CONTRACTS REVIEW QUESTIONS 1.

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.

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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?
2. CONTRACTS REVIEW QUESTIONS

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 ac-
cepts "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 "pro-
vided 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 re-
quired 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 accep-
tance to the offeror, Brown. On the same day, Fox changes her mind and tele-
graphs 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
 CONTRACTS REVIEW QUESTIONS 3.

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.
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I
I 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 enforceable?

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'g 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?
4. CONTRACTS REVIEW QUESTIONS

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 con-
tract?

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 0 that he made a mistake in computation and cannot perform at the
price bid. 0 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, con-

tracts with and performs services for O. 0 refuses to pay. Can P obtain a judg-
ment 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?
 CONTRACTS REVIEW QUESTIONS 5.

(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?

TIllRD-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?

May a student who is awarded a scholarship assign his right to someone else?
44.
A owns property on which she carries a policy insuring against loss by fire. On sale of her
45. 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?

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

49.
May a gratuitous assignment be revoked?
50.
6. CONTRACTS REVIEW QUESTIONS

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 con-
nection with a specified business. B promises nothing but takes over the busi-
ness operations. Can a creditor of A sue B for payment of A’s obligation?

PERFORMANCE OF CONTRACT

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?
 CONTRACTS REVIEW QUESTIONS 7.

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?