Law 1 Midterm (Business Law: Text and Cases)

Lucy agrees to work for Mung Manufacturing, Ltd., as a Chinese/ English/ French translator. In determining whether a contract has been formed, an element of prime importance is
the parties’ intent.
Ethan believes that he and Fiorina agreed that he would find the best location for a well on her ranch and then dig the well. In a later dispute, whether a contract was formed can be determined by
the parties’ statements at the time of their alleged contract.
Home & Barn Construction, Inc., contracts with Idyll Farms to build a new dairy barn on Idyll’s property for which Idyll agrees to pay. The elements of this, and any other, contract include
consideration
Omar asserts that a deal he entered into with Patty to sponsor and host a motivational conference for independent sales representatives is an unenforceable contract. Defenses to the enforcement of a contract include
the lack of a party’s voluntary consent
Randy promises to give Stewart her iPod in exchange for Stewart’s promise to pay Randy $50. This bilateral contract was created when
Stewart promised to pay Randy $50.
Lamar offers to pay Melanie $150 for a hot-air balloon ride for Nina. They agree to meet at dawn the next day to exchange the cash for the ride. At this point, these parties have
a bilateral contract
On Monday, O’Shea tells Patterson that she will pay Patterson $1,000 if O-Shea’s bill processing and office filing are completed by Friday. On Wednesday, when Patterson has finished more than half of the work, O’Shea says that she has changed his mind. Under the modern-day view, these parties had
a unilateral contract as soon as Patterson began to perform
Durham offers to sell his pick-up truck to Estelle for $1,500. Estelle agrees. They complete and sign a printed form titled “Contract,” and Estelle gives Durham a check for the price. This check is
a formal contract
On behalf of the gaming consortium Minderbender, Nerville agrees to design, develop, and deliver a game to Octave Games, Inc. Acting for Octave, Phoung sends a written copy of the agreement to Nerville to be signed. Typically, businesspersons put their contracts in writing to
ensure proof of the contracts’ existence.
Following negotiations with Gourmet Restaurant, Herb enters into an informal contract to park Gourmet’s customers’ cars. This means that the parties’ contract
requires no special form.
Bo signs a lease with Capri Apartments to lease a studio apartment for the next year for $650 per month. Daisy signs on Capri’s behalf. Bo and Capri have
an express contract.
Vita asks Walter, a cobbler and shoe salesperson, to repair a pair of work boots. There is no discussion of a price, and Vita and Walter do not sign any documents. After the repair, Walter hands Vita a bill. With respect to Vita’s obligation to pay the bill, this is
an implied contract.
When a rainstorm erupts outside Rita’s Souvenir & Gift Shop, Rita and Shaw enter into an implied contract to split the revenue from Shaw’s sale of umbrellas to Rita’s customers. The terms of this contract are defined by
the conduct of the parties.
Rough Water Fishing Trips, LLC, and Schafer enter into a contract for the delivery of a used freshwater fishing boat. Until the goods are delivered and paid for, these parties have
an executory contract
Bruce, a minor, enters into a contract with Coralee to buy her car. Later, Bruce opts to avoid the deal. With respect to the contract, this releases
both parties.
Jana, a nurse practitioner, renders aid to Kruz, who is injured and unconscious. Jana can recover the cost of the aid from Kruz
as if the parties had entered into an actual contract.
Jerome enters into a contract with Kate’s Catering Service for the delivery and serving of hors d’oeuvre, dinner, and dessert at a regional accountancy conference. In a later dispute between these parties over the service, the doctrine of quasi contract cannot be used because
there is an actual contract covering the matter in controversy.
Leilani enters into a contract with Metro Taxi Company to work as a cabdriver. Under the plain meaning rule, if the contract’s writing is clear and unequivocal, the meaning of the terms must be determined from
the face of the instrument.
Francisca and Garden Estate, Inc., enter into a contract for the use of a Victorian mansion and its grounds for a wedding and reception. If ambiguities appear in the contract, they will be construed against the party that
drafted the contract.
Downwind Winery, LLC, and eBusiness Solutions, Inc., enter an express contract for eBusiness to develop and implement an online marketing plan for Downwind’s enterprise. In interpreting the contract, a court will most likely give the most weight to
express terms.
Rachel tells Stan that she will sign a contract to retain his services as tech support for one year if the contract includes a clause to extend the term at the same price. Rachel’s intent to sign the contract is determined by reference to her
words and action.
Iggy tells Jade, “I might sell the snowboard that I bought this winter since I haven’t used it and the season is almost over.” This is
a statement of future intent.
An ad on the NewsNow Web site asks viewers to “send us your story and we might share it with the world.” Onyx submits a manuscript, adding, “I accept your offer.” Between NewsNow and Onyx, there is
no contract.
Dewey asks Ember, “Do you want to buy my bike?” This is
not a valid offer because the terms are not definite.
Isla’s Morsels offers to cater Jimmy’s Jars & Packaging, Inc.’s business meetings. Jimmy’s rejects the offer. The offer is
terminated.
Fabien offers to sell his Graphic Signs, LLC, business to Hana for $100,000. Hana replies, “The price is too high. I will buy it for $75,000.” Hana has
rejected the offer and made a counteroffer.
Rafi offers to sell his sailboat, Sea Siren, to Tiara for $50,000. Referring to the prices for similar vessels, Tiara says, “I’ll pay no more than $40,000.” Rafi’s offer is
terminated.
Deluxe Awnings, Inc., offers Elbert a job as an installer. No time for acceptance is specified in the offer. The offer will terminate
after a reasonable period of time.
Pacific Charter Company offers to provide an air-conditioned bus to Quincy’s tour group for $1,500 plus the cost of the fuel. The mailbox rule applies if Quincy accepts the offer by
regular mail.
Hog Haven Farms offers to sell Grocers Distribution Center, Inc., a truckload load of pork products. The offer is sent via overnight delivery because an acceptance is required urgently. It would be most reasonable for Grocers to accept via
a letter mailed to Hog Haven as soon as the offer is received
Green River Gas Company offers to sell Far East Energy, Ltd., a certain quantity of liquefied natural gas. If Far East sends an acceptance via Green River’s authorized mode of communication, it will be effective when it is
sent.
Ricci, a user of SmartPhoneApps.com’s Web site, can download apps for free if she first clicks on “I accept” after viewing certain terms. This is
a contract that includes the terms.
Bret buys a subscription to the catalog of music provided by Concerto, an online music vendor. Before accessing the catalog, Bret must agree to a provision stating that she will not make and sell copies of the music. This provision is
a click-on agreement.
Due on Receipt, Inc., makes tax software, which is packaged with a shrink-wrap agreement. Evenflo Products Company distributes the software to retailers, including a Flatprice discount store, where Greta buys a package of it. The parties to the shrink-wrap agreement are
Due on Receipt and Greta only.
Pads & Pods Corporation makes tablets, each of which is packaged with a shrink-wrap agreement. Reba buys a Pads & Pods tablet. The terms of the shrink-wrap agreement are most likely not enforceable if
Reba discovers the terms after contracting to buy the tablet.
Kelby enters into a contract with Lara on a social media network to buy her stock in Mobile Devices Corporation. Neither party prints out a hard copy. Under the Electronic Signatures in Global and National Commerce Act (E-SIGN Act), this contract can
not be “denied legal effect” solely because it is in electronic form.
Moby negotiates a contract with Nora via e-mail. It is reasonable to infer that Moby has consented to
transact business electronically.
Real Beverage Company and Springwater, Inc., transact a deal under the UETA. Other state law, and not the UETA, applies to a dispute between the parties relating to
the formation of the parties’ contract.
Using e-records, Online College Learning, Inc., and Plato University make a deal involving Plato’s course offerings. Under the UETA, an e-record is considered sent when it
leaves the sender’s control.
Orb, Inc., does business online around the globe. The United Nations Convention on the Use of Electronic Communications in International Contracts and other international agreements improve global commercial certainty by
a. all of the choices.
a. all of the choices.
b. determining an Internet user’s location for legal purposes.
c. providing for the recognition of judgments by other nations’ courts.
d. providing that e-signatures are the equivalent of signatures on paper.
Uri promises to pay Tami, his niece, $5,000 if she obtains her degree at State Institute of Technology, where she is in her third year. Tami graduates. Uri is
required to pay because Tami obtained a degree at State.
Aaron questions whether there is consideration for his contract with Banquet Hall to exchange his musical performance of country tunes at select social events for Banquet’s payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be
legally sufficient.
Frisco offers to buy a Gibson guitar owned by Hayden for twice what she paid for it. She accepts and hands the guitar to Frisco. Her delivery of the guitar is
consideration.
Fact Pattern 12-A1
Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deal—a mortgage loan secured by Bridey’s purchase of a house—was unfair because the consideration for their contract was inadequate.

Refer to Fact Pattern 12-A1. The court is most likely to evaluate the adequacy of consideration if

there is a large disparity in the amount or value of the consideration exchanged.
Fact Pattern 12-A1
Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deal—a mortgage loan secured by Bridey’s purchase of a house—was unfair because the consideration for their contract was inadequate.

Refer to Fact Pattern 12-A1. “Adequacy” of consideration refers to

“how much” consideration is given.
Fact Pattern 12-A1
Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deal—a mortgage loan secured by Bridey’s purchase of a house—was unfair because the consideration for their contract was inadequate.

Refer to Fact Pattern 12-A1. If, as Bridey claims, the consideration for this contract is inadequate, it may indicate a lack of

voluntary consent to the contract on Bridey’s part.
Under a contract with Valley Vineyard, Walsh begins grading a terraced hillside for the planting of grapes. Halfway through the project, Walsh asks for $5,000 over the contract price, claiming an increase in the “cost of doing business.” Valley agrees but later refuses to pay. Their agreement is
unenforceable because Walsh’s performance was a preexisting duty.
Fact Pattern 12-A2
Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.

Refer to Fact Pattern 12-A2. If Teatro offers no reason for the extra $250,000, but says only that it will stop work if it is not paid, the agreement is

unenforceable due to the preexisting duty rule.
Fact Pattern 12-A2
Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.

Refer to Fact Pattern 12-A2. If Teatro says it is asking for the extra $250,000 because ordinary business expenses have increased, the agreement is

unenforceable due to the preexisting duty rule.
Fact Pattern 12-A2
Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.

Refer to Fact Pattern 12-A2. If Teatro says it is asking for the extra $250,000 because it has encountered extraordinary unforeseen difficulties that will add considerable cost to the project, the agreement is

enforceable because of unforeseen difficulties.
Flavors of the Southwest, Inc., contracts to deliver a certain quantity of food and beverages every weekday to Geo Construction’s work site. Later, the parties decide to cancel their contract. They can
rescind their contract to the extent that it is executory.
D’Sean promises to pay his personal assistant Edie $50,000 in consideration of the services she provided over the years. D’Sean never makes the payment. D’Sean’s promise is
not enforceable because the consideration is in the past.
Digital Enterprise, Inc., promises to pay its employees a year-end bonus “if profits continue to be high and management agrees at the time.” This is
an illusory promise.
Mobile Media Company contracts to hire Nada for one year at $35 per hour, reserving the right to cancel the contract at any time after Nada begins performance by giving two weeks’ notice. This promise is
an enforceable contract.
Maya’s motorcycle is damaged in an accident caused by Luc’s negligence. Luc agrees to pay Maya $25,000 if she agrees to release him from further liability. Maya agrees. If her damages ultimately exceed $25,000, she can
not recover the balance.
Sully signs a contract to borrow $200,000 from Riverside Bank to buy a house. In the contract, Sully agrees to pay a certain rate of interest on the amount of borrowed funds at monthly intervals for thirty years. This debt is
liquidated.
Twyla’s dock is damaged in an accident caused by Ulric’s negligence. Twyla agrees not to sue him if he will pay for the damage. If Ulric fails to pay, Twyla can bring an action for breach of contract. This agreement is
a covenant not to sue.
Marketing Solutions Inc. promises to employ Niki as a software engineer. In reliance on the promise, Niki quits her job with Online Ad Company, but Marketing Solutions does not hire her. Most likely, Marketing Solutions is
liable to Niki under the doctrine of promissory estoppel.
Lea signs a contract with Metro Business Loans, Inc., to borrow $25,000 to remodel Lea’s Hair Care Salon. Lea does not repay the loan. Metro fails to sue within the time prescribed by the applicable statute of limitations. Later Lea promises to pay the debt. To be enforceable, this promise needs
no consideration.
Claudia pledges to donate $10,000 to Disaster Relief & Recovery Inc. (DR&R). On the basis of the pledge, DR&R orders additional supplies. If Claudia does not fulfill the pledge, a court may enforce it
under the doctrine of promissory estoppel.
Beth, who is sixteen years old, enters into a contract with Waldo, who is eighteen years old, for the sale of a car. Vern, who is nineteen years old, enters into a contract to load and unload a truck for Spencer, who is twenty-one years old. In almost all states, the age of majority for contractual purposes is
eighteen years.
Gabriella and Esteban are emancipated minors who, after their emancipation, marry each other. Later, they enter into a contract to buy a condominium. In this sequence of events, most likely, their minority status
terminated on their emancipation.
Jerome relinquishes the right to his daughter Meredith’s control, care, custody, and earnings. This act is
emancipation.
Chet, a minor, signs a contract with Porsha, an adult. The contract is
voidable at the option of Chet.
Morgan, a minor, signs a contract to buy a Call4U phone and a monthly calling plan from Sterling, an independent sales representative.. Morgan can avoid the contract. Sterling
cannot avoid the contract.
Alexis, a minor acting on her own, signs a contract to buy motorcycle and accessories from Bad Bikes dealership. Later, after taking possession, Alexis disaffirms the deal. She
must return both motorcycle and accessories.
Nelson, a minor, misrepresents his age when agreeing to a contract to buy a restored, antique soda vending machine from Old Is New Again, Inc. Ordinarily, Nelson can disaffirm the contract
under any circumstances.
Serenity, a minor, obtains fruits and vegetables on credit from Virgil at Growers’ Market. Later, Serenity disaffirms the purchase. Serenity owes Virgil
the reasonable value of the goods.
Fletcher signs a contract to buy a new electric guitar and amplifier just before reaching the age of majority. After reaching the age of majority, Fletcher does not take possession or make payments. With respect to the contract, most courts would hold that this is
disaffirmance.
Rosie, a minor subject to her parents’ care and control, signs a contract to rent a lake cabin from Sinclair for one year. Before the end of the term, Rosie moves out. Sinclair sues for the rent for the rest of the term. Rosie can
disaffirm the contract and avoid liability for the rent.
Colleen, an emergency medical technician, is called to an accident scene by Dennis and renders medical care to Theresa, a minor. Colleen may recover the reasonable value of the rendered care from
Theresa.
On Mitchell’s eighteenth birthday, he decides that he no longer wants to keep a fishing boat he bought from Water Craft, Inc., when he was seventeen. His right to disaffirm the deal will depend on
whether Mitchell acts within a reasonable period of time
At age seventeen, Mallory enters into a contract with Fit Health Clubs, Inc. Two years later, when Mallory attempts to disaffirm the contract, Fit files a suit against her. The court will most likely consider the contract ratified if it is
executed.
Intoxicated but fully aware of the consequences, Cory agrees to a two-year service contract with Signal Maintenance, Inc., at more than the average market price. This contract is
enforceable.
A court has not previously judged Ace to be mentally incompetent. Any contract Ace enters into is
voidable if Ace lacks the capacity to comprehend the consequences.
John obtains a loan from Liberty Credit Bank at an interest rate that exceeds the state’s maximum. Liberty has
committed usury
Shannon signs a contract with Tevin, an unlicensed contractor, to build a deck and gazebo at the rear of her house. This contract is enforceable by
no one.
Bailey is an accountant who is not licensed to practice her profession in Connecticut. Despite this lack of a license, Bailey enters into a contract with Douglas in Connecticut. This contract is most likely
enforceable only by a third party who is not aware that Bailey is not licensed in Connecticut.
Riverroad Transport contracts with Food Equipment & Supplies, Inc., to transport grain to a certain destination for $5,000. Riverroad delivers the goods, but Food Equipment & Supplies does not pay. Riverroad learns that the goods were stolen. Riverroad can
recover $5,000 from Food Equipment & Supplies.
Roscoe enters into an illegal bargain with Gilda. Roscoe can enforce the contract or recover for its value if he has been induced to enter into the bargain as a result of
fraud
Fact Pattern 15-A1
Lewis, an employee of Silos, Inc., makes a substantial mathematical error in totaling the estimated costs for a project for which AgriCo-op is seeking bids. Consequently, Silos’s bid is significantly low.

Refer to Fact Pattern 15-A1. Any contract with AgriCo-op that includes the mistake may be rescinded

if AgriCo-op knew or should have known of the mistake
Fact Pattern 15-A1
Lewis, an employee of Silos, Inc., makes a substantial mathematical error in totaling the estimated costs for a project for which AgriCo-op is seeking bids. Consequently, Silos’s bid is significantly low.

Refer to Fact Pattern 15-A1. Any contract with AgriCo-op that includes the mistake may be rescinded

if the mistake involves a material fact
In La Junta, Carlos and Alvaro contract for the sale of five hundred head of Carlos’s cattle for $95 per head. Unknown to either party, a unforeseen storm has struck the herd and many of the cattle have died. Alvaro is
not required to pay due to the mutual mistake.
Fact Pattern 15-A2
County Title Company processes information furnished by others to transfer title to real estate from a seller to a buyer. In performing this task for a sale of land from James to Kate, the furnished information is mistaken.

Refer to Fact Pattern 15-A2. If James and Kate are both ignorant of the mistake, it is

a bilateral mistake.
Fact Pattern 15-A2
County Title Company processes information furnished by others to transfer title to real estate from a seller to a buyer. In performing this task for a sale of land from James to Kate, the furnished information is mistaken.

Refer to Fact Pattern 15-A2. The contract between James and Kate that includes the mistake may be rescinded

if the mistake concerns a basic assumption on which the contract was made.
Phoebe enters into a contract with Everest for a guided tour of Whitewater Canyon. Everest acts as though he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Phoebe is most likely a victim of
fraud.
Dwight believes that a new phone to be sold by Ear Candy Corporation will become the most widely bought and used phone in the global market. Dwight enters into a contract to buy 500 shares of Ear Candy stock, anticipating an increase in its value. If the price of the stock does not rise, Dwight can recover
nothing.
Garland induces Jules to enter into a contract for the purchase of a Chef’s Burger House restaurant. Garland knowingly misrepresents a number of material features about the restaurant and the business. When Jules discovers the truth, he can
rescind the contract on the basis of fraud.
In selling a 300-acre farm to Rural Land Investments, Inc., Simone tells Rural’s that the land “will be worth twice as much by next year.” This is
opinion.
Winona enters into a contract with Peyton to buy Peyton’s land based on Peyton’s assertion that the land is legally open to development. After the sale, Winona learns what Peyton knew previously—only a small section of the land can be built on. A local law prohibits construction on the rest of the property. Winona can
not avoid the contract because persons are assumed to know the law
Fact Pattern 15-A3
Dana enters into a contract with Harley to buy Harley’s land based on Harley’s statement that the land consists of 350 acres. Harley is mistaken. The land is only 324 acres. But Harley was not aware of the mistake.

Refer to Fact Pattern 15-A3. Harley is guilty of

innocent misrepresentation.
Fact Pattern 15-A3
Dana enters into a contract with Harley to buy Harley’s land based on Harley’s statement that the land consists of 350 acres. Harley is mistaken. The land is only 324 acres. But Harley was not aware of the mistake.

Refer to Fact Pattern 15-A3. Dana can avoid the contract

if the misrepresentation is material.
Creighton applies to BigData Corporation for a position as a software engineer. Creighton has no training in computers or programming and no background as an engineer. After Creighton is hired, BigData learns the truth. BigData can
rescind the contract on the basis of fraud.
Fact Pattern 15-A4
Vaughn, an accountant, certifies audited financial statements for Business Apps Corporation, his client, knowing that Business Apps will use the financial statements to obtain a loan from Capital & Credit, Inc. Vaughn believes that the financial statements are accurate and does not intend to deceive Capital & Credit, but he does not review the statements before certifying them. The financial statements overstate Business Apps’s earnings.

Refer to Fact Pattern 15-A4. On learning the truth, Capital & Credit’s chief loan officer confronts Vaughn, who says, “I didn’t know.” This is

negligent misrepresentation.
Fact Pattern 15-A4
Vaughn, an accountant, certifies audited financial statements for Business Apps Corporation, his client, knowing that Business Apps will use the financial statements to obtain a loan from Capital & Credit, Inc. Vaughn believes that the financial statements are accurate and does not intend to deceive Capital & Credit, but he does not review the statements before certifying them. The financial statements overstate Business Apps’s earnings.

Refer to Fact Pattern 15-A4. Under these circumstances, Capital & Credit’s best course of action is most likely to

recover damages from Vaughn for any loss on the loan.
Gene, an accountant, convinces his client Lucille to sign a contract to invest her savings in 2Gether, a nonexistent social-networking Web site. There is clear and convincing evidence that Lucille did not act out of her free will. This is
undue influence.
Dumont threatens physical harm to force Eddie to sell his business, Citywide Vending, Inc., to Dumont for a below-market price. This is
duress.
Morris threatens physical harm to force Barb to contract to pay him for protecting her store—Barb’s Baubles—against vandalism and destruction. Barb may
rescind the contract or refuse to comply with its terms.