Contracts

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Contracts
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Contracts MBE Questions
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  1. On March 1, Green and Brown orally agreed that Brown would erect a boathouse on Green’s lot and dig a channel from the boathouse, across Clark’s lot, to a lake. Clark had already orally agreed with Green to permit the digging of the channel across Clark’s lot. Brown agreed to begin work on the boathouse on March 15, and to complete all the work before June 1. The total price of $10,000 was to be paid by Green in three installments: $2,500 on March 15; $2,500 when the boathouse was completed; $5,000 when Brown finished the digging of the channel.
    Assume that Green paid the $2,500 on March 15, that Brown completed the boat-house, that Green paid the second installment of $2,500, and that Brown completed the digging of the channel but not until July 1. Assume further that the absence of a writing is not raised as a defense.
    Which of the following is correct?

    A. Green has a cause of action against Brown for breach of contract.
    B. Green’s damages are for the full value of the contract.
    C. Green has no suit because he failed to notify Brown of his breach.
    D. Green is excused from paying the $5,000.
    A. Brown's failure to perform on June 1st constituted a breach of contract. The general rule is that if the breach is he breach is minor (i.e., the breaching party has substantially performed), the non-breaching party is entitled to a limited amount of any remedies that would apply to the non-material breach.

    (Green is excused from paying the $5,000) is wrong because there was substantial performance by Brown, which would not excuse all of Green’s performance or payment.

    (Green’s damages are for the full value of the contract) is incorrect because of Brown’s substantial performance.

    (Green has no suit because he failed to notify Brown of his breach) is wrong because notice is not required.
    (this multiple choice question has been scrambled)
  2. A buyer contracted in writing with a shareholder, who owned all of XYZ Corporation’s outstanding stock, to purchase all of her stock at a specified price per share. At the time this contract was executed, the buyer’s contracting officer said to the shareholder, “Of course, our commitment to buy is conditioned on our obtaining approval of the contract from our parent company.” The shareholder replied, “Fine. No problem.” The parent company orally approved the contract, but the shareholder changed her mind and refused to consummate the sale on the ground that the buyer had neglected to request the conglomerate's approval of the contract, which was true. The parent company’s chief executive officer, however, is prepared to testify that the parent company would have routinely approved the contract if requested to do so. The buyer can also prove that it has made a substantial sale of other assets to finance the stock purchase, although it admittedly had not anticipated any such necessity when it entered into the stock purchase agreement.

    If the buyer sues the shareholder for breach of contract, is the buyer likely to prevail?

    A. Yes, because the condition of the parent company’s approval of the contract, being designed to protect only the buyer and the parent company, can be and has been waived by those entities.
    B. Yes, because the buyer detrimentally relied on the shareholder’s commitment by selling off other assets to finance the stock purchase.
    C. No, because the express condition of the parent company’s approval had not occurred prior to the lawsuit.
    D. No, because obtaining the parent company’s approval of the contract was an event within the buyer’s control and the buyer’s failure to obtain it was itself a material breach of contract.
    A. The buyer’s obligation to purchase (not the shareholder’s obligation to sell) was conditioned by approval by the conglomerate. Because the parent company waived that approval, and no other condition existed, the buyer will prevail. Detrimental reliance is not applicable because the parent company’s approval was an express condition.

    (No, because obtaining the parent company’s approval of the contract was an event within the buyer’s control and the buyer’s failure to obtain it was itself a material breach of contract) is incorrect because a failure to obtain the approval would not be a breach, but would merely excuse the condition, not void the contract.
    (this multiple choice question has been scrambled)
  3. Albert engaged Bertha, an inexperienced actress, to do a small role in a new Broadway play for a period of six months at a salary of $200 a week. Bertha turned down another role in order to accept this engagement. On the third day of the run, Bertha was hospitalized with influenza and Helen was hired to do the part. A week later, Bertha recovered, but Albert refused to accept her services for the remainder of the contract period. Bertha then brought an action against Albert for breach of contract.

    Which of the following is Bertha’s best legal theory?

    A. Her failure to perform for one week was not a material failure so as to discharge Albert’s duty to perform.
    B. Her reliance on the engagement with Albert by declining another acting role created an estoppel against Albert.
    C. Her acting contract with Albert was legally severable into weekly units.
    D. Her performance of the literal terms of the contract was physically impossible.
    A. Under common law, a material breach of contract occurs when the non-breaching party does not receive the substantial benefit of its bargain and permits the withholding of any promised performance and the pursuit of remedies for the breach. If Bertha is able to successfully argue that a one-week loss of work was not material, but a minor breach, she would be able to recover damages.

    The other answer choices are weaker arguments, particularly in that they admit a material breach in part and argue for equitable remedies.
    (this multiple choice question has been scrambled)
  4. On October 1, Toy Store, Inc., entered into a written contract with Fido Factory, Inc., for the purchase at $20 per unit of 1,000 mechanical dogs, to be specially manufactured by Fido according to Toy Store’s specifications. Fido promised to deliver all of the dogs “not later than November 15, for the Yule shopping season,” and Toy Store promised to pay the full $20,000 price upon delivery. In order to obtain operating funds, Fido as borrower entered into a written loan agreement on October 5 with the High Finance Company. In relevant part, this agreement recited, “Fido Factory hereby transfers and assigns to High Finance its (Fido Factory’s) October 1 mechanical dog contract with Toy Store, as security for a 50-day loan of $15,000, the advance and receipt of which are hereby acknowledged by Fido Factory . . . . ” No copy of this agreement, or statement relating to it, was filed in an office of public record.

    On October 15, Fido notified Toy Store, “We regret to advise that our master shaft burned out last night because our night supervisor let the lubricant level get too low. We have just fired the supervisor, but the shaft cannot be repaired or replaced until about January 1. We can guarantee delivery of your order, however, not later than January 20.” Toy Store rejected this proposal as unacceptable and immediately contracted with the only other available manufacturer to obtain the 1,000 dogs at $30 per unit by November 15.

    By November 16, Fido, without legal excuse, has delivered no dogs, and Toy Store has brought an action against Fido. In an action brought on November 16 by Toy Store against High Finance Company on account of Fido’s default, Toy Store can recover:

    A. nothing, because the October 5 assignment by Fido to High Finance of Fido’s contract with Toy Store was only an assignment for security.
    B. nothing, because no record of the October 5 transaction between Fido and High Finance was publicly filed.
    C. $10,000 damages, because Toy Store was a third-party intended beneficiary of the October 5 transaction between Fido and High Finance.
    D. $10,000 in damages, because the October 5 transaction between Fido and High Finance effected, with respect to Toy Store as creditor, a novation of debtors.
    A. Fido’s failure to perform is a total or material breach, and Toy Store can seek damages. Here, High Finance’s role was only for financing and a posting of security, not as an assignment.

    (nothing, because no record of the October 5 transaction between Fido and High Finance was publicly filed) is incorrect because if a third party beneficiary relationship had been created, a public filing would be meaningless. The other two answer choices are incorrect for the reasons above.
    (this multiple choice question has been scrambled)
  5. On March 1, Green and Brown orally agreed that Brown would erect a boathouse on Green’s lot and dig a channel from the boathouse, across Clark’s lot, to a lake. Clark had already orally agreed with Green to permit the digging of the channel across Clark’s lot. Brown agreed to begin work on the boathouse on March 15, and to complete all the work before June 1. The total price of $10,000 was to be paid by Green in three installments: $2,500 on March 15; $2,500 when the boathouse was completed; $5,000 when Brown finished the digging of the channel.

    Assume that Green paid the $2,500 on March 15 and that Brown completed the boathouse according to specifications, but that Green then refused to pay the second installment and repudiated the contract. Assume further that the absence of a writing is not raised as a defense. Which of the following is correct?

    A. Brown has no cause of action because it was a series of unilateral acts.
    B. Brown has a cause of action against Green and his damages will be $2,500.
    C. Brown can refuse to dig the channel and not be liable for breach of contract.
    D. Brown’s damages are limited by contract.
    C. The general rule is that a material breach of contract (i.e., where the non-breaching party does not receive the substantial benefit of its bargain) allows the non-breaching party to withhold any promised performance and to pursue remedies for the breach, including damages. Here, Green’s breach permits Brown to stop work and avoid liability.

    (Brown has a cause of action against Green and his damages will be $2,500) is only partially correct, as his measure of damages may be more.
    (Brown’s damages are limited by contract) is similarly too restrictive.
    (Brown has no cause of action because it was a series of unilateral acts) is incorrect for the reasons above.
    (this multiple choice question has been scrambled)
  6. On March 1, Computer Programs, Inc. (CP) orally agreed with Holiday Department Store (HDS) to write a set of programs for HDS’s computer and to coordinate the programs with HDS’s billing methods. A subsequent memo, signed by both parties, provided in its entirety:HDS will pay CP $20,000 in two equal installments within one month of completion if CP is successful in shortening by one-half the processing time for the financial transactions now handled on HDS’s Zenon 747 computer; CP to complete by July 1. This agreement may be amended only by a signed writing.
    On June 6, CP demanded $10,000, saying the job was one-half done. After HDS denied liability, the parties orally agreed that HDS should deposit $20,000 in escrow, pending completion to the satisfaction of HDS’s computer systems manager. The escrow deposit was thereupon made. On July 5, CP completed the programs, having used an amount of time in which it could have earned $18,000 had it devoted that time to other jobs. Tests by CP and HDS’s computer systems manager then showed that the computer programs, not being perfectly coordinated with HDS’s billing methods, cut processing time by only 47 percent. They would, however, save HDS $12,000 a year. Further, if HDS would spend $5,000 to change its invoice preparation methods, as recommended by CP, the programs would cut processing time by a total of 58 percent, saving HDS another $8,000 a year. HDS’s computer systems manager refused in good faith to certify satisfactory completion. HDS requested the escrow agent to return the $20,000 and asserted that nothing was owed to CP even though HDS continued to use the programs.
    Assume that the programs completed on July 5 had cut processing time by one-half for all of HDS’s financial transactions. Is HDS entitled to renounce the contract because of CP’s delay in completion?

    A. Yes, because the doctrine of substantial performance does not apply to commercial contracts.
    B. No, because the contract did not contain a liquidated damages clause dealing with delay in completion.
    C. Yes, because “CP to complete by July 1” is an express condition.
    D. No, because both parties manifested an understanding that time was not of the essence.
    D.
    (this multiple choice question has been scrambled)
  7. Paul and Daniel entered a contract in writing on November 1, the essential part of which read as follows: “Paul to supply Daniel with 200 personalized Christmas cards on or before December 15, 1970, bearing a photograph of Daniel and his family, and Daniel to pay $100 thirty days thereafter. Photograph to be taken by Paul at Daniel’s house. Cards guaranteed to be fully satisfactory and on time.” Because Daniel suddenly became ill, Paul was unable to take the necessary photograph of Daniel and his family until the first week of December. The final week’s delay was caused by Paul’s not being notified promptly by Daniel of his recovery. Before taking the photograph of Daniel and his family, Paul advised Daniel that he was likely to be delayed a day or two beyond December 15 in making delivery because of the time required to process the photograph and cards. Daniel told Paul to take the photograph anyway. The cards were finally delivered by Paul to Daniel on December 17, Paul having diligently worked on them in the interim. Although the cards pleased the rest of the family, Daniel refused to accept them because, as he said squinting at one of the cards at arm’s length without bothering to put on his reading glasses, “The photograph makes me look too old. Besides, the cards weren’t delivered on time.”
    Which of the following statements is most accurate?

    A. Payment by Daniel of the $100 was a condition subsequent to Paul’s duty of performance.
    B. Payment by Daniel of the $100 was a condition precedent to Paul’s duty of performance.
    C. The performances of Paul and Daniel under the contract were concurrently conditional.
    D. Performance by Paul under the contract was a condition precedent to Daniel’s duty of payment of the $100.
    D. Performance by one or both of the parties may be made expressly conditional in the contract, and the conditions may precede the obligation to perform (condition precedent), or may discharge the duty to perform after a particular event occurs (condition subsequent). Here, Paul’s work had to be completed before Daniel was obligated to pay the $100.

    The other answer choices misstate the timing of the conditions.
    (this multiple choice question has been scrambled)
  8. A borrower owed a lender $1,000, plus interest at 8% until paid, on a long-overdue promissory note, collection of which would become barred by the statute of limitations on June 30. On the preceding April 1, the borrower and the lender both signed a writing in which the borrower promised to pay the note in full on the following December 31, plus interest at 8% until that date, and the lender promised not to sue on the note in the meantime. The lender, having received some advice from his non-lawyer brother-in-law, became concerned about the legal effect of the April 1 agreement. On May 1, acting pro se as permitted by the rules of the local small claims court, he filed suit to collect the note.
    Assume that on January 2 of the following year the lender’s suit has not come to trial, the borrower has not paid the note, the lender has retained a lawyer, and the lawyer, with leave of court, amends the complaint to add a second count to enforce the promise the borrower made in the April 1 agreement. Does the new count state a claim upon which relief can be granted?

    A. Yes, because the borrower’s failure to pay the note, plus interest, on December 31 makes the lender’s breach of promise not to sue before that date no longer material.
    B. Yes, because the borrower’s April 1 promise is enforceable by reason of his moral obligation to pay the debt.
    C. No, because such relief would undermine the policy of the statute of limitations against enforcement of stale claims.
    D. No, because the borrower’s April 1 promise was lawfully conditioned upon the lender’s forbearing to sue prior to December 31.
    • D. The April 1 agreement was expressly conditioned on the lender not suing prior to December 31. Here, the lender did bring suit prior to that time, so the condition failed to be met, relieving the borrower of the obligation to perform under the contract.
    • (Yes, because the borrower’s failure to pay the note, plus interest, on December 31 makes the lender’s breach of promise not to sue before that date no longer material) is incorrect, as the payment obligation was expressly conditioned on the lender not suing before December 31.
    • (Yes, because the borrower’s April 1 promise is enforceable by reason of his moral obligation to pay the debt) is incorrect, as a moral obligation does not make a contract enforceable. Here, the lender violated an express condition of the April 1 agreement, thus relieving the borrower of any obligation to perform under the contract.
    • (No, because such relief would undermine the policy of the statute of limitations against enforcement of stale claims) is incorrect, as the statute of limitations is irrelevant to whether or not the borrower was obligated to perform under the April 1 agreement. The agreement was expressly and lawfully conditioned on the lender not suing before December 31. The lender’s suit on May 1 meant that the condition failed and that the borrower was relieved from the obligation to perform the contract.
  9. A lumber supplier agreed to sell and a furniture manufacturer agreed to buy all of the lumber that the manufacturer required over a two-year period. The sales contract provided that payment was due 60 days after delivery, but that a 3% discount would be allowed if the manufacturer paid within 10 days of delivery. During the first year of the contract, the manufacturer regularly paid within the 10-day period and received the 3% discount. Fifteen days after the supplier made its most recent lumber delivery to the manufacturer, the supplier had received no payment from the manufacturer. At this time, the supplier became aware of rumors from a credible source that the manufacturer’s financial condition was precarious. The supplier wrote the manufacturer, demanding assurances regarding the manufacturer’s financial status. The manufacturer immediately mailed its latest audited financial statements to the supplier, as well as a satisfactory credit report prepared by the manufacturer’s banker. The rumors proved to be false. Nevertheless, the supplier refused to resume deliveries. The manufacturer sued the lumber supplier for breach of contract.
    Will the manufacturer prevail?

    A. No, because the supplier had reasonable grounds for insecurity and was therefore entitled to cancel the contract and refuse to make any future deliveries.
    B. No, because the contract was unenforceable, since the manufacturer had not committed to purchase a definite quantity of lumber.
    C. Yes, because the supplier was not entitled to condition resumption of deliveries on the receipt of financial status information.
    D. Yes, because the credit report and audited financial statements provided adequate assurance of due performance under the contract.
    D. A party to a contract with reasonable grounds to worry that the other party might not perform can request adequate assurances of performance, pursuant to Uniform Commercial Code § 2-609. The supplier in this case did so, but the information provided by the manufacturer would be regarded as satisfying the request for an assurance of performance. Therefore the supplier’s refusal to continue performance constituted a breach of contract for which the manufacturer is entitled to compensation.

    (No, because the contract was unenforceable, since the manufacturer had not committed to purchase a definite quantity of lumber) is not correct because a quantity term expressed in terms of a manufacturer’s requirements is enforceable. Uniform Commercial Code § 2-306 provides that “a term which measures the quantity by the . . . requirements of the buyer means such actual . . . requirements as may occur in good faith . . . .” Basically, the definiteness of quantity requirement is satisfied if there is an available objective method for determining the quantity, and the requirements of a manufacturer would generally satisfy that need. In this case, once the manufacturer provided the supplier with adequate assurance in the form of audited financial statements and a credit report, the supplier was bound to perform under the contract.

    (No, because the supplier had reasonable grounds for insecurity and was therefore entitled to cancel the contract and refuse to make any future deliveries) is incorrect because under Uniform Commercial Code § 2-609, a party to a contract who has reasonable grounds for insecurity is entitled to request assurances, and is also entitled to suspend performance pending receipt of that assurance. A failure to provide an adequate assurance within a reasonable time (not to exceed 30 days) can be treated as a repudiation, which may give rise to a right to terminate the contract.

    (Yes, because the supplier was not entitled to condition resumption of deliveries on the receipt of financial status information) correctly concludes that the manufacturer will prevail, but it misstates the reason why this is so. In this case, the supplier heard rumors from a credible source that the manufacturer’s financial condition was insecure. This would be enough to trigger the right to request assurance, and so it is incorrect to assert that the supplier was not entitled to request assurance.
    (this multiple choice question has been scrambled)
  10. On January 15, in a signed writing, Artisan agreed to remodel Ohner’s building according to certain specifications, Ohner to pay the agreed price of $5,000 to Artisan’s niece, Roberta Neese, as a birthday present. Neese did not learn of the agreement until her birthday on May 5.
    Before they signed the writing, Artisan and Ohner had orally agreed that their “written agreement will be null and void unless Ohner is able to obtain a $5,000 loan from the First National Bank before January 31.”
    Ohner was unable to obtain the loan, and, on January 31, phoned Artisan and told him, “Don’t begin the work. The deal is off.” In an action for breach of contract brought against Ohner by the proper party, will Ohner be successful in asserting as a defense his inability to obtain a loan?

    A. Yes, because obtaining a loan was a condition precedent to the existence of an enforceable contract.
    B. Yes, because the agreement about obtaining a loan is a modification of a construction contract and is not required to be in writing.
    C. No, because the agreement about obtaining a loan contradicts the express and implied terms of the writing.
    D. No, because Ohner is estopped to deny the validity of the written agreement.
    • A. Performance by one or both of the parties may be made expressly conditional in the contract, and the conditions may precede the obligation to perform (condition precedent), or may discharge the duty to perform after a particular event occurs (condition subsequent). If the condition is precedent, the plaintiff has the burden of proving that the condition occurred in order to recover.
    • The other answer choices are wrong because here, the loan condition came before or was precedent to performance by Ohner.
  11. A builder contracted with a client to construct for $500,000 a warehouse and an access driveway at highway level. Shortly after commencing work on the driveway, which required for the specified level some excavation and removal of surface material, the builder unexpectedly encountered a large mass of solid rock. Upon encountering the rock formation, the builder, instead of incurring additional costs to remove it, built the access driveway over the rock with a steep grade down to the highway. The client, who was out of town for several days, was unaware of this nonconformity until the driveway had been finished. As built, it is too steep to be used safely by trucks or cars, particularly in the wet or icy weather frequently occurring in the area. It would cost $30,000 to tear out and rebuild the driveway at highway level. As built, the warehouse, including the driveway, has a fair market value of $550,000. The client has paid $470,000 to the builder, but refuses to pay more because of the nonconforming driveway, which the builder has refused to tear out and rebuild.
    If the builder sues the client for monetary relief, what is the maximum amount the builder is entitled to recover?

    A. Nothing, because the client is entitled to damages for the cost of correcting the driveway.
    B. $30,000, because the builder substantially performed and the cost of correcting the driveway would involve economic waste.
    C. $30,000, because the fair market value of the warehouse and driveway “as is” exceeds the contract price by $50,000 (more than the cost of correcting the driveway).
    D. $30,000, minus whatever amount the builder saved by not building the driveway at the specified level.
    A. The builder here breached the contract, which required an access driveway at highway level. Accordingly, the builder will be liable for damages for the cost of correction.

    ($30,000, because the fair market value of the warehouse and driveway “as is” exceeds the contract price by $50,000 (more than the cost of correcting the driveway)) is incorrect, as the value of the driveway “as is” is irrelevant. The builder breached the contract and would be liable to the client for damages.

    ($30,000, because the builder substantially performed and the cost of correcting the driveway would involve economic waste) is incorrect, as there was no substantial performance. Access at highway level was a key condition of the contract and the breach of that condition would be major, not minor, thus negating substantial performance.

    ($30,000, minus whatever amount the builder saved by not building the driveway at the specified level) is incorrect because the builder is not entitled to damages. The builder breached the contract and would be liable to the client for damages.
    (this multiple choice question has been scrambled)
  12. On March 1, Computer Programs, Inc. (CP) orally agreed with Holiday Department Store (HDS) to write a set of programs for HDS’s computer and to coordinate the programs with HDS’s billing methods. A subsequent memo, signed by both parties, provided in its entirety:
    HDS will pay CP $20,000 in two equal installments within one month of completion if CP is successful in shortening by one-half the processing time for the financial transactions now handled on HDS’s Zenon 747 computer; CP to complete by July 1. This agreement may be amended only by a signed writing.
    On June 6, CP demanded $10,000, saying the job was one-half done. After HDS denied liability, the parties orally agreed that HDS should deposit $20,000 in escrow, pending completion to the satisfaction of HDS’s computer systems manager. The escrow deposit was thereupon made. On July 5, CP completed the programs, having used an amount of time in which it could have earned $18,000 had it devoted that time to other jobs. Tests by CP and HDS’s computer systems manager then showed that the computer programs, not being perfectly coordinated with HDS’s billing methods, cut processing time by only 47 percent. They would, however, save HDS $12,000 a year. Further, if HDS would spend $5,000 to change its invoice preparation methods, as recommended by CP, the programs would cut processing time by a total of 58 percent, saving HDS another $8,000 a year. HDS’s computer systems manager refused in good faith to certify satisfactory completion. HDS requested the escrow agent to return the $20,000 and asserted that nothing was owed to CP even though HDS continued to use the programs.
    If CP in fact had half-completed the job on June 6, would it then have been entitled to $10,000?
    A. Yes, because CP had done one-half the job.
    B. Yes, because June 6 was within one month of completion.
    C. No, because of a constructive condition precedent requiring at least substantial completion of the work before HDS would have a duty to pay.
    D. No, because “within one month of completion” would, in these circumstances, be interpreted to mean “within one month after completion.”
    C. The general rule is that performance by one or both of the parties may be expressly conditional in the contract. If a condition is precedent (where conditions may precede the obligation to perform) then the plaintiff has the burden of proving that the condition occurred in order to recover. An implied or constructive condition exists when they are deemed to be a part of the contract because of the nature of the agreement suggests that the parties truly intended the condition, but failed to expressly include it, or because fairness requires including the condition to prevent an unjust result. Here, the provision for substantial completion precludes CP’s recovery.

    For these reasons, answer choices (Yes, because June 6 was within one month of completion) and (Yes, because CP had done one-half the job) are wrong, while answer choice (No, because “within one month of completion” would, in these circumstances, be interpreted to mean “within one month after completion”) ignores the constructive condition created.
    (this multiple choice question has been scrambled)
  13. On June 1, a seller and a buyer contracted in writing for the sale and purchase of the seller’s cattle ranch (a large single tract), and to close the transaction on December 1.
    The buyer unequivocally repudiated the contract on August 1. On August 15, the seller urged the buyer to change her mind and proceed with the scheduled closing on December 1. On October 1, having heard nothing further from the buyer, the seller sold and conveyed his ranch to a rancher without notice to the buyer. On December 1, the buyer attempted to close under the June 1 contract by tendering the full purchase price to the seller. The seller rejected the tender.
    If the buyer sues the seller for breach of contract, the buyer will probably:

    A. win, because the seller failed seasonably to notify the buyer of any pending sale to the rancher.
    B. lose, because the buyer did not retract her repudiation before the seller materially changed his position in reliance thereon by selling the ranch to the rancher.
    C. win, because the seller waived the buyer's August 1 repudiation by urging her to retract it on August 15.
    D. lose, because acceptance of the purchase price by the seller was a concurrent condition to the seller's obligation to convey the ranch to the buyer on December 1.
    B. Upon repudiation, the promisee can treat the repudiation as a breach, or ignore it and demand performance. A repudiation may be retracted until such time as the promisee: (a) acts in reliance on the repudiation; (b) signifies acceptance of the repudiation; or (c) commences an action for breach of contract. Notice of the retraction must be sufficient enough to allow for the performance of promisee’s obligations. Because the buyer did not retract his repudiation before the seller acted in reliance on the repudiation (by selling to the rancher), the buyer will likely lose.

    Answer choice (win, because the seller failed seasonably to notify the buyer of any pending sale to the rancher) is incorrect because the seller is not obligated to give notice of his reliance on the buyer’s repudiation.

    No waiver was created when the seller urged the buyer to reconsider, so answer (win, because the seller waived the buyer's August 1 repudiation by urging her to retract it on August 15) is incorrect.
    (this multiple choice question has been scrambled)
  14. Alpha and Beta made a written contract pursuant to which Alpha promised to convey a specified apartment house to Beta in return for Beta’s promise (1) to convey a 100-acre farm to Alpha and (2) to pay Alpha $1,000 in cash six months after the exchange of the apartment house and the farm. The contract contained the following provision: “It is understood and agreed that Beta’s obligation to pay the $1,000 six months after the exchange of the apartment house and the farm shall be voided if Alpha has not, within three months after the aforesaid exchange, removed the existing shed in the parking area in the rear of the said apartment house.”
    Which of the following statements concerning the order of performances is LEAST accurate?

    A. Alpha’s tendering of good title to the apartment house and Beta’s tendering of good title to the farm are concurrent conditions.
    B. Beta’s tendering of good title to the farm is a condition subsequent to Alpha’s duty to convey good title to the apartment house.
    C. Alpha’s tendering of good title to the apartment house is a condition precedent to Beta’s duty to convey good title to the farm.
    D. Beta’s tendering of good title to the farm is a condition precedent to Alpha’s duty to convey good title to the apartment house.
    B. The general rule is that performance by one or both of the parties may be made expressly conditional in the contract, and the conditions may precede the obligation to perform (condition precedent), or may discharge the duty to perform after a particular event occurs (condition subsequent). Here, Beta’s tender of good title was a concurrent condition.

    The other answer choices are incorrect because they are accurate, and the question asks for the least accurate statement.
    (this multiple choice question has been scrambled)
  15. Johnston bought 100 bolts of standard blue wool, No. 1 quality, from McHugh. The sales contract provided that Johnston would make payment prior to inspection. The 100 bolts were shipped, and Johnston paid McHugh. Upon inspection, however, Johnston discovered that the wool was No. 2 quality. Johnston thereupon tendered back the wool to McHugh and demanded return of his payment. McHugh refused on the ground that there is no difference between No. 1 quality wool and No. 2 quality wool.
    Which of the following statements regarding the contract provision for pre-inspection payment is correct?

    A. It is invalid.
    B. It constitutes a waiver of the buyer’s remedy of private sale in the case of nonconforming goods.
    C. It does not impair a buyer’s right of inspection or his remedies.
    D. It constitutes an acceptance of the goods.
    C. Under the UCC (for the sales of goods), a buyer has the right to inspect the goods to determine if the seller’s obligations have been met. When conforming tender is made, the buyer is obligated to accept and pay the price under the contract. A rejection would constitute a breach. Here, the payment prior to inspection clause does not affect Johnston’s ability to inspect and ultimately seek “perfect tender” or other remedies.

    Answer choices (It constitutes an acceptance of the goods) and (It constitutes a waiver of the buyer’s remedy of private sale in the case of nonconforming goods) are wrong because the UCC specifically addresses a buyer’s right to reject following inspection and payment does not constitute acceptance.

    Answer choice (It is invalid) is wrong because the provision is valid, but does not diminish the buyer’s rights.
    (this multiple choice question has been scrambled)
  16. An adult woman bought a telescope from a seller and promised to pay $100 “as soon as I am able.”
    What effect does this quoted language have on enforceability of the promise?
    A. It requires the seller to prove the woman’s ability to pay.
    B. It makes the promise illusory.
    C. It requires the woman to prove her inability to pay.
    D. None.
    A. The quoted language is a condition precedent to the woman’s obligation to pay. If the condition is precedent, the plaintiff has the burden of proving that the condition occurred in order to recover.

    Answer choice (None) is incorrect, as the quoted language is a condition precedent, which would put the burden of proof on the seller to prove the woman’s ability to pay.

    Answer choice (It makes the promise illusory) is incorrect. An illusory promise is one that essentially pledges nothing, because it is vague or because the promisor can choose whether or not to honor it. Here the promise is not vague; it is simply conditional on the woman having the ability to pay.

    Answer choice (It requires the woman to prove her inability to pay) is incorrect, as this is a condition precedent, which places the burden on the seller (as plaintiff) to prove the woman’s ability to pay.
    (this multiple choice question has been scrambled)
  17. A broker needed a certain rare coin to complete a set that he had contracted to assemble and sell to a collector. On February 1, the broker obtained such a coin from a third party in exchange for $1,000 and the broker’s signed, written promise to re-deliver to the third party “not later than December 31 this year” a comparable specimen of the same kind of coin without charge to the third party. On February 2, the broker consummated sale of the complete set to the collector.
    On October 1, the market price of rare coins suddenly began a rapid, sustained rise; and on October 15 the third party wrote the broker for assurance that the latter would timely meet his coin-replacement commitment. The broker replied, “In view of the surprising market, it seems unfair that I should have to replace your coin within the next few weeks.”
    Having received the broker’s message on October 17, the third party sued the broker on November 15 for the market value of a comparable replacement-coin as promised by the broker in February. The trial began on December 1.
    If the broker moves to dismiss the third party’s complaint, which of the following is the broker’s best argument in support of the motion?

    A. Under the doctrine of impossibility, which includes unusually burdensome and unforeseen impracticability, the broker is temporarily excused by the market conditions from timely performance of his coin-replacement obligation.
    B. Even if the broker repudiated on October 17, the third party has no remedy without first demanding in writing that the broker retract his repudiation.
    C. The broker did not repudiate the contract on October 17, and may still perform no later than the contract deadline of December 31.
    D. Even if the broker repudiated on October 17, the third party’s only action would be for specific performance because the coin is a unique chattel.
    C. The broker’s letter merely said it seemed unfair and did not say that the broker would refuse to perform. This is not a repudiation, which must be clear and unequivocal.

    Answer choice (Even if the broker repudiated on October 17, the third party’s only action would be for specific performance because the coin is a unique chattel) is incorrect, as the coin here is not unique. There is more than one specimen on the market.

    Answer choice (Under the doctrine of impossibility, which includes unusually burdensome and unforeseen impracticability, the broker is temporarily excused by the market conditions from timely performance of his coin-replacement obligation) is incorrect, as the doctrine of impossibility requires objective impossibility. Here it is possible to perform, it would just be expensive to do so.

    Answer choice (Even if the broker repudiated on October 17, the third party has no remedy without first demanding in writing that the broker retract his repudiation) is incorrect, as there is no requirement that a demand be made to retract the repudiation.
    (this multiple choice question has been scrambled)
  18. On March 31, Selco and Byco entered into a written agreement in which Selco agreed to fabricate and sell to Byco 10,000 specially designed brake linings for a new type of power brake manufactured by Byco. The contract provided that Byco would pay half of the purchase price on May 15 in order to give Selco funds to “tool up” for the work; that Selco would deliver 5,000 brake linings on May 31; that Byco would pay the balance of the purchase price on June 15; and that Selco would deliver the balance of the brake linings on June 30.
    On May 10, Selco notified Byco that it was doubtful whether Selco could perform because of problems encountered in modifying its production machines to produce the brake linings. On May 15, however, Selco assured Byco that the production difficulties had been overcome, and Byco paid Selco the first 50 percent installment of the purchase price. Selco did not deliver the first 5,000 brake linings on May 31, or at any time thereafter; and on June 10, Selco notified Byco that it would not perform the contract.

    A. Byco has no cause of action for breach of contract, but can suspend its performance and demand assurances that Selco will perform.
    B. Byco has no cause of action for breach of contract, and must pay the installment of the purchase price due on May 15 to preserve its rights under the contract.
    C. Byco can treat the notice as an anticipatory repudiation, and can sue to enjoin an actual breach by Selco on May 31.
    D. Byco can treat the notice as an anticipatory repudiation, and has a cause of action on May 10 for breach of the entire contract.
    A. The general rule is that a party’s expectations of performance may be diminished by an event that occurs after the contract was made. Under both the general law of contracts and the U.C.C., the non-breaching party may request adequate assurances of performance. If those assurances are not provided, the non-breaching party can treat the failure to provide assurances as a breach by anticipatory repudiation.

    Answer choices (Byco can treat the notice as an anticipatory repudiation, and has a cause of action on May 10 for breach of the entire contract) and (Byco can treat the notice as an anticipatory repudiation, and can sue to enjoin an actual breach by Selco on May 31) are incorrect because there has been no anticipatory repudiation yet, only a prospective inability to perform.

    Answer choice (Byco has no cause of action for breach of contract, and must pay the installment of the purchase price due on May 15 to preserve its rights under the contract) is incorrect because Byco has the ability to request assurance before performance.
    (this multiple choice question has been scrambled)
  19. A broker needed a certain rare coin to complete a set that he had contracted to assemble and sell to a collector. On February 1, the broker obtained such a coin from a third party in exchange for $1,000 and the broker’s signed, written promise to re-deliver to the third party “not later than December 31 this year” a comparable specimen of the same kind of coin without charge to the third party. On February 2, the broker consummated sale of the complete set to the collector.
    On October 1, the market price of rare coins suddenly began a rapid, sustained rise; and on October 15 the third party wrote the broker for assurance that the latter would timely meet his coin-replacement commitment. The broker replied, “In view of the surprising market, it seems unfair that I should have to replace your coin within the next few weeks.”
    After receiving the broker’s message on October 17, the third party telephoned the broker, who said, “I absolutely will not replace your coin until the market drops far below its present level.” The third party then sued the broker on November 15 for the market value of a comparable replacement-coin as promised by the broker in February. The trial began on December 1.If the broker moves to dismiss the third party’s complaint, which of the following is the third party’s best argument in opposing the motion?

    A. Although the doctrine of anticipatory breach is not applicable under the prevailing view if, at the time of repudiation, the repudiatee owes the repudiator no remaining duty of performance, the doctrine applies in this case because the third party, the repudiatee, remains potentially liable under an implied warranty that the coin advanced to the broker was genuine.
    B. Anticipatory repudiation, as a deliberate disruption without legal excuse of an ongoing contractual relationship between the parties, may be treated by the repudiatee at her election as a present tort, actionable at once.
    C. The third party’s implied duty of good faith and fair dealing in enforcement of the contract required her to mitigate her losses on the rising market by suing promptly, as she did, after becoming reasonably apprehensive of a prospective breach by the broker.
    D. When either party to a sale-of-goods contract repudiates with respect to a performance not yet due, the loss of which will substantially impair the value of the contract to the other, the aggrieved party may in good faith resort to any appropriate remedy for breach.
    D. Upon repudiation, the promisee can treat the repudiation as a breach and resort to any appropriate remedies.

    Answer choice (The third party’s implied duty of good faith...) is incorrect, as good faith, fair dealing, and mitigation are all used out of context here. What matters is that the broker repudiated and the third party is entitled to treat that as a breach and seek any appropriate remedies.

    Answer choice (Although the doctrine of anticipatory breach is not...) is incorrect, as the UCC permits treatment as a breach under these circumstances if the prospective loss will substantially impair the value of the contract for the aggrieved party.

    Answer choice (Anticipatory repudiation, as a deliberate...) is incorrect, as this is a repudiation of a contract under contract law and not an actionable tort.
    (this multiple choice question has been scrambled)
  20. On January 1, Awl and Howser agreed in writing that Awl would build a house on Howser’s lot according to Howser’s plans and specifications for $60,000, the work to commence on April 1. Howser agreed to make an initial payment of $10,000 on April 1, and to pay the balance upon completion of the work.
    On February 1, Awl notified Howser that he (Awl) would lose money on the job at that price, and would not proceed with the work unless Howser would agree to increase the price to $90,000. Howser thereupon, without notifying Awl, agreed in writing with Gutter for Gutter, commencing April 1, to build the house for $75,000, which was the fair market cost of the work to be done.
    On April 1, both Awl and Gutter showed up at the building site to begin work, Awl telling Howser that he had decided to “take the loss” and would build the house for $60,000 as originally agreed. Howser dismissed Awl and allowed Gutter to begin work on the house.
    In a contract action by Awl against Howser, which of the following would the court decide under the prevailing American view?

    A. Awl will win, because Howser did not tell him before April 1 about the contract with Gutter.
    B. Howser will win, because Awl in legal effect committed a total breach of contract.
    C. Awl will win, because he attempted to perform the contract as originally agreed.
    D. Howser will win, because Gutter’s contract price was $15,000 lower than the $90,000 demanded by Awl on February 1.
    B. Awl’s notification can be treated as an anticipatory repudiation. Generally, the doctrine of anticipatory repudiation is applicable when a promisor repudiates a promise before the time for performance arises. Upon repudiation, the promisee can treat the repudiation as a breach or ignore it and demand performance. Awl’s lawsuit is a failure because of his material breach.

    The other answer choices do not take into account the ability by Howser to seek damages and another party to complete performance.
    (this multiple choice question has been scrambled)
  21. A seller and a buyer entered into a contract obligating the seller to convey title to a parcel of land to the buyer for $100,000. The agreement provided that the buyer’s obligation to purchase the parcel was expressly conditioned upon the buyer’s obtaining a loan at an interest rate no higher than 10%. The buyer was unable to do so, but did obtain a loan at an interest rate of 10.5% and timely tendered the purchase price. Because the value of the land had increased since the time of contracting, the seller refused to perform. The buyer sued the seller. Will the buyer prevail?

    A. Yes, because the buyer detrimentally changed position in reliance on the seller’s promise to convey.
    B. No, because the contract called for a loan at an interest rate not to exceed 10% and it could not be modified without the consent of the seller.
    C. Yes, because the buyer’s obtaining a loan at an interest rate no higher than 10% was not a condition to the seller’s duty to perform.
    D. No, because an express condition will only be excused to avoid forfeiture
    C. Courts look beyond the words of a condition, and if it is clear that the purpose of the condition was to benefit or protect one of the parties, the language of the condition will be interpreted as if that intention had been embodied in the contract terms. In this case it is clear that the language of the condition was intended for the benefit of the buyer, and so the seller’s duty was not subject to the condition.

    Answer choice (No, because an express condition will only be excused to avoid forfeiture)'s statement of law is much too broad to be true.

    Answer choice (No, because the contract called for a loan...) is incorrect because the issue in this dispute does not concern the modification of the contract. The parties did nothing which could be interpreted as an attempt to modify the agreement. The issue is whether the seller’s duty is conditional. While it is true that the buyer changed position because of the seller’s promise, that fact is not relevant to the question of whether the seller’s duty to perform is subject to a condition. As such, answer choice (Yes, because the buyer detrimentally...) is incorrect.
    (this multiple choice question has been scrambled)
  22. Paul and Daniel entered a contract in writing on November 1, the essential part of which read as follows: “Paul to supply Daniel with 200 personalized Christmas cards on or before December 15, 1970, bearing a photograph of Daniel and his family, and Daniel to pay $100 thirty days thereafter. Photograph to be taken by Paul at Daniel’s house. Cards guaranteed to be fully satisfactory and on time.” Because Daniel suddenly became ill, Paul was unable to take the necessary photograph of Daniel and his family until the first week of December. The final week’s delay was caused by Paul’s not being notified promptly by Daniel of his recovery. Before taking the photograph of Daniel and his family, Paul advised Daniel that he was likely to be delayed a day or two beyond December 15 in making delivery because of the time required to process the photograph and cards. Daniel told Paul to take the photograph anyway. The cards were finally delivered by Paul to Daniel on December 17, Paul having diligently worked on them in the interim. Although the cards pleased the rest of the family, Daniel refused to accept them because, as he said squinting at one of the cards at arm’s length without bothering to put on his reading glasses, “The photograph makes me look too old. Besides, the cards weren’t delivered on time.”
    In an action by Paul against Daniel, which of the following would be Daniel’s best defense?

    A. The cards, objectively viewed, were not satisfactory.
    B. Daniel’s illness excused him from further obligation under the contract.
    C. The cards were not delivered on time.
    D. The cards, subjectively viewed, were not satisfactory.
    D. The general rule is that a party’s duty to perform is absolute because it is easy to conclude that all conditions have been satisfied. When the aesthetic taste of an individual is a condition of satisfactory performance, and that individual in good faith determines that the work is not satisfactory, that person is not liable on the contract. Conditions requiring satisfaction of performance not involving aesthetics are examined against a reasonable person standard. Here, Daniel’s best defense is that his subjective acceptance is a condition of the contract, and that his distaste for the photos was a material breach by Paul.

    Answer choices (The cards were not delivered on time) and (Daniel’s illness excused him from further obligation under the contract) are wrong because they implicate conditions, the breach of which may have been waived or excused by Daniel.

    Answer choice (The cards, objectively viewed, were not satisfactory) is incorrect because of reasons explained above.
    (this multiple choice question has been scrambled)
  23. Alpha and Beta made a written contract pursuant to which Alpha promised to convey a specified apartment house to Beta in return for Beta’s promise (1) to convey a 100-acre farm to Alpha and (2) to pay Alpha $1,000 in cash six months after the exchange of the apartment house and the farm. The contract contained the following provision: “It is understood and agreed that Beta’s obligation to pay the $1,000 six months after the exchange of the apartment house and the farm shall be voided if Alpha has not, within three months after the aforesaid exchange, removed the existing shed in the parking area in the rear of the said apartment house.”

    Alpha’s removal of the shed from the parking area of the apartment house is:

    A. not a condition, either precedent or subsequent, to Beta’s duty to pay the $1,000.
    B. a condition subsequent to Beta’s duty to pay the $1,000.
    C. a condition subsequent in form but precedent in substance to Beta’s duty to pay the $1,000.
    D. a condition precedent in form but subsequent in substance to Beta’s duty to pay the $1,000.
    C. The general rule is that performance by one or both of the parties may be made expressly conditional in the contract, and the conditions may precede the obligation to perform (condition precedent), or may discharge the duty to perform after a particular event occurs (condition subsequent).

    Here, the shed removal was a condition subsequent but, as stated, Beta’s duty to pay the $1,000 did not begin until it was complete. The other answer choices are therefore incorrect.
    (this multiple choice question has been scrambled)
  24. On December 1, a broker contracted with a coin collector to sell her one of a certain type of rare coin for $12,000, delivery and payment to occur on the next March 1. To fulfill that contract, and without the collector’s knowledge, the broker contracted on January 1 to purchase for $10,000 a specimen of that type coin from a third party, delivery and payment to occur on February 1. The market price of such coins had unexpectedly fallen to $8,000 by February 1, when the third party tendered the coin and the broker repudiated.
    On February 25, the market in such coins suddenly reversed and had stabilized at $12,000 on March 1. The broker, however, had failed to obtain a specimen of the coin and repudiated his agreement with the collector when she tendered the $12,000 agreed price on March 1.
    Later that day, after learning by chance of the broker’s dealing with the collector, the third party telephoned the collector and said: “Listen, the broker probably owes me at least $2,000 in damages for refusing wrongfully to buy my coin for $10,000 on February 1 when the market was down to $8,000. But I’m in good shape in view of the market’s recovery since then, and I think you ought to get after the so-and-so.”
    If collector immediately sues the Broker for his breach of the contract between the broker and the third party, which of the following will the court probably decide?

    A. The collector wins, because she was an intended beneficiary of the contract between the broker and the third party, under which damages for the broker’s repudiation became fixed on February 1.
    B. The broker wins, because as of March 1 neither the third party nor the collector had sustained any damage from the broker’s repudiation of both contracts.
    C. The broker wins, because the collector, if a beneficiary at all of the contract between the broker and the third party, was only an incidental beneficiary.
    D. The collector wins, because she took an effective assignment of the third party’s claim for damages against the broker when the third party suggested that the collector get after the “so-and-so.”
    C. An incidental beneficiary is one who benefits from a contract even though there is no contractual intent to benefit that person. An incidental beneficiary has no rights to enforce the contract. Here, the collector is at best an incidental beneficiary, rather than an intended beneficiary of the contract between the broker and the third party.

    Answer choice (The broker wins, because as of March 1...) is incorrect, as both did technically sustain damages from the broker’s repudiation of both contracts.

    Answer choice (The collector wins, because she was an intended beneficiary...) is incorrect, as the collector was not an intended beneficiary of the contract between the broker and the third party. To be an intended beneficiary, the promisee must have a specific intention to benefit the person. Here there was no such intent and the collector was merely an incidental beneficiary.

    Answer choice (The collector wins, because she took an effective assignment...) is incorrect, as the suggestion did not constitute an assignment because there is no indication of a present intent by the third party to transfer his rights to the collector.
    (this multiple choice question has been scrambled)
  25. Ames had painted Bell’s house under a contract which called for payment of $2,000. Bell, contending in good faith that the porch had not been painted properly, refused to pay anything.
    On June 15, Ames mailed a letter to Bell stating, “I am in serious need of money. Please send the $2,000 to me before July 1.” On June 18, Bell replied, “I will settle for $1,800 provided you agree to repaint the porch.” Ames did not reply to this letter.
    Thereafter Bell mailed a check for $1,800 marked “Payment in full on the Ames-Bell painting contract as per letter dated June 18.” Ames received the check on June 30. Because he was badly in need of money, Ames cashed the check without objection and spent the proceeds but has refused to repaint the porch.
    After cashing the check Ames sued Bell for $200.00. Ames probably will:

    A. succeed, because he cashed the check under economic duress.
    B. not succeed, because he is entitled to recover only the reasonable value of his services.
    C. succeed if he can prove that he had painted the porch according to specifications.
    D. not succeed, because he cashed the check without objection.
    D. Ames’ acceptance of the payment can be viewed as either a proper release or under the principle of accord and satisfaction. Without an objection, Ames’ acceptance can be considered a valid release supported by new consideration, or as an accord and satisfaction whereby a creditor agrees to accept a lesser amount in full satisfaction of the original debt. As is generally required, and as in the case with Bell, where there is some dispute either as to the validity of the debt or the amount, a discharge can be granted.

    Answer choice (not succeed, because he is entitled...) is incorrect because it misstates the impact of a total discharge under the principles discussed.
    (this multiple choice question has been scrambled)
  26. For several weeks, a wealthy, unemployed widow, and a car dealer negotiated unsuccessfully over the purchase price of a new Mark XX Rolls-Royce sedan, which, as the car dealer knew, the widow wanted her son to have as a wedding gift. On April 27, the car dealer sent the widow a signed, dated memo saying, “if we can arrive at the same price within the next week, do we have a deal?” The widow wrote “Yes” and her signature at the bottom of this memo and delivered it back to the car dealer on April 29.
    On May 1, the widow wrote the car dealer a signed letter offering to buy “one new Mark XX Rolls-Royce sedan, with all available equipment, for $180,000 cash on delivery not later than June 1.” By coincidence, the car dealer wrote the widow a signed letter on May 1 offering to sell her “one new Mark XX Rolls-Royce sedan, with all available equipment, for $180,000 cash on delivery not later than June 1.” These letters crossed in the mails and were respectively received and read by the widow and the car dealer on May 2.
    On May 4, the widow and the car dealer both signed a single document evidencing a contract for the sale by the car dealer to the widow, “as a wedding gift for the widow’s son,” a new Mark XX Rolls-Royce sedan, under the same terms as previously stated in their correspondence. On May 5, the widow handed her son a carbon copy of this document. In reliance on the prospective gift, the son on May 20 sold his nearly new expensive sports car to a dealer at a “bargain” price of $50,000 and immediately informed the widow and the car dealer that he had done so.
    On May 25, however, the widow and the car dealer by mutual agreement rescinded in a signed writing “any and all agreements heretofore made between the undersigned parties for the sale-and-purchase of a new Mark XX Rolls-Royce sedan.” Later that day, the car dealer sold for $190,000 cash to another buyer the only new Mark XX Rolls-Royce that it had in stock or could readily obtain elsewhere. On June 1, the son tendered $180,000 in cash to the car dealer and demanded delivery to him “within a reasonable time” of a new Mark XX Rolls-Royce sedan with all available equipment.
    The car dealer rejected the tender and denied any obligation.
    If the son sues the car dealer for breach of contract, which of the following will the court probably decide?

    A. The car dealer wins, because it reasonably and prejudicially relied on its contract of mutual rescission with the widow by selling the only readily available new Mark XX Rolls-Royce sedan to another buyer.
    B. The son wins, because his rights as a third-party intended beneficiary became vested by his prejudicial reliance in selling his expensive sports car on May 20.
    C. The car dealer wins, because the son, if an intended beneficiary at all of the contract between the widow and the car dealer, was only a donee beneficiary.
    D. The son wins, because his rights with respect to the May 4 contract between the widow and the car dealer cannot be cut off by agreement between the original parties.
    B. The son is an intended beneficiary of the contract between the widow and the car dealer. The car dealer was specifically told and aware of the son’s detrimental reliance on the agreement with the widow. The son’s detrimental reliance vested his rights as a third-party intended beneficiary. Once the beneficiary’s rights have vested, the car dealer became bound to perform the contract.

    Answer choice (The son wins, because his rights...) is incorrect, as the original parties could cut off the son’s rights as to the May 4 contract, but only if done before he detrimentally relied on the agreement and his rights vested as a third-party intended beneficiary.

    Answer choice (The car dealer wins, because the son...) is incorrect, as even a donee beneficiary may enforce an agreement under the theory of promissory estoppel where his rights have vested and there has been detrimental reliance.

    Answer choice (The car dealer wins, because it reasonably) is incorrect, as the car dealer was aware of the prejudicial reliance on the May 4 agreement by the son and therefore had a duty to perform the agreement to benefit the son as a third-party intended beneficiary.
    (this multiple choice question has been scrambled)
  27. On March 1, Zeller orally agreed to sell his land, Homestead, to Byer for $46,000 to be paid on March 31. Byer orally agreed to pay $25,000 of the purchase price to Quincy in satisfaction of a debt which Zeller said he had promised to pay Quincy.
    On March 10, Byer dictated the agreement to his secretary but omitted all reference to the payment of the $25,000 to Quincy. In typing the agreement, the secretary mistakenly typed in $45,000 rather than $46,000 as the purchase price. Neither Byer nor Zeller carefully read the writing before signing it on March 15. Neither noticed the error in price and neither raised any question concerning omission of the payment to Quincy.
    In an action by Quincy against Byer for $25,000, which of the following, if proved, would best serve Byer as a defense?

    A. There was no consideration to support Zeller’s antecedent promise to pay Quincy the $25,000.
    B. On March 5, before Quincy was aware of the oral agreement between Zeller and Byer, Zeller agreed with Byer not to pay any part of the purchase price to Quincy.
    C. Whatever action Quincy may have had against Byer was barred by the statute of limitations prior to March 1.
    D. Before he instituted his action against Byer, Quincy had not notified either Byer or Zeller that he had accepted the Byer-Zeller arrangement for paying Quincy.
    B. If Zeller and Byer agreed not to pay Quincy, then his ability to sue under the theory of a third party beneficiary is fatally over. The other answer choices are wrong because even if true, ignore Quincy’s lack of standing and could result in equitable relief against Byer.
    (this multiple choice question has been scrambled)
  28. On March 1, Zeller orally agreed to sell his land, Homestead, to Byer for $46,000 to be paid on March 31. Byer orally agreed to pay $25,000 of the purchase price to Quincy in satisfaction of a debt which Zeller said he had promised to pay Quincy.
    On March 10, Byer dictated the agreement to his secretary but omitted all reference to the payment of the $25,000 to Quincy. In typing the agreement, the secretary mistakenly typed in $45,000 rather than $46,000 as the purchase price. Neither Byer nor Zeller carefully read the writing before signing it on March 15. Neither noticed the error in price and neither raised any question concerning omission of the payment to Quincy.
    In an action by Quincy against Byer for $25,000, which of the following is (are) correct?

    A. Byer could successfully raise the Statute of Frauds as a defense because the Byer-Zeller agreement was for the sale of an interest in land.
    B. Quincy was an incidental beneficiary, who should have recovered fully.
    C. Byer could successfully raise the Statute of Frauds as a defense because the Byer-Zeller agreement was to answer for the debt of another.
    D. Quincy was an intended beneficiary, who should have received the benefit of the bargain.
    D.
    (this multiple choice question has been scrambled)

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