Contracts Answer Outlines Professor Dodge Fall 2001 The following are outlines of model answers in narrative form. They indicate what issues were reasonably raised by the questions, but do not contain the level of detail that an answer would ideally include. Question One (60 points) The car is a good because it is moveable, so the UCC applies. Neither Baird (B) nor Drennan (D) is a merchant since neither deals regularly in goods of this kind. An offer must be addressed to a specific offeree, contain reasonably certain terms, and manifest a willingness to be bound. Generally ads are not offers, but B’s ad pro bably would be because it is addressed to a specific offeree (the first to come), specifies the subject matter and price, and manifest’s B’s willingness to sell to the first person to give him $4,000. Although the UCC has abolished t he mirror image rule, D’s reply is not an expression of acceptance because it proposes a different price. It is a rejection and a counteroffer. B’s reply is a rejection and a counteroffer for the same reason. B tries to revoke his offer to sell the car for $3,500 on October 17. Generally offers are freely revocable any time prior to acceptance, but there are a number of exceptions to this rule. B’s offer is not irrevocable under the UCC’s firm offer provision because, although it is a signed writing and give an assurance that the offer will be held open for less than three months, B is not a merchant. B’s offer is not a traditional option contract because, although he promises to keep the offer open, this promise is not supported by consideration. B’s offer is not irrevocable under § 87(1) because, although it is in a signed writing, it does not recite a purported consideration for keeping the offer open. However, B’s offer might be irrevocable under § 87(2) because it is an offer one would reasonably expect to induce substantial reliance and D relies on it by selling her VW. It is a close question whether this reliance is sufficiently substantial and whether justice requires that the offer be irrevocable. Even if D’s offer is irrevocable, an acceptance under an option contract is only effective upon receipt. D’s acceptance does not reach B until Friday, by which time her knowledge that B has sold the car to someone else would have revoked the offer. Moreover, because this contract is for goods worth more than $500, it would be within the UCC statute of frauds (SOF). D’s written offer would not satisfy the SOF by itself because, although it states all of the essential terms and is signed by B, it does not show that the offer was accepted. However, D’s acceptance might be used to show this, since it clearly relates to the same transaction. Alternatively, D might use her reliance to take the contract o ut of the SOF. 2 Question Two (60 points) A contract requires mutual assent and co nsideration. Altho ugh it is not clear precisely when the offer and acceptance occurred, the facts indicate that there was mutual assent. Consideration requires a bargained-for exchange. Gray’s (G’s) Hastings education is past consideration, which cannot be bargained-for. Dean Sane’s (S’s) promise to hire two new librarians might be consideration or a condition on a gratuitous promise. On the one hand, it might benefit G by preserving his papers, which would indicate consideration. On the other hand, S herself characterized the donation of the papers as a gift. Hastings might also be able to enforce G’s promise on a theory of pro missory restitution, which requires a benefit previously received by G, a promise in recognition of that benefit, and injustice if the promise is not enforced. G received the benefit of his Hastings education and promised to donate his papers in recognition of that benefit. However, justice does not require enforcement of the promise because G has already paid for the benefit he received from Hastings. Or Hastings might be able to enforce G’s promise on a theory of promissory estoppel, which generally requires a promise one would reasonably expect to induce reliance, actual reliance, and injustice if the promise is not enforced. The promise of the papers is one G should reasonably expect to induce at least the hiring of two librarians, but G revokes the promise fairly quickly and the facts do not indicate that Hastings has yet relied. As an educational institution, Hastings might benefit from the Restatement’s rule for charitable subscriptions which does not require actual reliance, although most states do not follow this rule. As for injustice, a court might look to the reasonableness and extent o f Hastings’ reliance, if any. If the statute of frauds (SOF) applies, it might bar all of these claims. The papers are goods because they are moveable, but since G is giving them to Hastings, they are not being sold for a price of $500 or more and the UCC’s SOF would not apply. The common-law SOF might apply because, even though G might die within a year, Hastings’ obligation to provide continuing care for the papers cannot be fully performed within a year. There is no writing to satisfy the SOF, and although there is a reliance except ion to the SOF and there is clear and convincing evidence of the promise and its terms, Hastings does not appear to have relied substantially.
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