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!!
q
ID:
--
~nstructor:
Exam Name:
—
Contracts
Section
Kasi~iy
Contracts Section B
Grade:
Page 1 of 6
Exam taken with SofTest v7,5
B
Kastely
ID: ~
Contracts Section B
Kastely
Short Answer:
1) The doctrine regarding nominal consideration is an exception to the general rule that courts
will not look into the adequacy of consideration. If the consideration seems to be of a nature
that the parties are trying to make something appear as consideration when in fact it is not (e.g.
exchanging $1 for several thousand dollars worth of a product), then a court will hold that
consideration did not exist.
2) The doctrine of misunderstanding may hold that a contract does not exist if both parties’
interpretation of a material term is either objectively correct or incorrect, hence it is giving
/
deference to what the parties actually thought a term meant (i.e. their subjective
understanding).
3) A promises B to reduce the amount of a mortgage, knowing that C will give B a second loan
//
in reliande on this promise. A has a binding promise with C because he reasonably relied on
V
A’s promise in deciding whether or not to approve the loan to B.
4) No, because advertisements or prices listed in a catalogue~orprice quotes are generally not
held to be an offer unless the party clearly intended it to be so, here Pepsi clearly did not intend
itto be an offer and it was clearly made in jest.
5) If somebody cares for another person’s child without that person requesting so, and the
person later promises to person who had his child cared for later promises to pay for the
services rendered. In such a situation the consideration was not ‘bargained for” but may still b~>
enforceable under Section 86.
6) In an implied in fact contract there is an actual contract between the parties that can be
implied by the parties’ actions, e.g. if someone’s son contracts with a mechanic to have his
parent’s car fixed, then there is an implied in fact contract between the mechanic and the
parent. With an implied in law contract the court is doing the implying, these types of contracts
typically deal with the idea of restitution and concept of unjust enrichment in which a contract
does not exist but a court finds that one party has been unjustly enriched and so the other party
should be compensated, e.g. if someone finds another persons horse and takes care of it for aJ
certain amount of time then the other party may be required to provide reasonable
compensation even though a promise did not actually exist.
7) Employer has made an offer for employment, and can revoke that offer at any time despite
the employee beginning the performance.
V
8) Possibly, if it can be found that the lawyer has knowledge or skill in the dealings of such
goods, but likely the lawyer will not be held to be a merchant.
9) Some courts have held that this indicates an exclusive mode of acceptance, but the recent
trend has been to allow any reasonable expression of acceptance to constitute a valid
acceptance in such a case, unless if the writing unambiguously says that it must be signed.
10) An offer can be terminated through lapse of time, the death of the offeror, a
rejectionlcounteroffer of the offeree, or a revocation by the offeror.
11) The rule of Section 45 contemplates a situation where the contract can only be accepted
through performance and the offeree has begun performance, hence a subordinate contract is
said to exist where the offeror promises not to revoke if the offeree promises to try; while the
Page 2 of 6
/
ID: ~
Contracts Section B
Kastely
rule in Qç~~nen
deals with a situation where the offeror may not revoke an offer if he should
reasonably expect that the offeree will rely upon and does not necessarily require that the
offeree have entered into any sort of unilateral contract as in section 45.
Long Question 1:
Will Martin have a claim under Annie’s first letter
In order for Annie’s offer in her first letter to be a bargain contract there must be an
agreement (mutual assent) and bargained for consideration. An agreement would require that
Annie made an offer and Martin accepted the offer.
The court will look at the words ofthe letter, the details in the letter, the number of.
people it was sent to, and any sort of custom between the parties to determine if this was an
offer. Annie’s letter offered to allow Martin to live in the houseif he would do some chores and
keep her company, The letter also stated that Martin would be cared for after her death, but did
not provide any further details as to this matter. In this case it seemathatAnnie’sletter would
be considered an offer to Martin to come live with her if he would help her out, but it does not
seem to be an offer to take care of Martin after her death if he does go oUt tO live with her. An
argument for the two brothers would be that the details were notspelled but as to what exactly
she meant by taking care of Martin after her death. Martin would be able to respond that there
was a clear intent that he would be taken care of after Annie’s death as shown by the words of
he would “of course” be well provided for.
The brothers could respond by saying that the offe as oo indefi
d did not say
exactly what was meant by providing for Martin after her death. Courts traditionally have held
that the contract would be invalid for such a reason, but the modern trend has been that courts
will fashion a remedy for the parties if they are able to do so and if the parties intended to be
bound by the contract, In this case the parties clearly intended that Annie would provide for
Martin after his death if he would perform her requests, and the subsequent letter written by
Annie may be used by the court to fashion a remedy.
In order for the acceptance to be valid it must be made in a reasonable manner and the
content must also be made according to the request of the promisor. The acceptance by
sending a letter was made in a reasonable manner, but there may be an issue regarding
whether he actually accepted her offer to care for him after her death if he went to live with her.
However, Martin could say that by subsequently performing the duties in the offer by Annie (i.e.
caring for her and doing the chores), that he clearly intended to accept the offer on the terms.
A court would likely hold that Martin accepted Annie’s offer to live with her.
The second main issue in dispute is if there is a bargained for consideration present
here. Consideration is present if there is a return promise or performance made by the —
promisee. If the court decides that there was not a mutual agreement saying that Martin would
be cared for in exchange for his coming to live with her then the consideration point will be
irrelevant because a bargained for exchange would not exist. However, assuming that the
court finds that there was a mutual agreement the court will need to decide if consideration
existed. Courts will often distinguish consideration from a gift with a condition attached to it, but
as a general rule something will look more like consläëi [ion ittelieltiepromisor, though a
benefit is not absolutely necessary. In order for the consideration’ffitë”bargained for the return
promise or performance must be sought by the promisor in exchange for his promise and must
be give by the promisee in exchange for that promise. In the Kirksey case a woman’s brother in
law offered some land to her if she decided to move out there, and the court held that this was
simply a gratuitous exchange and was not supported by consideration because the woman did
not have to refrain from doing anything she was entitled to do or to benefit the promisor in any
Page 3 of 6
ID: 6584
Contracts Section B
Kastely
way. The case at hand seeins slightly different from the Kirksey case because Annie is
promising to care for Martin after his death, but she is also seeking that he provide her with V K
companionship and that he ~erform certain chores around the house in exchange for her
promise to provide for him after his death. At first glance the gift to care for Martin after his
death does not seem to be supported by any consideration, but it may be argued that Annie
was indeed seeking a companion for the remaining years of her life and did in fact receive this
benefit when Martin went to live with her, and that to induce Martin to agree to come live with
her she said she would care for him after his death. However, an argument for the brothers
would be whether Martin assisted Annie in order to receive the inheritance or whether he did it
out of love and affection is a different issue, and if a court finds that Martin’s return promise was
not made in contemplation of receiving the inheritance then consideration will likely be found
not to exist. The brother’s kill also point out that Martin was never actually obligated to care for.
her, and this seems to reinforce the argument that he went to live with his aunt out of affection
rather than as an inducement to receive the inheritance. The correct decision for this issue
does not seem to be clear for either side.
1
If the court does not find that a bargained for exchange existed with regard to the firs
letter then Martin may have a claim under Section 90. Martin could argue that Annie should
reasonably have expected that her offer to provide him with housing would inducehimlo quit”
his job, which he could have retired from with a good pension, and then to subsequently go live
with her Martin would argue that his actions in reliance on this promise were reasonable
because he could not have complied with her tequest without actually quittin~hi~job A
counter argument for the brothers would be that even though Annie did promise to care fbr him..
after his death if he promised to live with her that his actions to quit his job with only a few yearS
left to retirement were unreasonable. They would argue that a reliance did not exist, but rather
Martin’s actions were done out of a sense of what he thought was the moral thing to do. The
second argument the brothers could use would be to say that the promissory estc-ppel claim is
j
too indefinite to be enforced because once again the letter only provided that he would be cared) fl~
for and did not state exactly what was meant by this, Courts are split over this issue, but the
modern trend has been to hold that a promissory estoppel claim will not fail for lack of
indefiniteness. Additionally, in this case the court has the subsequent letter written by Annie to
use as a guide as to her intentions.
~
7
Will Martin be have a claim under Annie’s second letter
Also at issue is the nature of the note that Annie wrote to Martin. Martin likely would not
have an argument under a theory of a bargained for exchange or of promissory estoppel
regarding the second note. However~Martin may have an argument regarding the promise
made in the second letter under Section 86 of the Restatement which will enforce a promise if it
is made in recognition of a part benefit. In this case Martin was the companion of Annie for
several years while also performing several chores for her, essentially taking care of all her
Vj”
needs. The brother’s may attempt to argue that its value is disproportionate to its benefit: They
would say that a house and hundred thousand dollars is not equal to benefits that Martin
provided to Annie over the years. Martin may then argue that it is not possible to put a value on /
the companionship that he provided to Annie, and that the house and hundred thousand were
made not only in recognition of the chores he performed while living with her but also for the
company he provided to her, and could point to the second letter expressing the gratitude by
Annie for all he had done for her. The brothers would once again that the house and the
money were simply a gift, and are outside the scope of Section 86 because Annie has in no
way been unjustly enriched by 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 amount that Annie gave to him under the theory of a promise made in recognition of a past
benefit.
7
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Page 4 of 6
ID:
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Contracts
Section B
Kastely
Long Question 2:
A contract will exist between the Suzanna and Ben if there was an agreement (mutual
assent) and b.argained for consideration. The main issue seems to be if there was an
agreement, which would require an offer and acceptance to be present.
Is Suzanna’a first letter an offer:
In order to determine if Suzanna’s first letter is an offer a court will look to see if there
was a present willingness on the part of the offeror to enter in to a contract. Suzanna would
point to several items in the letter. First, the wording clearly indicates that Suzanna is willing to
enter into a contract as indicated by the words “we are making....” Second, the letter clearly
states what are the material terms of the introductory offer, i.e. the price and the quantity, and
the shipping responsibility. Ben would then argue that the mailing was sent to several different
retailers, making it look more like an advertisement and less like an offer. Suzanna would
argue that although it was made tc 650 stores, that this was not a mass ad campaign but rather—
was only made to a select group of carefully chosen retailers. Suzanna could also point to the
fact that the letter said that it would onlybeopen for thirty days, hence makingltlookmore like
an offer. All of these arguments will have to be examined from the perspective of a reasonable
person in the position of the offeree, i.e. how would a reasonable person interpret the
communications contained in the letter. This issue is close, and the decision of the court may
turn on the fact that it was sent to several hundred retailers.
If Suzanna’s first letter is found to be an offer then the next issue will be if Ben’s letter
mailed on June 12 was an acceptance. Suzanna did not specify an exclusive means of
accepting the offer, so any reasonable means will be sufficient. The main issue is if the content
of the letter sent by Ben is acceptable. Courts have traditionally required that the acceptance
be a “mirror image” of the offer made. However, courts have recently found ways to get around
this by holding certain additional terms insignificant or finding that they are implied in the
contract. Additionally, this case deals with a situation for the sale of goods between merchants
so it is likely to fall under the provisions of the UCC. Section 2-207 ofthe UCC holds that a
contract will not fail if additional terms are added4~at~o~nq~
~eñaUy
esthe cpQtEaQt. In this
case Ben would argue that the acceptance is not valid because it requests 400 sets, while the ~,,
original offer was for only 100 sets. Suzanna would respond that her offer didnotlimit the
‘
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amount to 100, but rather that any quantity consistent with the price would have been
acceptable. Additionally, Ben would argue that the terms of his letter stated that Suzanna
would pay for the shipping costs. Suzanna would argue that under Section 207 courts have
dealt with different terms by employing the “knock out” rule, and thus the term regarding
shipping wilftë’iOffioved if the court believes that both parties intended to contract. FinallY>,...
Ben would say that the acceptance was made conditional on assent to the additional term,
namely the request that they be delivered by mid-July. Suzanna would counter argue that it v
was not unambiguously made conditional on acceptance to this term, and that this term really
was not a material issue relating to the completion of the contract.
if Suzanna’a first letter is not an offer:
In this situation Ben’s letter mailed on June 12 would likely be found to be an offer
because it contains sufficient detail, is sent to one person, and the wording indicates Ben’s
willingness to enter into the contract, Ben would argue that if it is found to be an offer then the
acceptance mailed by Suzanna on June 17 is not valid for several reasons. Ben could first
argue that the offer expressly says that they are only willing to agree if they could be received
Page 5 of 6
“3
ID:
.~
Contracts Section B
Kastely
by mid-July. He would say that Suzanna’s subsequent letter was a rejection and a counteroffer
because it said that she would not be able to make the entire shipment by the requested
deadline. Suzanna would argue that under the UCC section 2-207 an expression of
acceptance will not fail even though it states different terms from the offer. Under the modern
trend, she would say that a court will likely knock out the different terms regarding the shipping
times and that a reasonable time would then be allowed. Ben would counter argue that he
gave a notification of the objection to the different terms on July 2. Suzanna would say that the
fax was not sent within a reasonable time, and that therefore the contract would still be valid. In
addition, Ben may have an argument regarding the additional costs for shipping included in
Suzanna’s letter, but these would likely be held to not be material to the contract and Ben did
not give notification of the objection to the shipping costs within a reasonable; these additional
terms would therefore become part of the contract.
Ben would also argue that Suzanna knew or should have known that there was a
misunderstanding as to a material terms. if a court finds that Macanudo cigars refers tq those
made in Jamaica but that it could also refer to those made in the Dominican Republic then both
understandings would be found to be objectively correct and a contract would not exist.
However, in this case a court would likely find that Suzanna knew or should have known that
Ben was referring to the cigars made in Jamaica because he was clear about this in his letter,
and if a court finds this then the “snatch-up” will come into effect, This will require Suzanna to
meet the terms of the contract under Ben’s understanding, and if she is not able to she may be
liable to Ben for breach of the contract. A court seems likely to hold Suzanna’s acceptance was
not valid.
Another issue is regarding the shipment of the 100 Gold Box sets sent by Suzanna.
This would be considered a shipment of nonconforming goods because they were not the type
nor the quantity that Ben had requested. As such, they would be considered an acceptance of
Ben’s offer and a breach of the contract. However, if Suzanna’s letter sent to Ben on June 17 is
found not to be a valid acôeptance, and is instead held to be a rejection and a counteroffer,
then a contract would never have existed and the 100 Gold Box sets would simply be
considered an offer. Suzanna may then have an argument that Ben accepted the 100 Box Sets
through his subsequent fax on July 2. Of course, once again the idea that there was a mutual
misunderstanding between the parties and that at this point Suzanna should have known of this
due to the letter sent by Ben on June 12 world be taken into consideration, and hence Ben
could will likely be able to return the additional 100 Box Sets as well.
Taking all this into consideration, Ben will likely not be bound to any terms of the contract, and
Suzanna will likely not be able to recover from Ben.
END OF EXAM
Page6of6
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