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Exam 15: Written Contracts

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Question 21

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Brahma entered into an oral agreement to sell 50 jet skis to Summer Sports.Brahma delivered 20 of the skis on May 1.On June 1,Summer Sports notified Brahma that it will not honor the agreement.Which statement is correct?

A) The contract is void since it was oral.
B) The contract is enforceable for 20 jet skis.
C) The contract is enforceable for the 50 jet skis
D) The contract is obsolete.

E) A) and B)
F) A) and C)

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Question 22

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Ramona,age 42,orally agreed to work for Brahma,Inc.for the rest of her life for $50,000 per year.This agreement would not be enforceable since it violates the one-year rule of the statute of frauds.

A) True
B) False

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Question 23

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Explain the reason behind having a statute of frauds and give arguments for and against having such a statute.

Any contract involving a sale of goods of $100 or more must be in writing.

The Uniform Commercial Code provides that,under certain circumstances,a merchant may be liable on a written contract,even though that merchant has NOT signed it.

Sonny,a college student,places a telephone order for a new computer from Computers,Inc.The price of the computer is $1500.The clerk who takes the order sends Sonny a copy of the invoice.The next week,Sonny calls back and tries to cancel his order.

The Uniform Electronic Transmission Act (UETA) :

Ethel's Exercise World plans to order three weight machines from Pete's Push,Pedal and Pull,Inc.for a total of $15,000.Pete's demands that Ethel's friend,Moneybags,a wealthy independent businesswoman (not connected with Ethel's business in any way) promise to pay Pete's for the three machines if Ethel's Exercise World does not.Which of the promises in this problem must be in writing to be enforceable?

Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land.Since neither of them had any paper with them,Derek wrote the following on a napkin: "Abyan agrees to purchase from Derek a 5-acre parcel located at the local address of 123 105th Street,St.Joseph,Minnesota,U.S.A.for the price of $4,500 per acre.Transfer of title,payment,and possession to take place on May 1,2011." Abyan signed the napkin.On May 1,2011,Derek was ready to close the deal and transfer title but Abyan refused to pay the purchase price.If Derek sues Abyan for the price of the land,the most likely result will be:

Thomas Reep,was the president of First National Bank in Clarksville.R.L.Moore approached Reep requesting the bank to open an account in the name of Texas Continental Express,Inc.,a corporation owned by his two sons.R.L.had no affiliation with the corporation nor any financial interest in it.R.L.promised Reep that he would open several accounts in First National that would more than amount to the business of his sons.R.L.assured Reep that if anything came up in connection with the sons' account,Reep was to contract him directly.Upon these conditions,First National proceeded to furnish a regular checking account and bank draft services for Texas Continental.Sometime later,First National paid two drafts overdrawing the account by $448,942.When Reep contacted R.L.about the overdrawn account,R.L.assured Reep that money would be deposited in the account.When Reep called back a few days later to find out why the money had not been deposited,R.L.informed Reep that his wife had suffered a nervous breakdown the night before and the deal was off.First National Bank brought suit to enforce R.L.'s promise to pay the debts of Texas Continental.What is the likely outcome?

Tony signed a contract agreeing to purchase a used,high-powered boat for $10,000.Prior to signing the contract,the sales representative explained that the boat motor was guaranteed for six months for all labor and parts.The written contract contained nothing about the warranty; however,it did have an integration clause in it.Tony had problems with the boat motor,causing expensive repairs.Tony returned the boat to the sales representative for the repairs,only to learn the salesman denied knowing anything about a six-month warranty.If Tony sues,discuss the likely outcome.

Tuan is president and sole shareholder of Entertainment,Inc.Entertainment,Inc.wishes to borrow money,but to do so,the bank requires Tuan to orally agree to personally pay the debt of the corporation if Entertainment,Inc.cannot.Tuan's guarantee to repay is:

Abby dies,and her good friend,Clay is appointed to administer Abby's estate.Abby's house was in poor condition,so Clay orally hired a contractor to make repairs.Clay also orally promised that if the estate could not pay the repair bill,he would pay it even though he does not live in the house and has no entitlement under Abby's estate.The estate does not pay the repair bill.Who can the contractor collect from,if anyone?

Herb was interviewed for a job on Wednesday.The employer orally offered Herb a job right on the spot.Herb orally agreed to start working the following Monday,to be employed from that Monday,for one year thereafter.Three weeks after starting the job Herb was fired without cause and replaced by the employer's friend.Will Herb be successful in an action brought against the employer for breach of contract?

Raymond agrees to transfer an easement right to Sandra for $1,000.This contract is within the statute of frauds and therefore needs to be in writing to be enforceable.

Willis and Leslie orally agree to the sale of a parcel of land for $50,000: one-half payable now as a down payment; one-half payable in 30 days at the time of closing when the title will be transferred.The buyer,Willis,is to have possession immediately.Willis pays Leslie $25,000,takes possession of the land,and starts building a house.At the time of closing,Willis has made a substantial beginning on the house.However,Leslie refuses to transfer the title,claiming the oral contract is not enforceable.This contract is:

Claude agrees to lease his house to Irvin for nine months,the lease to begin six months from the signing of the contract.Under the statute of frauds:

For the purposes of the statute of frauds,an interest in land includes:

Hannah orally agrees to sell her house to Brett for $175,000.If she delivers the deed to Brett with the expectation of payment in two weeks and he fails to pay,most courts will not enforce the contract since it was not in writing.

Patrick owned an acre of land which was being divided into building lots.Nancy was interested in purchasing the corner lot.In a signed writing,Patrick stated "I will sell Nancy Grimes a lot on Route 70 for $5,500 cash,payable on April 30,2012." This writing is sufficient under the statute of frauds to make the contract enforceable.