REVIEW QUESTIONS

INTRODUCTORY NOTE

The short-answer questions that follow are intended to serve as both a substantive review
and a diagnostic test. Respond to the questions quickly and compare your answers to
those found at the end of this section. This will allow you to identify areas in which you
may need further review.

Fill in the Answer

Formation of Contract

1. Acceptance of an offer for a unilateral contract is complete when the offeree promises
to perform the required act. True or false?

2. A says to B, "I have decided to sell my car for $300." B replies that he will buy it at
that price. Has a contract been formed?

3. The parties' agreement provides that "each is to make a fair profit" from the bargain.
Will the court uphold the bargain by determining what would be a "fair" profit to
each?

4. A offers to purchase a rare gem from B. B accepts, but no price is mentioned. Is there
a contract?

5. A offers to purchase from B, at an agreed price, all the steel that he will produce in
his new manufacturing plant. B accepts. Is there a contract?

6. An attempt to revoke an executory offer made to the public (e.g., an offer of reward)
is effective only if notice of the revocation comes to the actual attention of all those
who have learned of the offer. True or false?

7. At common law, a revocation of an offer is effective upon dispatch through a

commercially reasonable mode of communication. True or false?

8. O promises A that he will hold open his offer for 30 days. One week later, and before
A has acted on the offer, O revokes his offer.

a. Is the revocation effective?

 b. Would the result be the same if O and A were merchants dealing in goods?

9. The general rule is that an offeror can revoke his offer for a unilateral contract at any
time until the offeree has completed the requested act of performance. True or false?

10. In most jurisdictions, a rejection is effective upon receipt by the offeror. True or
false?

11. May an offer be terminated by "operation of law" if the subject matter dies or is
destroyed?

12. The general rule is that an offer may be accepted only by the person to whom it is
made. True or false?

13. A offers to employ B as an advertising manager for $1,000 per month. B accepts
"provided my salary is payable weekly." Is there an enforceable contract?

14. Merchant A offers to sell 200 radios to merchant B for $1,000. B accepts "provided
you make delivery to my plant." Is there a contract? If so, is A obliged to deliver the
radios, or must B arrange to transport them himself?

15. Where the offer is for a bilateral contract, notice of acceptance is usually required to
form a contract. True or false?

16. At common law, an acceptance of an offer for a bilateral contract is effective only
when received. True or false?

a. Does the same rule generally apply in contracts for the sale of goods?

17. Using an expressly authorized mode of communication, Fox mails an acceptance to

the offeror, Brown. On the same day, Fox changes her mind and telegraphs a
rejection of the offer to Brown. Has a contract been formed between the parties if
Brown first receives the telegram of rejection?

18. The general rule is that silence is not an acceptance of an offer. True or false?
Consideration

19. Fox says to Brown, "I'll give you my golf clubs if you will come around to my
apartment this evening to claim them." Brown calls on Fox that evening and demands
the clubs. Fox refuses, declaring that she has "changed her mind." Brown's best claim
to legal title rests on a theory of unilateral contract. True or false?

20. D promises to pay P $20 per week for so long as P shall live "in consideration of P's
40 years of continuous service." Can P enforce this executory promise if D fails to
pay?

21. P nursed and cared for X, who was having financial difficulties. Later, X's son, D,
learns of this service and promises to repay P "for all of the expenses that you have
incurred in being of such aid to my father." At common law, this executory promise is
unenforceable should D change his mind. True or false?

22. Debtor's promissory note to Creditor for $1,000 was discharged in bankruptcy. Later,
Debtor wrote to Creditor and promised to pay $50 per month until the full amount of
the note was paid. However, Debtor never made any payments and Creditor now
sues. Assuming that the Bankruptcy Code presents no bars to enforcement of Debtor's
promise, Creditor is entitled to recover:

(A) Nothing
(B) $50 per month until the debt is paid
(C) The $1,000 debt

23. John promises to give Mary $10,000 if she names her expected baby "John." When
the baby is born, she gives him the name "John." The promise made to the mother is
enforceable at common law. True or false?

24. In June 2002, Brown borrows $5,000 from the City National Bank. Under the terms
of the loan, the sum was to bear interest at the rate of 8% per year. The note was due
and payable on July 1,2003. On June 15,2003, Brown requests that his obligation to
repay be extended for one year. The bank agrees. Two weeks later, the bank changes
its mind and demands immediate payment. When Brown refuses, an action to collect
the sum of the loan is commenced. Brown will prevail if he asserts the agreement to
extend as a defense. True or false?
25. O hires C to install sprinklers for $500. Later, during the course of a normal
installation, C demands and O agrees to pay $600 for the job. C then completes the
installation. O makes a tender of $500 and refuses to pay "one cent more." Can C
enforce the promise made to pay the additional $100?

26. A claims that he has been defamed by B. B denies it, but offers to pay A $100 to drop
his claim. A accepts. Later, B refuses to pay on the ground that he was legally
privileged to say the things he said about A, and therefore A had no valid claim
against him, so there was no consideration for his promise to pay $100. Is B's promise
enforceable by A?

27. A promises to sell his car to B "unless I change my mind." Is his promise en-
forceable?

28. A promises to buy goods only from B, but reserves an option to cancel by giving 30
days' notice to B. Is Ns promise to buy only from B sufficient consideration to render
enforceable B' s counterpromise to sell to A?

29. S promises to sell, and B, age 17, promises to buy, specific goods. Can B enforce the
contract?

30. H gratuitously promises his wife, W, that he will devise his farm to W's favorite
nephew, N. W tells N about H's promise, and relying thereon, N expends money and
time improving H's farm and working the crops. Will N's reliance on H's promise to
W be sufficient to invoke promissory estoppel?

Defenses

31. Walker sold Sherwood a cow for only $80 because both parties believed the cow to
be sterile. When Walker discovered that the cow was pregnant and worth between
$750 and $1,000, he refused to deliver. Sherwood will win in a suit for recovery. True
or false?

32. O offers to sell a violin to B for $200, not knowing that it is actually worth $1,000. B
accepts with knowledge of its true value. Can he enforce the contract?

33. O advertises for bids on a construction job. She receives three bids: $50,000, $57,000,
and $42,000, and accepts the lowest one. The low bidder promptly notifies O that he
made a mistake in computation and cannot perform at the price bid. O then employs
the next highest bidder and sues the low bidder for the $8,000.
 a. Will O recover?

b. Would the result be the same if the low bid were $12,000 instead of $42,000?

34. A telegraphs an offer to B to sell butter at 62i per pound, but the telegraph company
errs in the transmittal and the wire reads 60i per pound. B accepts. Is there a contract?

35. A accepts O's offer to sell her house on Peck Road. A does not know that O owns two
houses on Peck Road. Has a contract been formed? If so, which house is the subject
of the contract?

36. A statute requires all plumbers to be licensed. P, an unlicensed plumber, contracts

with and performs services for O. 0 refuses to pay. Can P obtain a judgment for the
contract price? In quasi-contract for the value of the work done?

37. Landlord rents an apartment to Son, age 17 (a minor), for $200 per month.

a. Can Son enforce the lease against Landlord, even though Landlord could not
enforce it against Son?

b. If Son does not pay the agreed rent, can Landlord recover from Son in quasi-
contract the reasonable value of the use of the apartment during the time Son lives
there (which may be less than the agreed rent)?

38. Can "economic duress" be a valid defense to a contract action?

39. Which, if any, of the following types of contracts fall within the Statute of Frauds
provision applicable to contracts incapable of being performed within one year?

(A) Lifetime employment contracts.

(B) Requirements or output contracts.
(C) A lease of personal property terminable at will.
(D) A five-year lease of personal property, terminable by either party giving 90 days'
notice to the other.

40. In determining the applicability of the Statute of Frauds to a contract for the sale of
goods, it is the price, not the value, of the goods that is determinative. True or false?

41. Under the majority common law view, failure to comply with the Statute of Frauds
renders void a contract that the Statute requires to be memorialized by a writing
signed by the person to be charged. True or false?
Third Party Rights

42. A contracts with B to build a road connecting C's farm with the highway.

a. Can C enforce the contract?

b. Can D, C's adjoining neighbor, enforce the contract?

43. Can a donee beneficiary sue the promisee of a third-party beneficiary contract?

44. May a student who is awarded a scholarship assign his right to someone else?

45. A owns property on which she carries a policy insuring against loss by fire. On sale
of her property to B, A assigns the policy to B.

a. Is the assignment effective?

b. Assume a fire occurred prior to the sale and A assigns to B her rights to the
proceeds. Is this assignment effective?

46. B has a contract to purchase Blackacre from A for $50,000, payable $25,000 in cash
and the balance secured by a mortgage on Blackacre. Before closing, B assigns the
contract to C. Can C enforce the contract?

47. For consideration, A assigns to B one-half of any proceeds A will obtain if A sells
Blackacre. Is this an effective assignment?

48. A contract contains the following provision: "Each party agrees not to assign this
contract or any interest herein." Notwithstanding, party A assigns her interest to
another. Is the assignment effective?

49. Must an assignment be in writing and signed by the assignor to be effective?

50. May a gratuitous assignment be revoked?

51. As a gift, A orally assigns to B a $15,000 debt owed by XYZ due within one month.
B thereupon contracts to purchase a new car. A is aware of this and also knows that B
has no other sources of funds with which to make the payment due for the car.
Nonetheless, the day before the debt comes due, A tells B that he has changed his
mind and needs the money himself. B is entitled to the payment from XYZ. True or
false?

52. If a gratuitous assignment of a simple chose is in writing but the assignor makes a
subsequent assignment, does the original assignee have an action against the
assignor?

53. D owes A $1,000. A orally assigns her right to the $1,000 as a gift to B. Later, in
writing, A assigns the same right to C. As between B and C, C will prevail. True or
false?

54. D owes A $1,000. For consideration, A assigns her right to B, who notifies D of the
assignment. Later, and also for consideration, A assigns the same right to C. As
between Band C, C prevails. True or false?

55. A "sells, transfers, and assigns" to B "all of my rights and obligations" in connection
with a specified business. B promises nothing but takes over the business operations.
Can a creditor of A sue B for payment of A’s obligation?

56. A and B sign a memorandum as to a contemplated business deal. Is A later permitted

to show certain additional oral terms that were not covered in the memorandum?

57. A "collateral agreement" may be shown by extrinsic evidence. True or false?

58. The occurrence of a condition subsequent extinguishes a previously existing duty of

performance. True or false?

59. Will constructive (i.e., implied in law) conditions be implied into a contract whenever
necessary to the performance of the contract?

60. To enforce a contract, a plaintiff must plead and prove that all conditions have been
either performed or legally excused. True or false?
61. A furnished advertising for B' s hotel resort, for which B promised to pay when he
"sold the hotel." B made a gift of the hotel to his children. Is B under any duty to A?

62. On June 1, Vendor and Vendee entered into a contract for the sale of Blackacre,
Vendor to convey title on September 1. On July 1, Vendor sold Blackacre to T, with
an option to repurchase at any time. Vendee learned of the sale to T on July 15. Is
Vendee's duty of counterperformance excused?

63. The legal effect of prospective inability or unwillingness to perform is to excuse the
duty of counterperformance. True or false?

64. A has a contract with B to employ B commencing June 1. In April, A tells B, "Unless
business improves, I'm afraid I'll be unable, to take you on the payroll in June."

a. Has there been an anticipatory breach?

b. Does B have an immediate cause of action for damages against A?

65. Notwithstanding the fact that rights and liabilities under an executory contract may be
excused by virtue of some unforeseen contingency that renders further performance
impossible, if the promisor has conferred benefits on the promisee prior to the
supervening contingency, she may have a recovery for their market value in quasi-
contract. True or false?

66. The death or permanent incapacitation of a party who was to receive performance
under a personal service contract will operate to excuse any further liability on the
part of either the promisor or the legal representative of the promisee. True or false?

67. As a practical matter, the critical difference between the operative effect of a
"material" as opposed to a "minor" breach of contract is that in the event of a material
breach, the aggrieved party is relieved of any further obligation to render his own
promised performance. True or false?

68. Faced with a tender of nonconforming goods, a buyer may mitigate his damages by
making an immediate cover contract. True or false?