Section I. TRUE/FALSE. (Max. 20 Points)
For each of the following statements, indicate (with a “T” or “F”) whether the statement is True or False. Each correct response is worth two (2) points.
1. _________.The relationship between an employee and employer is one of a fiduciary nature in which the employee owes a duty of good faith, loyalty, honesty and fair dealing to the employer.
2. __________. A gift, including gifts of love and affection, does not generally constitute valid consideration to support a contract.
3. __________. An unilateral contract is one that is typically made in a general way to an identifiable group of persons and invites an acceptance by the performance of a specified act or acts.
4. _________.The doctrines of promissory estoppel and unjust enrichment allow a Court to provide the reasonable value of goods or services where the party who received the goods or services did so in the absence of a legally-binding contract and the interests of justice require such an outcome.
5. _________.In general, the common law governs contracts for the sale of services, including professional services, and real estate interests while the Uniform Commercial Code governs merchant contracts for the sale of goods.
6. _________.All legal, enforceable contracts for the transfer of interests in real estate are required to be in writing and formally signed by the parties pursuant to the Statute of Frauds.
7. _________.Agreements made with minors are generally voidable by the minor and may be disavowed when the minor attains the age of majority, provided the disaffirmance occurs within a reasonable time after attaining the age of majority.
8. _________.In general, contracts that give one party the ability to cancel the parties’ obligations in his or its sole discretion are illusory and are not enforceable due to a lack of contractual intent.
9. _________.At common law, an acceptance that does not accept the terms of an offer exactly as made is deemed at law to be a rejection of the original offer and a counteroffer.
10. __________. A promise not to compete with your employer for a certain term of months or years after you leave its employ is also known as a “restrictive covenant” and is enforceable by the courts in general if it is reasonable in scope.
Section II. SHORT RESPONSES (Max. 20 Points)
This section consists of four short answer questions each worth a maximum of five (5) points. Total points for this Section equal twenty.
A. Identify the required elements of a legally valid, enforceable Contract. (5 Points)
B. Identify three types of agreements that the Statute of Frauds requires a writing for. (5 Points)
C. Identify three circumstances in which an agreement might be “voidable.” (5 Points)
D. Identify three types of equitable remedies that are available under contract law that may be ordered when money damages are inadequate. (5 Points)
Section III. MULTIPLE CHOICE. (Max. 30 Points)
This section contains 10 multiple choice questions. Choose the response for each question that is most accurate and write its corresponding letter in the space provided. Each correct response in this section is worth three (3) points.
1. ________.Which of the following IS NOT considered to be a legally binding offer?A. Bill tells his adult softball team that he will pay $50 to the first player to cut his lawn. B. A store mails its customers a circular that advises of this week’s sale items. C. Walmart advertises that the first 50 customers to arrive at its new store for its Grand Opening will be entitled to purchase one of only fifty 50” big screen TVs for $50. D. All of the above are considered to be legally binding offers.
2. ________.Which is true of the “objective reasonable person” standard?A. The standard is used in negligence cases but not in contract disputes.B. The standard is used in contract disputes but not in negligence cases.C. The standard is used in both contract disputes and negligence cases.D. The subjective intent of the parties governs in contract disputes and negligence cases.
3. ________.Fred had great difficulty accepting Sara’s decision to break off their engagement. Sara was Fred’s high school sweetheart and the couple had dated off and on since their grammar school days. Fred now wonders if he is entitled to the engagement ring back. If Fred sued, what would be the MOST LIKELY RESULT?A. Sara would be permitted to keep the ring because it was a conditional gift.B. Sara would be permitted to keep the ring because it was given in consideration of the love she and Fred had for many years.C. Fred would be entitled to the ring’s value or its return as a matter of equity because the ring unjustly enriched her at Fred’s expense.D. Fred would be entitled to the ring’s value or its return as a matter of law because Sara breached her promise to marry and the ring was a conditional gift.
4. ________.Egan, a 17-year old minor, contracted with Joe’s Computer Service to purchase a refurbished computer “as is” for $500.00. Joe’s Computer Service operated illegally out of a back room of his parent’s warehouse in a portion of the town zoned solely for Industrial and Warehouse use. The deal concluded between Egan and Joe’s Computer required a downpayment of $100 from Egan to take delivery of the computer and monthly payments of $100 thereafter for the next four months. On the 20th day after Egan paid the initial payment and took delivery, the computer was dropped and slightly damaged. Two weeks later, Egan turned 18 years old and attained the age of majority. Five days after his birthday, Egan returned the damaged computer to Joe’s Computer Service and claiming that he had no further obligation to Joe’s. Joe’s Computer sues Egan for the remaining $400 payment. What will the likely result be?A. Joe wins because Egan breached their deal, partial payment constituted partial performance, Egan was unjustly enriched and equity demands the result in the interests of justice.B. Joe loses because the computer was seriously defectiveand he took the risk by extending credit to Egan and failing to get an adult co-signer.C. Joe loses because Egan lacked the requisite contractual intent and properly disaffirmed within a reasonable time of reaching majority age.D. Joe wins because a Court may award his company the reasonable value of the computer since Egan could not return the computer in or close to its original condition.
5. _______. Which of the following common law principles states that a valid contract acceptance occurs when an offeree places his/her acceptance in a properly-addressed, stamped envelope and deposits it in the U.S. mail?A. The Mailbox RuleB. The Mirror RuleC. The Mutuality of Obligation RuleD. Promissory Estoppel
6. _______. In which of the following scenarios is an agreement properly “voidable” within a reasonable amount of time by the aggrieved party?A. An owner of a company learns that he has bipolar disorder at the time he signs a loan agreement and upon taking his newly prescribed medication a week after the diagnosis returns the loan monies and seeks to disaffirm the agreement.B. A corporate President of Ajax Co. signs a deal with a supplier over dinner to sell goods at a 50% wholesale discount to a new retailer XYZ Corporation after having had four martinis. The retailer’s CEO had six martinis that night and upon receipt of the goods protests that he thought the discount was 60%. The next day, the CEO of Ajax sends a letter disaffirming the contract due to his being under the influence and demands the return of the goods shipped to XYZ.C. Jack Swindler defrauds Susie Homemaker of $1,500 promising plumbing services that he never intended to complete or render in a competent fashion. Jack performs a small portion of the work and demands full payment of the agreed upon amount from Suzie and threatens to sue if not paid immediately. Suzie pays, Jack never shows up to complete the work and Suzie alleges that Jack defrauded her.D. The Contracts are voidable in all of the above circumstances.
7. _______. In which of the following scenarios would the agreement MOST LIKELY be declared to be unenforceable as an illusory promise?A. An oral contract for the sale of real estate.B. A written contract for the lease of a commercial premises that contains a one-year term and permits cancellation upon non-payment and thirty (30) days notice by the Tenant to the Landlord.C. A contract for professional services that permits cancellation upon notice by one of the parties at any time in its sole discretion.D. All of the above agreements are likely to be unenforceable as illusory promises.
8. _______. During a furlough from her work, LuAnn maxed out her credit card, hitting her limit of $6,000 while awaiting her return to work. Despite her expectations, LuAnn was not called to return to work for six months. After maxing out her credit card, LuAnn made two minimum payments of $150.00 before defaulting on her card. When the card issuer sent LuAnn a notice advising that there was a balance of $5,700 now due in full with interest, LuAnn called the company, explained her situation and made an agreement with the card issuer to make six payments of $500 to settle her outstanding debt. When LuAnn missed the last four payments, the card issuer demanded full payment of the outstanding balance of $4,700 plus interest and penalties under the original card agreement. When the credit card company sues LuAnn for the outstanding balance of $4,700 plus interest and penalties, what will be the likely result?A. The credit card company will be awarded a judgment against LuAnn but only for $2,000 because of the company’s agreement to settle LuAnn’s pre-existing debt.B. The credit card company will be awarded a judgment against LuAnn for the outstanding balance of $4,700 under the original card agreement because there was no valid consideration given by LuAnn under the settlement and she owed the pre-existing debt.C. The credit card company will lose the case against LuAnn because it waived its right to sue her by entering into a settlement.D. None of the above are likely outcomes.
9. _______. Which of the following constitutes the proper measure of legal, consequential damages awarded under the common law for a breach of contract?A. Benefit-of-the-Bargain damagesB. Incidental damagesC. Liquidated damagesD. Exemplary damages
10. _______. Which of the following is NOT a legal principle under the common law that applies to an offer to contract?A. The offeror fixes the terms of an offer and manner of acceptance.B. The offeror may revoke a valid offer at any time.C. The offeror must manifest an intent to be bound by the offer.D. The offeror must communicate an offer that is clear in order for it to be valid.
Section IV. CASE ANALYSIS (Max. 30 Points)
This Section requires the student to review 1 Case Scenario and respond to two short answer questions worth a total of thirty (30) points. The written responses should demonstrate the student’s knowledge of both the legal principles involved in the Scenario and critical thought in applying the legal principles to the Scenario provided. Write your short answers in sentence and paragraph form to each of the following questions after reviewing and analyzing the Scenario. No plagiarism or academic dishonesty will be tolerated. All work must be your own and solely the result of your individual efforts.
Scenario: Jenny was her grandfather’s favorite. Upon his death, she inherited $100,000.00 and embarked on a new business venture with her inheritance. She decided to go into the apparel business and created a line of women’s sportswear bearing her brand “AngelWear,” named with her grandfather in mind. Sally, the owner of a local Boutique, loved Jenny’s new line and encouraged Jenny to return in a few weeks when Sally would be ordering for the next season. Jenny did so and showed Sally several new pieces in addition to samples of her previously demonstrated products. Sally was thrilled to see the new pieces and indicated that she would be happy to order and dedicate significant floor space to Jenny’s new line. After leaving the Boutique and returning to her office, Jenny ramped up production and sent Sally an e-mail that offered a discounted wholesale price of 70% off of the MSRP for each piece for being her first customer and advised that delivery can be made within 3 days. In a reply e-mail, Sally thanked her for her generosity and told her that she would be in touch shortly. Jenny’s joy turned into disappointment when she did not hear from Sally for an entire week. Both ladies played phone tag for the better part of the following week, leaving general messages for one another until, frustrated by the situation, Jenny visited Sally’s Boutique again. Jenny was stunned to see that the space she thought would be dedicated to her line was filled with a competitor’s apparel. Sally was not present at the time and Jenny left angry at what she had seen and the significant costs she expended in ramping up the production of her new line for Sally’s Boutique.
(A) Analyze the above Scenario to determine if a valid, legally enforceable Contract existed (explaining all relevant, legal contract principles) and whether Jenny will be successful in a lawsuit against Sally and Sally’s Boutique for breach of contract or to recover her damages otherwise? (20 Points) (B) What is the doctrine of “promissory estoppel” and would the application of that doctrine afford Jenny any rights in the absence of a valid, enforceable Contract with Sally? (10 Points)
Section V. OPTIONAL EXTRA CREDIT (Max 10 points)
Consider the following scenario and explain the most likely result? Be sure to provide your legal reasons and analysis in two or three paragraphs in support of your conclusion.
Ivan is a 21 year-old owner of a landscaping and lawn service business in Greenville, NJ. Virgil is an adult customer of Ivan’s services and had been for six months. As the winter season approached, Ivan spoke to Virgil about drumming up business in Virgil’s neighborhood for his new snow removal division. Ivan told Virgil that he will take $10 off Virgil’s monthly landscaping bill for six months, starting in March of 2021, for each new customer that Virgil refers to Ivan for snow removal at Ivan’s snow job rate of $100 per house. Virgil tells Ivan that he is willing to help out and use his best efforts to do so. Ivan then handed Virgil thirty fliers that bore Ivan’s name, phone number, some marketing graphics and a general description of the snow removal services offered at the $100 rate discussed. The flyer also advised of a “New Customer Discount Available.” Virgil thanks Ivan for his anticipated assistance and the two men quickly conclude their business in a cordial manner.
Virgil gave Ivan’s flyers to twenty of his friends and neighbors and spoke favorably to them about Ivan’s new service. Fifteen of them agreed to use Ivan for their snow removal services. In the winter months, 12 of these friends/neighbors did use Ivan for snow removal on at least one occasion. Ivan performed the initial services requested by Virgil’s friends and neighbors and gave them all his discounted, new customer rate of $75 for their initial snow removal job. Ivan also advised each new customer that his standard rate of $100 would apply to their second and subsequent snow removal jobs when requested. Only 3 of Virgil’s referrals used Ivan a second time. Ivan charged these three referral customers 100 for their second and subsequent snow removal jobs. All three of these referral customers offered the flyer that Virgil gave them to their friends and families when Virgil told them that Ivan agreed to give him a $10 discount off the price for services for six months for each new customer he referred to Ivan. As a result of the referrals from these 3 friends of Virgil, Ivan received five new repeat customers.
In February 2021, Virgil caught up with Ivan and asked him to begin his regular landscaping services again in March. During the course of the conversation, Ivan thanked Virgil for his assistance and referral of three new customers to him, and gratefully advised Virgil that he would receive a credit on his monthly landscape bill in the amount of $30 for the next six months as promised. Virgil was surprised to hear that he would receive only $30 off his monthly landscaping services and protested to Ivan that he sent him more than ten referral customers for which Ivan provided snow removal services. Virgil told Ivan that he expected to receive a full $10 credit off of his Spring/Summer services for six months for every snow removal job that Ivan performed for all 12 of the referrals that Virgil provided and Ivan serviced. Ivan sarcastically said “yeah, right! You just want free services from me” and exclaimed “that was certainly not part of any deal that we had.” Both men became angry at one another, exchanged hostile words and Virgil walked away frustrated and outraged that he would not get the full amount of the credits that he anticipated. Just before leaving, however, Virgil threatened to hire another landscaper, to sue Ivan for breach of contract and to recover the amount of a monthly credit of at least $120 for the Spring/Summer months, as well as any difference in price should the new landscaper charge him in excess of $100 per month for such services.
Did Ivan and Virgil have a valid, enforceable Contract? In your answer, be sure to explain whether there was a meeting of the minds between the two and the relevant, legal principles used to determine whether a meeting of the minds exists, whether any such agreement formed a bilateral or unilateral contract and to identify the material terms of any such Contract.
Section I. TRUE/FALSE. (Max. 20 Points)