Contract Formation And Enforcement

Judy Olsen, Kristy Johnston, and their mother, Joyce Johnston, owned seventy-eight acres of real estate property on Eagle Creek in Meagher County, Montana. When Joyce died, she left her interest in the property to Kristy. Kristy wrote to Judy, offering to buy Judy’s interest or to sell her own interest to Judy. The letter said to “please respond to Bruce Townsend.” In a letter to Kristy, not to Bruce, Judy accepted Kristy’s offer to sell her interest. By that time, however, Kristy had made the same offer to sell her interest to their brother Dave, and he had accepted. Did Judy and Kristy have an enforceable binding contract? Or did Kristy’s offer specifying one exclusive mode of acceptance mean that Judy’s reply was not effective?

WHAT IF THE FACTS WERE DIFFERENT? *. What if Kristy and Judy were visiting face-to-face and Kristy made the offer to sell her property to Judy? Dave overheard and chimed in, "I'll buy it!" before Judy could reply. Does Dave have a contract

You are a purchasing manager for a retailer of high-end kitchen products. You know that Malinox, Inc. is the best manufacturer of kitchen knives in the industry. Malinox brand kitchen knives would be an ideal complement to your store’s inventory, but you know that Malinox is selective with whom they sell their products. Discuss what is legally necessary to make a valid offer to Malinox. In doing so, discuss the advantages and disadvantages of making the offer as specific as possible.

Liz agrees to cook twenty dinners for Brian, and in exchange Brian will repair all of the plumbing in Liz’s house. Liz has offered legally: a. sufficient consideration, because Liz has promised something of value. b. insufficient consideration, because this kind of bargain is against public policy. c. insufficient consideration, because cooking twenty dinners is not worth as much as repairing all of the plumbing in Liz’s house. d. insufficient consideration, because there is a clear lack of any bargain.

Lila tells her friend Joanne that she will give her $*,* toward the purchase of a new car. Lila later changes her mind, and Joanne tells her that she will sue to enforce the contract. A court would likely find that this agreement is: a. enforceable because Lila made a promise to Joanne, which is the same as a contract. b. unenforceable because there is no bargained-for exchange. c. unenforceable because their agreement was not in writing. d. enforceable because the $*,* is the consideration for the agreement.

Jackie agrees to pay Ben $*,* if Ben agrees to not go skydiving for six months. After Ben avoids skydiving for six months, he asks Jackie for payment. Jackie declines to pay Ben the $*,*. The contract between Jackie and Ben: a. will not be enforced due to lack of consideration. b. will be enforced because Jackie had a preexisting duty to pay Ben. c. will not be enforced because skydiving is a dangerous activity and Ben benefits from the forbearance. d. will be enforced because Ben exercised forbearance, which is legally sufficient consideration.

Julia promises to give Mary a piece of original artwork worth $*,* in return for Mary’s stamp collection, which is worth $*. After the exchange, Julia decides that she does not think the bargain was fair and demands that Mary give her back the painting. A court will most likely: a. force Mary to return the painting, because the consideration was not legally sufficient. b. not interfere with the contract, because the consideration is legally sufficient. c. force Mary to return the painting because even though the consideration was legally sufficient, there was too great a discrepancy in the value of the goods for the exchange to be considered fair. d. force Mary to pay Julia $* to make the exchange fair.

Madeline signs a contract agreeing to sell Norman her brand-new Porsche * automobile for $*. It is possible that a court will: a. immediately reject the contract because there is no consideration. b. enforce the bargain as agreed because of the presence of consideration. c. enforce the bargain as agreed, and not look further into the details. d. look more closely at the bargain to determine whether fraud, duress, or undue influence was involved.

Les agrees to install a new hard drive and operating system in Marilee’s computer in exchange for four of her used textbooks. After he installs the hard drive, Les says he won’t install the operating system unless Marilee gives him two more books. What legal position are the parties in now? a. Marilee can sue for breach of contract, because Les had a preexisting duty to do all of the work. b. Les can receive the extra books in exchange for doing more work as he has given good and fair consideration in exchange. c. Marilee must give Les the additional books. d. Les will only get one more book, because two is too many more to be fair.

An inmate escapes from the county prison. There is a $* reward offered for any information leading to the capture of the inmate. The county sheriff sees the inmate at a local restaurant and calls the department headquarters before arresting the inmate. The sheriff: a. can expect to collect the $* because he called the department headquarters before arresting the inmate. b. can expect to collect the $* because he performed a civil service. c. cannot expect to collect the $* because he had a preexisting duty to arrest the inmate. d. cannot expect to collect the $* because of the doctrine of unforeseen difficulties.

Michael agrees to buy Randy’s wheelbarrow for $*. After the agreement is reached, but before performance begins, both Michael and Randy agree to terminate the contract. The effect of agreement to terminate is that: a. their contract is not cancelled due to the existence of a valid agreement. b. both Michael and Randy must still perform their obligations because they agreed to a contract. c. their contract is cancelled due to rescission. d. their contract is cancelled due to lack of consideration.

hane is the manager of the Twinkle Toy Store. Kate is his best employee. Shane tells Kate: “You’ve been doing a great job lately. If I like what you do over the next two months, I’ll give you a $*,* bonus.” This is: a. an accord and satisfaction. b. an illusory promise. c. a requirements contract. d. valid consideration.

Tom agrees to hire Dave as a consultant at a salary of $*,* a month. Tom reserves the right to cancel the contract at any time. Before Dave begins his consultant job, Tom cancels the contract with Dave and hires Stanley. Tom can: a. cancel the contract because of a preexisting duty. b. not cancel the contract because Tom and Dave have agreed on terms. c. cancel the contract because it is illusory. d. not cancel the contract because there is sufficient consideration.

Morgan signs an installment loan contract with her banker. The contract specifies that Morgan will pay *.*% interest every month on the borrowed amount of $*,* for two years. Both Morgan and the banker know the precise amount of the total obligation. This is an example of: a. liquidated debt. b. satisfaction. c. an accord. d. a covenant not to sue.

Carol Rogers, a local millionaire, promises to donate $*,* to the Springfield Humane Society. This money will be used to build a new animal hospital. Based on Carol’s promise, the society begins work on the hospital. Carol then backs out of her offer. a. Carol will suffer from a bad conscience, but not from any lawsuit. b. Carol can be sued for the money under a theory of promissory estoppel. c. Nothing can be done. Carol’s donation was a gift. Promised gifts do not have to be delivered. d. Carol has violated the terms of a quasi in rem contract.

Kenneth’s parents own a cattle ranch. When they became too elderly to run the ranch by themselves, Kenneth moved back to the ranch to help them. With his parents’ help and permission, Kenneth builds a house on the ranch. After he builds it, his parents refuse to deed him the land. Kenneth can sue his parents under the doctrine of: a. satisfaction. b. covenant not to sue. c. promissory estoppel. d. unfair accord.

Helping Hands, Inc., wants to repair its aging roof and hot water heater but lacks the funds to do so. Members of the charity publicize a call for donations to fund the necessary repairs. James is a long-time supporter and pledges $*,* to the charity for this purpose. James pledges because he believes in the mission of the organization. Relying on James’s pledge, the charity enters into construction and hiring contracts to begin work. When six months later Irene, the CEO of the charity, asks James for the donation, James declines to provide it. In this case, Helping Hands: a. can enforce James’s pledge because James and Helping Hands agreed on a gift. b. cannot enforce James’s pledge because it lacks sufficient consideration. c. can enforce James’s pledge on the grounds of promissory estoppel based on a charitable subscription. d. cannot enforce James’s pledge because the statute of limitations has expired.

Francisco is driving his car when he collides with Wyatt’s car. Francisco writes Wyatt a letter in which he offers to pay Wyatt $*,* if Wyatt will agree to forfeit all of his rights to pursue a lawsuit against Francisco for this accident. If Wyatt agrees and signs the letter, they will have a: a. release. b. concerted satisfaction. c. delimited accord. d. covenant not to sue.

Ben hired Lewis to drive his car in a race. Tuan, a friend of Lewis, promised to pay Lewis $*,* if he won the race. Lewis won the race, but Tuan refused to pay the $*,*. Tuan contended that no legally binding contract had been formed because he had received no consideration from Lewis for his promise to pay the $*,*. Lewis sued Tuan for breach of contract, arguing that winning the race was the consideration given in exchange for Tuan’s promise to pay the $*,*. What rule of law discussed in this chapter supports Tuan’s claim?