Contract Law Sample
This is a sample of some of the questions you will see on the Contract Law section of the exam.
1.
Chrisby's, a famous auction house, held a well-advertised auction of goods from the estate of a former First Lady. One item was a faux pearl necklace with an estimated market value (absent its celebrity ownership) of $500. The bidding started at $10,000, due to the great public interest in any items owned by the former First Lady. After feverish bidding, the highest bid was $211,500, offered by Souvenir Hunter. Art, the auctioneer, asked, "Who will bid $212,000?" There was no answer, but his assistant handed Art a fax from Art's mother stating that she wished to purchase the necklace for $50,000. Souvenir Hunter has a right to the property at $211,500
A)
because the Uniform Commercial Code does not apply to auction sales.
B)
if Chrisby's announced before the sale that the auction was without reserve.
C)
if there are no higher bids, even if Art says he is withdrawing the necklace from sale.
D)
only if Art said "sold" and dropped the hammer after Souvenir Hunter's bid.
2.
Pigskin, Inc., a wholesale distributor of footballs, and the Hogs, a private college football team, entered into a written agreement in July whereby Pigskin agreed to supply footballs that met the sport's official specifications to the Hogs at a price of $50 per dozen in such quantities as the Hogs should order from time to time. Pigskin agreed to deliver the footballs within 15 days after each order. On August 16, the Hogs placed a written order with Pigskin for 20 dozen footballs at the price of $50 per dozen to be delivered by September 1. The order also contained a notation that the Hogs would take an additional 20 dozen footballs "if we can buy them for $40 per dozen." What is the nature of the contractual relationship between the Hogs and Pigskin as of September 1?
A)
There is no contractual relationship because the July agreement was unenforceable for lack of consideration.
B)
There is an enforceable contract for only 20 dozen footballs at $50 per dozen.
C)
There is an enforceable contract for 20 dozen footballs at $50 per dozen and an offer by the Hogs to purchase an additional 20 dozen at $40 per dozen.
D)
There is an enforceable contract for 40 dozen footballs at a price of $50 per dozen.
3.
Sue, a manufacturer of sewing machines, met Moe, a manufacturer of small motors, at a trade fair, where they generally discussed the possibility of doing business. She called him a week later, and their conversation was as follows: Sue: "I just received an order for 500 of my sewing machines, which require motors manufactured according to the specifications my assistant is faxing you right now. Can you quote me a price for making these motors after you review the specs?" Moe: "Okay, I have them now. Let's see. . . . I can ship them F.O.B. your factory in 30 days for a price of $25 each." Sue: "Please enter my order." Moe: "Consider it done." Which is true regarding the telephone conversation between Sue and Moe?
A)
Sue's first statement was an offer.
B)
Moe accepted Sue's offer when he said, "I can ship them F.O.B. your factory in 30 days for a price of $25 each."
C)
No contract was formed because there was no clear acceptance of Moe's offer.
D)
It is unnecessary to determine exactly when the parties reached agreement to find that a contract was concluded.
4.
Larry, doing business as Lawn Mower Man, is a distributor of lawn mowers to a number of retailers and other businesses. The majority of Larry's sales occur in the spring, and when summer arrives he begins to offer lower prices in order to reduce his inventory and make room for next year's stock. On June 30, he decided he needed to sell his remaining five commercial lawn tractors of the Power Lawn make, which had been priced at $1,200 each. He sent the following letter to the local Country Club, which uses Power Lawn mowers to keep its fairways in top condition: I have five Power Lawn lawn mowers remaining in this year's supply. I will sell them to you for $600 each if you want them. Think it over. I will hold this offer open for you until July 15. (Signed) Larry, Lawn Mower Man. Larry had not heard from Country Club by July 13, when another customer of Larry's, whose company tended the grounds of several large cemeteries, came into his shop and asked if Larry had any Power Lawn mowers left. Larry said he did, and sold him three of the lawn mowers. On July 14, Larry called the Country Club and said he had only two lawn mowers left. When he asked if the Club was still interested in these two, the Club's Manager demanded to purchase all five.
A)
An option contract was formed, giving Country Club the exclusive option to purchase the lawn mowers until July 15.
B)
The Country Club supplied consideration by thinking over Larry's offer.
C)
Larry's letter constituted a firm offer that could not be revoked before Country Club's acceptance, which occurred on July 14.
D)
An enforceable contract had been formed by Larry and Country Club before the sale to the other customer, and that sale constituted a breach of contract.
5.
If Country Club sends Larry a check for $600 stating thereon, "if you agree to accept this $600 as payment for two lawn mowers, we will not sue you for breach due to nondelivery of the other lawn mowers," and Larry cashes the check, the terms will
A)
be binding if Larry reasonably believed that Country Club had a cause of action against Larry.
B)
be binding if Country Club reasonably believed that Country Club had a cause of action against Larry.
C)
not be binding because the promise lacks consideration.
D)
not be binding due to the preexisting duty rule.
6.
Uncle Donald owns a lake-front estate known as Duckacre. His three nephews -- Huey, Duey, and Louie -- each own neighboring lots without access to the lake. All three have told Donald how much they like his property, but Huey had always felt he was Donald's favorite nephew and the property should be his. Donald met with Huey one day and told him he was thinking of selling the estate because he was tired of the upkeep and the property taxes. Donald stated that the price would be around $1 million dollars. Huey immediately indicated that he was interested in purchasing the property and called Donald a few days later to tell him that he had been preapproved for a mortgage and was ready to proceed at any time. Donald said he'd get back to him on it. Later that day Donald ran into Duey and Louie at the bank and told them that he was interested in selling his property for around $1 million. A week later, Donald sent identical letters individually addressed to Huey, Duey, and Louie without indicating that the same letter was being sent to each of them. The letter read as follows: As I have previously told you, I am planning to sell Duckacre. The sale is conditional upon my lawyer, Wordsmith, approving the deed and any note and mortgage. (s) Uncle Donald Louie immediately delivered a letter to Donald stating as follows: I accept your offer to purchase Duckacre for $1 million, 10% to be paid down in cash. I will close at your earliest convenience. (s) Louie One day after Louie's letter was received by Donald, Huey delivered a letter to Donald stating as follows: I reaffirm my previous offer to purchase Duckacre for $1 million, with a 20% cash down payment. I will close at your convenience. (s) Huey The next day, Donald, who had always been unpredictable and moody, sold the property to his own wealthy Uncle Scrooge for $1 million in cash.Which of the following would support Huey's contract claim if Huey sues Donald for breach of contract?
I. Huey had preliminary conversations with Donald regarding the property prior to his receipt of the letter from Donald.
II. Huey did not know at the time he received Donald's letter that similar letters were sent to Duey and Louie.
III. Donald sold the property to Scrooge.
A)
I only
B)
II only
C)
I and II
D)
I, II, and III
7.
Which of the following would be Donald's strongest defense to a breach of contract action by Huey?
A)
The fact that identical letters were sent to Duey and Louie indicates that Donald did not intend his letter to Huey to be an offer.
B)
Donald's letter to Huey and the others did not state explicitly or by reasonable implication that Huey could enter into a contract by manifesting acceptance.
C)
A binding contract between Donald and Huey could not occur until Wordsmith approved the deed and other legal documents.
D)
Louie's acceptance was prior to Huey's and terminated Huey's power to accept.
8.
Owen purchased a pure-bred Collie pup and named it Doggone. One day, Doggone disappeared. Owen placed an ad in a local newspaper stating as follows: "I will pay $400 to anyone who returns my Collie pup named Doggone." Ned, Owen's neighbor, spotted Doggone while walking in the park early the next morning, recognized the dog as Owen's and took him home at 7:30 a.m. Planning to call Owen just before Owen left for work at 8:00, Ned fixed himself a cup of coffee, sat down to read his morning paper, and saw Owen's advertisement about Doggone. Assuming that Owen's advertisement was an offer:
A)
Ned cannot recover the reward even if he returns Doggone because he did not have knowledge of the offer when he found the dog.
B)
Ned cannot recover the reward because Owen's promise was not represented by a signed writing.
C)
Ned has accepted the offer by finding Doggone and can recover the reward.
D)
Ned can recover the reward if he returns Doggone to Owen.
9.
Ned telephoned Owen as soon as Ned got home, before reading the advertisement. But before Ned could tell Owen about the dog, Owen said, "You must have seen my advertisement. I think I did a foolish thing in offering a reward for Doggone. Feeding and grooming him was costing me a fortune to begin with. I've changed my mind, and I'm going to cancel my offer by putting a new advertisement in the paper tomorrow." What is the state of the contractual relationship between Ned and Owen?
A)
The offer can be accepted by Ned until a revocation is published in the newspaper.
B)
Ned cannot accept the offer and collect the $400 because he knows of the intended revocation.
C)
Ned can collect the $400 because he had already accepted the offer.
D)
The offer has become irrevocable because Ned had begun to perform the requested act.
10.
On April 1, Alexandra mailed a letter to her friend Barnaby offering to sell Barnaby her Lamborghini automobile for $75,000. This letter was delivered to Barnaby on April 5. Barnaby replied by letter on April 7 that he accepted Alexandra's offer. In which case would Barnaby's letter operate as an acceptance?
A)
Barnaby's letter was lost by the U.S. Postal Service and never arrived.
B)
Barnaby misaddressed the letter, and as a result it was not delivered to Alexandra until April 15, by which time Barnaby knew Alexandra had sold the car to Christopher.
C)
Alexandra telephoned Barnaby on April 6 to tell him that her letter had been an April Fool's joke.
D)
Barnaby heard from a reliable third party on April 6 that Alexandra had sold the car to Christopher.
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