Contracts II (Law 1-201)

Spring 2021
Timothy J. Tracey

MIDTERM EXAMINATION

QUESTION 1

On June 1, Topline Wholesale, Inc., received a purchase-order form from Wonder-Good,

Inc., a retailer and new customer, in which the latter ordered 1,000 anti-recoil widgets for
delivery no later than August 30 at a delivered total price of $10,000, as quoted in
Topline's current catalog. Both parties are merchants with respect to widgets of all types.
On June 2, Topline mailed to Wonder-Good its own form, across the top of which Topline's
president had written, "We are pleased to accept your order." This form contained the
same terms as Wonder-Good's form except for an additional printed clause in Topline's
form that provided for a maximum liability of $100 for any breach of contract by Topline.

As of June 5, when Wonder-Good received Topline's acceptance form, which of the

following is an accurate statement concerning the legal relationship between Topline and
Wonder-Good?

(A) There is no contract, because the liability-limitation clause in Topline's form is a

material alteration of Wonder-Good's offer.
(B) There is no contract, because Wonder-Good did not consent to the
liability-limitation clause in Topline's form.
(C) There is an enforceable contract whose terms include the liability-limitation clause
in Topline's form, because liquidation of damages is expressly authorized by the
Uniform Commercial Code.
(D) There is an enforceable contract whose terms do not include the liability-limitation
clause in Topline's form.

QUESTION 2

A buyer sent a seller an offer to buy 50 tons of cotton of a specified quality. The offer
contained no terms except those specifying the amount and quality of the cotton. The
seller then sent an acknowledgment by fax. The acknowledgment repeated the terms of
the buyer's offer and stated that shipment would occur within five days. Among 12
printed terms on the acknowledgment was a statement that any dispute about the
cotton's quality would be submitted to arbitration. Neither the buyer nor the seller said
anything further about arbitration. The seller shipped the cotton, and it was accepted by
the buyer. A dispute arose between the buyer and the seller as to the quality of the cotton,
and the seller asserted that the dispute had to be submitted to arbitration. The buyer
instead sued the seller in court.

In that suit, which of the following arguments best supports the seller's position that the
buyer must submit the dispute to arbitration?

(A) Arbitration is a more efficient method of resolving disputes than resolving them in
court.
(B) The provision for arbitration did not contradict any term in the buyer's offer.
(C) The provision for arbitration did not materially alter the parties' contract.
(D) The seller's acknowledgment containing a provision for arbitration constituted a
counteroffer that was accepted by the buyer when it accepted delivery of the
cotton.

QUESTION 3

Wendy has owned her 5,000 acre farm for 20 years. One day, Jason approached Wendy
about selling 500 acres of her land to him for a housing development. Jason and Wendy
met repeatedly about his offer discussing which 500 acres of land would be best for the
development and how much Jason would pay. Eventually, Wendy agreed to sell Jason the
500 acres on the west edge of the property for $100,000. Jason had the papers drawn up
and brought them to Wendy. But by then Wendy had reconsidered and she refused to sell
the property.

Can Jason enforce Wendy's promise to sell the 500 acres?

(A) Yes, because the sale was negotiated by the parties.

(B) Yes, because the contract was for the conveyance of land.
(C) No, because Jason did not sign a writing that evidenced their agreement.
(D) No, because Wendy did not sign a writing that evidenced their agreement.

QUESTION 4

Keith worked at his father's entertainment agency. One day, Keith met Rory, an aspiring
singer. Trying to impress her, Keith offered Rory a standard, two-year representation
contract for performers. Keith told Rory to come to the office the next day to finalize the
agreement. That night, Rory wrote her sister an excited email that said, "I finally got my big

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break. The son of the owner of a major entertainment agency offered me a two-year
representation contract. I am going in to sign it tomorrow. Couldn't wait to tell you. Love,
Rory." The next day, Keith denies that he was serious about the offer and refuses to enter
into the representation contract.

Can Rory enforce the representation contract?

(A) Yes, because Rory's email memorialized the contract.

(B) Yes, because Rory's email includes the nature and subject matter of the contract.
(C) No, because Keith did not sign Rory's email.
(D) No, because the content of Rory's email was not memorialized in writing.

QUESTION 5

One afternoon, a developer and a broker were playing golf. The developer had his eye on a
piece of property the broker owned and made him an offer, "If I win this round of golf, you
sell that building to me for $1,000,000." The broker laughed and shook the developer's
hand. The developer won the round. On the back of the game's scorecard, the developer
wrote the building's address followed by "= $1,000,000." Both the broker and the
developer initialed the scorecard.

Is the scorecard sufficient to enforce this agreement?

(A) Yes, because the scorecard satisfies the Statute of Frauds.

(B) Yes, because the scorecard contains the developer's initials.
(C) No, because all the terms of a land sale contract must be reduced to writing.
(D) No, because the parties did not sign the scorecard.

QUESTION 6

A child prodigy in tennis hired a former world-ranked professional tennis player as his
personal coach and trainer. The child and the coach entered into a contract for the coach's
services, with no end date specified. At the age of 18, the former child, now no longer a
minor, decided to turn pro and find a new coach. The original coach sued for specific
performance.

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Will the court enforce the contract against the former child?

(A) No, because the child, as a minor, lacked the capacity to contract.
(B) No, because the child disaffirmed the contract within reasonable time after
reaching the age of majority.
(C) Yes, because the child did not disaffirm the contract.
(D) Yes, because the contract is for services.

QUESTION 7

A man has been suffering from steadily increasing dementia. Some days, the man is lucid,
but other days he is barely able to remember his name. On one of the man's bad days, a
developer approaches the man about purchasing his home. The man agrees and signs the
purchase and sale agreement. Later, when the man is lucid, he tells his daughter, a lawyer,
he does not actually want to sell his house.

Will the man be able to avoid enforcement of the purchase and sale agreement?

(A) Yes, because the man did not intend to sell his house.
(B) Yes, because the contract is voidable.
(C) No, because the developer did not know that the man had a cognitive defect.
(D) No, because the developer did not purposefully take advantage of the man's
cognitive defect.

QUESTION 8

Ben is a schizophrenic who suffers from severe auditory hallucinations. If Ben enters into
a contract based on the influence of the auditory hallucinations, which of the following
statements is not true?

(A) Ben can avoid enforcement of the contract.

(B) If Ben received a benefit from the contract, he must make the other party whole.
(C) Ben can only avoid enforcement of the contract if the other party knew of his
schizophrenia.
(D) Ben will be liable for any damage, wear and tear, or depreciation to goods he
received under the contract.

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QUESTION 9

A company manufactures engines for a motorcycle manufacturer. The company is under

contract to provide the motorcycle manufacturer with 100 engines every month. This
month the company's employees all go on strike until the company agrees to give them a
raise. The employees specifically picked this time because they knew the company would
not be able to train new employees with enough time to complete the order due to the
motorcycle manufacturer. The company agrees to the raises, but after the order to the
motorcycle manufacturer is completed the company informs the employees that they will
not be getting raises and if any employee wants to leave they can go and the company will
hire replacements. The employees then sue the company for enforcement of the contract.

Will the employees prevail?

(A) Yes, because the employees did not make a wrongful threat.
(B) Yes, because the company's acquiescence was not based on physical compulsion.
(C) No, because the company had a reasonable alternative to succumbing to the threat.
(D) No, because the contract is voidable by duress.

QUESTION 10

Emily is an 80-year-old woman who has lived on her waterfront property for over 50
years. Last year Emily's husband, Sean, died. Sean had always managed the couple's
finances, Emily had never even had a checking account or cell phone. Although Emily's
children lived nearby and visited her often, Emily formed a close relationship with her
next-door neighbor, Sally, after Sean's death. Sally visited Emily every day and helped her
with everyday tasks such as banking, shopping, cooking, and cleaning. A year after Sean's
death, Sally's sister, Debbie, expressed interest in buying waterfront property. Sally, a
licensed real estate agent, approached Emily about selling her property. At first, Emily did
not want to leave her house, but Sally convinced Emily she would be able to leave more to
her children if she sold the property for cash rather than continuing to live on it. Trusting
Sally's advice, Emily agreed to sell her property to Debbie for $1,000,000 despite the fact
that the property had been appraised at more than $2,500,000 by the tax assessor. When
Emily's children learn of the pending sale, they sue to vacate the purchase and sale
agreement based on Sally's undue influence.

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Will the court enforce the purchase and sale agreement for Emily's property?

(A) Yes, because Emily was not vulnerable to unfair persuasion.

(B) Yes, because Emily received adequate consideration for the purchase of her
property.
(C) No, because Emily's children could establish Sally asserted undue influence over
Emily.
(D) No, because Sally committed fraud by representing both Emily and Debbie.

CONTINUE TO NEXT PAGE FOR ESSAY QUESTION

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ESSAY QUESTION

Lena graduated from Hoity-Toity Law School in May 2017. After graduation, she began
working as a clerk for Judge Joseph Dredd of the Thirteenth Circuit Court of Appeals.

On December 14, 2018, Down-To-Earth School of Law orally offered Lena a job as an
assistant professor of law, beginning in August 2019, at a salary of $96,000 per year. By
letter dated January 2, 2019, Down-To-Earth confirmed the offer of employment to Lena.
The law school’s letter set out certain terms of employment — salary, position, time of
commencement — but it did not specify the length of time for Lena’s employment by the
school. The dean of the law school, Traitor Joe, signed the letter.

Lena wrote a letter, dated January 10, 2019, back to Down-To-Earth accepting the law
school’s offer to join the faculty. Her letter expressed her understanding of the terms of
employment she had been offered. One of the terms she listed was the following: “I also
understand that my employment will be for at least a three-year period, provided I take
and pass the Nevada State Bar Exam.” Dean Traitor Joe received and reviewed Lena’s
signed letter on January 13, 2019, but sent no response.

Lena’s clerkship with Judge Dredd ended and she moved to Nevada from Connecticut to
begin working for the law school in August 2019. She rented a two-bedroom apartment in
Omaha about six miles from the school. In November 2019, Lena received notice that she
successfully passed the Nevada State Bar Examination. Lena assumed this news meant her
job was safe at least through the 2021-2022 academic year.

However, fortune did not smile on Lena. On March 15, 2020, the school notified Lena that
her employment would terminate at the conclusion of the 2019-2020 academic year on
July 8, 2020. The school paid Lena her salary through the end of July 2020.

Lena has now sued Down-To-Earth School of Law for breach of contract, seeking her
salary for the two remaining years of what she claims was at least a three-year contract.
She alleges she has been unable to obtain further employment as a law professor, and has,
since February 1, 2021, been employed by a small law firm as an associate attorney at an
annual salary of $60,000.

Down-To-Earth School of Law moves for summary judgment, arguing that Lena’s claim is
barred by the statute of frauds.

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(A) Lena alleges she was hired by the law school for a three-year-minimum term, but
argues that the contract is not within the statute of frauds because her contract could
be terminated within one year if she did not pass the bar examination. Is Lena likely to
be successful with this argument? Why or why not?

(B) Assume for purposes of this question only that the court finds that Lena’s contract
with Down-To-Earth School of Law is in fact within the statute of frauds. Lena now
argues that the requirements of the statute of frauds are satisfied by the law school’s
January 2, 2019, letter to her. Is Lena likely to be successful with this argument? Why or
why not?

(C) Assume for purposes of this question only that the court finds there is no writing
sufficient to satisfy the requirements of the statute of frauds. Does Lena have any other
argument that the statute of frauds should not bar her claim against Down-To-Earth
School of Law? Why or why not?