Sample Questions Midterm

1. Frank offered to sell a parcel of land to Audrey for $50,000. He promised that his offer would not “under any circumstance” terminate prior to June 3 of the current year. Are there nonetheless any circumstances under which his offer might terminate prior to June 3? Offer Termination : The sale of land is governed by common law . Under common law, a contract can terminate by its express term , rejection by the offeree , or revocation by the offeror . Revocation generally can take place at any time prior to an offer having been accepted, unless the offeree has given consideration, such as money, to purchase an option guarantee that a contract offer will not terminate prior to a specified time. 2. On June 1, Audrey replied to Frank, “I agree to buy your land for $50,000 if you have all of the weeds growing on the property removed prior to June 3.” What is the legal consequence of Audrey’s statement? Offer Acceptance : This does not constitute a contract acceptance because an acceptance must be the “mirror image” of the original contract offer. Rather, this will be interpreted as a new offer, or counteroffer , which the seller (now called the offeree) is free to accept or reject . 3. What is the legal significance if Frank’s offer above was in writing instead of over a cell phone call? Contract Enforcement : The Statute of Frauds applies to certain types of major contracts, including sales of real estate . If an offer for the sale of real estate is made orally , such as in a cell phone call, it would not be enforceable by the buyer against the seller. In contrast, if a contract resulted and the seller had communicated in the form of a signed writing , the contract would satisfy the Statute of Frauds and be enforceable against the seller . 4. What is the legal significance if Audrey’s reply above was in writing rather than over a cell phone call? Audrey’s reply effectively is a contract offer involving the sale of real estate to her. As a result, the same discussion above applies to the enforceability by the seller of a contract against her , the buyer-offeror. 5. Have you ever entered into a transaction in which the implied warranty of fitness for a particular purpose would have governed your transaction? If not, identify such a hypothetical transaction. Warranties : The implied warranty of fitness for a particular purpose applies when a buyer purchases goods after telling a seller about her unique needs and the seller’s suggestion or actions do not adequately take into account this special need . One example would be if you tell a restaurant that you are allergic to soy sauce that has a certain ingredient in it, and the restaurant uses soy sauce in your meal by mistake or it tells you that it uses soy sauce that lacks that specified ingredient but they are incorrect. 6. Maritime Manufacturing sells GPS guidance systems used in navigating boats. It manufactures these devices using semiconductor chips made in Wujan, China and that it must import from China. On February 1, 2020, Maritime Manufacturing sent a letter to prospective customers. This letter stated that it was offering a “special selling price of $80,000 for a Maritime Mover boat.” This offer did not state when this offer would come to an end. The Company now is experiencing a shortage of semiconductor chips from China. When, if ever, can Maritime revoke this offer? Sales of goods such as navigation systems consisting of semiconductor chips are governed by the UCC , and the company is a merchant that regularly sells such goods . Under the UCC, if a merchant seller makes an offer for the sale of goods in a signed writing may revoke its offer only after a “reasonable” time has passed . Such time cannot be interpreted to exceed 3 months , but it can be considered to be an extremely short period . The question of a “reasonable” time is difficult to ascertain . Due to the inability of many companies to obtain raw materials and components parts from China due to the disruptions of production and shipping from China, it probably would be considered “unreasonable” for the company to be required to continue to have to keep its offer in effect after such a well-known and sudden supply disruption had occurred.