Contracts Keyed to Frierback
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A buyer signed a contract with a local car dealer, on January 1. The price of the car was $42,000, including options, license fees, taxes, and dealer preparation. The buyer gave a certified check for $4,000 to the car dealer as a deposit and was told by a salesman, “Delivery time varies, but it should take no longer than three months.” Later that day, as was its custom, the car dealer contracted to pay a car manufacturing company, $32,000 to procure the car it had promised to the buyer. The car manufacturer promised delivery on February 28.
On January 15, the president of the car manufacturing company, who was afraid to fly, died in a train crash en route to a race in Monaco. A public concern that the manufacturing company’s cars in production might decrease in quality due to the president’s death caused the demand for the cars to plummet. the buyer notified the car dealership that he wanted to cancel his order. The car dealership notified the car manufacturing company that it could not accept delivery of the car the buyer had ordered because of the buyer’s actions. The manufacturing company asserted an action against the buyer based on the buyer’s failure to honor his contract with the car dealership.
Which of the following assertions would most aid the buyer’s defense?CorrectIncorrect
An attorney invested his life savings in a new company that manufactured tests for AIDS. The contract stipulated that the attorney was to receive 49 percent of the company’s profit and provided, “This contract may not be assigned.” After producing the capital for the new company, the attorney had completed his performance, and he assigned all of his rights in the company to his grandmother.
A mechanic formed a partnership with a car designer. The contract provided that the mechanic would receive 49 percent of all winnings in exchange for providing the car designer with a customized racing car. The contract between the mechanic and the car designer provided, “Rights under this contract may not be assigned.” Two weeks after delivering the car and one day before its first race, the mechanic assigned all his rights in the car’s profits to his grandmother.
A runner ran ten miles every morning before he went to school. One day, he wrote the following: “I am going to be an Olympic marathon champion. I hereby assign to my grandmother all proceeds from any running shoe endorsement I might receive.” The runner gave this writing to her grandmother.
Which of the following grandmothers will be able to successfully enforce their assignment?CorrectIncorrect
An owner of a chain of supermarkets and an owner of a department store chain, agreed on a cooperative advertising program whereby both parties would share the costs of the campaign based on their respective average retail sales. They appointed an independent auditor to monitor their sales and bill them for their respective shares. The supermarket owner paid several bills without complaint, but then he said he had discovered an accounting error made by the auditor that had led him to pay a disproportionate amount. The supermarket owner asked the department store owner to refund the amount the auditor had caused him to overpay. The department store owner refused to give the supermarket owner a refund. The department store owner found it hard to believe that the auditor had erred.
The supermarket owner proposed a settlement to their dispute. The supermarket owner offered not to pursue his claim for the refund in exchange for the department store owner’s promise to pay the supermarket owner’s maintenance costs for the common areas of their shopping center for a two-year period. The department store owner said, “Okay, I’ll agree because you’re stubborn, but I still think that you’re wrong.”
Six months after the advertising agreement was signed, The department store owner’ department store in the mall experienced a sharp decline in sales. The department store owner closed the store to cut her losses. She managed to sublease the store to a tenant, who agreed in the sublease to maintain the common areas as per the supermarket-department store agreement. Shortly after the tenant subleased the department store owner’ store, he realized his sales were very low and moved the store to another shopping center. The supermarket store owner was forced to pay for maintaining the common areas.
If the court rules that the department-supermarket store maintenance agreement was an enforceable contract, will the supermarket owner be able to bring an action against the department store owner for the tenant’s refusal to maintain the common areas?CorrectIncorrect
A buyer and a seller orally agreed that the seller would sell his office building to the buyer for two million dollars. The seller agreed to send a check for one million dollars to a creditor to satisfy a debt owed to her by the seller. The buyer and the seller agreed that the title would pass immediately even though the agreement was not yet in writing.
The seller had the agreement typed a week later. He failed to include a clause in reference to the debt he had agreed to pay the creditor.
There was a typographical error in the printing of the contract that erroneously stated the sale price to be $1,500,000. Neither party noticed the error, nor questioned the omission of the payment to the creditor. Both the buyer and the seller signed the contract.
Which of the following will be the seller’s best argument in his defense?CorrectIncorrect
A seller sold a sixty-foot boat to a buyer pursuant to a signed contract. The contract provided that the buyer make sixty monthly payments of $20,000 starting January 1. On January 15 of the following year, reasonably fearing the buyer would lose his job and leave the country, the seller conveyed his rights under the contract to his neighbor for a lump sum. Neither party notified the buyer, who made six payments to the seller before learning that the neighbor had obtained the right to payment.
The buyer subsequently sold the boat to a new buyer, who assumed the buyer’s payments on his contract but failed to keep up with them. The neighbor asserted an action against the new buyer for payments of $20,000 per month. The neighbor will most likely be successfulCorrectIncorrect