AppendixC-StudyProblemsInContracts (1)

LGST 101 PROBLEMS:

CONSIDERATION

1. Cardoza threatened to sue Pereira for $960 which Pereira owed Cardoza. In order to dissuade Cardoza from this course of action, Pereira presented to Cardoza a promissory note made by Marshall to the order of Cardoza. Upon non-payment of the note at maturity, Cardoza sued Marshall. Marshall's defense was that no consideration moved from Cardoza, the promisee in the note, to him the promisor. Will Cardoza recover?

2. Towne ordered a shipment of Coffee from Brazil. The coffee was due to arrive shortly in New York and he expected to sell it for a profit. He entered into an agreement with Neely whereby they mutually promised to share equally the profits and the losses realized in the venture. Towne paid $2000 for the coffee, but was unable to sell it for more than $1000. Neely refused to abide by the agreement . and Towne sued him to recover $500. Defense: No consideration. Judgment for whom?

3. Mack, a builder, made a contract with West to build an addition to West's home for $8000. Mack agreed to complete the work within four months. At the end of one month Mack told West that he was about to discontinue the work because he could not employ men at eight dollars a day as he had planned. West was in a hurry to have the work completed, and agreed in writing with Mack to pay one-half extra labor cost if Mack would continue to work. Mack employed the men he needed at ten dollars a day, and finished the work on time. West refused to pay more than the original contract price of $8000. Mack sues to recover one-half the extra labor cost. Defense, lack of consideration. Should Mack recover? Discuss fully.

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LGST 101 PROBLEMS:

OFFER

1. On August 18, 1959, the Nursery Co., Inc. of La Feria, Texas, entered into a written agreement with H. L. Engel, Inc. of Edenburg, Texas, under the terms of which the Nursery Co. agreed to supply "50,000 citrus fruit trees to be selected as to variety, on or before October 1, 1959, by the buyer, said trees to caliper at time of delivery five-eight inches or larger and said trees to be from seedings now growing of seller's nursery." The price was to be $1.70 per tree, delivery to be between December 1, 1960 and April 1, 1961. On September 15, 1959 H.L. Engel, Inc. ordered the following citrus trees: 2500 Norris oranges, 2000 Temple oranges, 2000 Davey tangerines, 2500 Valencia oranges, 2000 Pineapple oranges, 5000 Marsh Pink oranges, 1000 Washington Navel oranges and 33,000 Marsh Seedless oranges. All of these were in seedling form at the seller's nursery. The Nursery Company refused to perform the agreement, upon the ground that it was indefinite as to subject matter, since the particular kinds of trees and the amount of each kind were not specified in the agreement. Is the contention of the Nursery Company sound? Explain.

2. Should a court find that there is the requisite mutual assent if the response to the following is "I accept"?

a) "I'm considering selling my car to you for $1200." b) "I will sell you my car for $1200." c) "Would it be a good deal if I sold my car for $1200?" d) "You wouldn't consider paying $1200 for my car, would

you?"

3. John Falstaff bought a new car for $15,000, but the first day he drove it to work it broke down on the highway and stranded him. John finally managed to get to his neighborhood bar where he loudly trumpeted his disgust with the car. When the busboy, Francis Feeble, who was known by all to have a very low I.Q., said, "I love your new car," John raised his stein of beer and toasted Francis, replying, "It's yours for $1,500 -- just go get it." Francis said, "Thanks, Mr. Falstaff, I'll do it now and pay you this evening." Everyone in the tavern laughed as Francis rushed off to rescue the car.

Later that day, after Francis had the car towed to his home, Francis showed up at the bar where John was still consoling himself and put $1,500 on the counter in front of John. When John asked, "What's this?" Francis explained that it was the payment for the car. John refused to take the money, saying that of course he had not been serious earlier in the day. Is Francis entitled to the car in your opinion?

4. At a legislative committee hearing, Walter Mitty, a lobbyist for consumer interests, stated: "If the banks are not willing to

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lend money at the currently permissible interest rate, that is not good business. The rates are high enough. I am willing to lend money at the present rate of interest." Edith Taylor saw a report on the committee meeting and heard Mitty make his statement on the evening news. She called him and demanded a loan at the then permitted interest rate. Contract?

5. U. N. Owen was a fanatical bridge player. Once a year he invited a number of people to his remote home on Island for a weekend of nonstop bridge. He sent the invitations two months in advance and followed them with phone calls to make sure everybody was really going to come. One of the guests, a retired jurist named Justice Wargrave, assured Mr. Owen that he would make the journey, but backed out at the last minute and went to a pinochle tournament instead. When the guests arrived at the island, Owen was dismayed to find that he did not have enough people for the complicated bridge tournament he had planned, so he canceled the entire weekend and sent everyone home. He then sent Wargrave a bill for $2,750, the expenses he had undergone in setting up the weekend. Must Justice Wargrave pay?

6. Beaumont and Fletcher signed a contract agreeing to each put up $50,000 for a theatrical performance that they were to write themselves. The five page, single-spaced contract contained this clause:

This contract shall not be enforceable in a court of law.

When Beaumont refused to contribute his share of the money or attend any writing sessions, Fletcher sued. Does the quoted clause strip the court of jurisdiction?

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LGST 101 PROBLEMS:

ACCEPTANCE

1. Hawley owned a Buick, and occasionally had work done on it at the Hoff Garage. One day he drove up with a flat tire, parked his car beside the garage, and called to Hoff that he had a flat tire and would be back in an hour. Hoff fixed the tire. Hawley refused to pay, saying that he had intended doing the job himself. (a) Was there a contract? Explain. (b) Suppose Hoff also adjusted the carburetor and straightened a fender. Could he recover for this?

2. Without prior solicitation, plaintiff sent to defendant, manufacturer of Chesterfield cigarettes, a letter in which he submitted what he called "an original advertising scheme" for billboard advertising. The idea consisted of a picture of "two gentlemen, well groomed, in working clothes or in hunting togs, apparently engages in conversation, one extending to the other a package of cigarettes Saying, 'Have one of these,' and the other replying, 'No thanks; I smoke Chesterfields." In his letter plaintiff stated that he trusted, "this idea will be of sufficient value to merit a reasonable charge therefor." Defendant did not reply, but subsequently advertised a picture of two men and a caddy with golf clubs, one man having an open cigarette case, and the other with a package of Chesterfields, and the slogan "I'll stick to Chesterfields." Plaintiff sued for $25,000. The jury found that defendant's advertisement was based directly on plaintiff's letter. Assuming that plaintiff had a property right in the idea, as the court decided he had, is plaintiff entitled to recover on the basis of contract or on any other basis? Explain.

3. Cooper, a tenant whose lease was about to expire, wrote to Springer, the landlord, proposing to rent the land for a new period on the same terms. Springer answered by letter, "I expect to be in your county early next week. If I do not call or communicate further with you in the course of a few days, you can count on having the land. But this year I am obliged to raise the rent to $125 a month instead of $110 as per the current lease about to expire." Cooper heard nothing further from Springer, and after a week had passed, Cooper proceeded to plow and plant his wheat. Springer sues Cooper for the rent as stated in this letter. Can he recover? Explain.

4. On March 2, 1971, Fredericks, a wholesaler in eggs, telegraphed Stevens, a farmer: "Am in the market for 10,000 dozen white leghorn eggs at 20 cents a dozen, delivery to be on March 7, next. Will buy all that you have of that kind on hand at present time, provided not more than 3 days old, up to 10,000 dozen." Stevens, without replying, on March 6, shipped 5,000 dozen white leghorn eggs, which arrived on March 7. Fredericks immediately notified Stevens that he had purchased all his eggs

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elsewhere. Stevens sold the eggs to Johnson, and took a 5 cents loss per dozen. He now sues Fredericks for $250, alleging breach of contract. Judgment for whom and why?

5. On October 15, Webb, in New York City, wired Cushing, in Scranton, as follows: "I offer you 100 shares Garnett Incorporated stock at $211 each. I suggest you answer by Air Mail today, because I must know your answer by 10 o'clock tomorrow morning." Cushing immediately upon receipt of Webb's offer sent a reply by Air Mail accepting the offer, depositing his letter in the Scranton Post Office at 3 o'clock, October 15. This letter, in the normal course, should have reached Webb by 9 o'clock the following morning. Unknown to either party the airplane carrying the mail was delayed, and Cushing' letter did not reach Webb until 12 o'clock, October 16. In the meantime Webb had sold the stock at 11 o'clock, October 16. Cushing brings suit against Webb for breach of contract. Can he recover? Explain.

6. Archie Goodwin signed a purchase order for a new car to be sold by Wolf Motors. The purchase order stated that $800 would be deducted from the price as a trade-in allowance on his old car. When he delivered the old car, Rex Stout, Wolf's sales manager, told him that a mistake had been made and that the car was only worth $600. Stout stated that Wolf Motors would not go though with the deal unless Goodwin agreed to this reduction. Goodwin sued. How should this come out?

7. When Thurio decided to remodel his den he asked for bids from several woodworkers before selecting Lance Speed. Thurio sent Speed a letter containing the news and added, "If you agree to do the job under the quoted terms, start work immediately."

a) Does the acceptance occur when Speed begins work or is something further required? Is UCC §2-206(2) applicable here?

b) Speed sent no formal reply to Thurio. Instead on Monday he phoned the lumberyard with an order for wood that was identical to his usual weekly order. Nonetheless, Speed will testify that he ordered this wood for Thurio's job, and that he always orders the same amount of wood each week planning on getting enough work that week to justify the order (he is a very popular carpenter).

On Tuesday morning, in contemplation of the Thurio project, he sharpened his tools. At one o'clock in the afternoon, he got out his plans of the project and began making detailed notes.

Assume that Thurio changes his mind late Monday night and decides to scrap the remodeling. If he phones a revocation of his offer, at what moment will it come too late? That is which, if any, of Speed's actions was sufficient as an acceptance?

8. In the beginning of their commerce, the Mikado Manufacturing Company and the Ruddigore Retailer had done business on a formal basis agreeing among other things that all items were delivered for immediate purchase at the invoice price. Eventually the

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parties stopped using formal contracts. A five-year period of extensive dealings was followed by a slack period of one year in which they had no dealings. Then suddenly, Mikado Manufacturing sent Ruddigore a shipment of its latest product line along with a bill for $8,000. If Ruddigore objects immediately, must it pay? What if it says nothing, but one week later sends Mikado Manufacturing a letter objecting to the shipment? Suppose instead that Ruddigore says nothing, but immediately resells the goods to another company. Is this an acceptance?

9. Reginald Bunthorne was considerably annoyed to receive in the mail a copy of a new magazine Country Music Today. He liked only classical music. The cover letter with the magazine stated that he was being sent a 12-month subscription for only $18, and that if he didn't want this fabulous limited offer he should return the enclosed card ("Please attach postage, the post office will not deliver unstamped letter," he was told by the envelope). Bunthorne threw the magazine away after a hurried reading confirmed his worst fears. He threw eleven more issues away too before the bill for $18 arrived. He then threw it away, and eventually the magazine threatened suit. At a cocktail party, Bunthorne asks you for a free bit of legal advice about his contractual liability.

10. Hannibal Hamlin ran a business concern that produced cheap cigars. One day he received in the mail the following purchase order:

August 18 Dear Mr. Hamlin:

I hereby offer to purchase 42 cartons of your West Coast cigars at $200 a carton, shipment to be made F.O.B. truck your plant by September 25th. If acceptable, please write me immediately.

/s/ Thomas R. Marshall

Now read UCC §2-206 and decide which of the following responses create a contract.

a) Hamlin telephoned Marshall and said, "I accept". b) Hamlin telegraphed Marshall with the same message. c) Hamlin shipped the cigars on August 15th without prior

agreement, though he immediately sent Marshall a telegram notifying him of the shipment (see UCC §2-504). If the cigars are defective (they explode, say, or are infected with a pesticide), can Hamlin escape liability by arguing in this way: the buyer only offered to buy a product that was usable as a cigar, but the cigars I sent did not conform to this offer so no "acceptance" arose and there is no "contract" between us?

d) You are Hamlin's attorney and he phones you with this dilemma: Marshall's letter asked for "West Coast cigars," but Hamlin is all out of that brand. He has a slightly different brand on hand ("East Coast") and he would be willing to sell them for the price Marshall quoted, but he cannot get in touch with Marshall to get approval of the change. If he ships the goods,

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will he be in breach? Is there any language he should add to the invoice or cover letter to protect himself? See UCC §2-206(1)(b). Was this a request for "prompt shipment"?

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LGST 101 PROBLEMS:

REVOCATION OF OFFER

1. Hoover Motor Express Company sent a written offer to purchase certain real estate to Clements Paper Company. Prior to accepting the offer, the vice-president of Clements phoned Mr. Hoover to discuss some details of the transaction. He was very surprised to hear Mr. Hoover say, "Well, I don't know if we are ready. We have not decided; we might not want to go through with it." Clements's VP wrote Hoover Motor and accepted the offer as soon as he hung up the phone. Hoover Motor responded that the acceptance came after the revocation and was therefore too late. Who prevails? Is it good policy to hold for the offeror here?

2. A says to B., "I will give you $100 if you walk across the Brooklyn Bridge." B starts to walk across the Brooklyn Bridge and has gone about one-half the way across. At that moment A overtakes B and says to him, "I withdraw my offer." Has B them any rights against A? At what moment will B have made an "acceptance"? Is it also right to use that as the moment that terminates A's power of revocation?

3. Three Pigs Restaurant hired Wolf Construction Company to put a new roof on the building, agreeing to pay Wolf $4,000 "on completion." Wolf quit the job when it was half-way done, leaving Three Pigs with a mess to clean up (a second contractor charged $5,000 for finishing the job). Three Pigs sued Wolf for its damages. Can Wolf defend by arguing that it had never made an acceptance? What, if any, is the moment of acceptance here?

4. Pecos Bill wanted to buy some logging equipment owned by Paul Bunyan, and they negotiated for some time. Finally Paul submitted a proposal to Bill stating, "I hereby give you the option to purchase this equipment for $12,000, the option to expire on Friday at noon unless exercised." Bill paid nothing for the option. On Friday at 11:00 a.m. he showed up at Paul's office but before he could tender the money, Paul said, "I revoke."

a) At common law, who prevails? What should Bill have done? b) Suppose that Paul Bunyan is a logger but that he does not

normally sell logging equipment. If the UCC applies, does §2-205 (the "Firm Offer Rule") change the result?

c) Assume that the Uniform Commercial Code applies to this problem and that Paul Bunyan, a logger, is selling logs to Pecos Bill. If he makes the same written offer to Bill, who again pays nothing for the option, could Paul revoke prior to Friday at noon?

d) If the offer stated that it would be held open for six months, would Paul be bound for that entire period?

5. Newman-Money Department Store wanted to buy 500 pairs of rainboots for a special sale. Newman-Money's buyer phoned Shoe

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World, a manufacturer, and asked for a quotation. Shoe World's sales manager said, "We will sell you the 500 pairs for $10,000 and guarantee that we will hold this offer open until next Monday." Shortly after the phone call ended, Shoe World learned it could sell the boots elsewhere at a greater profit. It phones you, its attorney, and asks if it can revoke its offer to Newman-Money. Look at UCC §2-205 and decide.

6. Alphonse and Gaston met on the street one day. Alphonse said, "I have long wanted to buy the painting you have hanging in your dining room. I offer you $800 for it." Gaston replied, "Well, I'm not sure I want to sell it. I'm very fond of that painting." The conversation drifted on to other matters, and eventually they shook hands and parted. The next day Gaston decided that he wasn't as fond of the painting as he was of having $800 so he phoned Alphonse and accepted the offer. The latter retorted that there was no deal and he refused to pay the $800. If Gaston sues, who should win here? If in the original conversation Alphonse had said, "I'll give you until tomorrow at noon to make up your mind," could Gaston have accepted the next day at 5:00 p.m.? At 1:00 p.m.? Would it make any difference if Alphonse were hard to find the next morning?

7. Zorba wrote Nikos and offered to be his guide for a summer tour of Greece, stating a price for his services and adding that he would leave this offer open until April 30. On April 9th, Nikos wrote back that he was "not interested," but the next day his plans changed and he decided to take the tour. He immediately wrote Zorba and accepted the offer. Zorba however was outraged by the first letter and he refused to act as Nikos's guide. Nikos consults you. Does he have a contract or not?

Would you answer change if Nikos had purchased an option that allowed him to retain Zorba's services at a fixed price until April 30?

If Nikos had replied that he would employ Zorba, but at a lower price than Zorba proposed, would this counteroffer also be a rejection and terminate his power of acceptance?

If Nikos responds that he is considering Zorba's offer, but in the meantime would like to propose that the tour include Turkey as well as Greece, with an appropriate adjustment in the price of Zorba's services, is this counteroffer also a rejection?

8. On March 1, 1972, the Clay Products Company wrote Potter offering to supply up to five million bricks at the rate of $28 per thousand, and expressly agreeing to keep the offer open until May 1. On April 1 the Clay Products Company wrote Potter withdrawing their proposition and he received this letter on April 2. On April 3 Potter wrote the Clay Products Company stating that he accepted their proposition and denouncing their attempt to withdraw the offer, inasmuch as they had given Potter two months in which to accept. When called upon to deliver the bricks, Clay Products Company refused to do so and Potter sued. Decide and explain.

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9. Well Oil Co. offered to sell Vincent a parcel of land in a distant state at a certain price. Vincent said he would like to examine the property to see if it was as represented. The Well Oil Co. agreed to give Vincent ten days to make the examination. Within the ten-day examination period and while Vincent was examining the property, Well Oil Co. advised him that it would sell the land only for an advanced price, which was considerably higher than the price mentioned. After making an examination at considerable expense Vincent decided to take the land on the terms first stated and notified Well Oil Co. within the ten-day period that he accepted those terms. The Well Oil Co. refused to convey the land. Vincent sued Well Oil Co. for damages. Can Vincent recover? Explain.

10. Without receiving any consideration from plaintiff, defendant delivered to plaintiff a memorandum signed by defendant in which he offered to sell plaintiff a described parcel of real estate and agreed to keep the offer open for two days. On the morning of the first day plaintiff decided to accept the offer, but did not at once signify his acceptance because he believed that he had the power to accept the following day. On the afternoon of the first day, plaintiff was informed by a trustworthy source that defendant had contracted to sell the property to a third party. This was true. Nevertheless, plaintiff located defendant early the second day and handed tom him a written acceptance of the offer. Defendant responded by stating that plaintiff was too late because he, defendant, already had sold the property. Plaintiff brought a bill in equity praying that defendant be required to perform the alleged contract and restrained from conveying the property to the third party to whom he had contracted to sell it. Decide and explain, stating the arguments that reasonably might be made by each of the parties.

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LGST 101 PROBLEMS:

REMEDIES

1. Siros owned a "Guarnerius", a rare violin made by Guarneri in 1705. He entered into a contract whereby he promised to sell and Lister promised to buy the instrument for $20,000. Lister subsequently refused, without legal cause, to abide by the contract. Siros set the violin up for sale at public auction and gave Lister due notice of this fact. Lister was also advised of Soros' intention to bid at the sale. The sale was properly advertised and fairly held and was well attended by collectors and musical authorities. Siros was himself the highest bidder, at $15,000. Siros then sued Lister to recover $5,000. Decide.

2. Maris Construction Co. agreed to build a house for Lee in accordance with certain specifications. The price stipulated was $45,000. The contract provided that the house was to be completed and ready for occupancy June 1, 1960. The construction company wrongfully refused to perform and repudiated the contract before anything was done thereunder. Lee, after some trouble, located another contractor who built the house, according to the same specifications, for $53,000. The house was built and completed on September 1, 1960. Lee then sued Maris Construction Co. •to recover damages for breach of contract. What is the measure of damages recoverable by Lee?

3. Osburn, who owned certain timber land, contracted to cut, peel, haul, and deliver all the hemlock bark upon his lands to the Elk Tanning Co., which owned a tannery in the vicinity. Subsequently Osburn attempted to sell the bark from his land elsewhere, and the Elk Tanning Company filed a bill in equity paying for specific performance, and alleging that it was necessary for them to have this bark for tanning, that the supply of such bark was limited, and that the loss of it would cause irreparable injury to the company, which had erected the tannery at great expense. The defendant, Osburn, objected that plaintiffs had an adequate remedy at law. Should a decree ordering specific performance issue?

4. Joseph and Pauline Shore conceived the idea of securing a concession to operate a drug store in Union Station, Washington, D.C. They approached Sixsmith with the proposition that he assist them in the venture. Sixsmith was to have a 60 percent interest in the enterprise while the interest of the Shores was to be 40 percent. If this lucrative concession were granted, a corporation was to be formed. After considerable difficulty the concession was granted and the Union Drug Company incorporated. Sixsmith refused to issue to the Shores their stock interest. They brought an action for specific performance. Sixsmith claimed that they should have sued for damages. Will the Shores be successful?

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5. Maluvius operated a grocery store in Glassboro, New Jersey, and sold to consumers throughout Glassboro. He sold the business to Bloomfield and agreed, as part of the consideration for the contract of sale, not to engage in the grocery business in Glassboro for five years. Two years later Maluvius opened in Glassboro a new grocery store in competition with Bloomfield, who sued to obtain an injunction against Maluvius. Will the injunction be granted?

6. Daroff and Vitullo of Philadelphia made a contract whereby Vitullo agreed to tailor a minimum of 1000 overcoats per week for a period of a year on specified terms and at certain prices, Vitullo agreeing that he would not do any tailoring work for any other person during the term of the agreement. Vitullo broke the agreement and entered into a contract to tailor garments for a competitor of Daroff. Daroff brought suit in equity to restrain Vitullo from tailoring garments for others during the term of the original contract. It appears that Vitullo possessed the only establishment in Philadelphia at this time capable of handling so large a contract. Is Daroff entitled to a decree restraining Vitullo?

7. Roderick Murgatoyd had always thought his family house was worth little because it was so old, and therefore he was surprised when Rose Maybud offered to buy it from him for $80,000. He signed the contract with her immediately. As he finished signing, he asked her why she was willing to pay so much for the property, and she replied, "Because it's worth twice the amount you have just sold it for, and I plan to retire on the profit I'll make when I resell." Astounded, he tore up the contract and told her that he was not going to sell her the property. When she sues, what damages should she ask for, considering that she never paid him a cent (though the property is worth $150,000)? Does the fact that she has paid nothing and has in no way relied on this contract furnish him with a defense?

8. Helen's Contracting agreed to build a huge horse for the town of Troy's annual pioneer parade. Helen agreed to build the horse for $24,000. It was going to cost Helen $20,000 to build the horse. After three months work and the expenditure of $15,000, the horse was three-fourths completed. On that date the town of Troy told Helen to stop construction on the horse. Troy had already paid Helen $5,000 but refused to pay any more. Helen can sell the horse for $2,000 salvage value. What is the loss in expectation value to Helen?

9. Rogette began drafting the fourteenth edition of her tour guide pursuant to an agreement with White Publishing. After Rogette was one quarter done, White repudiated the agreement. Rogette sued White for the amount of money she had expended on the book to the time of the repudiation. She also sued White for the "expectancy", that is, the total amount she expected she would have earned (royalties) on the book. White admits liability but alleges the damages should be measured either by

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the expectancy or the amount spent but should not include both. Rogette argues that she had suffered the loss of both elements of damages and should receive both. Who is right?

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LGST 101 PRoBLEMS:

LIMITATIONS ON REMEDIES

1. Bill Gilbert was offered $50,000 for his new play Engaged if he could get it to the producer, Dick Carte, by October 12. He finished writing the play on October 10, and called up a private courier. Overnight Delivery, Inc., telling the woman he talked to on the phone all of the above details. He ended the conversation saying, "I'll lose $50,000 if this package does not arrive by October 12." She told him not to worry. The Overnight Delivery courier picked up the package on October 11, and put it on board its airplane for delivery the next day. That night the plane crashed, and the package was never delivered. Gilbert's play was not produced, and he sued Overnight Delivery, Inc. for $50,000. Are either of the following defenses valid?

a) Mere knowledge of the possible damages flowing from the breach is not the same thing as an agreement to accept the liability for such damages. Before the liability attaches, there must be at least a tacit agreement under which the defendant assumes the risk of the consequential loss.

b) The plain crash was totally unforeseeable, so that Overnight Delivery is not liable for the consequential damages.

2. On graduating from law school, Andrew Advocate received a gift of $20,000 from his wealthy parents and used it to buy a sports car that he had long desired. The car proved to be a lemon; four times it stalled and stranded Andrew in dangerous situations. He took time off from his new job 18 times to take the car to and from the dealer's repair shop. Finally when it stalled for the fifth time and made him miss a court appearance, he parked the car at the dealership, and gave notice that he was revoking his acceptance. When the dealer ignored him, he sued, asking for a return of his purchase money plus consequential damages of $5,000 for "mental anguish". Is this last element of damages recoverable?

3. For the Cleveland World's Fair, Balloons of America had contracted with the government of Cuba to build a giant balloon in the shape of a cigar. It was halfway finished when Cuba decided to abandon a project. Balloons of America phones you, its attorney, and wants to know whether it should complete the cigar-shaped balloon (contract price: $13,000), or stop now (when it has expended only $8,000) and sell the partially completed balloon for its scrap value ($120). The cost of completion is $2,500 and the salvage value after completion is $1,000.

4. Hearing a report that Alice Chalk, a popular high school teacher, was a drug dealer on the side, the school's principal marched down to her classroom and fired Alice on the spot. Her horrified students' jaws dropped open when the principal accused her of selling drugs and ordered her from the building. Later

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that day, the principle learned that the report was false and he phoned Alice at home, apologizing, and offered her job back. She declined, and took a job as an evening waitress in an all-night diner. She also sued the school for wrongful termination. Is it a defense that she refused to return to her job? Is the salary she receives as a waitress a mitigating factor? What if she had accepted unemployment compensation?

6. Booth invented a certain rail cap, to be used by railroad companies along their rights of way. He contracted to supply the Lehigh Valley Railroad Company with a certain number of rails equipped with the above caps for $100,000. The Speyton-Day Mill Company, knowing of Booth's contract with the railroad, agreed to manufacture the caps for Booth for $10,000. The mill in which the caps were to be made burned. Booth could have obtained them elsewhere at a cost of $12,000, but did not. As a result he lost a $5,000 profit on his Lehigh Valley contract. In an action by Booth against the Mill Company how much, if anything, will Booth recover?

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PRACTICE PROBLEMS-Legal Studies 101

Jack and Jill have done business together for years. Jill is a professional landscaper and Jack sells lawn and garden tools. One day Old King Cole put the following advertisement in the Nursery Rhyme News: "Attention! I will pay $100,000 to the first person able to make flowers grow on the shady side of my hill. [After which was a description of the location of the hill.]"

Jill saw the ad and immediately remembered that Jack sells hybrid tulips that require no sunlight. Jack is the only dealer in Nurseryland that sells these tulips. Jill rushed over to Jack's store. When she got there Jack was helping other customers but Jill saw the hybrid tulips. She left Jack the following note: "Dear Jack: Here's $20; I took two dozen hybrid tulips but I need 2 dozen more. Please get them for me. I will pay you the usual $10 a dozen. Thanks, Jill."

Boy Blue saw the same ad in the newspaper. He goes to Jack's store that afternoon, tells him about the ad and asks if Jack has any flowers that he could use. Jack remembers his tulips. When he goes to get the tulips he sees Jills note. He reads it and puts it in his pocket. Jack tells Boy Blue that he is out of the tulips right now but is expecting another shipment tonight. "Great" says Boy Blue. I'll pay you $20 a dozen for 2 dozen. "Okay" says Jack.

The shipment comes but it is only 2 dozen tulips.

1. Assume Jack sells the tulips to Jill. The only other tulips are in Sesame Street and they cost $30 a dozen plus transportation. Can Boy Blue sue Jack for breach of contract. If so, what are his damages?

2. Assume Jack sells the tulips to Boy Blue. Furthermore assume that Boy Blue won the money because he was the first to make flowers grow on the hill. Can Jill sue Jack? If so, what are her damages? Does Jack have any defenses?

3. Assume Jill finds out about the tulip delivery before Jack sells them to Boy Blue. What factors are important in her request for specific performance.

4. Assume Jack sells the flowers to Jill. Jill shows up at Old King Cole's hill ready to plant. If King Cole says he was only kidding make a case for Jill to sue for breach of contract.

5. Again Jack sell tulips to Jill. King Cole's horses and men keep Jill away from the hill so that she cannot plant the flowers. In defense of the breach of contract suit Jill brings against the King he states that this was a unilateral contract that could only be accepted by performance. Analyze the strength of this argument.

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