Formation
Austin offers to sell Ohona his used Business Associations casebook for $50 and states that no other acceptance will be honored but the mailing of a personal check from Ohona for exactly $50.
Ohona doesn't own a checkbook, but she really needs the casebook before her first class tomorrow. In a panic, Ohona runs to the nearest ATM and pulls out the exact amount of money Austin requested. Ohona returns to campus and delivers the $50 in cash to Austin.
Is there a contract?
NO- did not accept offer in necessary way
A landholder was land-rich by inheritance but money-poor, having suffered severe losses on bad investments, but still owned several thousand acres of unencumbered timberland. He had a large family, and his normal, fixed personal expenses were high. Pressed for cash, he advertised a proposed sale of standing timber on a choice 2,000-acre tract.
The only response was an offer by a logger, the owner of a large, integrated construction enterprise, after inspection of the advertised tract.
The logger offered to buy, sever, and remove the standing timber from the advertised tract at a cash price 70% lower than the regionally prevailing price for comparable timber rights. The landholder, by then in desperate financial straits and knowing little about timber values, signed and delivered to the logger a letter accepting the offer.
If, before the logger commences performance, the landholder's investment fortunes suddenly improve and he wishes to get out of the timber deal with the logger, which of the following legal concepts affords his best prospect of effective cancellation?
Unconscionability.
DeWayne Hubbert purchased a computer online from Dell Corporation. To make a purchase on the Dell website, Hubbert had to fill out information on five separate web pages. Each page included a blue hyperlink to the “Terms and Conditions of Sale,” which in turn provided, in all capital letters, that any dispute related to the purchase “SHALL BE RESOLVED EXCLUSIVELY AND FINALLY BY BINDING ARBITRATION ADMINISTERED BY THE NATIONAL ARBITRATION FORUM.” The last three web pages also stated that “All sales are subject to Dell’s Terms and Conditions of Sale.” Dell did not require customers to acknowledge or assent to its terms and conditions. Dell did include a copy of the terms in the box sent to purchasers, along with notice of its “total satisfaction” policy—that is, purchasers could obtain a full refund if they returned their computers within 30 days. Hubbert did not return his computer and later sued Dell in state court, alleging that the company deceived him and other customers about the processing speed of the computer. Dell moved to enforce the arbitration clause. Who should prevail?
Dell, because there was plenty of notice via the blue hyperlinks and capitalized warnings on the last three pages.
Austin is an F1 race driver. Leclerc Insurance Co. insures Austin’s race cars for any damages up to $10,000,000 due to an accident. Under Austin’s insurance policy, insurance is only payable if he gives Leclerc written notice of any accident and subsequent loss within 60 days from the accident.
At the peak of his career, Austin is involved in an accident. Thankfully, the amount in damages to his car falls within his insurance policy. Austin calls up Leclerc 49 days after his accident to inform them of the accident and subsequent loss. Although Austin did not provide any written notice, Leclerc tells Austin that the phone call is sufficient notification.
However, Leclerc later refuses to cut Austin a check for his insurance claim. If Austin sues Leclerc, what result?
Austin will likely win. Leclerc cannot rely on Austin’s failure to give written notice to excuse them from cutting Austin a check for his insurance claim.
A high-volume, pleasure-boat retailer entered into with a boater, a written contract signed by both parties, to sell the boater a power boat for $12,000. The manufacturer's price of the boat delivered to the retailer was $9,500. As the contract provided, the boater paid the retailer $4,000 in advance and promised to pay the full balance upon delivery of the boat. The contract contained no provision for liquidated damages. Prior to the agreed delivery date, the boater notified the retailer that he would be financially unable to conclude the purchase; the retailer thereupon resold the same boat that the boater had ordered to a third person for $12,000.
If the boater sues the retailer for restitution of the $4,000 advance payment, which of the following should the court decide?
The boater's claim should be upheld in the amount of $4,000 minus the amount of the retailer's lost profit under its contract with the boater.
One night, Mary Iacono had a dream about winning on a Las Vegas slot machine. Her friend of 35 years, Carolyn Lyons, considered this a good omen and invited Iacono to join her on a trip to Las Vegas. Lyons agreed to pay for all the expenses of the trip, including providing money for gambling, and to split any gambling winnings 50-50. Iacono accepted the invitation.
At Caesar’s Palace, they started playing the slot machines. After losing $47, Lyons wanted to leave to see a show. Iacono begged Lyons to stay, and Lyons agreed on condition that Lyons, not Iacono, put coins into the machine. (As Iacono had advanced rheumatoid arthritis and was wheelchair bound, Lyons felt that Iacono took too long to put coins into the machine.) Iacono led Lyons to a dollar slot machine that looked like the one in Iacono’s dream. Lyons put a coin into the machine and it paid $1,908,064.
If Lyons refused to split the winnings, which of the following is likely?
Iacono is entitled to half of the winnings. The agreement is enforceable because there was a bargained-for-exchange between Iacono and Lyons.
A.S. McClanahan received an oral offer from the Otto-Marmet Coal & Mining Company to pay him to cut down all the trees on two tracts of land in order to provide wooden stakes for Otto-Marmet’s mine. McClanahan worked the land for over two years before the company told him they would not pay him anymore and proceeded to hire someone else to do the work. McClanahan sued the mine for breach of contract, and the company argued that recovery was barred by the statute of frauds because the agreement was for greater than one year and not memorialized in writing.
At trial, when McClanahan was asked how long he expected the job to take, he answered, “I hardly know. I did not expect it to take more than five or six years.”
The lawyer followed up, “And you calculated to take five or six years to cut it off?”
To which McClanahan replied, “Yes, at the way they used the posts.”
Should McClanahan be entitled to recover for breach of contract?
Yes. The contract falls outside the scope of the Statute of Frauds and is enforceable without a written memorandum. Despite McClanahan's expectation that it would take five or six years to cut down the trees, the contract, by its terms, could conceivably be performed within one year.
The Roy family is the epitome of success and dysfunction. Kendall Roy and Shiv Roy sign what appears to be a complete contract for Shiv to transfer shares of her NewCo to Kendall in exchange for funding, but orally agree that she need not do so unless Shiv can secure funding from their father, Logan Roy. The express language of their written contract does not contradict the oral stipulation.
A month later, Shiv has yet to perform her end of the bargain. Kendall sues Shiv to enforce their agreement. Kendall is confident that Logan provided Shiv with funding because Logan has a soft-spot for Shiv, his only daughter. But Shiv maintains that Logan never provided Shiv with money to fund the agreement.
Shiv seeks to introduce extrinsic evidence that supports her contention that she never received funding. Will PER bar Shiv from introducing the evidence?
No, because when parties to a written agreement agree orally that performance of the agreement is subject to occurrence of a condition, the agreement is not integrated with respect to that oral condition.
A computer company contracted in writing with a bank to sell and deliver to the bank a mainframe computer using a new type of magnetic memory, then under development but not perfected by the computer company, at a price substantially lower than that of a similar computer using current technology. The contract's delivery term was "F.O.B. the bank, on or
before July 31."
After making the contract with the bank, the computer company discovered that the new technology it intended to use was unreliable and that no computer manufacturer could yet build a reliable computer using that technology. The computer company thereupon notified the bank that it was impossible for the computer company or anyone else to build the contracted-for computer "in the present state of the art."
If the bank sues the computer company for failure to perform its computer contract, the court will probably decide the case in favor of
the bank, because the computer company assumed the risk, in the given circumstances, that the projected new technology would not work reliably.
1. Austin sells tote bags. It costs him 75 cents to obtain the material needed for one bag, and he can get all the material he needs to sell up to 20,000 bags. He enters into a contract to sell 10,000 tote bags to Ohona, a buyer for Free People. The agreed upon price is $1 per bag. However, Ohona later repudiates the contract.
Luckily, Austin is able to sell the 10,000 tote bags to Chitra, a buyer for Aritzia (another store he had plans to sell tote bags to anyways).
Which of the following is true?
A. Austin is not a lost volume seller.
B. Austin is a lost volume seller. His lost profit = $10,000.
C. Austin is a lost volume seller. His lost profit = $2,500.
D. Austin is a lost volume seller, but his lost profit = $0.
2. If Ohona had not repudiated the contract, Austin would have received a sales commission check for $500. Additionally, he would have incurred $100 in delivery expenses. How much could Austin recover?
1. C. Austin is a lost volume seller. His lost profit = $2,500.
2. $2,900
D.P. McIllmoil owned a 1995 Infiniti G20 sedan that he wanted to sell in order to purchase a new Infiniti automobile. He went to Frawley Motor Company, which dealt in Infiniti automobiles of different models and prices. McIllmoil and Frawley both signed the following agreement: ‘‘McIllmoil agrees to purchase a new Infiniti car from Frawley. Frawley agrees to purchase McIllmoil’s 1995 Infiniti G20, serial number 79293, for $1,000.’’ Frawley paid McIllmoil $1,000 for his sedan, but McIllmoil refused to purchase a new Infiniti from Frawley.
What result if Frawley sues? Choose the BEST answer.
A. Frawley wins because there was consideration on both sides of the agreement to purchase a new Infiniti.
B. Frawley wins because both parties indicated a willingness to be bound to the agreement, and the open terms could be decided later.
C. Frawley loses because the contract did not specify the model for the new Infinity.
D. Frawley loses because the contract does not specify a price term for the new Infiniti.
B. Frawley wins because both parties indicated a willingness to be bound to the agreement, and the open terms could be decided later.
A girl, who was a minor both in fact and appearance, bought on credit and took delivery of a telescope from a thirty-year-old seller for an agreed price of $100. Soon after reaching the age of majority, the girl encountered the seller and said, "I am sorry for not having paid you that $100 for the telescope when the money was due, but I found out it was only worth $75. So, I now promise to pay you $75." The seller agreed. The girl subsequently repudiated this promise and refused to pay anything.
In an action for breach of contract by the seller against the girl, the seller's probable recovery is
$75
Perseus sends Blue Sky a purchase order for 100 widgets at $10 per widget. The purchase order contains six terms. Blue Sky sends Perseus a written order confirmation for 75 widgets at $12 per widget. Blue Sky’s order confirmation contains seven terms. Six terms are identical to the terms in Perseus’ purchase order. The seventh term provides that Perseus will indemnify Blue Sky for any liabilities Blue Sky might incur for damages caused by the widgets. Is there a K?
There is no mutual assent and therefore no contract because an order confirmation with a different price and quantity is not an “expression of acceptance.” See 2-207(1).
ShowCo, located in SF, produces shows for theater owners. StageCo, located in Oakland, owns and operates a theater. On Oct. 1, 2022, ShowCo and StageCo form a contract including these terms:
Whereas StageCo plans to sell seats in its theater for $100 each on such dates and for such performances as are described below, and whereas Ariana Grande is a world-renowned soprano revered, moreover, for her portrayal of the part of Glinda in the play herein-after mentioned, the parties do agree that:
Which of the following facts, if proven, would most likely discharge ShowCo’s duty to perform on the theory of impracticability? What about on the theory of frustration of purpose?
A. On Oct. 1, Ariana Grande was dead.
B. On Oct. 31st, Ariana Grande died.
C. On Oct. 1, just before forming their contract, the parties mutually acknowledged their understanding that Wicked might not be appealing to an Oakland audience.
D. On Oct. 31st, through no fault of StageCo, the Daily-Carta opera company obtains a court order against StageCo forbidding it to present Wicked to any audience, whether or not the audience pays for the presentation.
Impracticability = B: on Oct. 31 Grande died
Frustration = C:
Pepsi signs a multi-million dollar contract with Tom, a famous football player for the Buccaneers, to have Tom film 10 TV commercials endorsing Pepsi beverages in the 4 months leading up to the Super Bowl (this took place before Pepsi stopped sponsoring the Halftime Show). The K terms also provide that Tom cannot endorse any competing beverages, such as Coca-Cola, while under the K with Pepsi.
After filming 2 of the 10 TV commercials, Tom signs a K to endorse Coca-cola beverages. Pepsi sues Tom for breach of K.
Which of the following remedies is the court likely to grant Pepsi?
A. Any possible monetary damages.
B. Specific performance of the 8 remaining TV commercials.
C. An injunction prohibiting Tom from endorsing the Coca-Cola beverages.
D. Both A and B.
E. Both A and C.
F. A, B, and C.
E. both A and C: any possible monetary damages and an injunction
A general contractor about to bid on a construction job for an office building invited a carpenter and several others to bid on the carpentry work. The carpenter agreed to bid if the general contractor would agree to give the carpenter the job provided that his bid was lowest and the general contractor was awarded the main contract. The general contractor so agreed. The carpenter, incurring time and expense in preparing his bid, submitted the lowest carpentry bid. The general contractor used the carpenter's bid in calculating its own bid, which was successful.
Which of the following best supports the carpenter's position that the general contractor is obligated to award the carpentry subcontract to the carpenter?
The carpenter gave consideration for the general contractor's conditional promise to award the carpentry subcontract to the carpenter.
1. Austin and Ohona are at a bar celebrating their new summer jobs. While there, Austin has a lot more to drink than Ohona and enters into a contract to sell his Apple Watch to her for $10. At the time, Ohona knew Austin was extremely drunk and unable to act in a reasonable manner in relation to their transaction. Is the K void,voidable or enforceable?
2. Austin is compelled into entering a contract under physical threat. Is the K void,voidable or enforceable?
3. Austin makes an improper threat to commence a civil suit against Ohona unless she agrees to discharge a claim that she has against him. In order to avoid defending the threatened suit, Ohona is induced to agree and they enter into a contract. Is the K void or voidable?
1. Voidable
2. Void
3. The contract is not voidable because defense of the threatened suit is a reasonable alternative. Austin's threat does not amount to duress.
Perseus sends Blue Sky a purchase order for 100 widgets at $10 per widget. The purchase order contains six terms. Blue Sky sends Perseus a written order confirmation for 100 widgets at $10 per widget. Blue Sky’s order confirmation contains seven terms. Six terms are identical to the terms in the Perseus purchase order. The seventh term provides that Perseus will indemnify Blue Sky for any liabilities Blue Sky might incur for damages caused by the use of the widgets.
There is a contract and the contract does not contain the indemnity clause (an additional term) because the indemnity clause is a material alteration. See 2-207(2)(b).
A contractor painted an owner's house under a contract which called for payment of $2,000. The owner, contending in good faith that the porch had not been painted properly, refused to pay anything.
On June 15, the contractor mailed a letter to the owner stating, "I am in serious need of money. Please send the $2,000 to me before July 1." On June 18, the owner replied, "I will settle for $1,800 provided you agree to repaint the porch." The contractor did not reply to this letter.
Thereafter the owner mailed a check for $1,800 marked "Payment in full on the painting contract as per letter dated June 18." The contractor received the check on June 30. Because he was badly in need of money, the contractor cashed the check without objection and spent the proceeds but has refused to repaint the porch.
The owner's refusal to pay anything to the contractor when he finished painting was a
A total breach of contract only if the contractor had properly or substantially painted the porch
A property owner hired an arborist to cut down all the trees on her property and to transport the trees to a lumber company. The owner agreed to pay the arborist $10,000 when the work was complete. The arborist said that the work would take him three days. On the first day the arborist cut down all the trees. That evening a fire caused by vandals completely destroyed the trees, making them unfit for use by the lumber company.
What if anything must the owner pay the arborist?
The arborist's restitutionary interest, which would be the reasonable value of the services rendered?
After George’s death, his wife, Lucille, realizes he had no money left. Lucille only has $25,000 to her name. She becomes fearful that she will outlive her financial resources. On August 10th, she describes her concerns to her son Michael, who is known as the responsible one of her children. On that same day, by signed writing, Michael makes her this promise: “When you have run out of the $25,000 that you now have, I will provide you any amount of money you request, up to a maximum of $50,000 per year, for the rest of your life.”
In September, Lucille’s daughter Lindsay asks Lucille for $25,000. Unable to resist, and believing that she can turn to Michael for any money she may need, Lucille gives Lindsay the $25,000 in her bank account.
Lucille then contacts Michael and reveals what she has done. She asks him for $25,000. Michael responds, “I did not make that promise to you just so you could keep spoiling Lindsay. Forget I ever promised you anything, I’m not giving you any money.”
To what extent does promissory estoppel require that Michael keep his promise to Lucille?
Not at all, because Lucille did not reasonably or foreseeably rely on it.
Austin enters into a valid contract with Ohona to buy her large property in Washington. Ohona last visited the property in early 2021, and she still thinks about its serene, tree-filled landscape. Austin recalls seeing all of the beautiful trees on Ohona's Instagram stories from her last visit.
Ohona knows the trees are great for her end of the deal because available timber greatly affects the value of land in Washington. Austin, who left the legal field after he found his calling in the logging industry, is also very excited by this deal and the available timber.
At the time of the contract, Austin and Ohona were unaware that the property had been devastated by a wildfire in late 2021 and 95% of the trees are now gone.
1. Assuming Austin did not bear the risk of a mistake, can either party get out of the contract?
2. Same facts as above, except the wildfire luckily missed Ohona's property by a few acres and both are unaware that there are more trees than expected on the property. Ohona is upset because the additional trees were not priced into the contract. Austin, on the other hand, is ecstatic. Assuming the contract is silent about the quantity of trees, can she get out of the contract?
3. Same facts as above, except the contract specifically allocates the risk of mistake about the quantity of trees to Ohona. Assuming the court finds that the additional trees have a material effect on their agreement, can Ohona get out of the contract?
1. Yes. The contract is voidable by Austin.
2. No, because Ohona bears the risk of her insufficient knowledge.
3. No. Per their agreement, Ohona bore the risk of a mistake.
1. Austin loves cars and recently started obsessing over Formula 1 on Netflix. Eventually, he leaves law school to pursue work that better matches these interests. He ends up working at a Ferrari dealership selling luxury sports cars. Under a written contract, Ferrari agrees to pay Austin commission for every car he sells. Ferrari is to pay Austin the commission once customers take delivery of the car. The contract also includes a provision that allows either party to terminate the contract at any time without cause. Both parties signed the contract, and Austin began selling cars at the dealership on October 1. Austin turns out to be an excellent salesman. By October 20, he had earned himself over $100,000 in potential commission (no salesperson had ever made this much in such a short time). However, he had not received any of his commission because customers typically take delivery on the last business day of the month (the last business day of October this year is October 31). Unfortunately, Ferrari terminated Austin on October 26 to avoid paying him his commission. Which of the following is true?
A. Ferrari likely did not breach the duty of GFFD because Ferrari could terminate Austin at any time without cause under the explicit terms of the contract. The contract was reduced to writing and signed, so the contract is binding on both parties.
B. Ferrari likely breached the duty of GFFD when they terminated Austin to avoid paying his commission.
C. Austin likely breached the duty of GFFD because no salesperson at Ferrari had ever made that much commission in such a short period of time.
D. None of the above.
E. Both B and C.
2. Same facts as above, except the written contract explicitly disclaims the duty of GFFD as part of the contract. Also, recall that the parties reduced their agreement to writing and that both parties signed it. If Austin sues Ferrari on a theory that Ferrari breached the duty of GFFD, what result?
1. B. Ferrari likely breached the duty of GFFD when they terminated Austin to avoid paying his commission.
2. Austin will likely win, GFFD is immutable rule
On January 2, a landowner and a builder entered into a written contract in which the builder agreed to build on the landowner's lot a new house for the landowner, according to plans and specifications furnished by the landowner's architect at a contract price of $200,000. The contract provided for specified progress payments and a final payment of $40,000 upon the landowner's acceptance of the house and issuance of a certificate of final approval by the architect. Further, under a "liquidated damages" clause in the agreement, the builder promised to pay the landowner $500 for each day's delay in completing the house after the following October 1. The landowner, however, told the builder on January 2, before the contract was signed, that he would be on an around-the-world vacation trip most of the summer and fall and would not return to occupy the house until November 1.
The builder completed the house on October 14 and, when the landowner returned on November 1, requested the final payment of $40,000 and issuance of a certificate of final approval by the architect. The landowner, however, refused to pay any part of the final installment after the architect told him that the builder "did a great job and I find no defects worth mentioning; but the builder's contract price was at least $40,000 too high, especially in view of the big drop in housing values within the past ten months. I will withhold the final certificate, and you just hold on to your money."
If the builder sues the landowner for the $40,000 final payment after the architect's refusal to issue a final certificate, which of the following will the court probably decide?
a. The builder wins, because nonoccurrence of the condition requiring the architect's certificate of final approval was excused by the architect's bad-faith refusal to issue the certificate
b. The builder wins, but, because all contractual conditions have not occurred, her recovery is limited to restitution of the benefit conferred on the landowner, minus progress payments already received
c. The landowner wins, because he can prove by clear and convincing evidence that the fair-market value of the completed house is $160,000 or less
d. The landowner wins, because he can prove by clear and convincing evidence that the total payment to the builder of $160,000 will yield a fair net profit
A. The builder wins, because nonoccurrence of the condition requiring the architect's certificate of final approval was excused by the architect's bad-faith refusal to issue the certificate
In Hawkins v. McGee, the court applied a rule about what constitutes a promise. What did the court decide after applying this rule to the facts of this case?
McGee made a promise because of the words used and the external context of their agreement.