FINAL EXAMINATION
                                  CONTRACTS II
                             PROFESSOR CHERYL LEE
                                   SPRING 2005

1. You have three (3) hours to complete this exam. It is suggested you allot 30 minutes to
read the essay, think, organize and outline your answers before you begin writing. I
suggest you allot 30 minutes to answer each of the first FOUR calls (sections A through
D) of the essay question and 15 minutes to Section E of the essay. You will have 15
minutes remaining to review your answers. (These are only suggested times).

2. This is an open book exam. You may use ONLY YOUR STATUTE BOOK,
Selections For Contracts 2003 Edition and NO OTHER book. You may have any
written materials in your statute book on the already existing pages you so desire in your
own handwriting, however you may NOT add any pages of printed or handwritten
material. You may also tab the pages of your statute book for quick reference.

3. This exam consists of one essay question, divided into five (5) sections – A, B, C, D,
and E. The point values of each section are as follows:

*Section A is worth 35 points.
*Section B is worth 25 points.
*Sections C and D are worth 15 points each.
*Section E is worth 10 points.

Please write your response in the blue books provided. Please write clearly. Write on
every other line and every other page to permit instructor comments.

For purposes of all Sections (A through E) of the Essay Question, you are NOT TO
issues pertaining to the law of contracts will be considered in connection with your grade.

4. Write your exam number on your exam envelope. Put your correct class section and
student exam number at the top of this page, each page of questions, and each blue book.
Do not use your name, student ID number or Social Security Number on any exam

5. At the conclusion of the exam, return all test materials including blue books, scratch
paper, and this exam packet to the envelope and submit it to the proctor. DO NOT seal
the envelope. Students who fail to return all exam materials at the end of the exam may
not be graded.

                                     GOOD LUCK!

                                  ESSAY QUESTION
Julia Banning inherited $100,000 at her father’s death in June 2004. She deposited the
money into the account she shared with her husband at National Bank. She and her
husband Michael had two toddlers together. Johnny was two years old and Jack three,
when Julia was diagnosed with breast cancer and began undergoing chemotherapy. After
her diagnosis, she and Michael agreed that in the event she succumbed to the cancer, he
would convey her inheritance to her sister Joyce.

Because of her poor health and periods of time when Julia was too weak even to dress
herself or care for the boys, as a precaution Michael requested they authorize Lupe, his
daughter by a previous marriage, to act as a guardian to the younger boys if anything
should happen to either of them. Because all of their children were close and loving, and
the boys because of Julia’s weakened condition already relied on Lupe for a lot of their
care, according to Michael it was the natural order of things. In order to give this power
to Lupe, Michael said that Julia would have to sign a formal document giving her
stepdaughter guardianship of Johnny and Jack.

Michael Banning secretly intended to make a gift to his 16-year-old daughter by moving
Julia’s $100,000 inheritance into a Certificate of Deposit at National Bank for the benefit
of Lupe. On Saturday, August 7, Michael presented Julia with a form for her signature.
Michael explained that the form contained the logo and name of National Bank because a
lady at the bank told him the bank kept forms on hand just for this sort of thing, and they
could use the bank’s forms to convey guardianship in order to avoid hiring a lawyer. In
fact, the National Bank form Michael presented to Julia actually allowed him to create
the CD.

The couple sat down in the kitchen together to discuss the matter. Michael began by
commanding Julia: “As your husband you must trust me to make decisions that will
protect all our children.” Julia protested, saying that she was not sure in an emergency
that Lupe was mature enough to make decisions that would protect Johnny and Jack.

For hours, Michael begged Julia to sign the form. Although he had no intention of doing
so, he told Julia that “if you sign the Bank form, I will have wills for both of us drawn up
naming the adult of our choice as Trustee to administer and govern the distribution of our
monetary assets to the children if anything happens to either one of us.” Michael never
had the wills created. At one point, Michael dramatically confessed to Julia that Lupe had
a large trust fund from which she would inherit. He suggested that making her guardian
to Johnny and Jack would help build Lupe’s trust such that she might allow them access
to her trust account. In fact no such trust account existed. When the lies failed, Michael
resorted to threats of violence. But even in Julia’s feeble state, suffering from depression,
fear and the exhaustion of chemotherapy and the conversation, Julia continued to refuse
to sign the Bank form. Finally in anger, Michael overpowered Julia. Grasping her hand,
he compelled her by force to sign her name on the bank form.

Joyce, Julia’s sister was visiting the Banning family for two weeks. Unbeknownst to
either Michael or Julia, Joyce witnessed the entire scene, unable to decide whether she
should intervene in such an intense marital disagreement between the two. Perched high
on the stairs above the kitchen, Joyce could see and listen to the entire conversation.

Michael used the Bank form to purchase a CD for $100,000 in Lupe’s name. Other than
the bank form with Julia’s signature, at the time of the CD purchase there was no other
signature card or deposit agreement executed, nor did Lupe have knowledge of the
existence of the CD. Six months after signing the form, Julia died of breast cancer. Two
weeks after Julia’s death, Michael was killed in a car accident while driving under the

After the death of her father, Lupe discovered a locked steel box under her parents’ bed.
In it she found the Certificate of Deposit for $100,000 payable to her.

Assume for purposes of this question that a Certificate of Deposit is a contract and that
the contract referred to in the call of the questions that follow is between Michael
Banning and National Bank.

A. Is the Certificate of Deposit contract between Michael Banning and National
Bank void or voidable, and if so, on what theory or theories?

B. What objection, if any, would a court make to the admission of Joyce’s testimony
to prove the validity of the Certificate of Deposit contract?

C. What rights, if any, does Lupe have to enforce the Certificate of Deposit contract
between Michael Banning and National Bank?

D. Will the failure of Michael’s performance to create the wills hinder Lupe’s ability
to enforce the Certificate of Deposit contract between Michael Banning and
National Bank?

E. If the Certificate of Deposit contract is not voidable, what equitable relief, if any,
is a court likely to award?

                                     END OF EXAM

To top