STMU Law, Exam Bank, Contracts, Kastely, Answer Key

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To: Contracts Students Fr: Amy Kastely Re: Examination answers on Reserve in the Library As you review these examinations in comparison to your answer, look especially at the organization of these answers and the number of issues and sub-issues identified with or in statemçnts of applicable doctrine and arguments. This is the significant difference among answers. Note: the fact that three of these 4 are typed is irrelevant. Over the past five years, the number of “A” papers written by those students who type and those who handwrite their answers is almost equal. Before that, most “A”s were hand~written, but that is just because at that time, most students handwrote their answers. Each of you can write an “A” answer. I recommend writing an “A” answer out, even if you must have another person’s answer in front of you as you write. The process of writing will give you a sense of the thoroughness with which you should study each week of the semester and the detail you should write in your examination answer. Dare to do well!!

Transcript of STMU Law, Exam Bank, Contracts, Kastely, Answer Key

Page 1: STMU Law, Exam Bank, Contracts, Kastely, Answer Key

To: Contracts StudentsFr: Amy KastelyRe: Examination answers on Reserve in the Library

As you review these examinations in comparison to your answer, look especially atthe organization of these answers and the number of issues and sub-issues identifiedwith or in statemçnts of applicable doctrine and arguments. This is the significantdifference among answers.

Note: the fact that three of these 4 are typed is irrelevant. Over the past five years,the number of “A” papers written by those students who type and those who handwritetheir answers is almost equal. Before that, most “A”s were hand~written,but that is justbecause at that time, most students handwrote their answers.

Each of you can write an “A” answer. I recommend writing an “A” answer out, evenif you must have another person’s answer in front of you as you write. The process ofwriting will give you a sense of the thoroughness with which you should study eachweek of the semester and the detail you should write in your examination answer.

Dare to do well!!

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q

ID: -- — Contracts Section B Kastely

~nstructor: Kasi~iyExam Name: Contracts Section B

Grade:

Page 1 of 6Exam taken with SofTest v7,5

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Short Answer:

1) Thedoctrineregardingnominal considerationis an exceptionto thegeneralrulethat courtswill not look into theadequacyof consideration.If the considerationseemsto beof a naturethat thepartiesaretrying to makesomethingappearasconsiderationwhen in fact it is not (e.g.exchanging$1 for severalthousanddollarsworth of a product),thena courtwill hold thatconsiderationdid not exist.

2) Thedoctrineof misunderstandingmayhold that a contractdoesnot exist if both parties’interpretationof a materialterm is eitherobjectivelycorrector incorrect,henceit is giving /deferenceto what the partiesactuallythoughta termmeant(i.e. their subjectiveunderstanding).

3) A promisesB to reducetheamountof a mortgage,knowing that C will give B a secondloan //

in reliandeon this promise. A hasa binding promisewith C becausehe reasonablyrelied on VA’s promisein decidingwhetheror not to approvethe loan to B.

4) No, becauseadvertisementsor priceslisted in a catalogue~orpricequotesaregenerallynotheldto bean offer unlessthe partyclearly intendedit to be so, herePepsiclearly did not intenditto bean offer and it wasclearly madein jest.

5) If somebodycaresfor anotherperson’schild without thatpersonrequestingso,andthepersonlaterpromisesto personwho had his child caredfor later promisesto pay for theservicesrendered.In sucha situationtheconsiderationwasnot ‘bargainedfor” but maystill b~>enforceableunderSection86.

6) In an implied in fact contractthereis an actualcontractbetweenthepartiesthat can beimplied by theparties’actions,e.g. if someone’ssoncontractswith a mechanicto havehisparent’scarfixed, thenthereis an implied in factcontractbetweenthemechanicand theparent.With an implied in law contractthecourtis doing theimplying, thesetypesof contractstypically dealwith theideaof restitution andconceptof unjustenrichmentin which a contractdoesnot existbut a court finds that oneparty hasbeenunjustlyenrichedand sotheotherpartyshould becompensated,e.g. if someonefinds anotherpersonshorseand takescareof it for aJcertainamountof timethentheotherparty maybe requiredto providereasonablecompensationeventhougha promisedid not actuallyexist.

7) Employerhasmadeanoffer for employment,andcanrevokethat offer at any time despite Vtheemployeebeginningthe performance.

8) Possibly,if it canbe foundthat the lawyerhasknowledgeor skill in thedealingsof suchgoods,but likely the lawyerwill not be heldto bea merchant.

9) Somecourtshaveheldthat this indicatesan exclusivemodeof acceptance,but the recenttrendhasbeento allow any reasonableexpressionof acceptanceto constitutea validacceptancein sucha case,unlessif thewriting unambiguouslysaysthat it mustbe signed.

10) An offer canbe terminatedthroughlapseof time, thedeathof the offeror, arejectionlcounterofferof theofferee,or a revocationby theofferor.

11) Therule of Section45 contemplatesa situationwherethecontractcan only beaccepted /throughperformanceandthe offereehasbegunperformance,hencea subordinatecontractissaidto existwheretheofferorpromisesnot to revokeif theoffereepromisesto try; while the

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rule in Qç~~nendealswith a situationwheretheofferor maynot revokean offer if heshouldreasonablyexpectthattheoffereewill rely upon anddoesnot necessarilyrequirethat theoffereehaveenteredinto anysort of unilateral contractasin section45.

Long Question1:

Will Martin havea claim underAnnie’sfirst letter

In orderfor Annie’s offer in her first letterto bea bargaincontracttheremustbe anagreement(mutualassent)andbargainedfor consideration.An agreementwould requirethatAnnie madeanoffer and Martin acceptedthe offer.

Thecourtwill look at thewordsofthe letter, thedetailsin theletter, thenumberof.peopleit wassentto, and any sort of custombetweenthepartiesto determineif thiswasanoffer. Annie’s letterofferedto allow Martin to live in thehouseif he would do somechoresandkeephercompany, Theletteralso statedthat Martin would becaredfor after herdeath,but didnot provideanyfurtherdetailsasto this matter. In this caseit seemathatAnnie’sletterwouldbe consideredan offer to Martin to comelive with her if he would helpher out, but it doesnotseemto be an offer to takecareof Martin afterherdeathif hedoesgo oUt tO live with her. Anargumentfor thetwo brotherswould bethat thedetailswerenotspelledbut asto what exactlyshemeantby taking careof Martin afterherdeath. Martin would be ableto respondthattherewasa clearintentthathewould be takencareof afterAnnie’s deathasshownby thewordsofhe would “of course”bewell providedfor.

Thebrotherscould respondby sayingthattheoffe as oo indefi d did not sayexactlywhatwasmeantby providing for Martin afterherdeath. Courtstraditionally haveheldthat thecontractwould be invalid for sucha reason,but the moderntrendhasbeenthatcourtswill fashiona remedyfor the partiesif theyareableto do soand if thepartiesintendedto bebound by thecontract, In this casethe partiesclearlyintendedthatAnnie would provideforMartin afterhis deathif hewould performher requests,andthesubsequentletterwritten byAnnie may be usedby thecourt to fashiona remedy.

In orderfor theacceptanceto be valid it mustbemadein a reasonablemannerandthecontentmustalsobe madeaccordingto therequestof thepromisor. Theacceptancebysendinga letterwasmadein a reasonablemanner,but theremaybean issueregardingwhetherhe actuallyacceptedheroffer to carefor him afterherdeathif hewentto live with her.However,Martin could saythat by subsequentlyperformingthedutiesin theoffer by Annie (i.e.caringfor heranddoing thechores),that heclearly intendedto accepttheoffer on theterms.A courtwould likely hold that Martin acceptedAnnie’s offer to live with her.

Thesecondmain issuein disputeis if thereis a bargainedfor considerationpresenthere. Considerationis presentif thereis a return promiseor performancemadeby the —

promisee. If the courtdecidesthat therewas not a mutualagreementsayingthat Martin wouldbecaredfor in exchangefor his coming to live with herthentheconsiderationpointwill beirrelevantbecausea bargainedfor exchangewould not exist. However,assumingthat thecourtfinds thattherewasa mutualagreementthecourtwill needto decideif considerationexisted. Courtswill oftendistinguishconsiderationfrom a gift with a conditionattachedto it, butasa generalrule somethingwill look morelike consläëi[ion ittelieltiepromisor, thoughabenefit is not absolutelynecessary.In orderfor theconsideration’ffitë”bargainedfor the returnpromiseor performancemustbe soughtby thepromisorin exchangefor his promiseand mustbe give by the promiseein exchangefor that promise. In theKirksey casea woman’sbrotherinlaw offeredsomeland to herif shedecidedto move out there,and thecourtheld that this wassimply a gratuitousexchangeandwasnot supportedby considerationbecausethewomandidnot haveto refrainfrom doing anything shewasentitled to door to benefitthepromisor in any

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way. The case at hand seeins slightly different from the Kirksey case because Annie ispromisingto carefor Martin afterhis death,but sheis alsoseekingthat he provideher with V Kcompanionshipandthat he~erformcertainchoresaroundthe housein exchangefor herpromiseto providefor him afterhis death. At first glancethegift to carefor Martin afterhisdeathdoesnot seemto besupportedby any consideration,but it may be argued that Anniewas indeedseekinga companionfor theremainingyearsof her life and did in fact receivethisbenefitwhen Martin wentto live with her, andthat to induceMartin to agreeto comelive withhershesaidshewould carefor him after his death. However, an argumentfor thebrotherswould bewhetherMartin assistedAnnie in orderto receivethe inheritanceor whetherhe did itoutof love andaffection is a different issue,and if a courtfinds that Martin’s returnpromisewasnot madein contemplationof receiving theinheritancethenconsiderationwill likely be foundnot to exist. The brother’skill alsopoint out that Martin wasneveractuallyobligatedto carefor.her,and thisseemsto reinforcetheargumentthat he went to live with his auntout of affectionratherthanasan inducementto receivethe inheritance. Thecorrectdecisionfor this issuedoesnot seemto beclearfor eitherside. 1

If thecourtdoesnot find thata bargainedfor exchangeexistedwith regardto thefirsletter then Martin may havea claim underSection90. Martin could arguethatAnnieshouldreasonablyhaveexpectedthat her offer to providehim with housingwould inducehimloquit”his job, which he couldhaveretired from with a good pension,andthento subsequentlygo livewith her Martin would arguethat his actionsin relianceon this promisewerereasonablebecausehe could not havecompliedwith her tequestwithout actuallyquittin~hi~job Acounterargumentfor thebrotherswould be that eventhoughAnnie did promiseto carefbr him..afterhis deathif he promised to live with her that his actions to quit his job with only a few yearSleft to retirementwereunreasonable.Theywould arguethata reliancedid not exist,but ratherMartin’s actionsweredoneout of a senseof whathe thoughtwasthemoralthing to do. Thesecondargumentthebrotherscould usewould be to saythat the promissoryestc-ppelclaim is ~ jtoo indefinite to beenforcedbecauseonceagaintheletteronly providedthat he would becared)fl~for and did not stateexactlywhatwasmeantby this, Courtsaresplit overthis issue,but themoderntrendhasbeento hold that a promissoryestoppelclaim will not fail for lackof 7indefiniteness.Additionally, in this casethecourthasthe subsequentletterwritten by Annie touseasa guideasto her intentions.

Will Martin behavea claim underAnnie’s secondletterAlso at issueis thenatureof thenotethat Annie wrote to Martin. Martin likely would not

haveanargumentundera theoryof a bargainedfor exchangeor of promissoryestoppelregardingthesecondnote. However~Martin mayhavean argumentregardingthe promisemadein thesecondletterunderSection86 of the Restatementwhich will enforcea promiseif itis madein recognitionof a part benefit. In this caseMartin wasthecompanionof Annie forseveralyearswhile alsoperforming severalchoresfor her, essentiallytaking careof all her Vj”needs.The brother’smayattemptto arguethat its valueis disproportionateto its benefit:Theywould saythata houseand hundredthousanddollarsis not equalto benefitsthat Martinprovidedto Annie overtheyears. Martin maythenarguethat it is not possibleto put a valueon /thecompanionshipthat heprovidedto Annie, andthat thehouseandhundredthousandweremadenot only in recognitionof thechoreshe performedwhile living with her but alsofor thecompanyhe providedto her, andcould pointto thesecondletterexpressingthe gratitudeby 7Annie for all he haddonefor her. The brotherswould onceagainthat the houseandthemoneyweresimply a gift, and areoutsidethescopeof Section86becauseAnnie hasin noway beenunjustly enrichedby Martin’s services.It seems close if a court will hold that the court will hold that Martin should not be entitled to the _—

full amountthatAnnie gaveto him underthe theoryof a promisemadein recognitionof a pastbenefit.

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Long Question2:

A contractwill exist betweenthe Suzanna and Ben if there was an agreement (mutualassent)and b.argainedfor consideration.Themain issueseemsto be if therewasanagreement,which would requirean offer and acceptanceto be present.

Is Suzanna’afirst letteran offer:

In order to determine if Suzanna’s first letter is an offer a court will look to see if therewasa presentwillingnesson thepartof the offeror to enterin to a contract. Suzannawouldpoint to severalitems in theletter. First, thewording clearly indicatesthat Suzannais willing toenterinto a contractasindicatedby thewords“we are making....” Second, the letter clearlystateswhatarethematerialtermsof theintroductoryoffer, i.e. thepriceandthequantity, andtheshippingresponsibility. Ben would thenarguethat themailing wassentto severaldifferentretailers,making it look morelike anadvertisementand lesslike an offer. Suzannawouldarguethat althoughit wasmadetc 650 stores,thatthis wasnot a massad campaignbut rather—wasonly madeto a selectgroupof carefully chosenretailers. Suzannacould alsopointto thefact thatthelettersaidthat it would onlybeopenfor thirty days,hencemakingltlookmorelikean offer. All of theseargumentswill haveto beexaminedfrom theperspectiveof a reasonablepersonin the positionof theofferee,i.e. howwould a reasonablepersoninterpretthecommunicationscontainedin the letter. This issueis close,andthe decisionof thecourtmayturn on the fact that it was sent to several hundred retailers.

If Suzanna’sfirst letter is foundto bean offer thenthenext issuewill be if Ben’s lettermailed on June12 wasanacceptance.Suzannadid not specifyan exclusivemeansofacceptingtheoffer, so any reasonablemeanswill be sufficient. Themain issueis if thecontentof thelettersentby Ben is acceptable.Courtshavetraditionally requiredthat the acceptancebea “mirror image”of theoffer made. However,courtshaverecentlyfoundwaysto getaroundthis by holding certainadditional termsinsignificant or finding that theyare implied in thecontract. Additionally, this casedealswith a situationfor thesaleof goodsbetweenmerchants “3so it is likely to fall undertheprovisionsof the UCC. Section2-207ofthe UCC holdsthat acontractwill not fail if additionaltermsareadded4~at~o~nq~~eñaUy esthecpQtEaQt. In thiscaseBen would arguethat theacceptanceis not valid becauseit requests400 sets,while the ~,,

original offer was for only 100 sets. Suzannawould respondthat her offer didnotlimit the ‘ 0

amountto 100, but ratherthat any quantity consistentwith thepricewould havebeenacceptable.Additionally, Ben would arguethat thetermsof his letterstatedthat Suzannawould pay for theshipping costs. Suzannawould arguethat underSection207 courtshavedealtwith different termsby employing the“knock out” rule, andthustheterm regardingshippingwilftë’iOffioved if thecourtbelievesthat both partiesintendedto contract. FinallY>,...Ben would saythat theacceptancewasmadeconditionalon assentto theadditionalterm,namelytherequestthat theybe deliveredby mid-July. Suzannawould counterarguethat it vwas not unambiguouslymadeconditionalon acceptanceto this term,andthat this termreallywas not a materialissuerelating to thecompletionof thecontract.

if Suzanna’afirst letteris not an offer:

In this situationBen’sletter mailedon June12 would likely be foundto bean offerbecauseit containssufficient detail, is sentto one person,andthewording indicatesBen’swillingnessto enterinto thecontract, Ben would arguethat if it is foundto be an offer then theacceptancemailed by Suzannaon June17 is not valid for severalreasons.Ben could firstarguethat theoffer expresslysaysthat they are only willing to agreeif theycould be received

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by mid-July. He would saythat Suzanna’ssubsequentletterwasa rejectionanda counterofferbecauseit saidthat shewould not beableto makethe entireshipmentby therequesteddeadline. Suzannawould arguethat underthe UCC section2-207anexpressionofacceptancewill not fail eventhoughit statesdifferent termsfrom the offer. Underthemoderntrend, shewould saythat a courtwill likely knock out the different termsregardingtheshippingtimes and that a reasonabletimewould thenbe allowed. Ben would counterarguethat hegavea notification of theobjectionto thedifferent termson July 2. Suzannawould saythat thefax wasnot sentwithin a reasonabletime, andthat thereforethecontractwould still be valid. Inaddition, Ben mayhaveanargumentregardingtheadditionalcostsfor shipping includedinSuzanna’sletter, but thesewould likely be held to not be materialto thecontractand Ben didnot give notification of theobjection to the shippingcostswithin a reasonable;theseadditionaltermswould thereforebecomepartof the contract.

Ben would alsoarguethat Suzannaknewor shouldhaveknownthat therewasamisunderstandingasto a materialterms. if a court finds that Macanudocigarsreferstq thosemadein Jamaicabut that it couldalso referto thosemadein the Dominican Republicthen bothunderstandingswould be found to be objectivelycorrectand a contractwould not exist.However, in this casea courtwould likely find that Suzannaknewor should haveknownthatBen wasreferringto thecigarsmadein Jamaicabecausehewasclearaboutthis in his letter,and if a court finds this thenthe“snatch-up”will comeinto effect, This will requireSuzannatomeetthetermsof thecontractunderBen’s understanding,and if sheis not ableto shemaybeliable to Ben for breachof thecontract. A courtseemslikely to hold Suzanna’sacceptancewasnot valid.

Anotherissueis regardingtheshipmentof the100 Gold Box setssentby Suzanna.This would beconsidereda shipmentof nonconforminggoodsbecausetheywerenot thetypenor the quantity that Ben hadrequested.As such,theywould beconsideredanacceptanceofBen’s offer anda breachof the contract. However,if Suzanna’slettersentto Ben onJune17 isfound not to be a valid acôeptance,andis insteadheld to bea rejectionand a counteroffer,thena contractwould neverhaveexistedand the 100 Gold Box setswould simply beconsideredan offer. Suzannamaythenhaveanargumentthat Ben acceptedthe 100 Box Setsthrough his subsequentfax on July 2. Of course,onceagaintheideathat therewasa mutualmisunderstandingbetweenthepartiesandthat at this point Suzannashould haveknown of thisdueto thelettersentby Ben on June12 world be takeninto consideration,andhenceBencould will likely beableto returntheadditional 100 Box Setsaswell.Taking all this into consideration,Ben will likely not be boundto any termsof thecontract,andSuzannawill likely not beableto recoverfrom Ben.

END OF EXAM

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