UNIT 4
In Academy Chicago Publishers v. Cheever, the Illinois Supreme Court ultimately held that the contract between Academy Chicago Publishers and Mary Cheever (the widow of author John Cheever) was unenforceable. What was the primary reason for this ruling?
A. The contract was invalid because it was not in writing. B. The contract failed for indefiniteness because essential terms—such as the number and selection of stories, delivery dates, and editorial control—were never agreed upon. C. Mary Cheever lacked legal capacity to enter into the agreement. D. The publisher materially breached the agreement by delaying publication.
B. The contract failed for indefiniteness because essential terms—such as the number and selection of stories, delivery dates, and editorial control—were never agreed upon.
In the context of Wood v. Lucy, Lady Duff-Gordon, the court inferred a “best efforts” obligation from Wood’s exclusive agency. Under the distinction between interpretation and construction, this inference would be considered constructionrather than interpretation when:
A. The parties explicitly discussed the best-efforts obligation during negotiations.
B. The agreement expressly stated Wood must use best efforts.
C. There is no evidence of the parties’ actual intent—such as negotiation history, course of performance, or trade usage—and the court supplies the term based on what reasonable parties would have agreed to.
D. The court enforces the contract strictly according to its plain language without implying any missing terms.
C. There is no evidence of the parties’ actual intent—such as negotiation history, course of performance, or trade usage—and the court supplies the term based on what reasonable parties would have agreed to.
_____ _____ refers to the situation where a promisee has reasonably relied on a promisor’s promise by taking some sort of action or forbearance. Courts may enforce the promise if the promisee’s action (or forbearance) was reasonably foreseeable to the promisor and the promisee suffered a _____.
Promissory estoppel; detriment
Using IF, THEN, and EXCEPT/UNLESS, break down Restatement [Second] of Contracts RSC 90(1): A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
IF A promisor makes a promise which promisor should reasonably expect to induce promisee’s action or forbearance AND if promisee acts or forbears in reliance to that promise AND if promisee does so reasonably AND the only way to avoid injustice to enforce the promise
THEN the promise will be enforced through promissory estoppel
EXCEPT / UNLESS the promisor already has a pre-existing legal duty
Under UCC § 2-207(1), a definite and seasonable expression of acceptance operates as an acceptance even though it states terms additional to or different from those offered, unless:
A. The party adding the new terms is a merchant.
B. The parties have not yet performed under the contract.
C. The additional terms materially alter the contract.
D. The offer expressly limits acceptance to the terms of the offer.
D. The offer expressly limits acceptance to the terms of the offer.
Based on Joseph Martin Jr. Delicatessen v. Schumacher, can a court rule there is a contract if a material term is missing?
No, the court held that deferred agreement on a material term defeated contract formation and left the parties with nothing more than a nonbinding “agreement to agree.”
The legal value element of consideration requires
A. a detriment to either the promisor or promisee plus a benefit to either the promisor or promisee. B. a benefit to the promisee or a detriment to the promisor. C. a detriment to the promisee and a benefit to the promisor. D. a detriment to the promisee or a benefit to the promisor.
D. a detriment to the promisee or a benefit to the promisor.
Linda wishes to purchase property named Blue Acre from Albert, but Linda needs time to arrange financing. The fair market value of Blue Acre is $300,000. Albert and Linda enter a written option agreement that states, “In consideration of $1, Albert grants Linda an option to purchase Blue Acre for $300,000. Linda has 60 days to exercise this option.” Blue Acre recently appraised for $305,000. Which of the following is the most correct statement of the law governing the option?
A. The $1 is past consideration since the option can be exercised within 60 days. B. The consideration for the option contract is nominal; therefore, no contract exists since this is only the pretense of a bargain. C. Even though the consideration is nominal, courts will probably allow the option contract to stand because the price and terms of the sale are fair. D. Since the $1 is of such low value, the promise to keep the option available for 60 days is illusory.
C. Even though the consideration is nominal, courts will probably allow the option contract to stand because the price and terms of the sale are fair.
True or False? Section 2-305 specifies that the court can establish a “reasonable price” if: the contract is silent regarding price, the price is left to be agreed and the parties fail to agree; or the parties agree upon an external standard to establish the price and the external standard fails to establish the price.
True
What are the differences between Type 1, 2, and 3 preliminary agreements?
A “Type I” preliminary agreement is a binding contract. Although preliminary in form, it does reflect agreement on all the major issues that need negotiation and the parties’ intent to be bound by it. A “Type II” preliminary agreement settles some terms of the relationship but leaves other important aspects of it to future negotiation. It therefore cannot be a final and comprehensive contract that binds the parties to their ultimate objective. However, it does commit them to continue to work with each other and to negotiate in good faith in an effort to reach a final agreement. A “Type III” preliminary agreement is merely an expression of the parties’ intent to work together in the hope of being able to conclude a contract, but they do not intend it to create any binding obligation.
Services among family members are presumed ______.
Gratuitous.
UCC Article 2 requires that any contract modification be made in ____ ____.
good faith
In the absence of an agreement, when is delivery due and where?
Within a reasonable time and at the sellers place of business
What does a gratuitous promise lack?
Consideration
What is the difference between a promise and a conditional gift?
The presence of a condition
What is the analytic framework for Promissory Estoppel?
Was there a promise? Should the promisor have reasonably expected the promise to indie action or forbearance? Did the promisee take action (or forbearance) in reliance on the promise? Can justice only be avoided by enforcing the promise? Should the remedy be limited?
Unless the parties make other arrangements, payment is due when?
At the time and place where the buyer will receive the goods
True or False? The key requirement in the consideration rule is a bargained for exchange between the parties. When used in reference to consideration, the term “bargain” does not mean “a good deal” or “to negotiate.” Here, bargain refers to the parties’ motives in making an exchange.
True
What is the beginning price for consideration to be considered nominal?
$1
A charitable subscription involves a promise by a benefactor to a charity, such as a nonprofit foundation, to make a donation. Such promises were traditionally thought to be ______; however, many modern courts enforce the promise by applying ______.
Gratuitous; promissory