BUSINESS LAW

ESSAY QUESTIONS

1. On May 1, Bryan Cartage Company and Giordana Computers, Inc., orally agree that Bryan Cartage will pick up from National Chip Corporation and deliver to Giordana Computers' manufacturing plant a certain number of computer chips on each Monday in May. Under the agreement, Girodana Computers will pay for the delivery services on June 1. On May 1, is this contract express, implied in fact, or implied in law? On May 31, after all of the deliveries have been made, is the contract executed or executory?

2. In May, John agrees to work for Soda Sales Company at $800 per week for a year beginning June 1. The following January, Nancy Beverages, Inc., offers John the same work at $900 per week. John tells Soda about the offer. Soda offers to enter into a new contract with John at $875 per week. If John agrees, is the new Soda contract enforceable? Why or why not?

3. Downspout Drainage Company hires Alina to design a Web page for Downspout for $400. Before the project is started, Downspout asks Alina to trouble-shoot Downspout's computer operating system software for an additional $400. Alina agrees. The entire contract is oral. Alina completes the work, but Downspout refuses to pay. Alina files a suit against Downspout, which raises the Statute of Frauds as a defense. Can Alina recover from Downspout? If so, how much, and on what basis?

4. Cortney has lived in an apartment for ten years when she decides to buy a house. Her one-year lease will end on May 1. On April 15, she orally contracts to buy Smith's house for $100,000, with the closing (transfer of the deed) to take place on June1. Smith's lawyer, who is out of town on vacation, is to draft a written contract of sale on his return to his office on May 15. Because Cortney's lease is terminating, Smith agrees to let her take possession of the house on May 1 if Cortney gives him a "down payment" on the house of $5,000. Cortney agrees and gives Smith the $5,000. She moves into the house on May 2, and the following weekend plants trees in the back yard. On May 10, Smith receives a written offer from Green to buy Smith's house for $120,000. Smith accepts Green's offer, asks Cortney to move out of the house, and tries to return the $5,000 to Cortney. Cortney claims that she has an enforceable contract to buy the house. Smith claims that any such contract must be in writing to be enforceable under the Statute of Frauds. Who is correct and why?

5. Evergreen Landscapers, Inc., owes Frank Finance Company $5,000. Evergreen enters into a contract with Suburban Office Park under which Evergreen promises to maintain the landscaping on Suburban's property. Under the contract, Suburban promises to pay Frank Finance the amount that will be due Evergreen until Evergreen's debt to Frank Finance is paid. Evergreen performs as promised, but Suburban does not pay Frank Finance. Can Frank Finance succeed in a suit against Suburban? Why or why not?

6. Jeanette contracts to buy six cases of vintage Fertile Valley wine from Grapes & Vines Winery for $1,200. The contract states that delivery is to be made at Jeanette's residence "on or before May 1, to be used for daughter's wedding reception on May 2." On May 1, Grapes & Vines's delivery van is involved in an accident, and no wine is delivered that day. On the morning of May 2, Jeanette buys the wine from Happy Hill Winery. That afternoon, just before the reception, Grapes & Vines tenders delivery of the wine at Jeanette's residence. Jeanette refuses tender. Grapes & Vines sues Jeanette for breach of contract. How is the court most likely to rule?

7. Investment Properties, Inc., hires Jerry Construction Company to renovate the interior of Investment's office building. Jerry submits plans that Investment approves. Jerry completes the major reconstruction, paints the interior, and buys the fixtures and furnishings. Investment rejects some of the furnishings because they do not match the plans, and subsequently refuses to allow Jerry to finish the work or to collect payment. Could Jerry sue successfully for payment for the entire contract?

8. National Drilling Company ships its only pump to American Hydraulics Corporation, the manufacturer, for repair. National hires Overland Transport, Inc., to take the pump to American Hydraulics and to return it to National as soon as the repair is complete. National is forced to suspend operations without a pump, but Overland does not know this. National expects to be without the pump for five days and to lose profits of $5,000. When the pump is not returned by the end of the fifth day, National rents a pump at a cost of $100 per day. Overland delays five more days before returning the pump. National files a suit against Overland, asking for compensatory, consequential, and punitive damages. Will National recover?

9. Kristen buys a used Prius from Mike's Motors, Inc., paying $1,000 down and agreeing to pay off the balance in thirty-six monthly payments of $200 each. The terms of the agreement call for Kristen to make a payment on or before the first of each month, beginning March 1. During the first six months, Mike's Motors receives a $200 payment before the first of each month. Starting in September, however, and continuing for the subsequent five months, Kristen's payment is never made until the fifth of the month. Mike's accepts and cashes the payment check each time. Before the next payment is due, Mike's decides that it is no longer willing to accept late payments. Can Mike's sue Kristen immediately for breach? Can Kristen continue to make late payments without liability? Explain.

10. Natalia Delivery Service contracts to deliver Melody's Pizza Parlor's products to its customers for $5,000, payable in advance. Melody's pays the money, but Natalia fails to perform. Can Melody's rescind the contract? Can Melody's also obtain restitution? What does it mean to "rescind" a contract? How is a contract rescinded? What is restitution? How is restitution accomplished? Explain.