Kinky $15,000. Is Lil Jon’s promise to pay the additional $5,000 legally enforceable? NO. Kinky is trying to enforce the promise. No detriment. He’s doing what he is already obligated to do. (60) What if Lil Jon promised to pay Kinky the additional $5,000 if he will sing Tom Lehrer’s “I Am Spending Hanukkah in Santa Monica” instead of his usual opening song, “Get Your Biscuits in the Oven and Your Buns in the Bed”? Yes. If there is any change in the performance, it is consideration (61) The sound system at Town Hall is inoperative. Lil Jon agrees to pay Kinky an additional $5,000 if he will still perform. Kinky performs. Is the promise to pay the additional $5,000 legally enforceable? Yes. Unforeseen difficulty exception. (62) Same facts as (59) except Conviser, not Lil Jon, promises to pay the additional $5,000. Is Conviser’s promise to pay the additional $5,000 enforceable? Yes. 3rd Party promise to pay. (63) S contracts to sell grits to B for $1,000. S subsequently tells B that it cannot deliver the grits for less than $1,300. B promises to pay the additional $300. S delivers. Does B have to pay the additional $300? Sale of Goods. YES, so long as this is a good faith modification. Article 2 test has a good faith test for changes in an existing sale of goods contract. (64) D owes C $3,000. The debt is due and undisputed. C agrees to take $2,000 in full satisfaction of the debt. D pays $2,000. Did C receive consideration for his promise to release the balance of the debt? ____ Can C now sue for the remaining $1,000 even though he agreed he would not? No. If you already owe someone $3k, it is not new consideration for you to pay $2k. This is because the debt is due and undisputed. (65) Same facts as (64) except the $3,000 debt was due on January 15. C agrees to take $2,000 on or before January 11 in full satisfaction of the debt. D pays the $2,000 on January 11. Can C now sue for the remaining $1,000 even though he agreed he would not? No. Was not due yet- so C cannot sue for the remaining. (66) D owes C $1,000. Legal action to collect this debt is barred by the statute of limitations. D writes C, "I know that I owe you $1,000. I will pay you $600." Can C collect either the original $1,000 or the new $600 promise? Yes. This is not because of consideration. This is a substitute for consideration. (67) L leases a building to T. L tells T that he will renew the lease. T paints the building. L does not renew T’s lease but instead leases the building to X. Is painting the building “consideration”?_____ Promissory estoppel? [compare with (53)] Conviser hires 14 year old Maeby Funke to lecture on Contracts for $100 a lecture. If she lectures and Conviser does not pay her, can she sue Conviser for breach of the employment contract?_____ If Maeby does not do the lectures, can Conviser sue her for breach of contract?_____ A 14 year old can enforce an agreement. Convisor can’t enforce it against the 14 year old. (68) (69) S sells B a car on credit. B is only 17. B does not pay S but refuses to return the car. B later becomes 18. B continues to retain the car without complaint or objection. Can S now enforce the agreement that B made when she was 17? Yes. Because there is an implied affirmation by retaining the benefit after S gained capacity. (70) X, a person who is mentally incompetent, leases an apartment from L. The lease agreement provides for $400 a month rent; L’s other tenants are only paying $300 a month for a comparable apartment. Does X have to pay $400 a month rent? ____ Does X have to pay any rent? ____ No. There is no contract liability on behalf of the person who is incapacitated. X does have to pay rent though- the amount of value of the apartment. (71) H claims that W agreed to renounce any claim to property that he owned prior to the marriage if he would marry her. Is this within the Statute of Frauds? Yes. This is an example of a promise in consideration of marriage. (72) H claims that W agreed to marry him. Is this within the Statute of Frauds? No. This is not within the statute of frauds because it is simply a promise to marry. (73) F, Funeral Home, claims that E, executrix for the estate of D, promised that she personally would pay for D’s funeral. Is this within the Statute of Frauds? Yes. Within statute of frauds. You need special proof. (74) F, Funeral Home, claims that E, executrix for the estate of D, promised that D’s estate would pay for D’s funeral. Is this within the Statute of Frauds? No. (75) B buys paint from S on credit. B does not pay S. S claims that T promised she would pay for the paint he delivered to B. Is T’s promise within the Statute of Frauds? No. This is just a PROMISE to pay, it is NOT a guarantee. (76) S claims that G promised that she would pay for the paint if B did not pay. Is G’s promise within the Statute of Frauds? Yes. This is a guarantee. “secondary liability”- Just remember the facts. (77) Main purpose exception: S sells P paint on credit. S claims that O promised to pay for the paint if P did not pay. P’s purpose in (reason for) buying the paint was to paint O’s house. Is O’s promise within the Statute of Frauds? No, even though it was a guarantee. If the main purpose of the debt is for the 3 rd party’s benefit (the 3rd party that guarantees to pay), then it is not within the statute of frauds. (78) P claims that D agreed to employ her for three years. Is this within the Statute of Frauds? Yes. Because the contract is 3 years. (79) P claims that O agreed to employ her for three years and that the deal was that P could terminate the contract on thirty days' notice. Is this within the Statute of Frauds? Yes. The statute of frauds only focuses on how long the performance will take. A RIGHT OF EARLY TERMINATION IS TOTALLY IRRELEVANT. (80) John Tesh claims that Club Putz hired him on January 15, 2003, to perform on December 24, 2004. Is this within the Statute of Frauds? YES. John Tesh is going to perform for only one day, but the agreement was made more than a year from then. Is there any way to perform within the time of the agreement…then we are within the statute of frauds. (81) P claims that O agreed to employ her for a year, starting next month. Is this a contract within the Statute of Frauds? YES. It is not capable of being performed within a year (1 year and a month from now). Remember: right of early termination does not matter. (82) P claims that D hired him on January 15, 2004, to cut all of the trees on D’s land. Is this within the Statute of Frauds? No. It is about whether it is theoretically possible with unlimited resources. It is capable of being performed within a yar. (83) What if P does not actually finish cutting the trees until December of 2005? Is this contract capable of being performed within a year from the time of the contract? No. If it was capable of being performed within the year (84) P claims that D hired her to work for her for the rest of P’s life. P is only 21 years old and in great health. Is this within the Statute of Frauds? No. P could die within a year. (85) P claims that D agreed to build a house on Blackacre. Is this within the statute of frauds? No. Because you are not transferring an interest in real estate. Just because (86) P claims that D agreed to sell Redacre for $400. Is this within the statute of frauds? Yes. Transfer (87) P claims that D agreed to sell an easement on Greenacre for two years. Is this within the statute of frauds? Yes. Need not be an ownership interest. (88) P claims that D agreed to lease Blackacre for one year. Is this within the statute of frauds? No. One year lease. (if it was a 2 year lease, than YES.) (89) Conviser claims Epstein agreed to sell him his 1973 Cadillac for $500. Is this within the statute of frauds? Yes. (90) Same facts as (89) except that Conviser claims that the agreed upon price was $400. No. $500 or more. Remember: all of the rest of the UCC §2 applies, just not the statute of frauds. (91) Conviser and Ludacris agree that (i) Ludacris will write new mini review materials and (ii) Conviser will advertise the course as the Ludacris Mini Review for the next five years. Ludacris completes the materials. Conviser continues to call the course the Conviser Mini Review. Ludacris sues Conviser for breach of contract. Is the Statute of Frauds satisfied? Yes. Full performance satisfies the statute of frauds. (92) P agrees to work for D for three years. P works for 13 months and then D fires her without cause. Does D have a Statute of Frauds defense?_____ Can P recover for the 13 months of work she had done? No. Part Performance does not satisfy the statute of frauds. 13 months is not 3 years.