Law Of Contract Quiz: Multiple Choice Questions! - ProProfs Quiz

Law Of Contract Quiz: Multiple Choice Questions!

63 Questions | Total Attempts: 3063

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Multiple Choice Questions Quizzes & Trivia

Are you familiar with the law of contract? Contract law is the form of law that pertains to the creation and enforcement of pacts. A contract is an arrangement that a party can go to court to protect. Contract law is the part of law that governs creating contracts. When you are in a business, you generally utilize contract law. This quiz will explain the law of contract. All the best.


Questions and Answers
  • 1. 
    Integrated Circuit Technology, Inc. ('ICT') was having difficulty finding qualified engineers to work in its expanding production facilities because the hardware needed to train top-flight engineering students was so expensive that most colleges could not afford to purchase more than a minimal amount of such equipment, which limited program sizes and held down the number of applicable engineering degree candidates. ICT's chief executive officer, Cruz, wrote the following letter to the heads of several universities:  If you will commit your institution to accepting in your engineering degree program every junior-year undergraduate who wishes to pursue that major, ICT will provide your institution with all the necessary electronic hardware to instruct such students. Our engineers have informed me that one set of equipment (i.e., one each of every machine used by ICT in its production process) is sufficient for use by five students; therefore, for every five engineering degree majors you accept in excess of your current engineering degree population, ICT will provide one such set of equipment. Jackson, chancellor of Seaport College of Engineering ('SCE'), also received a letter from Cruz. The ICT letter arrived during SCE's annual budget review process, and Jackson was called upon to decide how much of the college's limited funds to apply to engineering equipment purchases. The day that she received Cruz's letter, Jackson informed the budget committee that no funds would be needed from that year's budget for engineering equipment purchases. A few days later, as Jackson was dictating the acceptance letter to ICT, she received a second letter from Cruz indicating that the ICT equipment program was being canceled due to an influx of qualified foreign engineers to the United States. Because the budget had been approved and all available funds had been committed to nonengineering equipment purchases, Jackson mailed the acceptance letter anyway and it was delivered to Cruz at ICT. If SCE brings a breach of contract action against ICT, what result?
    • A. 

      Judgment for SCE, if Jackson's removal of funds from the engineering department's budget was a reasonable and foreseeable response to ICT's offer.

    • B. 

      Judgment for SCE, because Jackson's removal of funds from the engineering department's budget converted ICT's offer into an express option.

    • C. 

      Judgment for ICT, because its promise to supply equipment to SCE was not supported by consideration.

    • D. 

      Not recover, because he was in a drunken stupor when injured.

    • E. 

      Judgment for ICT, because its revocation was received by Jackson before she dispatched the acceptance letter.

  • 2. 
    In July of last summer George, a grape grower, contracted with Walter's Winery to deliver '500 tons of premium quality pinot chardonnay grapes grown on my ranch Grapeacre in Grape County.' The price was to be $1,000 per ton and delivery was to be on or before September 15. In August of the same year, George entered into an identical contract with Vinnie's Vintner Co. to sell 300 tons of premium quality pinot chardonnay grapes. George completed his harvest by September 10 and had 800 tons of premium quality grapes. On September 11, an unexpected rain ruined 400 tons, and George notified Walter and Vinnie on that day that he would only be able to deliver 250 tons to Walter and 150 tons to Vinnie. On September 14, Vinnie purchased an additional 150 tons of premium quality pinot chardonnay grapes from Godfrey, one of several other available sources for premium quality pinot chardonnay grapes. These grapes along with the 150 tons from George gave Vinnie the 300 tons he needed. On September 15, what is Walter's Winery's legal position with regard to George's failure to deliver the 500 tons of grapes required by his contract?
    • A. 

      If Walter has given George a written notice of termination, Walter will have the right to refuse to accept the 250 tons of grapes but will have no cause of action for damages against George.

    • B. 

      Even if Walter has given George a written notice of termination, Walter must accept the 250 tons of grapes and will have no cause of action for damages against George.

    • C. 

      Since Vinnie's purchase establishes that it is possible for George to perform by obtaining additional grapes from other available sources, Walter may accept the 250 tons from George and recover damages for George's failure to deliver the balance of the amount specified by the contract.

    • D. 

      Since George's contract with Walter was entered into before his contract with Vinnie, George is bound to deliver the entirety of his grape crop to Walter.

  • 3. 
    Christine and her friend Zelda were going away to college and had quite a few personal belongings to transport. Christine's father offered to drive them in his van, but when the van was loaded they discovered there was only room for two people, so Christine asked her boyfriend Harry to drive her in his car while Christine's father and Zelda rode in the van. About halfway to the college, while the van and Harry's car were driving down the freeway, the van in front, the van suddenly swerved out of control and ran off the highway, ending up on its side in the center divider. When Harry stopped his car and Christine ran to the van, she discovered to her horror that her father was dead. Zelda appeared to be injured, but not severely. Because her father previously had heart trouble, Christine assumed that he had had a heart attack while driving, although a later investigation would reveal that the accident was caused solely by a defect in the steering mechanism of the van. Filled with remorse, Christine told Zelda, 'I'm so sorry about this. I'll make good any losses you suffer because of this accident.' Later, when Christine learned that Zelda was going to seek treatment from Dr. Winston, she wrote the doctor a letter stating that she would be responsible for all of Zelda's medical expenses; Dr. Winston received the letter the next day. Assume for purposes of this question only that several months after the accident, but within the applicable statute of limitations, Zelda discovered that she had suffered an injury to her spinal column that would prevent her from ever playing basketball again. Zelda had been a scholarship athlete in basketball at the college and was considered to be a certain high draft selection for the newly formed women's professional basketball league when she graduated. She brought an action against Christine for several million dollars in damages. Which of the following is the best defense Christine could assert against Zelda's claim?
    • A. 

      There was no consideration supporting her promise to Zelda to make good any losses.

    • B. 

      She did not intend to offer to pay Zelda for the loss of her professional career when she said she would make good any losses.

    • C. 

      She was in error when she assumed that her father's heart attack was the cause of the accident.

    • D. 

      She did not know that Zelda would not be able to play basketball when she offered to make good any losses.

  • 4. 
    On January 2, Smith borrowed $1,000 from his friend Jones, agreeing in writing to repay the loan within a year. In September, it became clear to Smith that he would have difficulty meeting the year deadline, and so Smith approached Brown with the following proposition: Smith would perform 200 hours of work for Brown during the next six months at the special rate of $5 per hour, if Brown would agree to pay $1,000 for the entire 200 hours to Jones on the following January 1. Brown agreed. By January 1, Smith had only worked five hours for Brown, and Brown stated to Smith that he would not pay Jones because Smith had not worked enough. Smith responded, 'That's okay, just hold on to the money until I get 200 hours in, then pay Jones.' Brown agreed. Assume for purposes of this question that after the agreement between Smith and Brown was entered into in September, Smith informed Jones of the arrangement. Jones's response was, 'I don't care who pays me but if I don't get my money by January 2, I'll sue.' The January 1 modification between Smith and Brown occurs, and after learning of the modification, Jones sues Brown for $1,000. What is the probable result of this action?
    • A. 

      Judgment for Jones, because he was informed of the original agreement and did not participate in the modification.

    • B. 

      Judgment for Jones, because he assented to the original agreement.

    • C. 

      Judgment for Brown, because the original agreement was modified before Jones's rights became vested.

    • D. 

      Judgment for Brown, because his contract was with Smith, not Jones.

  • 5. 
    Tortfeasor tortiously injured Victim in an auto accident. While Victim was recovering in Hospital, Tortfeasor's liability insurer, Insurer, settled with Victim for $5,000. Victim gave Insurer a signed release and received a signed memorandum wherein Insurer promised to pay Victim $5,000 by check within 30 days. When Victim left Hospital two days later, Hospital demanded payment of its $4,000 stated bill. Victim thereupon gave Hospital his own negotiable promissory note for $4,000, payable to Hospital's order in 30 days, and also, as security, assigned to Hospital the Insurer settlement memorandum. Hospital promptly assigned for value the settlement memorandum and negotiated the note to Holder, who took the note as a holder in due course. Subsequently, Victim misrepresented to Insurer that he had lost the settlement memorandum and needed another. Insurer issued another memorandum identical to the first, and Victim assigned it to ABC Furniture to secure a $5,000 credit sale contract. ABC immediately notified Insurer of this assignment. Later it was discovered that Hospital had mistakenly overbilled Victim by the amount of $1,000 and that Tortfeasor was an irresponsible minor. In view of Tortfeasor's age and irresponsibility when Insurer issued his liability policy, can Holder and ABC Furniture recover on their assignments?
    • A. 

      Neither can recover because Victim, the assignor, is a third-party beneficiary of the liability policy, whose rights thereon can be no better than Tortfeasor's.

    • B. 

      Neither can recover unless Insurer knowingly waived the defense of Tortfeasor's minority and irresponsibility.

    • C. 

      Neither can recover because the liability policy, and settlement thereunder, are unenforceable because of Tortfeasor's minority.

    • D. 

      Either Holder or ABC Furniture, depending on priority, can recover as assignee (or subassignee) of Victim's claim because the latter arose from Insurer's settlement agreement, the latter agreement not being vitiated by Tortfeasor's minority and irresponsibility when he obtained the policy.

  • 6. 
    QUESTIONMater, a wealthy widow, wishing to make a substantial and potentially enduring gift to her beloved adult stepson, Prodigal, established with the Vault Savings and Loan Association a passbook savings account by an initial deposit of 10000.For this question only, assume the following facts. The passbook was issued solely in Prodigal's name; but Mater retained possession of it, and Prodigal was not then informed of the savings account. Subsequently, Mater became disgusted with Prodigal's behavior and decided to give the same savings account solely to her beloved adult daughter Distaff. As permitted by the rules of Vault Savings and Loan, Mater effected this change by agreement with Vault. This time she left possession of the passbook with Vault. Shortly thereafter, Prodigal learned of the original savings account in his name and the subsequent switch to Distaff's name. If Prodigal now sues Vault Savings and Loan for $10,000 plus accrued interest, will the action succeed? 
    • A. 

      Yes, because Prodigal was a thirdparty intended beneficiary of the original Mater-Vault deposit agreement.

    • B. 

      Yes, because Prodigal was a constructive assignee of Mater's claim, as depositor, to the savings account.

    • C. 

      No, because Prodigal never obtained possession of the passbook.

    • D. 

      No, because Prodigal's right, if any, to the funds on deposit was effectively abrogated by the second Mater-Vault deposit agreement.

  • 7. 
    In early January 2004, representatives of MacDougall Corporation, makers of the famous MacDougall Dog hot dog and related convenience foods sold through thousands of owned and franchised 'MacDougall's' restaurants, met with representatives of Time Management, Inc. ('TM'), a firm specializing in time-and-motion studies of labor intensive industries. After extensive negotiations, it was orally agreed that TM would redesign the food production area of MacDougall's restaurants, including modification of cooking equipment, if necessary, so that, using existing MacDougall's food products, savings in labor costs through reduction in restaurant cooking staffs would result. Lawyers for MacDougall's subsequently drafted a written agreement, sent it to TM, whose lawyers modified the draft, and returned the modified draft to MacDougall's. This modified writing, signed by both parties, stated in its entirety: Provided that at least 2,000 work-hours per restaurant are eliminated, MacDougall Corporation will pay to TM within 90 days of installation of new food production systems at MacDougall's restaurants in Richmond a first installment of $1 million. Upon installation of new food processing systems nationwide, MacDougall Corporation will pay to TM a second and final installment of $1.5 million. Nationwide installation must be completed by January 15, 2005. Any amendments to this agreement must be in writing signed by both parties. TM immediately began work on the restructuring of MacDougall's food processing methods. On September 5, 2004, a radical change in the layout of MacDougall's kitchen area and new personnel assignments had been designed, and TM demanded payment of the first installment payment of $1 million. MacDougall Corporation refused, but negotiations conducted between the parties resulted in an oral agreement that MacDougall's would pay $750,000 immediately and then the $1.5 million second installment as originally agreed, after nationwide installation of the new system. The restructured food production system was installed and in operation in all Richmond MacDougall's restaurants on October 1, 2004. Subsequent audits revealed that the new system enabled MacDougall Corporation to eliminate 1,500 work-hours per restaurant, saving the corporation $90,000 in labor costs for all Richmond restaurants. The new system required that MacDougall's increase the length of the famous MacDougall Dog by three centimeters and that the 'Mother MacDougall Hot Apple Fritters' be made in a rectangular shape rather than the traditional round form. Nationwide installation of the new system in all MacDougall's restaurants was completed on January 30, 2005. The 1,500 work-hours per restaurant savings to MacDougall Corporation was projected at $1.8 million per year. TM sent a certified letter to the chief executive officer of MacDougall Corporation requesting his certification that the new food production system was in place and operating as promised, and demanding the $1.5 million second installment. The CEO refused to so certify and refused to make any payment, noting in his reply letter that the system had not been installed by January 15, 2005, and that it did not use existing MacDougall's food products, as promised by TM. Assume for the purpose of this question only that an express condition of Mac- Dougall Corporation's duty to pay the contract price failed and that TM was in breach because it failed to complete nationwide installation of the food processing system by January 15, 2005. If TM brings an action to recover the reasonable value of its services, will it likely succeed?
    • A. 

      No, because failure of an express condition precedent would excuse MacDougall Corporation of its duty to pay TM.

    • B. 

      No, because a claim for reasonable value of services would be inconsistent with a claim by MacDougall Corporation against TM for breach of contract.

    • C. 

      Yes, because MacDougall Corporation continued to use the new food processing system and was aware that TM expected to be paid for its services.

    • D. 

      Yes, because MacDougall Corporation continued to use the new food processing system and would realize $1.8 million per year as a consequence of the contractual relationship between the parties.

  • 8. 
    Producer hired Fiddler to play in an orchestra that was to leave on a 10-week tour of the United States. Fiddler, a musician, turned down another job opportunity in order to accept Producer's job offer. One week after the start of the tour, Fiddler was hospitalized with a bad back and was unable to perform. Producer hired Player to take Fiddler's part in the orchestra. Four days later, Fiddler recovered but Producer refused to allow Fiddler to rejoin the orchestra or to complete the tour. Fiddler then sued Producer for breach of contract. Which of the following is Fiddler's best legal theory?
    • A. 

      His reliance on the job offered by Producer by declining another job opportunity created an estoppel against Producer.

    • B. 

      His failure to perform with the orchestra for four days was not a material failure so as to discharge Producer's duty to perform.

    • C. 

      His performance with the orchestra for the four-day period was physically impossible.

    • D. 

      Fiddler was never told that an injury might jeopardize his continued employment with the orchestra.

  • 9. 
    Aunt Sheila told her niece, Sinead, 'I'd like you to go to Tara Imports and select the $300 lace shawl of your choice and I'll buy it for you if you wear it to the ethnic festival. I want you to look as sweet and delicate as an Irish rose.' Sinead, a modern 22-year-old, despised shawls because she thought they were 'the sorts of things old ladies wear.' Also, her taste in music ran to heavy metal rock and roll, rather than the traditional Celtic bagpipe and fiddle music she would be subjected to if she went to the ethnic festival. However, Sinead really loved Aunt Sheila and did not want to hurt her feelings. She went to Tara Imports and purchased a $300 lace shawl imported from Ireland. Sinead accompanied Sheila to the ethnic festival wearing the shawl, and Sheila was very pleased. Assume for purposes of this question only that Sheila died shortly after the festival and her estate refuses to reimburse Sinead for her purchase. Sinead filed suit. Her attorney advanced four legal theories on which he asserts that Sinead can collect the $300 from Sheila's estate. They are as follows: (I. Promissory estoppel. (II. Bargain and exchange. (III. Conditional gift. (IV. Account stated. (Which of the following represents the correct combination of legal theories that support Sinead's case against Sheila's estate?
    • A. 

      I. and II.

    • B. 

      I. and III.

    • C. 

      II. and IV.

    • D. 

      I., II., III., and IV.

  • 10. 
    Civil service rules, which have been on the books in the city of Charlesville for many years, provide that any member of the police department must serve a one-year probationary period before he or she will be considered a permanent employee. In fact, this rule was enacted before Charlesville had a police academy, and now a prospective police officer spends six months in the academy before being hired by the city. Ruby, a graduate of the police academy, was with the city police department for eight months when she was terminated. There were no city ordinances or state laws that required that Ruby be given a reason for the termination or a hearing, and she was given neither. Which of the following facts, if shown, gives the city of Charlesville the strongest argument for refusing to give Ruby a statement of reasons why her employment was terminated and for denying her the opportunity to contest the termination?
    • A. 

      Ruby, as a female, did not perform as a police officer as well as her male counterparts.

    • B. 

      Ruby had failed to include in her application the fact that during college she was a member of a radical student organization.

    • C. 

      Ruby had not been granted permanent employment status.

    • D. 

      Ruby had graduated in last place in her class at the police academy.

  • 11. 
    Jenny, a general contractor, advertised in a trade publication that she planned to bid on the construction of a new building to be located in the Civic Mall. The advertisement welcomed bids from subcontractors to perform various functions, such as plumbing, electrical work, and masonry. The lowest plumbing bid was from Plunger, who bid $10,000. Jenny used Plunger's bid in preparing her general bid. At 2 p.m. on June 22, Jenny submitted her general bid. At 3 p.m. Plunger called her and said, 'I'm sorry, Jenny, but I made a mistake on that bid I submitted to you; I can't possibly do that plumbing work for a dime less than $12,000.' Jenny told him, Look, you've done a lot of good work for me in the past and we all make mistakes. I'll just forget you ever made that $10,000 bid. Plunger effusively thanked Jenny. Jenny then hired Flusher to do the plumbing work for $12,000. She then sued Plunger for damages. Jenny will:
    • A. 

      Win, because there was no additional consideration to support a release.

    • B. 

      Win, because the dollar amount of the agreement is large enough that the Statute of Frauds applies.

    • C. 

      Lose, because a rescission has taken place.

    • D. 

      Lose, because Jenny and Plunger mutually agreed to a release.

  • 12. 
    Zeller contracted in writing to deliver to Baker 100 bushels of wheat on August 1 at $3.50 per bushel. Because his suppliers had not delivered enough wheat to him by that time, Zeller on August 1 had only 95 bushels of wheat with which to fulfill his contract with Baker. If Zeller tenders 95 bushels of wheat to Baker on August 1, and Baker refuses to accept or pay for any of the wheat, which of the following best states the legal relationship between Zeller and Baker?
    • A. 

      Zeller has a cause of action against Baker, because Zeller has substantially performed his contract.

    • B. 

      Zeller is excused from performing his contract because of impossibility of performance

    • C. 

      Baker has a cause of action against Zeller for Zeller's failure to deliver 100 bushels of wheat.

    • D. 

      Baker is obligated to give Zeller a reasonable time to attempt to obtain the other five bushels of wheat.

  • 13. 
    Wendy, a wealthy widow, owned a prime piece of land in an exurban area populated by affluent residents. Wendy had a daughter, Dorothea, who was Wendy's only child and the 'apple of her eye.' Dorothea was 23 years of age and engaged to be married to Pemberton d'Argent, a rich, polo-playing investment banker. Wendy wanted to give Dorothea a very special wedding gift. Wendy therefore entered into a written agreement with contractor Brikk whereby Brikk would build a house on the property for $300,000. The house was to be built to very exacting specifications that described in great detail the materials to be used, the exact shape of each room, etc. These specifications were included in the written agreement between Wendy and Brikk. The agreement provided that Wendy would pay Brikk $300,000 upon completion of the building according to specifications and that Brikk would turn the keys to the home over to Dorothea. After the agreement was signed by both Wendy and Brikk, Dorothea and Pemberton looked at some fine homes in the same general area. They had two opportunities to purchase suitable homes at good prices, but decided to turn them down. Since then, property values in the area have increased by approximately 30%. Just as Brikk was about to begin construction of the house, he discovered that an underground river bisected Wendy's property. This left insufficient subterranean support to construct the house as planned. Assume for purposes of this question only that upon discovering the underground river, Brikk refused to try to build the house for $300,000. If Wendy files suit demanding specific performance or damages from Brikk, which of the following additional facts, if proven, would most favor Wendy's case?
    • A. 

      It is physically possible to build the house according to the original specifications by the sinking of many pilings deep into the ground for support, although it would add $1 million to Brikk's costs.

    • B. 

      The detailed specifications in the agreement had been drawn up by Brikk, as were other blueprints and plans for the house.

    • C. 

      Neither Wendy nor Brikk had reason to know of the underground river before the contract was signed.

    • D. 

      Dorothea knew of the contract between Wendy and Brikk, and her sole reason for turning down the opportunities to purchase suitable housing was reliance on the contract.

  • 14. 
    On February 1, Ridewell Rubber Co. telephoned Smithson Tire Shop and offered to sell to Smithson 500 series 4 Ridewell tires for $20,000. Smithson accepted immediately. On February 3, Smithson sent Ridewell a letter confirming the deal and stating that Smithson was counting on a 20% discount due to the size of the purchase. On February 20, Ridewell telephoned Smithson and stated that it could not afford to sell the 500 series 4 tires for less than 30000. If Smithson brings suit against Ridewell and Ridewell asserts the Statute of Frauds as a defense, will Smithson prevail?
    • A. 

      Yes, but only if its February 3 letter contained the quantity term.

    • B. 

      Yes, regardless of whether its February 3 letter contained the quantity term because the letter merely confirms a prior deal for 500 series 4 tires.

    • C. 

      No, because Smithson's February 3 letter varied the terms of Ridewell's offer.

    • D. 

      No, because Ridewell is the party to be charged and has signed nothing.

  • 15. 
    Integrated Circuit Technology, Inc. ('ICT') was having difficulty finding qualified engineers to work in its expanding production facilities because the hardware needed to train top-flight engineering students was so expensive that most colleges could not afford to purchase more than a minimal amount of such equipment, which limited program sizes and held down the number of applicable engineering degree candidates. ICT's chief executive officer, Cruz, wrote the following letter to the heads of several universities: If you will commit your institution to accepting in your engineering degree program every junior-year undergraduate who wishes to pursue that major, ICT will provide your institution with all the necessary electronic hardware to instruct such students. Our engineers have informed me that one set of equipment (i.e., one each of every machine used by ICT in its production process) is sufficient for use by five students; therefore, for every five engineering degree majors you accept in excess of your current engineering degree population, ICT will provide one such set of equipment. Marchand, chancellor of Middle States University ('MSU'), received a letter from Cruz and immediately mailed a reply letter accepting ICT's generous offer. A few weeks later, Marchand received another letter from Cruz explaining that the response to his original letter had been so overwhelming that schools such as MSU who had no history of supplying graduates to ICT as employees would have to be omitted from ICT's equipment program. If MSU brings an action for breach of contract against ICT, what result?
    • A. 

      Judgment for ICT, because it could not be determined with sufficient specificity what MSU's needs for equipment would be, there having been no time to ascertain how many new engineering degree students would apply to the expanding degree program.

    • B. 

      Judgment for ICT, because MSU's obligation under any contract is illusory|no additional students will necessarily apply to an expanded engineering degree program.

    • C. 

      Judgment for MSU, because ICT is classified as a merchant under the U.C.C. and its offer was therefore irrevocable.

    • D. 

      Judgment for MSU, because Marchand's letter was an effective acceptance of ICT's offer and an enforceable contract was thereby formed.

  • 16. 
    Martha needed a new pair of shoes. She went to her local Skysheim shop and told the salesperson that she worked in the city's downtown area and had to walk eight blocks to get from her house to her commuter train and then six blocks from her train to her office. During the workday, she had to climb up and down stairs several times. She wanted shoes that were suitable for walking on concrete, had gripping power for stairs, and were comfortable. The salesperson went into his stockroom and brought out four different styles of Skysheim's 'Clouds,' reputably the most comfortable shoe on the market, designed for the type of use that Martha had in mind. Martha tried on each of the four pairs but did not like the way any of them looked. While walking around the store, however, Martha saw a shoe she did like|'Hobblers,' Skysheim's high-fashion shoe. She told the salesperson to bring her a pair to try. He did so and explained to Martha that Hobblers were completely made of the finest leather and would probably last for years. Martha tried on the shoes and told the salesperson that she would take them. Assume for this question only that Martha bought the shoes and wore them twice. She decided that they were too uncomfortable for her daily commute. She took the shoes back to the Skysheim shop and demanded her money back. Skysheim refused. If Martha sues to get her money back, under which theory would she most likely prevail? I. Breach of the implied warranty of fitness for particular purpose. II. Breach of the implied warranty of merchantability.III. Breach of express warranty.
    • A. 

      I. and II., but not III.

    • B. 

      I. and III., but not II.

    • C. 

      II. and III., but not I.

    • D. 

      None of the above.

  • 17. 
    Hair of the Dog, a small pet store, entered into a written contract with Pet Products, Inc. whereby Pet Products agreed to supply Hair of the Dog with whatever quantity of pet food it might order, at a mutually agreed price, for two years, with an option to renew. Also, the contract required that Hair of the Dog buy its pet food from Pet Products only. For the first six months of the contract, Hair of the Dog ordered from Pet Products 10 cases of pet food per month. In the seventh month, the owner of Hair of the Dog sold the shop, inventory, and accounts receivable to Amalgamated Pet Shops, a chain operation. As part of the sale, Hair of the Dog assigned to Amalgamated the contract with Pet Products. Amalgamated promptly notified Pet Products of the sale and assignment. That same month, Amalgamated, looking to stock the pet food in stores throughout its chain, sent Pet Products an order for 5,000 cases of pet food on the terms and conditions of your agreement with Hair of the Dog, which has been assigned to us. Pet Products did not have the means to fill such a large order and refused to deliver 5,000 cases. If Amalgamated brings suit, the court should hold that:
    • A. 

      Amalgamated is entitled to enforce the agreement, as it gave Pet Products prompt notice of the assignment from Hair of the Dog.

    • B. 

      There was no mutuality of obligation in the original agreement between Pet Products and Hair of the Dog and hence there was nothing to 'assign' to Amalgamated.

    • C. 

      Amalgamated cannot compel Pet Products to fill the order for 5,000 cases of pet food.

    • D. 

      Amalgamated is entitled to enforce the agreement if it is willing to pay cash, as one person's credit is not necessarily as good as another's.

  • 18. 
    Babe was a professional baseball player who was known both for his prowess at the plate and his perceived 'heart of gold.' One day, Babe was visiting a sick boy named Jimmy in the hospital. Babe was touched by Jimmy's will to live despite a very poor prognosis. In a moment of weakness, Babe told Jimmy that in consideration of Jimmy's courage, he would do anything that Jimmy asked. Jimmy's eyes momentarily gleamed as he asked Babe to 'hit a homer for me in your next game.' Babe replied, 'Sure kid.' As Babe was leaving Jimmy's hospital room, Jimmy's father, Joe, pulled Babe aside and told Babe, 'It would mean a lot to Jimmy if you would hit a home run for him in your next game. The medicinal value of raising Jimmy's spirits would be priceless.' Babe replied, 'Hey man, we all have problems. I don't work for the Make a Wish Foundation.' Undaunted, Joe repeated that it would really raise Jimmy's spirits if Babe would hit a homer, and as incentive, Joe told Babe that he would pay Babe $5,000 if Babe did hit a home run in his next game. Babe replied, 'You've got a deal.' To raise his chances of collecting the $5,000 from Joe, Babe took extra batting practice before his next game, and the practice paid off because in his next game, Babe hit two home runs. During a post-game interview, Babe explained, 'I did it for little Jimmy, who is in the hospital.' After showering, Babe went directly to Joe's house and asked Joe for $5,000. Babe's contract with his ball club does not forbid him from accepting money from fans for good performance. If Joe refuses to pay and Babe brings an action against Joe for damages, which of the following is correct under the modern trend in contract law?
    • A. 

      Babe can recover the $5,000 because the preexisting duty rule does not apply where the duty is owed to a third person.

    • B. 

      Babe can recover the $5,000 if he can prove that the value of the home run to Jimmy is at least $5,000.

    • C. 

      Babe cannot recover from Joe because Babe had a preexisting duty to use his best efforts to hit home runs.

    • D. 

      Babe cannot recover from Joe because, even under the modern trend, moral consideration is not valid.

  • 19. 
    Patrick was exasperated with the smog in Big City and sent Andrew the following letter on January 1: Andrew, my family and I are moving out of here and going to live on a tropical island. Do you want to buy the stuff in our house? The price is 25000 Andrew received the letter on January 2, and on January 3 sent Patrick a letter accepting the offer. The next day Andrew changed his mind. He called Patrick and told him to forget the deal. Later that day, Patrick received the letter that Andrew had sent on January 3. Is there a contract between Patrick and Andrew?
    • A. 

      Yes, because the contract is for the sale of goods for more than $500 and Patrick's attempted rejection is oral.

    • B. 

      Yes, because Andrew's letter of acceptance was effective when he mailed it.

    • C. 

      No, because Andrew's rejection was communicated to Patrick before his letter of acceptance was received.

    • D. 

      No, because the description of the subject matter as 'the stuff in our house' is not sufficiently definite and certain.

  • 20. 
    Lehman was a limited partner in Bountiful Homes, a partnership organized by Lehman's nephew, Sanders, which purchased land, subdivided it, then constructed and sold single-family residences on the lots thus created. Sanders was the sole general partner. During the construction of the only housing development undertaken by the partnership, Lehman discovered that Sanders had taken most of the money invested by the limited partners and all of the money paid to the partnership by purchasers of the homes in the development and lost it gambling in Las Vegas. When confronted by Lehman, Sanders admitted everything, then went to his apartment and committed suicide. When news of Sanders's suicide was made public, Lehman was besieged by creditors of the partnership and by people who had purchased homes. The jurisdiction statutorily limited the liability of limited partners for debts of the partnership or acts of the general partner to the extent of their investment in the partnership, but being unaware of this, Lehman believed himself liable to all who had claims against Bountiful Homes. He told Wolcott, a single mother whose house was partly completed, that he would make good any losses caused by my nephew's actions, and then orally agreed with Smith, a contractor, to pay for the completion of Wolcott's house. Lehman also told Brubaker, an unsecured creditor of Bountiful Homes, that if Brubaker would hold off filing an involuntary bankruptcy petition against the partnership, Lehman would pay the partnership debt. In a bankruptcy action filed by secured creditors of the partnership, the assets of the partnership, which were very small, were consumed by the costs of the proceedings and no creditor received any payment. Sanders himself left no assets and was in fact heavily indebted on a personal basis due to his compulsive gambling. If Smith did not complete construction of Wolcott's house and Wolcott brings an action against him for breach of contract, which of the following would be an effective defense for Smith? I. Smith's contract was with Lehman. II. Wolcott furnished no consideration. III. Any agreement between Wolcott and Smith was discharged by novation because of the agreement between Smith and Lehman.
    • A. 

      I. only.

    • B. 

      I. and II. only.

    • C. 

      II. and III. only.

    • D. 

      None of the above.

  • 21. 
    Ben and Sandy, brother and sister, received a $50,000 inheritance from their deceased father. By mutual agreement, they used the money to purchase a 10-acre parcel of land. Ben and Sandy took title as joint tenants. Three years after the purchase, Ben suggested to Sandy that they build an apartment house on the property. Sandy rejected this idea. Ben then asked if he could build an apartment house on his half of the property; Sandy agreed. Ben then built an apartment house on the eastern five acres of the property. Six months later, Sandy gave permission to the Boy Scouts of America to use the western half of the property as a site for weekend camping trips. Two years later, Ben died, leaving his entire estate to his son, Steven. In an appropriate action to determine the respective interests of Sandy and Steven in the property, if Sandy is adjudged to be the owner of all of the property, the most likely reason for the judgment will be that:
    • A. 

      The Statute of Frauds prevents the enforcement of Sandy's oral agreement.

    • B. 

      The record title of the property as joint tenancy can be changed only by a duly recorded instrument.

    • C. 

      Ben could not unilaterally sever the joint tenancy.

    • D. 

      Ben's expenditure of funds in building the apartment house in reliance on Sandy's oral promise estops her from denying the oral permission.

  • 22. 
    Sam was a famous auto racer and builder of racing cars. He and Bob signed a contract for sale of one of Sam's hand-built race cars for $25,000, the price to be paid and the car to be delivered one week later. The day after the contract was signed, Sam called Bob and told him that Sam's wife, Winnie, who had a half interest in the race car, would not go along with the sale at $25,000. Winnie would agree to a sale for $40,000. If Winnie in fact has a half interest in the racing car:
    • A. 

      There is no enforceable contract because the car cannot be sold unless both owners convey title.

    • B. 

      There is an enforceable contract only if Bob was unaware of Winnie's interest when he signed with Sam.

    • C. 

      There is an enforceable contract regardless of whether Bob was aware of Winnie's interest at the time he signed.

    • D. 

      The contract is discharged by prospective inability of performance.

  • 23. 
    Odivia owned Homeacre, on which both a house and a garage were located. Odivia did not own an automobile, and she decided that she would turn the garage into an exercise area, including a modern sauna and spa. Odivia entered into a written agreement with contractor Eero, who agreed to do the job personally for $12,500, which included all requisite plumbing, electrical, and carpentry work. Eero was to begin work by May 14. On May 15 Eero had not yet appeared to start the job. Odivia telephoned Eero, who told her, 'I've got a big job with Developers Incorporated that's going to pay me a lot more money than that marginal project of yours, so I'm not going to work on your garage.' Over a period of several months, Odivia made many calls to local contractors, but none of them would agree to do the job for the price agreed upon by Eero. On June 3 of the following year Odivia filed suit for specific performance against Eero. Which of the following represents Eero's best argument in his defense against Odivia's suit?
    • A. 

      Specific performance is an equitable remedy, and because Odivia waited for over a year to sue, the equitable defense of laches will apply.

    • B. 

      Specific performance is inappropriate, because a contract for personal services is involved.

    • C. 

      Specific performance is not an appropriate remedy if nominal legal damages are available to Odivia.

    • D. 

      Specific performance is inappropriate, because Odivia's failure to obtain another contractor for the job is an indication that $12,500 was an unfair price.

  • 24. 
    Jenny, a general contractor, advertised in a trade publication that she planned to bid on the construction of a new building to be located in the Civic Mall. The advertisement welcomed bids from subcontractors to perform various functions, such as plumbing, electrical work, and masonry. The lowest electrical bid was from Ohmco, who bid $20,000. The lowest plumbing bid was from Plunger, who bid $10,000. Jenny used Ohmco's and Plunger's bids in preparing her general bid. At 2 p.m., on June 22, Jenny submitted her general bid. At 3 p.m., Plunger called her and said, 'I'm sorry, Jenny, but I made a mistake on that bid I submitted to you; I can't possibly do that plumbing work for a dime less than $12,000.' Jenny told him, 'I can't do anything about that because I've already submitted my general bid.' Jenny was awarded the contract. Assume for purposes of this question only that after receiving the contract, Jenny hired Flusher to do the plumbing work on the building at a cost of $12,000. She now sues Plunger for damages. Jenny is entitled to recover:
    • A. 

      $10,000.

    • B. 

      $2,000, which represents the difference between Plunger's bid and the amount Jenny had to pay for plumbing work.

    • C. 

      Nothing, because $12,000 was a reasonable amount to pay for the work performed.

    • D. 

      Nothing, because Jenny did not accept Plunger's bid before it was withdrawn.

  • 25. 
    Via a circular, WidgeCo, a manufacturer of widgets, sent an offer to Distrucorp, a major wholesaler. WidgeCo offered a standard lot (quantity well-known in the widget trade) of widgets for $8,000. This was a good price, and the president of Distrucorp personally mailed back to WidgeCo Distrucorp's standard printed acceptance form. However, the president wrote in large letters in his own hand on the form, 'Our liability on this contract is limited to $200.' Two days later, the WidgeCo sales manager received the communication from Distrucorp. A week later, WidgeCo had sent no additional communication to Distrucorp. Assuming no additional facts, what is the relationship between the parties?
    • A. 

      There is no contract between WidgeCo and Distrucorp, because Distrucorp made a material alteration.

    • B. 

      There is a valid, enforceable contract between WidgeCo and Distrucorp, but it is limited to the terms of WidgeCo's offer.

    • C. 

      There is a valid, enforceable contract between WidgeCo and Distrucorp, and it contains the additional term because WidgeCo raised no objection.

    • D. 

      Distrucorp has sent a valid counteroffer to WidgeCo, which WidgeCo can accept or reject.