Exam 10: Contracts

A novation occurs when the parties to a contract agree to release one party from the contract and assign the duties to another party to form a new contract.

The basic elements of a contract are: offer, acceptance, fair value, lawful subject matter, and genuine consent.

Bob tells Charles and Fritz: "If either of you collect all the old bricks at the house on Main Street that has been torn down and deliver them to the new house I am going to build, I will pay you 10 cents per brick." Charles then spends three days collecting the bricks at the old house site and is about to deliver them to Bob's new building site when Bob drives by and tells him to forget it. Charles wants Bob to pay him.

When the U.S. government announced that no Americans could do business with Iraq, all existing contracts became unenforceable.

Fact Pattern 10-1 Lulene makes the best lemon meringue pies in Mississippi. So Ellen, who owns Ellen's Old Fashion Cafe, contracts with Lulene to buy 50 pies per week at the price of $5.00 per pie. Although Lulene took a class in business law, she forgot to get her agreement with Ellen in writing. Lulene and Ellen agreed during a chat. Lulene said: "I will supply you with lemon meringue pies for however long you want them at $5.00 per pie." Ellen said: "That's great, I'll take them." Both women were pleased. Soon Lulene had a problem. Between a hurricane in Florida and brush fires in California, the price of lemons increased by 200%. Now, instead of the $5.00 per pie price she intended to charge Ellen, she feels she must charge $7.00 per pie to make a little profit. Lulene calls Ellen with the bad news and Ellen has a fit. She tells Lulene that's too bad, but the deal is off. Lulene says, "That's what you think!" and goes to see Amanda, her attorney. -Refer to Fact Pattern 10-1. After Lulene offers to supply Ellen with pies for as long as she wants them, Ellen then says "I don't really like lemon meringue, how about blueberry?" The offer was terminated:

An accord is an agreement by parties to a contract to have a third party step in and fulfill part of the duties of a contract.

____ punish the wrongdoer by allowing the plaintiff to receive relief beyond compensatory or expectancy damages because of a tort.

A(n) ____ is when one party to the contract has the right to avoid a legal obligation.

Some courts use the notion of impracticability or frustration instead of impossibility.

In a novation, all relevant parties agree to discharge one party from the contract and create a new contract with another party who accepts responsibility for the discharged party's performance.

A contract made by a person with partial capacity is:

Tracy drinks beer at a bar, then goes to a car dealer and orders a new car. Tracy later claims he was drunk and should not have to buy the car. This:

Fernando owes Lucia $8,000. They both realize he is unlikely to be able to repay that much, so Lucia says: "Pay me $5,000 and we'll call it good." Fernando pays the $5,000. This settlement is called:

In a famous old case Sherwood v. Walker, Sherwood sold Walker a cow for $80 that both believed could not produce calves. When it was later discovered the cow could calve, which made her much more valuable, Sherwood sued to get the cow back. You would expect the Supreme Court of Michigan ruled for:

Rea says "Susan, I will sell you my car for $5,000." Susan says, "I'll give you $4,500." Rea says "No." Later Susan calls Rea and says, "I have $5,000 and want the car." Rea:

For a contract to be valid, its subject matter must be lawful. A contract is illegal and unenforceable if its subject matter:

Specific performance is a type of remedy employed by the courts where money damages would be inadequate.

A(n) ____ is an act, or a promise to act, or the refraining from an action, such as giving up a legal right.

The parol evidence rule holds that oral testimony by one party that contradicts a written contract cannot be accepted as evidence in court.

Expectancy damages are a measure of the profits you expected to earn if the other party to a contract had not breached the contract.