ESSENTIAL ELEMENTS OF A VALID CONTRACT

Exercise 1

This exercise is about offer and acceptance.

John, a homeowner, answers the telephone and listens to a solicitor make a five-minute sales pitch for Weed Gardening Services. John responds, “No, thank you,” and hangs up. Two days later, John returns home from work to find a crew gardening in his yard and a bill for $200 sitting on the porch.

When John tells the Weed representative that he never asked for this service, Weed responds by saying, “It looks much better, doesn’t it? You got the service, now pay for it.” John agrees that the work was of good quality, but refuses to pay for it. He is later served with a summons to appear in magistrate court because of this dispute.

How should the judge rule?

A. For Weed Gardening Services, because Weed performed good quality services for John.

B. For John, because he did not accept Weed's offer.

Exercise 2

This exercise is about offer and acceptance.

Harry drops by Mack’s house and finds him working on his old pickup truck in the driveway. Mack kicks the truck and exclaims to Harry, “This piece of junk isn’t worth a tank of gas – you can have it.” Harry says thanks and the next day comes by with his SUV to tow away the pickup. Mack stops him and says the truck is working now. Harry goes to court and claims that the truck Mack promised him was worth $500 and Mack should pay him that amount.

How should the judge rule?

A. For Mack, because there was no consideration for the transaction.

B. For Harry, because Mack promised him the pickup truck, and that created a contract.

C. For Mack, because Harry never accepted his offer.

Exercise 3

This exercise is about offer and acceptance.

Mike puts an ad in the newspaper stating that he wants to sell his truck for $500. James goes to Mike’s home and tells him that he is interested in buying the truck. After looking at it, James hands Mike $500 in cash, which Mike puts in his pocket. Just then, Steve drives up and tells Mike that he’ll give him $600 for the truck. Mike hands James back his $500 and sells the truck to Steve. James sues Mike for breach of contract.

How should the judge rule?

A. For Mike, because there was no offer and acceptance.

B. For Mike, because he gave the money back to James.

C. For James, because once Mike accepted the money, the deal was closed.

D. For Mike, because he didn’t specifically say why he was taking the money.

Breach of Contract

What Constitutes a Breach of Contract?

A contract case usually comes before a judge because one or both parties claim that the contract was breached. A breach of contract is a failure, without legal excuse, to perform any promise that forms all or part of the contract. This includes failure to perform in a manner that meets the standards of the industry or the requirements of anyexpress warranty or implied warranty, including the implied warranty of merchantability.

When a party claims a breach of contract, the judge must answer to the following questions:

1. Did a contract exist?

2. If so, what did the contract require of each of the parties?

3. Was the contract modified at any point?

4. Did the claimed breach of contract occur?

5. If so, was the breach material to the contract?

6. Does the breaching party have a legal defense to enforcement of the contract?

7. What damages were caused by the breach?

What is the Difference Between a Material and Minor Breach of Contract?

Defenses to Breach of Contract

What Are Valid Defenses Against a Breach of Contract Claim?

Exercise 4

This exercise is about breach of contract.

Brunhilda and Frank had a valid contract under which Frank would buy all of the fruit from Brunhilda’s orchard. A fire swept through Brunhilda’s orchard just before the harvest, destroying all of the fruit trees. Brunhilda tells Frank that she will not be able to supply him with the fruit. Frank sues Brunhilda for breach of contract.

How should the judge rule?

A. For Brunhilda, because it has become impossible for her to perform the contract.

B. For Frank, because Brunhilda did not supply him with fruit as they had agreed.

Exercise 5

This exercise is about breach of contract.

Green Company has a contract with Red Company to buy 400 golf balls, to be delivered to Green Company on July 16. The contract states that “time is of the essence.” On July 18, Red Company delivers the 400 golf balls to Green Company. Green Company refuses to accept the golf balls because of the delay and sues Red Company for breach of contract.

How should the judge rule?

A. For Green Company, because the late delivery of golf balls constituted a material breach.

B. For Red Company, because the delivery was only two days late.

Exercise 6

This exercise is about breach of contract.

Carlotta sees a horse running in Troy’s fields and decides to see if Troy will sell her the horse. During the course of negotiations, Troy realizes that Carlotta is confused about the name of the horse she wants–she keeps using the name Misty, who is actually an old broken-down nag, when the horse she saw in the field is named Sissy.

Troy draws up a written contract in which he agrees to sell Misty to Carlotta for $3000 and they both sign it. When Carlotta brings a trailer to pick up her horse, she realizes that she has bought the wrong horse and refuses to pay for Misty. Troy sues Carlotta for breach of contract.

How should the judge rule?

A. For Troy, because Carlotta agreed to pay $3000 for Misty.

B. For Carlotta, because Troy knew that Carlotta was making a mistake about the horse’s name.

Exercise 7

This exercise is about breach of contract.

Mr. Brown makes a contract for Mr. Yellow to do repair work to his living room, which is to be finished by June 3. Mr. Yellow comes down with a bad case of the flu and is delayed in finishing the work. He is able to complete the work on June 8. Mr. Brown sues Mr. Yellow for breach of contract.

How should the judge rule?

A. In Mr. Brown’s favor, because Mr. Yellow’s delay was a material breach of the contract.

B. In Mr. Yellow’s favor, because the breach was minor.

Remedies for Breach of Contract

What are the Remedies for Breach of Contract?

What Damages Can Be Awarded?

How are Compensatory Damages Calculated?

Are There Any Limitations on the Award of Compensatory Damages?

Exercise 8

This exercise is about damages for breach of contract.

Jeff makes a contract with Acme Farms to buy 1000 apples for $200, which is the average price for apples at that time. The contract specifies that Jeff must have the apples by April 2 so that he can make his specialty apple pies to sell to Yummy Bakery. On March 15, Acme Farms informs Jeff that they will not be able to meet his order.

On April 4, Jeff files suit against Acme Farms for breach of contract and wins the case. Jeff asks for consequential damages that will reimburse him for the amount of profit that he would have been paid by Yummy Bakery if he had been able to make his apple pies. Acme presents evidence proving that Jeff had not even tried to find substitute apples, even though he had sufficient time before his deadline and there were other farms nearby that could have supplied him with apples for the same $200 price.

How should the judge rule?

A. Jeff should not recover any damages because he did not look for another apple supplier.

B. Jeff can recover damages, but such recovery should be reduced by the amount that he could have avoided if he had tried to buy his apples elsewhere.

C. Jeff should get full damages that include the amount that he would have been paid by Yummy Baker for his apple pies.

Exercise 9

This exercise is about damages for breach of contract.

Tory and Cathy entered into a contract under which Cathy was supposed to provide the floral arrangements for Tory’s wedding on May 23. The day of the wedding arrives, but Cathy does not deliver the floral arrangements.

Cory is devastated and feels that her wedding was ruined by the lack of floral arrangements. She sues Cathy successfully for breach of contract and then asks for punitive damages because her wedding was ruined. The evidence presented at court only shows that Cathy did not deliver the arrangements because she had accidentally written the wrong delivery date on her calendar.

How should the judge rule?

A. Only award compensatory damages and not punitive, because there is not sufficient evidence to prove that Cathy had the requisite mental state for an award of punitive damages.

B. Award punitive damages, because Cathy should have known that the breach would ruin Cory’s wedding.

The Uniform Commercial Code (UCC)

When Does the UCC Apply?

Exercise 10

This exercise is about contract modification.

Marcy is the owner of the Merry Elves Shop. She enters into a written contract to buy 200 Christmas tree ornaments from Bob for delivery October 1. They later modify the agreement in writing, so that Marcy will buy a total of 300 ornaments that will all be delivered October 15. On October 3, Marcy sues Bob, stating that he should have delivered the 200 ornaments to her on October 1 because the contract modification was not valid. She says that there was a lack of additional consideration for the modification.

How should the judge rule?

A. For Bob, because additional consideration was not necessary.

B. For Marcy, because additional consideration was necessary in order to modify their contract.

Exercise 11

This exercise is about the parol evidence rule.

Diana and Jim enter into a written contract under which Diana will sell Jim some of her rare comic books for $300. The contract contains a list of each comic book that is supposed to be part of the sale. The contract states that it contains the complete and final agreement reached by Diana and Jim. When Jim receives the comics, he is upset to find out that Diana did not include a particular Superman comic.

He sues Diana, stating that even though the written contract does not mention that particular Superman issue, he and Diana had orally agreed, just after the contract was written, that she would include the Superman in the deal. Jim wants to submit evidence of their oral agreement. Diana argues that such evidence would violate the parol evidence rule.

How should the judge rule?

A. For Diana, because the contract states that it is the complete and final agreement.

B. For Jim, because he is presenting evidence that is an exception to the parol evidence rule.

Exercise 12

This exercise is about the parol evidence rule.

In the same scenario, Jim now claims that before he signed the contract he and Diana agreed orally that at least half the comics would be Superman. Diana denies the conversation took place and argues that such evidence would violate the parol evidence rule.

How should the judge rule?

A. For Diana, because the contract states that it is the complete and final agreement.

B. For Jim, because he is presenting evidence that is an exception to the parol evidence rule.