2. Which of these contracts must be in writing to be enforceable according to the Statute of Frauds?
1) Sale of an interest in land
2) Sale of goods greater than $500
3) Employment contract longer than 1 year.
4) All of the above
3. Under the UCC which of the following must be included in a confirming memo sent after conclusion of verbal negotiations in order to satisfy the Statute of Frauds requirement?
1) Price term
2) Delivery terms
4) All of the above
4. Merchant A and Merchant B are negotiating in good faith for the sales of widgets. Merchant B accepts the terms of Merchant A’s offer, but adds to the bottom of the form “interest rate at 2% for unpaid balance as usual.” Merchant A does not object. Under these facts and UCC 2-207:
1) A contract is formed on the original terms.
2) No contract is formed; they are still negotiating.
3) Contract is formed including the interest rate for unpaid balance.
4) No contract because B’s acceptance is not a mirror image of A’s offer.
5. Bob Cratchit, who has been an employee-at-will with the firm of Scrooge & Marley, was laid off on Christmas Eve after 24 years and within several months of his receiving his full pension. The employee manual that was in effect when Bob began his employee stated that seniority would be given great weight in any layoffs. The manual was changed during Bob’s last year of employment in order to delete mention of any seniority rights. The HR department told him upon discharge that his seniority was not figured in their decision. Under these facts, which of the types of contracts below is the best theory of recovery for his suit for breach of contract?
1) Express contract
2) Implied contract
3) Executory contract
4) Restitution contract
6. Plaintiff and Defendant entered into a written contract for the sale Defendant’s land, a sunny stretch of acreage judging by the pictures and verbal representations Defendant had made. Plaintiff felt glad to have made a deal for it, that is, until he discovered that most of the land was over a toxic waste site. What best describes the situation with respect to the enforcement of the contract given that the defendant misrepresented the land and possibly defrauded the plaintiff?
1) The contract is void from the beginning.
2) The contract is voidable if the Defendant wants out of the deal.
3) The UCC will not allow this contract to be enforced.
4) The contract is voidable at the sole discretion of the Plaintiff.
7. Farmer A leased over 5,000 acres of farm land in northern Ohio for one year. Subsequently he signed a second 1 year lease. During each year he harvested the crops and prepared the land for the next season’s crops. During negotiations for the next lease, he began preparation of the land for planting, as was the local custom. Unfortunately Farmer A and his land lord couldn’t come to terms and the third year’s lease was never signed. Under these facts, what is A’s best theory of recovery of the value of the land preparations he made?
1) A should sue for breach of contract to recover his lost profits for the crops he didn’t get to plant.
2) A should sue in quasi-contract to recovery the value of the work he did in preparing the land for planting in the third year.
3) A has no remedy in contract law because he should have been more careful about working the land before he had a binding contract.
4) A should sue for promissory estoppel because he was relying on the third year’s lease to make his living.
8. Merchant A offers in writing to sell your company certain goods at a certain price and also promises in writing to keep the offer open until June 1. You are considering your options but have not accepted yet as it is still before June 1. Merchant A realizes that he can get a better price by selling the same goods to another company; therefore he sends you a revocation letter informing you the deal is off. He then sends a letter to Merchant C offering to keep his offer to sell at higher price open until June 15 What best describes the legal obligations of Merchant A in this fact pattern?
1) Merchant A can revoke his original offer because you have not accepted.
2) Merchant A can revoke his original offer because you have not paid any consideration to create an option contract to keep his offer open until June 1.
3) Merchant A is still obligated to hold his offer open you as required by the UCC.
4) Merchant A has formed a valid option contract with Merchant C.
9. Brodsky is interested in buying Culbertson’s land. He asks him to hold the land open and not sell to anyone else but him. They sign the following agreement: “In consideration of Culbertson’s promise to not sell to anyone else during the next 30 days, Brodsky will deposit a personal check in an escrow account at his bank, Lone Star Bank, which will be returned to him at the end of 30 days.” Under these facts, which statement is most accurate?
1) A valid option contract is formed.
2) Brodsky must buy the land at the end of the 30 days.
3) Culbertson is obligated to not sell to anyone else during the next 30 days.
4) Brodsky’s promise is illusory; there is no consideration for his side of the bargain.
10. Blue Chip, Inc. has agreed in writing to sell 100,000 of its programmable chips to Mr. Chips, Inc. for $10,000, to be delivered November 9th. Blue Chip has suffered a loss of skilled workers due to a strike and as a result its production capacity is greatly reduced. Wishing to stay on good terms with it customer, Blue Chip immediately informs Mr. Chips of the slowdown. Mr. Chips reluctantly agrees in writing to accept the chips on November 22. Under these facts and under the UCC:
1) This written modification of contract governed by the UCC needs no new consideration to be binding.
2) Mr. Chips can change its mind and immediately demand the chips because Blue Chip is under a preexisting duty to deliver on November 9.
3) Both A and B
4) Mr. Chips can still sue for breach of contract if the chips are not there on November 9th because there was no consideration for its promise to accept a later delivery time.
11. Hard Times Mining Cooperative of West Virginia has agreed in writing with the Peabody Coal Company to sell its entire production for the next three years, with the price to be indexed to coal production standards in the vicinity. Under these facts and the UCC :
1) Price terms are not definite enough; therefore, no contract is formed.
2) Valid output contract is formed.
3) Quantity is not certain; therefore no contract.
4) Valid requirements contract if formed.
12. Which of these promises would be enforceable as supported by valid consideration?
1) Your promise not to break any state or federal laws before you are 30.
2) My promise to give you an A on the final in consideration of your past hard work.
3) Your rich aunt’s promise to change her will and leave you a fortune.
4) Your promise to pay money in exchange for a promise to provide goods.
13. Mega Manufacturing has agreed over the phone to manufacture 10,000 highly specialized routers and couplers to the exact specifications required by Circuits Systems, Inc. for use in one of its proprietary designs. These are highly specialized goods for which there is no ready market. Mega sends a signed confirming memorandum “This is to confirm our understanding of the purchase of routers and couplers to be delivered to your Dayton, Ohio facility by Dec. 1, for a total contract price of $37,000.” Mega waits 10 days, then begins the manufacturing of the items and is nearly complete when Circuit Systems attempts to breach the contract. Under these facts and under the UCC:
1) Mega’s memorandum to Circuit is sufficient to satisfy the requirements of the statute of frauds.
2) Unfortunately this oral contract is not enforceable.
3) Mega’s verbal contract with Circuit is enforceable as a specialized goods exception to the Statute of Frauds rule.
4) Circuit is not bound to pay Mega for any of the goods because the confirming memo did not specify the quantity of goods.
14. You have entered into a valid binding bilateral contract to buy a painting in a private collection by the famous Dutch painter, Vermeer, for 11 million dollars. It is a rare item and a rare price. Before you can take possession, the seller tells you that he is refusing to honor the contract because he has a much, much better offer from the Tate Gallery in London. The breach of contract remedy that will allow you to obtain the painting itself rather than any monetary damages is:
1) Specific Performance
2) Consequential Damages
3) Punitive Damages
4) Compensatory Damages
15. Lucy Van Pelt is a pumpkin merchant and retailer. She has entered into a valid binding contract with Linus Wholesaling for the purchase of 1,000 giant pumpkins to be delivered Oct 1st at a per pumpkin price of $10. Linus is well aware of Lucy’s need for these particularly plump pumpkins during this specific selling season. Moreover, Lucy told Linus at the time they entered into the contract that she has specific resale deals that she must meet on time. Linus has figured his price based upon all the information Lucy has provided.
Subsequently, Linus fails to deliver all of these prize gourds on time, before Halloween. Therefore, Lucy was forced to buy as many replacement pumpkins as she could find on the open market for $15 in an attempt to meet her contractual obligations under her resale contracts. She couldn’t find enough substitute pumpkins and lost significant sales as a result. Assume that her lost profits are calculable at $12,000. Assume further that the rule in Hadley v. Baxandale
Generally under these facts which of the following statements is true only as to Lucy’s consequential
A) Lucy can recover the amount she spent to buy replacement pumpkins, $5 per pumpkin
B) Lucy should recover $12,000.
C) Lucy will not be allowed to recover consequential damages because Linus’ breach was not foreseeable from her perspective.
D) Lucy should recover @12,000 but only as incidental damages.
16. Pat promises Matt that he will buy his land for $100,000. Matt agrees wholeheartedly. They shake hands and agree to meet the next day to complete the transaction. Pat brings the agreed upon sum; Matt gives Pat a valid deed to the land.
Subsequently Pat suffers buyer’s remorse and wants his money back. What best describes his legal situation with respect to the Statute of Frauds?
1) Pat can get his money back because there was no written contract as required by the Statute of Frauds.
2) Pat can get his money back because the terms of the deal were not clear enough.
3) Pat cannot get his money back because the contract is still executory.
4) Pat cannot get his money back because the contract has been fully performed and it doesn’t matter that the contract was verbal.
17. Your company, the Dunder Mifflin Paper Company, has a valid contract to sell $100,000 worth of goods to one of its key customers. At the last minute the customer breaches. You’ve had to scramble to resell the same goods for $90,000 to meet your sales quota for the year. Which statement(s) below is/are correct as to what guidance the UCC offers in measuring Dunder Mifflin’s damages should they decide to sue for breach of contract?
1) Dunder Mifflin’s compensatory damages will be difference between the original contract price ($100K) and the price obtained on the open market ($90K)
2) Dunder Mifflin can always recover consequential damages.
3) Dunder Mifflin will be allowed incidental damages only if there are lost profits.
4) All of the above.
18. Stephen T. Colbert is under contract to speak at WSU graduation. On the day before he is to appear he tells the president, who signed the deal, that he cannot appear unless the university pays him $10,000 more than originally stated under contract. President Hopkins reluctantly agrees, but wisely bargains to get Colbert to agree to also give a lecture at the Raj Soin College of Business. Is the president’s agreement to pay extra money enforceable?
1) No because Stephen is under a pre-existing duty to perform and there is no valid new consideration.
2) Yes because Stephen has agreed to additional work, which is valid consideration for the common law contract modification.
3) No because that amount is too high and a court would never enforce such a ridiculous sum.
4) Yes because Stephen is worth it. (Not an answer)
19. Your Manufacturing Company receives a call from a long-time Client telling you to begin work ASAP on 1,000 widgets at $500 per unit to be made to the Client’s highly unusual specifications. You buy raw materials and immediately begin the manufacturing process. Because of the Client’s specifications, these widgets have no ready market. Subsequently, Client calls and says “Sorry, we changed our mind…oh, and don’t bother suing for breach of contract we only had a verbal agreement. There is no contract you can enforce.” What best describes the legal obligations in this fact pattern?
1) The Statute of Frauds requires contracts for the sale of good greater than $500 must be in writing to be enforceable; therefore, the Manufacturing Company is out of luck.
2) An exception to the Statute of Frauds allows Manufacturing Company to enforce the verbal contract only is there had been a confirming memo.
3) An exception to the Statute of Frauds allows Manufacturing Company to enforce the verbal contract because they are specially manufactured goods and work has already begun.
4) An exception to the Statute of Frauds allows Manufacturing Company to enforce the verbal contract irrespective of whether it had begun work on the order because they are specially manufactured goods.
20. X offers in writing to sell his land to Y and further promises (in writing) to keep this offer open until the end of this quarter so that Y will have time to think it over. X realizes that he really doesn’t want to sell the land at this time after all, and sends a letter to Y before the quarter telling him the deal is off. What best describes the legal obligations in this fact pattern?
1) The Statute of Frauds requires contracts for the sale of land to be in writing, therefore a contract has been formed and X must sell Y his land.
2) Because this transaction is governed by Common Law, X is allowed to revoke his promises before they are accepted.
3) Because X’s offers are written, Y is obligated to buy the property at the end of the quarter.
4) Y can force X to keep his promise open until he has time to think it over.
21. Merchant A offers to sell certain goods greater than $500 to Merchant B and further promises that he’ll keep the deal open until June 1. Merchant B meant to get around to sending a confirming memo or acceptance but never did. He wakes up in the middle of the night of June 1st-June 2nd in a cold sweat and realizing his mistake. He immediately faxes his acceptance to Merchant A. The fax machine’s time stamp reads: 2:32 AM, June 2. Merchant B is left sitting in the dark worrying about his legal situation.
Which rule of contract formation controls the outcome of this situation?
1) Statute of Frauds requires verbal negotiations to be put in writing to be enforceable.
2) UCC does not require extra consideration to keep an offer open.
3) An offer will terminate upon its expiration date.
4) Revocation is effective upon receipt.
22. Which of the following forms of concurrent ownership are associated with the automatic right of survivorship under real property law?
1) Tenancy in Common
2) Joint Tenancy
3) Tenancy by the entirety
4) B and C
5) All of the above
A subdivides his water-front property and sells one parcel along the shoreline to B. At the same time A creates an easement for right away across B’s land so that A can reach the water when he wants to. See diagram.
Under these facts:
1) A has created an easement appurtenant by reservation
2) A has acquired an easement by prescription.
3) A has granted B an easement in gross
4) Both A and B are correct.
24. Under the same facts and diagram as above:
1) A’s property is considered the dominant tenement
2) B’s property is considered the servient tenement
3) A and B are considered joint tenants with right of survivorship
4) A and B are correct
25. Under the same facts and diagram as above, assume that B sells his land to C, who in turn wills it to D. After A dies, his heirs inherit the land and wish to enforce the easement against D.
What are the rights of the A’s heirs against D?
1) A’s heirs can enforce the easement because easements appurtenant run with the land.
2) A’s heirs can only enforce the easement if they have used it for 30 years.
3) D can keep A off the easement because D never agreed to the creation of it.
4) D has a remainder interest and can keep A’s heirs out.
26. A is a land owner who grants a deed to B who pays good value for the property, but waits until after finals are over to record the deed. Subsequently, A (a crook) sells the same property to C, who checks the deeds records and sees A’s name as the last owner of the land, pays good value and, having taken Business Law last semester, records immediately. Who owns the land?
1) B does because he was first to give value for the land.
2) C does because he is a bona fide purchaser who recorded first.
3) A does because of his fraudulent conveyance the contracts are voided and the property is returned to him.
4) It will depend on who paid more for the land, as between B and C.
27. Marge and Homer, a married couple, own real estate in Springfield, Ohio as tenants by the entirety. They divorce. Marge leaves her interest in the real estate to Bart in her will. When Marge dies, which statement best describes the concurrent ownership rights?
1) Homer and Bart are tenants in common
2) Homer is the sole owner because of the right of survivorship
3) Homer and Bart become joint tenants
4) Homer and Bart become tenants by the entirety
28. A deeds valuable acreage to B, expressly stating in the deed “to B as long as the land is used as a nature preserve, and if that condition is broken, then to C and her heirs in fee simple absolute.” What type of freehold estate is created in B?
1) Life Estate
2) Fee Simple Absolute
3) Fee Simple Defeasible
4) General Warranty
29. A deeds valuable acreage to B, expressly stating in the deed “to B as long as the land is used as a nature preserve.”
Which of these best describes the future interests of A’s heirs?
1) Remainder Interest
2) Possibility of a Reverter
3) Right of survivorship
4) A’s heirs have no future interest in the land.
30. A deeds valuable acreage to B, expressly stating in the deed “to B as long as the land is used as a nature preserve, and if that condition is broken, then to C and her heirs in fee simple absolute.”
Which of these best describes the future interests of C and her heirs?
1) Life estate
2) Fee Simple Defeasible
3) Possible Remainder Interest
4) C and her heirs have no future interest in the land.
31. Which of the deeds below grants the greatest number of warranties to the grantee?
1) Special Warranty Deed
2) Quit Claim Deed
3) General Warranty Deed
4) Implied Warranty of habitability
32. Old King Lear had three daughters, A, B, C, who never got along. Nonetheless he deeded 1,000 acres of land to them. The Deed expressly stated “…to A, B and C in fee simple absolute as joint tenants with right of survivorship.” Because his daughters proved to be less than kind to King Lear in his old age, he ranted and raved that he wanted his land back. At one point C told the King she would give the land back but she never executed a deed. The years passed and B died before the king. C consulted a common law expert in freehold estates and concurrent ownership to find out who owned the land. What did the expert tell her about who owned the land?
1) A and C as joint tenants
2) A, B heirs, and C as joint tenants
3) A and King Lear
4) King Lear only
33. X grants Y a life estate. Subsequently Y executes a valid quit claim deed to convey her interest to Z. What best describes Z’s interest in the land?
1) Z has a fee simple absolute because he has a deed.
2) Z has a life estate that reverts back to X or X’s heirs when Z dies.
3) Z has a life estate that reverts back to X or X’s heirs when Y dies.
4) Z has a fee simple defeasible.
34. Mick is eating fish chowder one Friday in Cincinnati. He discovers a small piece of soft white bone when he chomps down. Annoyed, he spits the piece out into his fine linen napkin and calls the waiter over and complains vehemently about the negligent preparation of the chowder. Under these facts:
1) Mick will recover damages under res ipsa loquitur.
2) Mick will not collect any damages because he suffered no recoverable injury
3) Mick will recover only if he can prove that small bits of fish bone in chowder can be prevented and that other local fish houses have taken actions to so prevent.
4) Mick proves beyond a shadow of a doubt that a duty of care was breached.
35. Pat was waiting for a bus at a bus stop. Across the street and down the block, Mike the mechanic was negligently over inflating a tire he intended to put on his pickup. He had been involved with problems with over inflated tires blowing up so he knew the danger. This tire did explode, startling a man walking two pit bulls who broke free and viciously attacked Pat. Applying the court’s logic and ruling in Palsgraf v. Long Island Rail Road, Pat would probably:
1) Win because the mechanic was negligent and had knowledge of the danger he was creating.
2) Win in strict liability because walking pit bulls is an ultrahazardous activity.
3) Win because Pat’s injuries were severe and Mike had good insurance.
4) Lose because there was no foreseeable duty of care that extended to Pat from Mike’s negligence.
36. Your business, McNamara’s Drive-Through Coffee, sells millions of cups of very hot coffee in styrofoam cups through its numerous drive-through outlets every year. According to its operating manual McNamara’s coffee is to be kept at 180 degrees, although this is on average 40 degrees hotter than coffee brewed at home and has resulted in hundreds of complaints of scalding. McNamara feels there is a competitive advantage to keeping coffee extremely hot as its aroma attracts customers. Moreover, McNamara feels that the money paid out to customers who complain for medical bills, pain and suffering is statistically insignificant when compared to the volume of cups sold yearly.
When an elderly customer suffers third degree burns (worst degree) after spilling McNamara’s coffee on herself in stationary car and required several painful days of hospitalization, she sues. At trial the plaintiff’s expert witness showed that liquid kept at 180 degrees can create severe burns in 2- 7 seconds, and that by lowering the temperature to 140-150 degrees the possibility of is severe burns is greatly decreased.
Based upon your understanding of elements and defenses in tort law which statement below best summarizes McNamara’s liability?
1) McNamara’s may not be liable as there is no duty of care that extends to this plaintiff.
2) McNamara’s may not be liable as the plaintiff assumed the risk of all harm by buying coffee at a drive-through window.
3) McNamara’s may be liable as the type of harm that occurred was reasonably foreseeable as NcNamara’s was on notice of similar injuries; and therefore, a duty of care arose to protect this client from harm.
4) McNamara’s may be liable as the customer is a licensee and therefore there was a duty to warn of known dangers.
37. Wayne, a spectator, was injured at a hockey match by a flying puck. As he was leaving for the hospital, part of the arena seating collapsed because of faulty construction causing him further harm. Given these facts, which is the most correct about the application of tort law:
1) He assumed the risk of all injury by going to the game.
2) If a court found that a hockey puck leaving the ice is a highly foreseeable risk, the defense may be successful in using assumption of the risk as defense as to the puck injury sustained by Wayne.
3) A court would find that he was comparatively negligent and bar any recovery.
4) Causation is too remote to find negligence.
38. Wiley is driving down the freeway and as he passes under an overhead that was being repaired Acme Welding a large metal truss drops through the air and strikes Wiley’s car doing injury to Wiley. At the time of the accident Acme alone had access to the overpass during repairs. Wiley sues for negligence. Under these facts it is likely that:
1) The court might infer negligence by Acme under the doctrine of negligence per se.
2) The court might infer intentionality to harm Wiley.
3) The court might infer negligence by Acme under the doctrine of res ispa loquitur.
4) If the court infers negligence under the res ispa loquitur, then the burden of proof shifts to Acme (the defendant) to prove that it did not cause the harm.
5) C and D
39. A city ordinance in Rock Ridge strictly forbids the manufacturing of pesticides within the city limits in order to reduce the risk of harm to its citizens. The ordinance expressly states that manufacturing of pesticides within city limits is considered negligence per se. In violation of this ordinance, Lamar Chemicals begins production of a highly potent pesticide at its new Rock Ridge facility. Assume that there are provable damages, which of the following statements is the most correct as to Lamar Chemical’s liability to Plaintiff under the ordinance.
1) Lamar may be held liable for negligence per se and Plaintiff does not have to prove that Lamar breached a duty owed to him
2) Lamar may be held liable for negligence per se if Plaintiff can prove it breached a duty owed.
3) Lamar may only be held liable for foreseeable damages so far removed from its facility.
4) Lamar cannot be held liable for negligence per se simply for violating an ordinance.
40. Which statement about business entities is NOT correct?
1) In a general partnership the partners can be held personally responsible for the debts of the partnership.
2) Sole proprietorships provide limited liability; therefore, creditors cannot seize the personal assets of the operator to pay for debts incurred by the business.
3) A limited liability partnership allows partners to limit their liability while maintaining the tax status of a partnership.
4) A close corporation, or closely held corporation, is not publicly traded.
41. Assuming all other requirements are met, a corporation may elect to be treated as an S corporation under the Internal Revenue Code if it has:
1) Several classes of stock
2) At least one partnership as a stockholder
3) 100 or fewer stockholders
4) Shareholders from at least two foreign countries
5) All of the above
42. Extra Credit. You and several other WSU graduates are forming a business. You’ve decided that you’d like to form an entity that offers the limited liability of a corporation, but without the disadvantages and limitations of a subchapter S corporation. You also prefer the tax status of a partnership. Which of the following business forms best fits that description?
1) Closely held corporation
2) Joint Venture
4) Limited Liability Company
43. Extra Credit. Al makes a written job offer to Bea. Al changes his mind and faxes to Bea his revocation, which is received by Bea before she sends her acceptance by mail.
What rule of contract formation controls the outcome of this fact pattern?
1) B’s acceptance is valid when received by A.
2) B’s acceptance is valid when she sent it to A.
3) A’s revocation is valid when sent to B.
4) A’s revocation is valid when received by B.