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Judgment for Minth. In order to establish a cause of action for unjust enrichment, Puttkammer must be able to demonstrate that (1) a benefit was conferred on Minth by Puttkammer; (2) Minth knew of or appreciated the benefit; and (3) Minth accepted or retained the benefit under circumstances making it inequitable for Minth to retain the benefit without paying for its value. Here, the first and second elements have been satisfied but not the third. An action for unjust enrichment is based on the moral principle that one who has received a benefit has the duty to reimburse the other when to retain that benefit would be unjust. But it is not enough that the benefit was conferred and retained; the retention must also be unjust. Here, Puttkammer does not claim or imply that Minth ordered or ratified the work, that he performed the work expecting to be paid by Minth, that he was prejudiced by any misconduct or fault on Minth's part, or that Minth's interests were so intertwined with those of Piekarski that the contract could be said to have been executed on Minth's behalf.

Rather, all that Puttkammer has alleged is that Minth knowingly acquiesced in the performance of the work. Puttkammer v. Minth, 83 Wis.2d 686, 266 N.W.2d 361 (1978). Mary Dobos was admitted to Boca Raton Community Hospital in serious condition with an abdominal aneurysm. The hospital called upon Nursing Care Services, Inc., to provide around-the-clock nursing services for Mrs. She received two weeks of in-hospital care, forty-eight hours of postrelease care, and two weeks of at-home care.

The total bill was $3,723.90. Dobos refused to pay, and Nursing Care Services, Inc., brought an action to recover. Dobos maintained that she was not obligated to render payment in that she never signed a written contract, nor did she orally agree to be liable for the services. The necessity for the services, reasonableness of the fee, and competency of the nurses were undisputed. Dobos admitted that she or her daughter authorized the forty-eight hours of postrelease care, the trial court ordered compensation of $248 for that period. It did not allow payment of the balance, and Nursing Care Services, Inc., appealed.

These circumstances establish a contract implied in law or 'quasi contract,' which is imposed by law to prevent the unjust enrichment of one party at the expense of another. The principle of quasi contract is frequently applied in the area of work performed or services rendered, although liability is generally imposed only when the person for whose benefit the services were rendered requested them or knowingly and voluntarily accepted their benefits. Emergency aid, however, is an exception.

In the present case, the services provided to Mrs. Dobos in the hospital were essential to her health and safety, and she was unable to consent to receiving them. Nursing Care Services, Inc., acted with intent to charge for the services and had no reason to know that Mrs. Dobos would not agree. Given these circumstances, the in-hospital services clearly fall within the emergency aid exception. As for the two weeks of at-home care, Mrs. Dobos knowingly and voluntarily accepted the benefits conferred, and thus obligated herself to pay for the reasonable value of the services.

Nursing Care Services, Inc. Dobos, 380 So.2d 516, (Fla. 4th DCA 1980). Contracts Outside the Code. Does not apply to contracts primarily for services. The test for inclusion is whether the contract's predominant purpose is the rendition of services with goods incidentally involved, or whether it is a sale of goods with labor incidentally involved. In this case the contract to install a water system was a service transaction and, therefore, not within the scope of the U.C.C.

For two reasons. First, the parties had no agreement as to what specific component parts were to be installed, but rather the contractor undertook to install a system of indefinite description and of warranted capacity. Second, the language of the contract itself indicated that the arrangement was a service contract rather than a sale of goods.

Charles Drilling Co., 500 F.Supp. Helvey brought suit against the Wabash County REMC for breach of implied and express warranties. He alleged that REMC furnished electricity in excess of 135 volts to Helvey's home, damaging his 110-volt household appliances. This incident occurred more than four years before Helvey brought this suit. In defense, REMC pleads that the Uniform Commercial Code's Article 2 statute of limitations of four years has passed, thereby barring Helvey's suit.

Helvey argues that providing electrical energy is not a transaction in goods under the U.C.C. But rather a furnishing of services that would make applicable the general contract six-year statute of limitations. Is the contract governed by the UCC? Uniform Commercial Code. Judgment for REMC.

To be within the U.C.C.' S definition of a good, electricity must be (1) a thing, (2) existing, and (3) movable, with (2) and (3) occurring simultaneously. Electricity can be measured in order to establish a purchase price by the amount of current which passes through the meter, thus fulfilling the existing and movable requirements. Also, it is legally considered personal property, subject to ownership, and may be bartered, sold, and, in fact, stolen. Therefore, the sale of electricity is a sale of goods subject to U.C.C.' S Article 2's statute of limitations. Wabash County REMC, Court of Appeals of Indiana, First District, 1972.

176, 278 N.E.2d 608. Jack Duran, president of Colorado Carpet Installation, Inc., began negotiations with Fred and Zuma Palermo for the sale and installation of carpeting, carpet padding, tile, and vinyl floor covering in their home. Duran drew up a written proposal that referred to Colorado Carpet as 'the seller' and to the Palermos as 'the customer.' The proposal listed the quantity, unit cost, and total price of each item to be installed. The total price of the job was $4,777.75. Although labor was expressly included in this figure, Duran estimated the total labor cost at $926.

Palermo orally accepted Duran's written proposal soon after he submitted it to her. After Colorado Carpet delivered the tile to the Palermo home, however, Mrs. Palermo had a disagreement with Colorado Carpet's tile man and arranged for another contractor to perform the job. Colorado Carpet brought an action against the Palermos for breach of contract.

Does the UCC apply to this contract? Uniform Commercial Code.

Defines 'goods' as 'all things... Which are movable at the time of identification to the contract for sale' and defines a 'sale' as 'the passing of title from the seller to the buyer for a price.' In this case, the carpeting and other materials were movable when Colorado Carpet procured them for installation, and the agreement contemplated that title would pass to the Palermos. The contract included, however, not only the sale of goods as defined by the U.C.C., but also the performance of labor or service. Since goods and services are mixed, the primary purpose of the agreement is crucial in determining the nature of the contract. A number of factors point to the conclusion that the primary purpose of the contract was the sale of goods, with labor or service only incidentally involved.

Colorado Carpet's proposal referred to the parties as 'seller' and 'customer.' The charge for labor was a small percentage of one overall contractual price.

Further, as noted above, the carpeting and other materials meet the U.C.C. Definition of 'goods.' Since the contract is oral and for the sale of goods for more than $500, it is unenforceable. Colorado Carpet Installation, Inc. Palermo, 668 F.2d 1384 (Col.

On November 1, the Kansas City Post Office Employees Credit Union merged into the Kansas City Telephone Employees Credit Union to form the Communications Credit Union (Credit Union). Systems Design and Management Information (SDMI) develops computer software programs for credit unions, using Burroughs (now Unisys) hardware. SDMI and Burroughs together offered to sell to Credit Union both a software package, called the Generic System, and Burroughs hardware.

Later, in November, a demonstration of the software was held at SDMI's offices, and the Credit Union agreed to purchase the Generic System software. This agreement was oral.

After Credit Union was converted to the SDMI Generic System, major problems with the system immediately became apparent. SDMI filed suit against Credit Union to recover the outstanding contract price for the software. Credit Union counterclaimed for damages based upon breach of contract and negligent and fraudulent misrepresentation. Does the UCC apply to this contract? Uniform Commercial Code. Judgment for SDMI. We must determine whether the oral agreement between SDMI and Credit Union was for goods or services.

The test when dealing with a mixed contract is 'not whether they [goods or services] are mixed, but, granting that they are mixed, whether their predominant factor, their thrust, their purpose, reasonably stated, is the rendition of service, with goods incidentally involved... Or is a transaction of sale, with labor incidentally involved.' Prior to entering into an agreement for the Generic System software, Credit Union attended a demonstration of the program at SDMI's place of business. Therefore, we conclude the software was movable at the time of identification to the contract, satisfying that requirement of the definition of goods. SDMI installed the Generic System software on Credit Union's computer and was present to attempt modifications and corrections of the program so the accounting system would run more efficiently. These services are incidental to the sale of the software because, without Credit Union buying the Generic System program, the services would not be necessary. Therefore, the sale of the software is predominant.

SDMI remains the owner of the accounting program as intellectual property. Credit Union purchased only a reproduction or the result of the programmer's skill. Credit Union is interested only in the outcome of running the program and whether the program will perform the functions for which it was purchased. We hold this software to be goods and subject to the provisions of the U.C.C.

This holding is consistent with the purpose of the U.C.C. It simplifies commercial transactions. It provides a uniform rule for courts to follow. Richardson hired J. Flood Company, a plumbing contractor, to correct a stoppage in the sewer line of her house. The plumbing company's 'snake' device, used to clear the line leading to the main sewer, became caught in the underground line. To release it, the company excavated a portion of the sewer line in Richardson's backyard.

In the process, the company discovered numerous leaks in a rusty, defective water pipe that ran parallel with the sewer line. To meet public regulations, the water pipe, of a type no longer approved for such service, had to be replaced either then or later, when the yard would have to be redug for such purpose. The plumbing company proceeded to repair the water pipe. Though Richardson inspected the company's work daily and did not express any objection to the extra work involved in replacing the water pipe, she refused to pay any part of the total bill after the company completed the entire operation. Flood Company then sued Richardson for the costs of labor and material it had furnished. Richardson argued that she only requested correction of a sewer obstruction and had never agreed to the replacement of the water pipe.

Is Richardson correct in her assertion? Express and Implied Contracts. Contracts are either expressed or implied-expressed when their terms are stated by the parties, implied when arising from a mutual agreement not set forth in words. An implied contract 'may be presumed from the acts and conduct of the parties as a reasonable man would view them under all the circumstances.' Here, Richardson made daily inspections yet failed to object to the replacement of the water pipe until after the work was completed. Although she did not expressly agree to this extra work, her acts and conduct indicate her consent to it.

Therefore, she created an implied (in fact) contract obligating her to pay for the reasonable value of the company's services. Insul-Mark is the marketing arm of Kor-It Sales, Inc. Kor-It manufactures roofing fasteners and Insul-Mark distributes them nationwide. Kor-It contracted with Modern Materials, Inc. To have large volumes of screws coated with a rust-proofing agent. The contract specified that the coated screws must pass a standard industry test and that Kor-It would pay according to the pound and length of the screws coated. Kor-It had received numerous complaints from customers that the coated screws were rusting, but Modern Materials unsuccessfully attempted to remedy the problem.

Kor-It terminated its relationship with Modern Materials and brought suit for the deficient coating. Modern Materials counterclaimed for the labor and materials it had furnished to Kor-It. The trial court held that the contract (1) was for performance of a service, (2) not governed by the U.C.C., (3) governed by the common law of contracts, and (4) therefore barred by a two year statute of limitations. Insul-Mark appealed. Contracts Outside the Code. The transaction is predominantly for the performance of a service and, therefore, is not governed by the Sales article of the U.C.C.

Where a transaction is 'mixed,' that is it involves both goods and services, the Sales article of the U.C.C. Will apply only where the 'predominant thrust' of the transaction is a sale of goods with labor only incidentally involved. This court rejects the 'bifurcation' approach, taken by some lower courts, whereby a mixed transaction is viewed as two transactions: one for the sale of goods governed by the U.C.C., and one for the performance of a service governed by the common law.

The bifurcation approach is less sensitive to the parties' expectations than the predominant thrust approach and would not work where an agreement is not readily divisible. Whether the predominant thrust of a transaction is the sale of goods or the performance of a service depends primarily on the language of the contract in light of the situation of the parties and the surrounding circumstances.

Also relevant are the final product the purchaser bargained to receive and whether it may be described as a good or a service. Finally, the courts examine the costs involved for the goods and services, and whether the purchaser was charged only for a good or a price based on both goods and services.

The agreement between Kor-It and Modern Materials was predominantly for the performance of a service. The performance Kor-It contracted to obtain was the transformation of its screws from a non-coated form to a coated form with enhanced rust-resistance. Modern Materials' complex multi-step application process was the crucial element completing this transformation. The transfer of the coating material, a good, in the process was incidental to the larger service. This is evidenced by the fact that Kor-It did not involve itself in deciding which coating material Modern Materials would apply to the screws. Furthermore, the pricing method in this transaction reveals that its predominant thrust was the performance of a service: Kor-It was charged by the pound of screws coated rather than by the gallons of coating used.

In March, William Tackaberry, a real estate agent for Weichert Co. Realters, informed Thomas Ryan, a local developer that he knew of property Ryan might be interested in purchasing. Ryan indicated he was interested in knowing more about the property Tackaberry disclosed the property's identity and the seller's proposed price.

Tackaberry also stated that the purchaser would have to pay Weichert a 10 percent commission. Tackaberry met with the property owner and gathered information concerning the property's current leases, income, expenses, and development plans. Tackaberry also collected tax and zoning documents relevant to the property. In a face-to-face meeting on April 4, Tackaberry gave Ryan the data he had gathered and presented Ryan with a letter calling for a 10 percent finder's fee to be paid to Weichert upon 'successfully completing and closing of title.' Tackaberry arranged a meeting, held three days later, where Ryan contracted with the owner to buy the land. Ryan refused, however, to pay the 10 percent finder's fee to Weichert.

Weichert sues Ryan for the finder's fee. To what, if anything, is Weichert entitled to recover? Quasi Contracts. Judgment for Weichert Co. A contract arises from offer and acceptance, and must be sufficiently definite 'that the performance to be rendered by each party can be ascertained with reasonable certainty.' Applying that principle, courts have allowed quasi-contractual recovery for services when a party confers a benefit with a reasonable expectation of payment.

That type of quasi-contractual recovery is known as quantum meruit ('as much as he deserves'), and entitles the performing party to recoup the reasonable value of services. Accordingly, a broker seeking recovery on a theory of quantum meruit must establish that the services were performed with an expectation that the beneficiary would pay for them, and under circumstances that should have put the beneficiary on notice that the plaintiff expected to be paid. Courts have allowed brokers to recover in quantum meruit when a principal accepts a broker's services but the contract proves unenforceable for lack of agreement on essential terms-for instance, the amount of the broker's commission.

Application of the foregoing principles to the transaction between Weichert and Ryan demonstrates that the record is insufficient to support a finding that Tackaberry and Ryan mutually manifested assent to the essential terms of the contract. First, Ryan never expressly assented to the terms of Tackaberry's offer. Although Ryan expressed interest in learning more about the Pitt property during the initial March phone call, neither his expression of interest nor his agreement to meet with Tackaberry to learn more about the transaction was sufficient to establish the 'unqualified acceptance' necessary to manifest express assent. Moreover, Ryan refused to agree to the ten-percent figure during the April 4th meeting, and thereafter consistently rejected that term.

Thus, the parties never formed an express contract. And his wife, Martha N.

Pass, departed in an aircraft owned and operated by Mr. Pass from Plant City, Florida, bound for Clarksville, Tennessee. Somewhere over Alabama the couple encountered turbulence, and Mr. Pass lost control of the aircraft. The plane crashed killing both Mr. Approximately four and a half months prior to the flight in which he was killed, Mr. Pass had taken his airplane to Shelby Aviation, an aircraft service company, for inspection and service.

In servicing the aircraft, Shelby Aviation replaced both rear wing attach point brackets on the plane. Three and one half years after the crash, Max E. Pass, Sr., father of Mr. Pass and administrator of his estate, and Shirley Williams, mother of Mrs.

Pass and administratrix of her estate, filed suit against Shelby Aviation. The lawsuit alleged that the rear wing attach point brackets sold and installed by Shelby Aviation were defective because they lacked the bolts necessary to secure them properly to the airplane. The plaintiffs asserted claims against the defendant for breach of express and implied warranties under Article 2 of the Uniform Commercial Code ('UCC'), which governs the sale of goods. Shelby Aviation contended that the transaction with Mr. Pass had been primarily for the sale of services, rather than of goods, and that consequently Article 2 of the UCC did not cover the transaction. Does the UCC apply to this transaction? Uniform Commercial Code.

No, plaintiffs' warranty claim dismissed. The problem in 'mixed' transactions such as this one is to determine whether Article 2 governs the contract. The test for inclusion or exclusion in the U.C.C. Is not whether the contracts are mixed, but granting that they are mixed, whether their predominant factor, their thrust, their purpose, reasonably stated, is the rendition of services with goods incidentally involved (e.g. Contract with artist for painting) or is a transaction of sale, with labor incidentally involved (e.g., installation of a water heater in a bathroom). In order to determine the predominant purpose of a mixed transaction, courts examine the language of the parties' contract, the nature of the business of the supplier of the goods and services, the reason the parties entered into the contract (i.e. What each bargained to receive), and the respective amounts charged under the contract for goods and for services.

In this case, the written document evidencing the transaction is the invoice prepared by Shelby Aviation. In the top left hand corner is a preprinted paragraph that states that the owner is authorizing 'the following repair work to be done along with the necessary material.' As a whole, the invoice clearly emphasizes the repair and inspection aspect of the transaction, indicating that the predominant purpose was the sale of service, with the sale of goods incidental to that service. Ames, seeking business for his lawn maintenance firm, posted the following notice in the meeting room of the Antlers, a local lodge: 'To the members of the Antlers—Special this month. I will resod your lawn for two dollars per square foot using Fairway brand sod. This offer expires July 15.' The notice also included Ames's name, address, and signature and specified that the acceptance was to be in writing.

Bates, a member of the Antlers, and Cramer, the janitor, read the notice and became interested. Bates wrote a letter to Ames saying he would accept the offer if Ames would use Putting Green brand sod. Ames received this letter July 14 and wrote to Bates saying he would not use Putting Green sod. Bates received Ames's letter on July 16 and promptly wrote Ames that he would accept Fairway sod. Cramer wrote to Ames on July 10, saying he accepted Ames's offer. By July 15, Ames had found more profitable ventures and refused to resod either lawn at the specified price.

Bates and Cramer brought an appropriate action against Ames for breach of contract. Decisions on the claims of Bates and Cramer? Ames wins both cases. The first letter from Bates was not an acceptance because it did not correspond with the terms of the offer. It was a counteroffer, as it called for Ames to use a different brand sod, and therefore constituted a rejection of the original offer which terminated the original offer. After Ames had rejected the counteroffer, Bates wrote on July 16 an acceptance of the original offer. This failed to form a contract as the original offer had been terminated by (a) the rejection, Restatement, Second, Contacts, §38 and (b) expiration of the time for acceptance as by its terms it expired July 15, Restatement, Second Contracts, §41.

Cramer cannot recover because he was not an offeree. The offer was addressed to members of the Antlers. The party making an offer has the right to determine with whom he will contract. It is immaterial whether the offeror had special reasons for contracting with the offeree rather than with someone else. Garvey owned four speedboats named Porpoise, Priscilla, Providence, and Prudence. On April 2, Garvey made written offers to sell the four boats in the order named for $4,200 each to Caldwell, Meens, Smith, and Braxton, respectively, allowing ten days for acceptance.

In which, if any, of the following four situations described was a contract formed? (a) Five days later, Caldwell received notice from Garvey that he had contracted to sell Porpoise to Montgomery. The next day, April 8, Caldwell notified Garvey that he accepted Garvey's offer. (b) On the third day, April 5, Meens mailed a rejection to Garvey which reached Garvey on the morning of the fifth day.

But at 10:00 A.M. On the fourth day, Meens sent an acceptance by telegram to Garvey, who received it at noon on the same day. (c) Smith, on April 3, replied that she was interested in buying Providence but declared the price asked appeared slightly excessive and wondered if, perhaps, Garvey would be willing to sell the boat for $3,900. Five days later, having received no reply from Garvey, Smith, by letter, accepted Garvey's offer and enclosed a certified check for $4,200. (d) Braxton was accidentally killed in an automobile accident on April 9.

The following day, the executor of Braxton's estate mailed an acceptance of Garvey's offer to Garvey. (a) Where the offeror, after making an offer for sale, sells or contracts to sell the property to another person and the offeree acquires reliable information of this fact, before he has exercised his power of creating a contract by acceptance of the offer, the offer is revoked.

Restatement, Second, Contracts, Section 43. (b) A contract was formed on April 6. Rejection by mail or telegram does not destroy the power of acceptance until received by the offeror, but limits the power so that an authorized or unauthorized means of acceptance (this was an authorized means since the contracts fall under the U.C.C.) started after the sending of a prior rejection is only effective if the acceptance is received, as here, by the offeror before he receives the rejection. (c) A contract. A counteroffer by the offeree, relating to the same matter as the offer, is a rejection of the original offer, unless the offeror in his offer or the offeree in his counteroffer manifest a different intention. Restatement, Second, Contracts, § 39.

Here, Edward made a mere inquiry regarding the possibility of different terms or, stated somewhat differently, a request for a better offer. Edward's inquiry was not a counteroffer since it did not contain a promise. Edward's subsequent acceptance was therefore effective. (d) No contract. The death of the offeree terminates a revocable offer because it thereby becomes impossible to accept it. Restatement, Second, Contracts, Section 48.

A revocable offer can be accepted only by or for the benefit of the person to whom it is made. Alpha Rolling Mill Corporation, by letter dated June 8, offered to sell Brooklyn Railroad Company 2,000 to 5,000 tons of fifty-pound iron rails upon certain specified terms, adding that, if the offer was accepted, Alpha Corporation would expect to be notified prior to June 20. Brooklyn Company, on June 16, by telegram, referring to Alpha Corporation's offer of June 8, directed Alpha Corporation to enter an order for 1,200 tons of fifty-pound iron rails on the terms specified. The same day, June 16, Brooklyn Company, by letter to Alpha Corporation, confirmed the telegram. On June 18, Alpha Corporation, by telegram, declined to fill the order. Brooklyn Company, on June 19, telegraphed Alpha Corporation: 'Please enter an order for 2,000 tons rails as per your letter of the eighth. Please forward written contract.

In reply to Brooklyn Company's repeated inquiries regarding whether the order for 2,000 tons of rails had been entered, Alpha denied the existence of any contract between Brooklyn Company and itself. Thereafter, Brooklyn Company sued Alpha Corporation for breach of contract. Decision for Alpha Rolling Mill Corporation and against Brooklyn Railroad Company. The offer was for a quantity of between 2,000 to 5,000 tons of iron rails. When the railroad company ordered 1,200 tons it was not accepting the offer but making a counter-offer. This counter-offer is a rejection of the original offer.

After Alpha's refusal to accept the counter-offer, the railroad company attempted to accept 2,000 tons under the original offer. However, the original offer at this time was no longer in existence, having been terminated by the rejection. There was no offer open to the railroad company for acceptance after the rejection, and no contract was formed. On April 8, Burchette received a telephone call from Bleluck, a truck dealer, who told Burchette that a new model truck in which Burchette was interested would arrive in one week. Although Bleluck initially wanted $10,500, the conversation ended after Bleluck agreed to sell and Burchette agreed to purchase the truck for $10,000, with a $1,000 down payment and the balance upon delivery.

The next day, Burchette sent Bleluck a check for $1,000, which Bleluck promptly cashed. One week later, when Burchette called Bleluck and inquired about the truck, Bleluck informed Burchette he had several prospects looking at the truck and would not sell for less than $10,500. The following day, Bleluck sent Burchette a properly executed check for $1,000 with the following notation thereon: 'Return of down payment on sale of truck.' After notifying Bleluck that she will not cash the check, Burchette sues Bleluck for damages. Should Burchette prevail? Decision for Burchette.

The agreement made in the course of a telephone conversation between Burchette and truck dealer Bleluck was for the sale by Bleluck to Burchette at an agreed price of $10,000 for a new model truck. The trade description of the truck was known to both parties, as Burchette was interested in it, and dealer Bleluck had apparently ordered the new truck from the manufacturer as he told Burchette that he expected to receive delivery of it in one week. The price was payable $1,000 down, and the balance upon delivery. This is a valid oral contract for the sale of goods by description.

Each party manifested to the other over the telephone assent to these terms, and Burchette promptly sent to Bleluck her check for $1,000 which Bleluck cashed. The mutual promises exchanged were definite and certain. Note regarding the statute of frauds: Bleluck 's check for $1,000 payable to Burchette and Bleluck 's notation thereon fulfill all of the requirements of the statute of frauds and make the contract enforceable against Bleluck in that (1) the notation evidences a contract for the sale of goods; (2) the check bears Bleluck 's signature as drawer; and (3) the singular number of 'truck' refers to the quantity of one truck.

On November 15, I. Sellit, a manufacturer of crystalware, mailed to Benny Buyer a letter stating that Sellit would sell to Buyer 100 crystal 'A' goblets at $100 per goblet and that 'the offer would remain open for fifteen (15) days.'

On November 18, Sellit, noticing the sudden rise in the price of crystal 'A' goblets, decided to withdraw her offer to Buyer and so notified Buyer. Buyer chose to ignore Sellit's letter of revocation and gleefully watched as the price of crystal 'A' goblets continued to skyrocket. On November 30, Buyer mailed to Sellit a letter accepting Sellit's offer to sell the goblets. The letter was received by Sellit on December 4. Buyer demands delivery of the goblets; what result? Firm Offers Under the Code. Buyer prevails.

Sellit's offer of Nov. 15, constituted a firm offer-it is a signed writing by a merchant promising to hold open an offer for 3 months or less (15 days in this case) and therefore cannot be revoked prior to Nov.

Thus, Sellit's revocation of Nov. 18, is ineffective and of no legal effect.

Buyer accepted Sellit's offer within the prescribed time period by dispatching his acceptance on November 30. Buyer's use of the mail for sending his acceptance is a reasonable means of acceptance (this is a UCC sale) and thus is effective upon dispatch. On May 1, Melforth Realty Company offered to sell Greenacre to Dallas, Inc., for $1,000,000. The offer was made by telegraph and stated that the offer would expire on May 15. Dallas decided to purchase the property and sent a registered letter to Melforth on May 10, accepting the offer. Due to unexplained delays in the postal service, Melforth did not receive the letter until May 22.

Melforth wishes to sell Greenacre to another buyer, who is offering $1,200,000 for the tract of land. Has a contract resulted between Melforth and Dallas? Effective Moment: Acceptance By Dispatch. Under the Restatement, Second, Dallas' acceptance, via mail, is a reasonable means of acceptance and is effective upon dispatch. Thus, Dallas' acceptance, mailed on May 10, would have been effective prior to the offer's termination on May 15. Under the traditional rule the acceptance would have been unauthorized, since it was not the means utilized by the offeror in making the offer, and therefore effective only when received by the offeror, provided it is received within the time period the authorized means would have arrived.

Here the offer was not received (May 22) until the offer had already expired (May 15) and it was not received within the time frame that the authorized means (telegraph) would have been received within (probably no later than May 16). Had Melforth stipulated that the acceptance be received by May 15, then the effective moment of acceptance would be upon receipt by Melforth, and there would no contract. Ford is not entitled to the $5,000, as he did not accept Rowe's offer and therefore no contract was formed. The gift of the nine books by Ford to Rowe was not an acceptance because acceptance requires an intention on the part of the offeree to accept the offer, and since at the time of making the gift Ford had no knowledge of the offer, he did not have and could not have had such intention. Moreover, even if Ford had then known of the offer, his intention at that time was to give the nine books to Rowe as a Christmas present, and not to accept any offer.

Scott, manufacturer of a carbonated beverage, entered into a contract with Otis, owner of a baseball park, whereby Otis rented to Scott a large signboard on top of the center field wall. The contract provided that Otis should letter the sign as Scott desired and would change the lettering from time to time within forty-eight hours after receipt of written request from Scott. As directed by Scott, the signboard originally stated in large letters that Scott would pay $1,000 to any ballplayer hitting a home run over the sign. Scott refuses to pay any of the three players.

What are the rights of Scott, Hume, Perry, and Todd? In the first game of the season, Hume, the best hitter in the league, hit one home run over the sign. Scott immediately served written notice on Otis instructing Otis to replace the offer on the signboard with an offer to pay $500 to every pitcher who pitched a no-hit game in the park. A week after receipt of Scott's letter, Otis had not changed the wording on the sign. On that day, Perry, a pitcher for a scheduled game, pitched a no-hit game while Todd, one of his teammates, hit a home run over Scott's sign. Objective Standard for Intent. Mutual assent to the formation of a contract is operative as to the extent it is manifested.

If the manifestation is at variance with the mental intent, the objective expression is controlling. It was Clark's intention to sell the coin collection as a whole and the parties mutually assented to this.

See City of Everett v. Estate of Sumstad, 631 P.2d 366 (Wash. This transaction shows no evidence of fraud in the inducement, which would make this it voidable at Clark's choice. Small, admiring Jasper's watch, asked Jasper where and at what price he had purchased it. Jasper replied: 'I bought it at West Watch Shop about two years ago for around $85, but I am not certain as to that.'

Small then said: 'Those fellows at West are good people and always sell good watches. I'll buy that watch from you.'

Jasper replied: 'It's a deal.' The next morning Small telephoned Jasper and said he had changed his mind and did not wish to buy the watch.

Jasper sued Small for breach of contract. In defense, Small has pleaded that he made no enforceable contract with Jasper (a) because the parties did not agree on the price to be paid for the watch, and (b) because the parties did not agree on the place and time of delivery of the watch to Small. Are either, or both, of these defenses good? Definiteness of Acceptance. The first defense has merit, especially when combined with the second defense. The second defense will not stand alone, but when coupled with the lack of agreement as to price, it is less likely they intended to form a contract.

Small's comments regarding the watch were not definite and certain. (a) Section 2-305, U.C.C., provides: 'Open Price Term. (1) The parties if they so intend can conclude a contract for sale even though the price is not settled. In such a case the price is a reasonable price at the time for delivery if (a) nothing is said as to price.' From the facts given, it would be difficult to a reasonable price.

As to the second argument of time and place for delivery the U.C.C. Provides: '2-308. Absence of Specified Place for Delivery. Unless otherwise agreed (a) the place for delivery of goods is the seller's place of business or if he has none his residence; *** '2-309. Absence of Specific Time Provision; Notice of Termination.

(1) The time for shipment or delivery of any other action under a contract if not provided in this Article or agreed upon shall be a reasonable time.' On November 19, 1949, Hoover Motor Express Company sent to Clements Paper Company a written offer to purchase certain real estate. Sometime in December, Clements authorized Williams to accept. Williams, however, attempted to bargain with Hoover to obtain a better deal, specifically that Clements would retain easements on the property.

In a telephone conversation on January 13, 1950, Williams first told Hoover of his plan to obtain the easements. Hoover replied: 'Well, I don't know if we are ready. We have not decided, we might not want to go through with it.'

On January 20, Clements sent a written acceptance of Hoover's offer. Hoover refused to buy, claiming it had revoked its offer through the January 13 phone conversation. Clements then brought suit to compel the sale or obtain damages.

Did Hoover successfully revoke its offer? Judgment for Hoover. Express notice of revocation before acceptance of an offer is not required. The offeror may implicitly revoke his offer through acts or communications to the offeree that are inconsistent with its continuance. If the offeree has knowledge of this inconsistent interest before he has accepted then the offer is revoked. Here, Williams knew through the January 13 phone conversation that Hoover 'thought they might not go through with it.' This communication by Hoover to Williams effectively revoked its offer.

Therefore, Clements' acceptance on January 20 came too late to bind Hoover to the sale. Hoover Motor Express Co. Clements Paper Co., 241 S.W.2d 851 (Tenn. Walker leased a small lot to Keith for ten years at $1,000 a month, with a right for Keith to extend the lease for another ten-year term under the same terms except as to rent. The renewal option provided: 'Rental will be fixed in such amount as shall actually be agreed upon by the lessors and the lessee with the monthly rental fixed on the comparative basis of rental values as of the date of the renewal with rental values at this time reflected by the comparative business conditions of the two periods.'

Keith sought to exercise the renewal right and, when the parties were unable to agree on the rent, brought suit against Walker. Who prevails? Option Contract. Decision for Walker. The renewal option provision did not constitute an option contract or any agreement giving Keith a unilateral right to accept the new contract for a second 10-year period of time.

The renewal option was merely an agreement to attempt to negotiate in good faith a new lease agreement for the second 10-year period. If Walker acted reasonably and attempted to negotiate an extension of the lease in good faith, yet despite that effort the parties were unable to agree on the new rent, Walker has no liability.

The Brewers contracted to purchase Dower House from McAfee. Then, several weeks before the May 7 settlement date for the purchase of the house, the two parties began to negotiate for the sale of certain items of furniture in the house. On April 30, McAfee sent the Brewers a letter containing a list of the furnishings to be purchased at specified prices; a payment schedule, including a request for a $3,000 payment, due on acceptance; and a clause reading: 'If the above is satisfactory, please sign and return one copy with the first payment.' On June 3, the Brewers sent a letter to McAfee stating that enclosed was a $3,000 check; that the original contract had been misplaced and could another be furnished; that they planned to move into Dower House on June 12; and that they wished the red desk to be included in the contract. McAfee then sent a letter dated June 8 to the Brewers, listing the items of furniture purchased.

The Brewers moved into Dower House in the middle of June. Soon after they moved in, they tried to contact McAfee at his office to tell him that there had been a misunderstanding relating to their purchase of the listed items. They then refused to pay him any more money, and he brought this action to recover the balance outstanding.

Will McAfee be able to collect the additional money from the Brewers? Mirror Image Rule. Here, McAfee did not indicate in his April 30 letter to the Brewers that a particular manner of acceptance was required. Therefore, the Brewer's letter of June 3, together with the enclosed $3,000 check, the amount due upon acceptance of the contract, manifested their assent to the items listed in the April 30 letter from McAfee. The June 3 letter was both definite and seasonable, and the reference to the red writing desk was not expressed in language making acceptance conditional upon inclusion of the desk. This item, then, was merely a proposal for an addition to the contract as McAfee requested, they did send a letter of their own. This was reasonable under the circumstances since they had misplaced the contract and, therefore, the letter constituted an effective acceptance of McAfee's offer.

Brewer, 214 Va. 579, 203 S.E.2d 129 (1974. The Thoelkes were owners of real property located in Orange County, which the Morrisons agreed to purchase. The Morrisons signed a contract for the sale of that property and mailed it to the Thoelkes in Texas on November 26.

The next day the Thoelkes executed the contract and placed it in the mail addressed to the Morrisons' attorney in Florida. After the executed contract was mailed but before it was received in Florida, the Thoelkes called the Morrisons' attorney in Florida and attempted to repudiate the contract. Deposited Acceptance Rule. Decision for the Morrison's.

There is a contract. Under the deposited acceptance rule, an unqualified offer was accepted when the letter was placed in the mail. The repudiation was ineffective, because a contract came into existence when the letter was mailed, even though it had not been received by the Morrison's attorney. This rule is also known as the 'rule in Adams v.

Lindsell,' because that was the first case in which it was enunciated. Thoelke, 155 So.2d 889 (Fla. Lucy and Zehmer met while having drinks in a restaurant. During the course of their conversation, Lucy apparently offered to buy Zehmer's 471.6-acre farm for $50,000 cash. Although Zehmer claims that he thought the offer was made in jest, he wrote the following on the back of a pad: 'We hereby agree to sell to W. Lucy the Ferguson Farm complete for $50,000, title satisfactory to buyer.' Zehmer then signed the writing and induced his wife Ida to do the same.

She claims, however, that she signed only after Zehmer assured her that it was only a joke. Finally, Zehmer claims that he was 'high as a Georgia pine' at the time but admits that he was not too drunk to make a valid contract. Does a contract exist between the Thoelkes and the Morrisons? Offers/Objective Standard of Intent/Contractual Capacity. Judgment for Lucy. An agreement or mutual assent is essential to the formation of a valid contract.

The mental assent of the parties is not requisite, however, unless one party's undisclosed intentions are not made known to the other party. If they are not, then the words and undisclosed intentions are judged by an objective standard to see if they manifest an intention to agree. Thus Zehmer cannot claim that he was merely jesting when his conduct and words would warrant a reasonable person in believing that he intended a real agreement. Zehmer's response to Lucy's offer, therefore, whether made in earnest or in secret jest constituted a binding contract. Zehmer had contractual capacity, because he was able to understand the nature and consequences of his actions.

Zehmer, 196 Va. 493, 84 S.E.2d 516 (1954). Lee Calan Imports advertised a used Volvo station wagon for sale in the Chicago Sun-Times. As part of the information for the advertisement, Lee Calan Imports instructed the newspaper to print the price of the car as $1,795. However, due to a mistake made by the newspaper, without any fault on the part of Lee Calan Imports, the printed ad listed the price of the car as $1,095. After reading the ad and then examining the car, O'Brien told a Lee Calan Imports salesman that he wanted to purchase the car for the advertised price of $1,095.

Calan Imports refuses to sell the car to O'Brien for $1,095. Is there a contract? If so, for what price?

On May 20 cattle rancher Oliver visited his neighbor Southworth, telling him, 'I know you're interested in buying the land I'm selling.' Southworth replied, 'Yes, I do want to buy that land, especially since it adjoins my property.' Although the two men did not discuss the price, Oliver told Southworth he would determine the value of the property and send that information to him, so that Southworth would have 'notice' of what Oliver 'wanted for the land.'

On June 13, Southworth called Oliver to ask if he still planned to sell the land. Oliver answered, 'Yes, and I should have the value of the land determined soon.'

On June 17, Oliver sent a letter to Southworth listing a price quotation of $324,000. Southworth then responded to Oliver by letter on June 21, stating that he accepted Oliver's offer. However, on June 24 Oliver wrote back to Southworth, saying 'There has never been a firm offer to sell, and there is no enforceable contract between us.'

Oliver maintains that a price quotation alone is not an offer. Southworth claims a valid contract has been made. Essentials of an Offer/Intent. There is a valid and enforceable contract to sell the property. Despite the general rule that a price quotation alone is insufficient to constitute an offer, 'there may be circumstances under which a price quotation, when considered together with facts and circumstances, may constitute an offer which, if accepted, will result in a binding contract.'

Whether Oliver has communicated his intent to enter into a contract must be judged on the basis of what a reasonable person in the position of Southworth has been led to believe. Here, the circumstances surrounding the letter of June 17 (of itself merely a price quotation) made it reasonable that Southworth believed Oliver had made an offer to sell the ranch lands. Southworth v. Oliver, 284 Or.

361, 587 P.2d 994 (1978). On December 23, Wyman, a lawyer representing First National Bank & Trust (defendant), wrote to Zeller (plaintiff) stating that he had been instructed to offer a building to Zeller at a price of $240,000. Zeller had previously expressed an interest in purchasing the building for $240,000. The letter also set forth details concerning interest rates and loan fees.

After receiving the letter, Zeller instructed his attorney, Jamma, to send Wyman a written counteroffer of $230,000 with varying interest and loan arrangements. Jamma sent the written counteroffer as instructed on January 10. On the same day, Jamma telephoned Wyman and informed him of the counteroffer. Jamma then tried to telegraph acceptance of the original offer to Wyman. When Wyman refused to sell the property to him, Zeller brought this action to seek enforcement of the alleged contract. The trial court entered summary judgment against Zeller, and he appealed. Judgment for First National Bank.

In order for an acceptance to create a binding contract, it must comply strictly with the terms of the offer. An acceptance requesting modification or containing terms that vary from those offered constitutes a rejection of the original offer and becomes a counteroffer that must be accepted by the original offeror before a valid, binding contract is formed. Here, in a telephone conversation on January 10, Jamma told Wyman of the $230,000 counteroffer, which operated as a rejection of the original offer and terminated Zeller's power of acceptance. Finally, it matters not that the counteroffer was communicated orally in response to a written offer. If an offer requires a written acceptance, no other form will do.

Here, however, no particular form of response was required, so the oral counteroffer was an effective rejection. As such, it is irrelevant that the written acceptance arrived prior to the written counteroffer since the oral counteroffer preceded them both. On August 12, Mr. Mitchell, the owners of a small secondhand store, attended Alexander's Auction, where they bought a used safe for $50.

The safe, part of the Sumstad estate, contained a locked inside compartment. Both the auctioneer and the Mitchells knew this fact. Soon after the auction, the Mitchells had the compartment opened by a locksmith, who discovered $32,207 inside. The Everett Police Department impounded the money. The city of Everett brought an action against the Sumstad estate and the Mitchells to determine the owner of the money. Who should receive the money?

Auction Sales. Judgment in favor of the Mitchells. The subject matter transferred in a sale is determined by the intent of the parties as revealed by the terms of their agreement in light of the surrounding circumstances. The intentions of the parties are revealed by a reasonable interpretation of their words and acts.

Any unexpressed intention is irrelevant. In this case, the Mitchells understood that all auction sales were final, and the auctioneer made no statement reserving rights to any contents of the safe to the estate. The reasonable conclusion is that the auctioneer intended to sell the safe and its contents and that the parties mutually assented to such a sale. Irwin Schiff is a self-styled 'tax rebel' who has made a career, and substantial profit, out of his tax protest activities. On February 7, Schiff appeared live on CBS News Nightwatch, a late-night program with a viewer participation format. During the broadcast Schiff repeated his assertion that nothing in the Internal Revenue Code stated that an individual was legally required to pay federal income tax. Schiff then challenged, 'If anybody calls this show—I have the Code—and cites any section of this Code that says an individual is required to file a tax return, I will pay them $100,000.'

Call-in telephone numbers were periodically flashed on the screen. John Newman, an attorney, did not see Schiff's live appearance on Nightwatch. Newman did, however, see a two-minute videotaped segment, including Schiff's challenge, which was rebroadcast several hours later on the CBS Morning News. Newman researched the matter that same day, and on the following day, February 9, placed a call using directory assistance to CBS Morning News stating that the call was performance of the consideration requested by Mr. Schiff in exchange for his promise to pay $100,000.

When Schiff refused to pay, Newman sued. Should Newman prevail?

Anita and Barry were negotiating, and Anita's attorney prepared a long and carefully drawn contract, which was given to Barry for examination. Five days later and prior to its execution, Barry's eyes became so infected that it was impossible for him to read. Ten days thereafter and during the continuance of the illness, Anita called upon Barry and urged him to sign the contract, telling him that time was running out. Barry signed the contract despite the fact he was unable to read it.

In a subsequent action by Anita, Barry claimed that the contract was not binding upon him because it was impossible for him to read and he did not know what it contained prior to his signing it. Should Barry be held to the contract? Yes, decision in favor of Anita and against Barry. Barry's defense that the contract was not binding upon him because he had not and could not have read it prior to signing it is not valid. Here, there was no misrepresentation of the contents of the contract Barry was requested to sign.

There is nothing approaching fraud upon the part of Anita. Upon the facts stated, Barry's inability to read the contract because of impaired vision does not afford him a defense where his signature to the contract was voluntary, and was not induced by fraud or misrepresentation. Moreover, Barry could not prove a defense based upon duress since Anita did not physically compel nor force Barry by threats to manifest assent to the proposal. Barry could easily have had someone read the contract to him, or have it reviewed by his attorney. (a) Johnson tells Davis that he paid $150,000 for his farm in 2004, and that he believes it is worth twice that at the present time.

Relying upon these statements, Davis buys the farm from Johnson for $225,000. Johnson did pay $150,000 for the farm in 2004, but its value has increased only slightly, and it is presently not worth $300,000. On discovering this, Davis offers to reconvey the farm to Johnson and sues for the return of his $225,000. (b) Modify the facts in (a) by assuming that Johnson had paid $100,000 for the property in 2004. (a) Decision for Johnson; Davis is not entitled to the return of his $225,000 as long as Johnson actually believed his farm was worth approximately $300,000.

Johnson's statement with respect to the value of the farm was merely the expression of an opinion and not the statement of a material fact upon which Davis had a right to rely. There is no indication of an appraisal or other expert opinion upon which Johnson's opinion is based.

(b) Decision for Davis. Johnson's statement to Davis that he paid $150,000 for the farm was an untrue statement of a material fact, upon which Davis had a right to and did rely. On September 1, Adams in Portland, Oregon, wrote a letter to Brown in New York City, offering to sell to Brown one thousand tons of chromite at $48.00 per ton, to be shipped by S.S. Malabar sailing from Portland, Oregon, to New York City via the Panama Canal. Upon receiving the letter on September 5, Brown immediately mailed to Adams a letter stating that she accepted the offer. There were two ships by the name of S.S. Malabar sailing from Portland to New York City via the Panama Canal, one sailing in October and the other sailing in December.

At the time of mailing her letter of acceptance Brown knew of both sailings and further knew that Adams knew only of the December sailing. Is there a contract?

If so, to which S.S. Malabar does it relate? There is a contract, and it relates to the S.S. Malabar sailing in December.

In the classic Peerless case (Raffles v. Wichelhaus, 2 Hurlstone and Coltman Reports 906) there were two ships sailing from Bombay both named 'Peerless.' The defendant knew only of the 'Peerless' sailing in October and the plaintiff knew only of the 'Peerless' sailing in December. There was no meeting of the minds and hence, no contract. Here, since Brown knew of both sailings and further knew that Adams did not know of the October sailing, she, Brown, will not be heard to say that she intended the chromite to be shipped on the S.S. Malabar sailing in October.

Adams and Brown manifested their mutual intent to a sale of chromite to be shipped on the S.S. Malabar sailing in December.

Restatement, Second, Sect. Adler owes Panessi, a police captain, $500. Adler threatens that unless Panessi discharges him from the debt, Adler will disclose the fact that Panessi has on several occasions become highly intoxicated and has been seen in the company of certain disreputable persons. Panessi, induced by fear that such a disclosure would cost him his position or in any event lead to social disgrace, gives Adler a release but subsequently sues to set it aside and recover on his claim. Will Adler be able to enforce the release? The restatement, second, Contracts, Section 175, defines duress as a manifestation 'induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim.'

Moreover, a 'threat is improper if the resulting exchange is not on fair terms, and (a) the threatened act would harm the recipient and would not significantly benefit the party making the threat.' Restatement, Second, Section 176(2). The facts presented in the problem state a clear-cut case of duress by the use of improper threats. Fraud in the Inducement.

Decision in favor of Pringle. Because Pringle was fraudulently induced to buy the farm, Pringle had the right to disaffirm the transaction. All of the elements are present, including justifiable reliance on the statements made by Harris.

The contract was voidable by Pringle only, not by Harris. Presumably Pringle will be content with the bargain even though induced by fraud to make the purchase. The right of avoidance rests entirely with Pringle and he may, if he so desires, abide by the contract. It should be noted, however, that Pringle would not prevail in a suit brought in tort since Pringle did not suffer an injury. Fraud in the Inducement.

Yes, Miller will prevail against Phillips. The statement that the actual book value of the shares of stock in XYZ Corporation was $200 per share was a statement of material fact made to induce Miller to purchase the stock and which did, in fact, succeed in persuading Miller to buy the shares. The transaction meets the requirements of fraud in the inducement: (1) The representation related to a material fact; (2) It was knowingly false; (3) It was made with the intention that it be acted upon by the person to whom made; (4) It was justifiably relied upon; and (5) The false representation was the proximate cause of injury or damage. Doris mistakenly accused Peter's son, Steven, of negligently burning down her barn. Peter believed that his son was guilty of the wrong and that he, Peter, was personally liable for the damage, since Steven was only fifteen years old.

Upon demand made by Doris, Peter paid Doris $2,500 for the damage to her barn. After making this payment, Peter learned that his son had not caused the burning of Doris's barn and was in no way responsible for its burning. Peter then sued Doris to recover the $2,500 he had paid her. Will he be successful?

Jones, a farmer, found an odd-looking stone in his fields. He went to Smith, the town jeweler, and asked him what he thought it was. Smith said he did not know but thought it might be a ruby. Jones asked Smith what he would pay for it, and Smith said two hundred dollars, whereupon Jones sold it to Smith for $200.

The stone turned out to be an uncut diamond worth $3,000. Jones brought an action against Smith to recover the stone. On trial, it was proved that Smith actually did not know the stone was a diamond when he bought it, but he thought it might be a ruby.

Can Jones void the sale? Decedent Judith Johnson, a bedridden, lonely woman of eighty-six years, owned outright Greenacre, her ancestral estate. Ficky, her physician and friend, visited her weekly and was held in the highest regard by Johnson. Johnson was extremely fearful of suffering and depended upon Ficky to ease her anxiety and pain. Several months before her death, she deeded Greenacre to Ficky for $5,000. The fair market value of Greenacre at this time was $125,000. Johnson was survived by two children and six grandchildren.

Johnson's children challenged the validity of the deed. Should the deed be declared invalid due to Ficky's undue influence? Dorothy and John Huffschneider listed their house and lot for sale with C. The asking price was $165,000, and the owners told C. That the size of the property was 6.8 acres. Dean Olson, a salesman for C. B., advertised the property in local newspapers as consisting of six acres.

James and Jean Holcomb signed a contract to purchase the property through Olson after first inspecting the property with Olson and being assured by Olson that the property was at least 6.6 acres. The Holcombs never asked for or received a copy of the survey. In actuality, the lot was only 4.6 acres. The Holcombs now seek to rescind the contract.

Fraud in the Inducement. Decision for James and Jean Holcomb. When Olson falsely represented that the property was at least 6.6 acres a fraud was committed. As the sales agent Olson had an obligation to disclose all material information to the purchasers as well as to respond truthfully to all inquiries. The agent had access to the survey and could have easily verified the actual acreage. His conduct can be characterized at a minimum as 'recklessly indifferent' if not outright as an intended deception, so long as Dorothy and John Huffschneider did not provide C.B. Property with a fraudulent survey of the property.

In February, Gardner, a schoolteacher with no experience in running a tavern, entered into a contract to purchase for $40,000 the Punjab Tavern from Meiling. The contract was contingent upon Gardner's obtaining a five-year lease for the tavern's premises and a liquor license from the State.

Prior to the formation of the contract, Meiling had made no representations to Gardner concerning the gross income of the tavern. Approximately three months after the contract was signed, Gardner and Meiling met with an inspector from the Oregon Liquor Control Commission (OLCC) to discuss transfer of the liquor license. Meiling reported to the agent, in Gardner's presence, that the tavern's gross income figures for February, March, and April were $5,710, $4,918, and $5,009, respectively. The OLCC granted the required license, the transaction was closed, and Gardner took possession on June 10. After discovering that the tavern's income was very low and that the tavern had very few female patrons, Gardner contacted Meiling's bookkeeping service and learned that the actual gross income for those three months had been approximately $1,400 to $2,000. Will a court grant Gardner rescission of the contract? Fraudulent Misrepresentation/Justifiable Reliance.

To sustain a case of fraudulent misrepresentation, the injured party must prove that he actually relied upon the false representation, causing him to enter into the bargain. Meiling's only representations concerning the Tavern's gross income were made months after the contract was formed. Since these misrepresentations came after the binding agreement of February, they could not have been relied upon by Gardner in making the agreement.

Therefore, rescission of the contract is not permitted. Meiling, 280 Or. 665, 572 P.2d 1012 (1977). Christine Boyd was designated as the beneficiary of a life insurance policy issued by Aetna Life Insurance Company on the life of Christine's husband, Jimmie Boyd. The policy insured against Jimmie's permanent total disability and also provided for a death benefit to be paid on Jimmie's death.

Several years after the policy was issued, Jimmie and Christine separated. Jimmie began to travel extensively, and Christine therefore was unable to keep track of his whereabouts or his state of health. Jimmie, however, continued to pay the premiums on the policy until Christine tried to cash in the policy to alleviate her financial distress. A loan had previously been made on the policy, however, leaving its cash surrender value, and thus the amount that Christine received, at only $4.19. Shortly thereafter, Christine learned that Jimmie had been permanently and totally disabled before the surrender of the policy.

Aetna also was unaware of Jimmie's condition, and Christine requested that the surrendered policy be reinstated and that the disability payments be made. Jimmie died soon thereafter, and Christine then requested that Aetna pay the death benefit. Mutual Mistake of Fact. Decision for Mrs. As a matter of equity, the surrender agreement had to be rescinded. Boyd known the true facts at the time she surrendered the policy, she certainly would not have done so. Since her mistaken belief that her husband was not disabled was a material mistake of fact, her rescission was not effective.

In the opinion of the court, 'The supposed elements of doubt as to the health of Mr. Boyd never entered into the contemplation of either party, nor did it form any part of the consideration for the cancellation and surrender of the policy.

Since the policy was in full force and effect at the time of total permanent disability,' the defendant insurance company is liable. Aetna Life Insurance Co., 310 Ill. 2d 99 (1941).

Plaintiff, Gibson, entered into negotiation with W. May, president of Home Folks Mobile Home Plaza, Inc., to buy Home Plaza Corporation.

Plaintiff visited the mobile home park on several occasions, at which time he noted the occupancy, visually inspected the sewer and water systems, and asked May numerous questions concerning the condition of the business. Plaintiff, however, never requested to see the books, nor did May try to conceal them.

May admits making the following representations to the plaintiff: (1) the water and sewer systems were in good condition and no major short-term expenditures would be needed; (2) the park realized a 40 percent profit on natural gas sold to tenants; and (3) usual park vacancy was 5 percent. Additionally, May gave plaintiff the park's accountant-prepared income statement, which showed a net income of $38,220 for the past eight months. Based on these figures, plaintiff projected an annual net profit of $57,331.20. Upon being asked whether this figure accurately represented income of the business for the past three years, May stated by letter that indeed it did. Plaintiff purchased the park for $275,000.

Shortly thereafter, plaintiff spent $5,384 repairing the well and septic systems. By the time plaintiff sold the park three years later, he had expended $7,531 on the wells and $8,125 on the septic systems. Furthermore, in the first year, park occupancy was nowhere near 95 percent. Even after raising rent and the charges for natural gas, plaintiff still operated at a deficit. Plaintiff sued defendant, alleging that May, on behalf of defendant, made false and fraudulent statements on which plaintiff relied when he purchased the park. Fraud: Justifiable Reliance.

Defendant's motion for summary judgment denied. The essential elements of fraud are: '(1) false representation made by the defendant; (2) scienter; (3) an intention to induce the plaintiff to act or refrain from acting in reliance by the plaintiff; (4) justifiable reliance by the plaintiff; (5) damage to the plaintiff.' Home Plaza claims that Gibson was not justified in relying upon the false representations of May because Gibson failed to exercise ordinary diligence and prudence before acting on the alleged misrepresentations. A lack of diligence may be apparent as a matter of law when the defrauded party blindly and carelessly relies upon the representations of another or had notice of the allegedly misrepresented fact and proceeded anyway. However, the law of Georgia 'does not require a defrauded party to exhaust all means at his disposal to ascertain the truth of representations before acting thereon.' Gibson visited the park several times and communicated extensively with May, Gibson tried to verify a number of items, among them the eight-month income statement and the projection of annual income. This behavior is not blind reliance as a matter of law.

Gibson had a right to rely upon the truth of May's statements without seeking verification from other sources, since the statements related to matters apparently within May's knowledge. Columbia University brought suit against Jacobsen on two notes signed by him and his parents, representing the balance of tuition he owed the University. Jacobsen counterclaimed for money damages due to Columbia's deceit or fraudulent misrepresentation. Jacobsen argues that Columbia fraudulently misrepresented that it would teach wisdom, truth, character, enlightenment, and similar virtues and qualities. He specifically cites as support the Columbia motto: 'in lumine tuo videbimus lumen' ('In your light we shall see light'); the inscription over the college chapel: 'Wisdom dwelleth in the heart of him that hath understanding'; and various excerpts from its brochures, catalogues, and a convocation address made by the University's president. Jacobsen, a senior who was not graduated because of poor scholastic standing, claims that the University's failure to meet its promises made through these quotations constituted fraudulent misrepresentation or deceit.

Fraud: False Representation. Judgment for Columbia University. The necessary elements of an action for deceit are: (1) a false representation; (2) knowledge or belief on the part of the person making the representation that it is false; (3) an intention that the other party act thereon; (4) reasonable reliance by such party in so doing; and (5) resultant damage to him. Here, the quotations in the University's brochures and catalogues, inscriptions over its buildings, and speech by its president merely indicated Columbia's objectives, desires, and hopes together with factual statements as to the nature of some of the courses included in its curricula. There is nothing in these statements to establish that Columbia represented that it would teach wisdom. Jacobsen's interpretation of them as a representation, express or implied, that it could or would teach wisdom and the like is entirely subjective and irrational.

Wisdom is not a subject that can be taught and no reasonable person would accept such a claim made by any man or institution. Therefore, there is no false representation upon which to base an action in deceit. Frank Berryessa stole funds from his employer, the Eccles Hotel Company. His father, W. Berryessa, learned of his son's trouble and, thinking the amount involved was about $2,000, gave the hotel a promissory note for $2,186 to cover the shortage. In return, the hotel agreed not to publicize the incident or notify the bonding company. (A bonding company is an insurer that is paid a premium for agreeing to reimburse an employer for thefts by an employee.) Before this note became due, however, the hotel discovered that Frank had actually misappropriated $6,865.

The hotel then notified its bonding company, Great American Indemnity Company, to collect the entire loss. Berryessa claims that the agent for Great American told him that unless he paid them $2,000 in cash and signed a note for the remaining $4,865, Frank would be prosecuted. Berryessa agreed, signed the note, and gave the agent a cashier's check for $1,500 and a personal check for $500. He requested that the agent not cash the personal check for about a month.

Subsequently, Great American sued Berryessa on the note. He defends against the note on the grounds of duress and counterclaims for the return of the $1,500 and the cancellation of the uncashed $500 check. Who should prevail?

Improper Threats. In an action on the note, Berryessa (Frank was not served with summons) resisted liability upon the grounds of duress and lack of consideration. He counterclaimed for the return of the $1,500 and the cancellation of the uncashed check for $500. Held (1) that the note having been given to suppress a criminal prosecution was against public policy and not enforceable between the parties because of duress of illegal consideration; (2) that there was not duress as to the uncashed check for $500 and the payment of $1,500 cash which were substituted for the $2,186 note that had been given by defendant to the hotel employer without any duress or threat of prosecution. Jane Francois married Victor H.

At the time of the marriage, Victor was a 52 year-old bachelor living with his elderly mother, and Jane was a 30-year-old, twice-divorced mother of two. Victor had a relatively secure financial portfolio; Jane, on the other hand, brought no money or property to the marriage.

The marriage deteriorated quickly over the next couple of years, with disputes centered on financial matters. During this period, Jane systematically gained a joint interest in and took control of most of Victor's assets. Three years after they married, Jane contracted Harold Monoson, an attorney, to draw up divorce papers. Victor was unaware of Jane's decision until he was taken to Monoson's office, where Monoson presented for Victor's signature a 'Property Settlement and Separation Agreement.'

Monoson told Victor that he would need an attorney, but Jane vetoed Victor's choice. Monoson then asked another lawyer, Gregory Ball, to come into the office. Ball read the agreement and strenuously advised Victor not to sign it because it would commit him to financial suicide. The agreement transferred most of Victor's remaining assets to Jane. Victor, however, signed it because Jane and Monoson persuaded him that it was the only way that his marriage could be saved. In October the following year, Jane informed Victor that she had sold most of his former property and that she was leaving him permanently. Can Victor have the agreement set aside as a result of undue influence?

Undue Influence. Yes, decision for Victor. The essence of undue influence is the subversion of another's free will in order to obtain assent to an agreement. The degree of persuasion that is necessary to constitute undue influence varies from case to case.

The proper inquiry is not just whether persuasion induced the transaction but whether the result was produced by the domination of the will of the victim by the person exerting undue influence. Hence, the particular transaction must be scrutinized to determine if the agreement was truly the product of a free and independent mind. The fairness of the agreement must be shown by clear and convincing evidence. Because the agreement was clearly unfair, and the agreement was contrary to Victor's own best interests, it is clear that Victor would not have signed the agreement but for undue influence. Francois, 599 F.2d 1286 (1979). Iverson owned Iverson Motor Company, an enterprise engaged in the repair as well as the sale of Oldsmobile, Rambler, and International Harvester Scout automobiles. Forty percent of the business's sales volume and net earnings came from the Oldsmobile franchise.

Whipp contracted to buy Iverson Motors, which Iverson said included the Oldsmobile franchise. After the sale, however, General Motors refused to transfer the franchise to Whipp. Whipp then returned the property to Iverson and brought this action seeking rescission of the contract. Should the contract be rescinded? Nonfraudulent Misrepresentation. Historically, an action for fraud required that the injured party show that the misrepresentation upon which it detrimentally relied was made with the speaker's knowledge of its falsity or with reckless disregard for the falsity of the statement. Today, however, a cause of action may be based on an innocent misrepresentation.

Here, Iverson represented that the Oldsmobile franchise was transferable, when, in fact it was not. That misrepresentation, even though innocently made, makes the entire agreement voidable. Iverson, 34 Wis.2d 166, 168 N.W. 2d 201 (1969). On February 10, Mrs.

Sunderhaus purchased a diamond ring from Perel & Lowenstein for $6,990. She was told by the company's salesman that the ring was worth its purchase price, and she also received at that time a written guarantee from the company attesting to the diamond's value, style, and trade-in value.

Sunderhaus went to trade the ring for another, however, she was told by two jewelers that the ring was valued at $3,000 and $3,500, respectively. Sunderhaus knew little about the value of diamonds and claims to have relied on the oral representation of the Perel & Lowenstein's salesman and the written representation as to the ring's value.

She seeks rescission of the contract or damages in the amount of the sales price over the ring's value. Fraud/Misrepresentation of Fact/Opinion of Expert as to Value. Decision for Mrs. Although in general a statement of opinion as to value is not considered to be a statement of fact, the opinion here was given by a jeweler who was an 'expert' upon whose advice Mrs. Sunderhaus relied. Whenever a party states a matter, which might otherwise be only an opinion, and does not state it as the mere expression of his own opinion, but affirms it as an existing fact material to the transaction, so that the other party may reasonably treat it as a fact, and rely and act upon it as such, then the statement clearly becomes an affirmation of fact within the meaning of general rule, and may be fraudulent misrepresentation.

The layman must of necessity rely upon the integrity of the jeweler in purchasing a diamond or other precious stone. Sunderhaus was in no position to make her own determination as to the weight and value of the stones. She relied upon the jeweler's statement of value and had a right to rely upon the statement of value. The written guarantee of the ring's value, style and trade-in value is a statement of fact for purposes of fraud.

Sunderhaus v. Perel & Lowenstein, 215 Tenn. 619, 388 S.W. 2d 140 (1965).

Division West Chinchilla Ranch advertised on television that a five-figure income could be earned by raising chinchillas with an investment of only $3.75 per animal per year and only thirty minutes of maintenance per day. The minimum investment was $2,150 for one male and six female chinchillas. Division West represented to plaintiffs that chinchilla ranching would be easy and that no experience was required to make ranching profitable. Plaintiffs, who had no experience raising chinchillas, each invested $2,150 or more to purchase Division's chinchillas and supplies. After three years without earning a profit, plaintiffs sue Division for fraud. Do these facts sustain an action for fraud in the inducement?

William Schmalz entered into an employment contract with Hardy Salt Company. The contract granted Schmalz six months' severance pay for involuntary termination but none for voluntary separation or termination for cause. Schmalz was asked to resign from his employment. He was informed that if he did not resign, he would be fired for alleged misconduct. When Schmalz turned in his letter of resignation, he signed a release prohibiting him from suing his former employer as a consequence of his employment. Schmalz consulted an attorney before signing the release and upon signing it received $4,583.00 (one month's salary) in consideration. Schmalz now sues his former employer for the severance pay, claiming that he signed the release under duress.

Is Schmalz correct in his assertion? A person with business experience who understands the nature of what he is signing and who has sought the advice of counsel may not claim duress. The claim of duress is reserved for those who truly have been deprived of their free will. In this case, Schmalz signed the release with the full knowledge of its implications, accepted the salary payment, and did not repudiate until much later. These factors constitute a ratification of the release.

Hardy Salt Company., 739 S.W. Treasure Salvors and the State of Florida entered into a series of four annual contracts governing the salvage of the Nuestra Senora de Atocha. The Atocha is a Spanish galleon that sank in 1622, carrying a treasure now worth well over $250 million. Both parties had contracted under the impression that the seabed on which the Atocha lay was land owned by Florida.

Treasure Salvors agreed to relinquish 25 percent of the items recovered in return for the right to salvage on State lands. In accordance with these contracts, Treasure Salvors delivered to Florida its share of the salvaged artifacts.Subsequently, the United States Supreme Court held that the part of the continental shelf on which the Atocha was resting had never been owned by Florida. Treasure Salvors then brought suit to rescind the contracts and to recover the artifacts it had delivered to the State of Florida. Should Treasure Salvors prevail? Mutual Mistake of Fact. Yes, judgment for Treasure Salvors. Both parties based their contracts upon the erroneous assumption that the state of Florida owned the land in question.

But for this belief neither party would have entered into the agreements. The contracts are therefore voidable under the doctrine of mutual mistake of fact.

Accordingly, Treasure Salvors may rescind the contracts and recover the artifacts delivered to the state of Florida. State of Florida, Dept. Treasure Salvors, Inc., 621 F.2d 1340 (5th Cir.

International Underwater Contractors, Inc. (IUC), entered into a written contract with New England Telephone and Telegraph Company (NET) to assemble and install certain conduits under the Mystic River for a lump sum price of $149,680. Delays caused by NET forced IUC's work to be performed in the winter months instead of during the summer as originally bid, and as a result a major change had to be made in the system from that specified in the contract. NET repeatedly assured IUC that it would pay the cost if IUC would complete the work. The change cost IUC an additional $811,810.73; nevertheless, it signed a release settling the claim for a total sum of $575,000. IUC, which at the time was in financial trouble, now seeks to recover the balance due, arguing that the signed release is not binding because it was signed under economic duress.

Is IUC correct? Yes, judgment for IUC. A release signed under duress is not binding. To prove that there was duress, IUC must show that (1) one side involuntarily accepted the terms of another; (2) the circumstances permitted no other alternative; and (3) the circumstances were the result of coercive acts of the other party. Just taking advantage of another's financial difficulty is not duress; the party claiming duress must show that its financial difficulty was contributed to or caused by the one accused of coercion. Here, NET insisted on the change in the contract and repeatedly assured IUC that it would pay the substantial additional cost, if IUC would complete the work.

Furthermore, NET refused to make payments for almost a year, which in turn caused IUC's financial difficulties. Other factors also indicate the existence of economic duress, including the unequal bargaining power of the two parties and the disparity among IUC's actual costs ($811,816), the amount NET's engineers had recommended for settlement ($775,000) and the final amount offered as a 'take-it-or-leave-it' with the release ($575,000). Conrad Schaneman was a Russian immigrant who could neither read nor write the English language. In 1975 Conrad deeded (conveyed) a farm he owned to his eldest son, Laurence, for $23,500, which was the original purchase price of the property in 1945.

The value of the farm in 1975 was between $145,000 and $160,000. At the time he executed the deed, Conrad was an eighty-two-year-old invalid, severely ill, and completely dependent on others for his personal needs. He weighed between 325 and 350 pounds, had difficulty breathing, could not walk more than fifteen feet, and needed a special jackhoist to get in and out of the bathtub. Conrad enjoyed a long-standing, confidential relationship with Laurence, who was his principal adviser and handled Conrad's business affairs. Laurence also obtained a power of attorney from Conrad and made himself a joint owner of Conrad's bank account and $20,000 certificate of deposit.

Conrad brought this suit to cancel the deed, claiming it was the result of Laurence's undue influence. The district court found that the deed was executed as a result of undue influence, set aside the deed, and granted title to Conrad. Laurence appealed. Undue Influence. Judgment for Schaneman.

A confidential or fiduciary relationship exists between two persons if one has gained the confidence of the other and purports to act or advise with the other's interest in mind. In such a relationship, the court will scrutinize critically any transaction between the two parties, especially where age, infirmity, and instability are involved, to see that no injustice has occurred. Here, the evidence shows that a confidential relationship existed between Conrad and Laurence and that due to age and physical infirmities, Conrad was, for all intents and purposes, an invalid at the time of the conveyance. It further supports a finding that Conrad's mental acuity was impaired at times and that he sometimes suffered from disorientation and lapse of memory. Conrad was subject to the influence of Laurence, who was acting in a confidential relationship; the opportunity to exercise undue influence existed; there was a disposition on the part of Laurence to exercise such undue influence; and the conveyance appeared to be the effect of such influence. Accordingly, the deed is canceled for undue influence. At the time of her death, Olga Mestrovic was the owner of a large number of works of art created by her late husband, Ivan Mestrovic, an internationally known sculptor and artist whose works were displayed throughout Europe and the United States.

By the terms of Olga's will, all the works of art created by her husband were to be sold and the proceeds distributed to members of the Mestrovic family. Also included in the estate of Olga Mestrovic was certain real property that 1st Source Bank (the Bank), as personal representative of the estate of Olga Mestrovic, agreed to sell to Terrence and Antoinette Wilkin. The agreement of purchase and sale made no mention of any works of art, although it did provide for the sale of such personal property as dishwasher, drapes, and French doors in the attic. Immediately after closing on the real estate, the Wilkins complained to the Bank of the clutter left on the premises; the Bank gave the Wilkins an option of cleaning the house themselves and keeping any personal property they desired, to which the Wilkins agreed.

At the time these arrangements were made, neither the Bank nor the Wilkins suspected that any works of art remained on the premises. During clean-up, however, the Wilkins found eight drawings and a sculpture created by Ivan Mestrovic to which the Wilkins claimed ownership based upon their agreement with the Bank that, if they cleaned the real property, they could keep such personal property as they desired. Who is entitled to ownership of the art work? Mutual Mistake of Fact. Judgment for 1st Source Bank; the art works must be sold and the proceeds distributed to the family.

The parties in this case shared a common presupposition as to certain facts which proved false. The Bank and Wilkins considered the real estate which Wilkins had purchased to be cluttered with items of personal property variously characterized as 'junk,' 'stuff' or 'trash.' Neither party suspected that Mestrovic works of art remained on the premises, and the discovery of those works of art by Wilkins was unexpected. Where both parties share a common assumption about a vital fact, upon which they based their bargain, the transaction may be avoided if, because of the mistake, a quite different exchange of values occurs from the exchange of values contemplated by the parties. The gain to the Wilkins and the loss to the Bank were not contemplated when they made their agreement, and so a true meeting of the minds never occurred, allowing the Bank to avoid the agreement. Johnson is a former employee of International Business Machines Corporation (IBM).

As part of a downsizing effort, IBM discharged Johnson. In exchange for an enhanced severance package, Johnson signed a written release and covenant not to sue IBM. IBM's downsizing plan provided that surplus personnel were eligible to receive benefits, including outplacement assistance, career counseling, job retraining, and an enhanced separation allowance. These employees were eligible, at IBM's discretion, to receive a separation allowance of two weeks' pay. However, employees who signed a release could be eligible for an enhanced severance allowance equal to one week's pay for each six months of accumulated service with a maximum of twenty-six weeks' pay.

Surplus employees could also apply for alternate, generally lower-paying, manufacturing positions. Johnson opted for the release and received the maximum twenty-six weeks' pay. He then alleged, among other claims, that IBM subjected him to economic duress when he signed the release and covenant-not-to-sue, and he sought to rescind both. What will Johnson need to show in order to prove his cause of action? To constitute duress, there must be an application of such pressure or constraint as compels someone to go against their free will. Parties to a contract must freely and mutually consent to its terms. If consent to a contract is not freely given, the contract may be rescinded by the parties.

In order to establish a claim for economic duress, the Plaintiff must prove by a preponderance of evidence the following elements: (1) the Defendant engaged in a sufficiently coercive wrongful act such that; (2) a reasonably prudent person in Plaintiff's economic position would have had no reasonable alternative but to succumb to Defendant's coercion; (3) Defendant knew of Plaintiff's economic vulnerability; and (4) Defendant's coercive wrongful act actually caused or induced plaintiff to enter into a contract. Johnson's case fails to meet these elements. First, IBM did not commit a wrongful act by designating Johnson a surplus employee or by requiring that he choose between severance options.

Although the wrongful act need not be criminal or tortious, being allowed a voluntary choice of perfectly legitimate alternatives is the antithesis of duress. Encouragement or incentives is a far cry from coercion or denial of choice. Second, Johnson had reasonable alternatives to signing the release. In determining whether a reasonable alternative was available, courts employ an objective test dependent on the circumstances of each case. Johnson was not facing imminent bankruptcy or financial ruin. Regardless of what he may have subjectively believed, Johnson had reasonable alternatives available.

Third, IBM had no knowledge of Johnson's particular economic circumstances nor of any peculiar economic vulnerability he had. Finally, Johnson's decision was his own and was not caused by any unfair action on the part of IBM. Therefore, at the time he signed the release, Johnson was not subject to economic duress. Vokes, a widow of fifty-one years and without family, purchased fourteen separate dance courses from J. Davenport's Arthur Murray, Inc., School of Dance. The fourteen courses totaled in the aggregate 2,302 hours of dancing lessons at a cost to Mrs.

Vokes of $31,090.45. Vokes was induced continually to reapply for new courses by representations made by Mr. Davenport that her dancing ability was improving, that she was responding to instruction, that she had excellent potential, and that they were developing her into an accomplished dancer. In fact, she had no dancing ability or aptitude and had trouble 'hearing the musical beat.' Vokes brought action to have the contracts set aside.

Should she prevail on her claim? Fraud in the Inducement. Judgment for Mrs. Ordinarily, for a misrepresentation to be actionable, it must be one of fact rather than of opinion. Where, as here, however, a statement is made by a party having superior knowledge, that statement may be taken as one of fact, although it would be considered as one of opinion if the parties were dealing on equal terms.

Here it could be said that Mr. Davenport had superior knowledge as to Mrs. Vokes' dancing potential and as to her degree of improvement and that he set forth those 'facts' in a greatly exaggerated fashion to induce her to enter into new contracts. Even in contractual situations where a party to a transaction owes no duty to disclose facts within his knowledge or to answer inquires as to those facts, if he undertakes to speak, he must disclose the whole truth. Because of his superior knowledge, Davenport's statements regarding Mrs.

Vokes' dancing ability and potential may be taken as statements of fact. Bargained-for Exchange. Consideration was paid to Hill for holding the property for the specified time subject to the right of Joyce to exercise the option whether to buy or not.

When the time limit expired, the contract was at an end and the right under the option was extinguished. Of course, if that right were extended by some valid binding agreement, then it could be enforced. Joyce did not attempt to exercise the option and complete a contract of purchase within the time limited by the written agreement. It is true that before the expiration of the time stated, Hill verbally agreed or promised to extend the time for the exercise of the option from April 1 to July 1, and that it was within this latter or extended period and after the property had been sold and conveyed to Gray that Joyce presented himself ready to accept the property and pay the price. However, such acceptance came too late. There was no consideration for the verbal promise or agreement to extend the time, and such promise was therefore not enforceable. After April 1 the verbal agreement operated simply as a mere offer continuing until withdrawn or otherwise ended by some act of the offeror, Hill.

The sale to Gray was known to Joyce and resulted in a revocation of the offer. (NOTE: In addition, the Statute of Frauds would require an extension of the option to be in writing because such an option deals with an 'interest in' or 'concerns' land.). (a) Ann owed $500 to Barry for services Barry rendered to Ann. The debt was due June 30, 2007. In March 2008, the debt was still unpaid. Barry was in urgent need of ready cash and told Ann that if she would pay $150 of the debt at once, Barry would release her from the balance.

Ann paid $150 and stated to Barry that all claims had been paid in full. In August 2008, Barry demanded the unpaid balance and subsequently sued Ann for $350. (b) Modify the facts in (a) by assuming that Barry gave Ann a written receipt stating that all claims had been paid in full. (c) Modify the facts in (a) by assuming that Ann owed Barry the $500 on Ann's purchase of a motorcycle from Barry.

Settlement of an Undisputed Debt. (a) Decision for Barry. As this debt arose out of a contract for services, the common law of contracts would apply. At common law the payment of a lesser sum of money in full satisfaction of a liquidated, undisputed debt in a greater amount is legally insufficient consideration for a promise of the creditor to discharge the entire debt.

There is no legal detriment to the promisee or legal benefit to the promisor. UCC: Renunciation.

(b) Decision for Barry unless UCC Section 1-107 applies. It is unclear whether Section 1-107 applies to transactions outside of the Code. If it does not, then the written receipt would not change the result in question 2a. If Section 1-107 applies, then the written receipt would constitute a written waiver or renunciation signed and delivered by the aggrieved party and would discharge the debt. Modification of a Pre-existing Contract. (c) This transaction would be subject to the Uniform Commercial Code.

Under Section 2-209 (1) a contract for the sale of goods can be validly modified by the parties without new consideration provided they so intend and act in good faith. This problem presents a question of intent and good faith. Since payment was already due and Barry was acting under economic urgency, the modification is probably not binding. However, if Barry gave Ann a written release as was done in (2) (b), the result would most likely differ. UCC Section 1-107 expressly provides that any claim or right arising out of any breach can be discharged in whole or in part 'without consideration' by a written waiver or renunciation signed and delivered by the aggrieved party. Consequently, under the Code, consideration is no longer required to discharge a debt.

The only requirement is that the creditor sign and deliver a sufficient writing, which Barry did. Barry's only defense would be that of economic duress, which should be found to exist under the facts as stated. (a) Judy orally promises her daughter, Liza, that she will give her a tract of land for her home. Liza, as intended by Judy, gives up her homestead and takes possession of the land.

Liza lives there for six months and starts construction of a home. Is Judy bound to convey the real estate?

(b) Ralph, knowing that his son, Ed, desires to purchase a tract of land, promises to give him the $25,000 he needs for the purchase. Ed, relying on this promise, buys an option on the tract of land.

Can Ralph rescind his promise? Promissory Estoppel. (a) Yes, decision for Liza. Usually, gift promises are ruled as lacking consideration and are not binding agreements.

In this case, Liza justifiably relied on the promise and acted to her detriment by selling her home, moving onto the property, and starting construction of a new house. The doctrine of promissory estoppel applies to such promises that induce action by the promisee that would be reasonably expected by the promisor. Judy becomes liable for having induced the change in position by Liza. (b) Yes, judgment for Ralph. The doctrine of promissory estoppel does not make every gift promise binding just because the promisee has changed positions. There must be a justifiable reliance on the promise to the extent that the promisee takes definite and substantial action. Since Ed purchased only an option to buy the property, this probably would not be construed as a substantial action on his part.

George owed Keith $800 on a personal loan. Neither the amount of the debt nor George's liability to pay the $800 was disputed. Keith had also rendered services as a carpenter to George without any agreement as to the price to be paid. When the work was completed, an honest and reasonable difference of opinion developed between George and Keith with respect to the value of Keith's services. Upon receiving from Keith a bill of $600 for the carpentry services, George mailed in a properly stamped and addressed envelope his check for $800 to Keith. In an accompanying letter, George stated that the enclosed check was in full settlement of both claims.

Keith indorsed and cashed the check. Thereafter, Keith unsuccessfully sought to collect from George an alleged unpaid balance of $600. May Keith recover the $600 from George? Settlement of Disputed/Undisputed Debts. Decision, in part, in favor of Keith.

This common law problem presents questions attending the payment or settlement of (1) a past due, undisputed or liquidated debt and (2) a disputed debt. In Pinnel's Case, 5 Coke 117, and Cumber v. Wayne, 1 Strange, 426, the question presented and decided was 'that payment of a lesser sum on the day in satisfaction of a greater, cannot be in satisfaction for the whole,' although the parties agreed that such payment should satisfy the whole.

An accord and satisfaction is a contract and like any other contract must be supported by a valid consideration. Consideration consists of a benefit to the promisor or a detriment to the promisee. Because of the past due undisputed debt, George was under legal obligation to pay $800. By paying $800 in full settlement of both obligations, George did not suffer a legal detriment as to the second (carpentry) contract. George merely did something which he was already legally bound to do.

The payment of the $800 discharged the undisputed obligation but, since it did not constitute consideration for the disputed debt, that debt remains. In short, Keith still had a claim for $600 which George could, of course, contest, as to the amount. Had George paid an amount greater than $800, he would have a better argument as to settlement of both debts. The Snyder Mfg. Co., being a large user of coal, entered into separate contracts with several coal companies. In each contract it was agreed that the coal company would supply coal during the entire year in such amounts as the manufacturing company might desire to order, at a price of $35 per ton.

In February, the Snyder Company ordered 1,000 tons of coal from Union Coal Company, one of the contracting parties. Union Coal Company delivered 500 tons of the order and then notified Snyder Company that no more deliveries would be made and that it denied any obligation under the contract.

In an action by Union Coal to collect $35 per ton for the 500 tons of coal delivered, Snyder files a counterclaim, claiming damages of $1,500 for failure to deliver the additional 500 tons of the order and damages of $4,000 for breach of agreement to deliver coal during the balance of the year. What contract, if any, exists between Snyder and Union? Illusory Promises. Owes Union the rate of $35 per ton for 500 tons of coal already delivered. Moreover, the alleged contracts, to the extent executory, are probably not binding on either party.

These agreements to supply Snyder with such amounts of coal as 'it might desire to order' contain illusory promises. Snyder did not agree to order or to buy any coal. It was therefore not contractually bound to do so. Where one party to an agreement is not bound, neither party is bound. Puffy Amiyumi Puffy Rar Files.

Even though the contracts come within the UCC, its good faith provisions could, but probably would not validate these illusory promises. Furthermore, these alleged contracts would not constitute requirements contracts. On February 5, Devon entered into a written agreement with Gordon whereby Gordon agreed to drill a well on Devon's property for the sum of $5,000 and to complete the well on or before April 15. Before entering into the contract, Gordon made test borings and had satisfied himself as to the character of the subsurface.

After two days of drilling, Gordon struck hard rock. On February 17, Gordon removed his equipment and advised Devon that the project had proved unprofitable and that he would not continue. On March 17, Devon went to Gordon and told Gordon that he would assume the risk of the enterprise and would pay Gordon $100 for each day required to drill the well, as compensation for labor, the use of Gordon's equipment, and Gordon's services in supervising the work, provided Gordon would furnish certain special equipment designed to cut through hard rock. Gordon said that the proposal was satisfactory. The work was continued by Gordon and completed in an additional fifty-eight days. Upon completion of the work, Devon failed to pay, and Gordon brought an action to recover $5,800.

Devon answered that he had never become obligated to pay $100 a day and filed a counterclaim for damages in the amount of $500 for the month's delay based on an alleged breach of contract by Gordon. Pre-existing Contractual Obligation. Decision in favor of Gordon.

As a general rule, a promise to do what one is already bound to do by a valid contract will not be sufficient consideration for a new agreement. However, Section 89 of the Restatement, Second, Contracts provides that a 'promise modifying a duty under a contract not fully performed on either side is binding (a) if the modification is fair and equitable in view of the circumstances not anticipated by the parties when the contract was made...' Alternatively, although of dubious validity in this problem, the same result may be reached on the ground of a substituted contract: that the original contract was rescinded by mutual agreement and that new promises were then made which furnished consideration for each other.

Discuss and explain whether there is valid consideration for each of the following promises: (a) A and B entered into a contract for the purchase and sale of goods. A subsequently promised to pay a higher price for the goods when B refused to deliver at the contract price. (b) A promised in writing to pay a debt, which was due from B to C, on C's agreement to extend the time of payment for one year. (c) A orally promised to pay $150 to her son, B, solely in consideration of past services rendered to A by B, for which there had been no agreement or request to pay. Pre-existing Contractual Obligation. (a) At common law there would be no legally sufficient consideration.

A's promise to pay a higher price is not supported by anything other than what B had already agreed to do. The consideration on the part of the promisee does not involve any legal detriment to him. However, under Section 2-209 (1) of the Code, the new agreement would be binding without consideration if it was entered into voluntarily and in good faith. (b) Valid consideration. Agreement to extend the time of payment is a legal detriment. (c) No valid consideration. In general, past consideration is no consideration.

Settlement of a Disputed Debt. Yes, decision in favor of Alan and against Barbara. The problem indicates that a genuine dispute occurred between Alan and Barbara. Where a check is tendered by the debtor to the creditor in full payment or settlement, the cashing of the check constitutes an accord and satisfaction.

Revised 3-311. The fact that Alan gave Barbara his promissory note for $1,000 and that Barbara collected on the note strengthens the conclusion stated.

Moreover, under UCC Section 2-209(1), consideration is not needed. The parties entered into an oral contract in June, under which plaintiff agreed to construct a building for defendant on a time and materials basis, at a maximum cost of $56,146, plus sales tax and extras ordered by defendant. When the building was 90 percent completed, defendant told plaintiff he was unhappy with the whole job as 'the thing just wasn't being run right.' The parties then on October 17 signed a written agreement lowering the maximum cost to $52,000 plus sales tax. Plaintiff thereafter completed the building at a cost of $64,155. The maximum under the June oral agreement, plus extras and sales tax, totaled $61,040. Defendant contended that he was obligated to pay only the lower maximum fixed by the October 17 agreement.

The Supreme Court of Washington held that the October 17th modification agreement was not binding for lack of consideration and plaintiff was entitled to recover under the original agreement, stating: 'Applying our holding to the facts in this case, we must conclude that no consideration existed to support the October 17th agreement. Under the oral contract plaintiff had an antecedent duty to complete the building; defendant had an antecedent duty to pay a maximum of $56,146 plus extras, plus sales tax. Under the October 17th agreement plaintiff had the same duty while defendant had a lesser duty, unsupported by consideration. This is not a case of the mutual surrender of rights constituting consideration.' Taylor assaulted his wife, who then took refuge in Ms. Harrington's house.

The next day, Mr. Taylor entered the house and began another assault on his wife, who knocked him down and, while he was lying on the floor, attempted to cut his head open or decapitate him with an axe.

Harrington intervened to stop the bloodshed, and the axe, as it was descending, fell upon her hand, mutilating it badly, but sparing Taylor his life. Afterwards, Taylor orally promised to compensate Harrington for her injury. Is Taylor's promise enforceable? Moral Obligation. Taylor may have a moral obligation to honor his promise but not a binding contractual one. Harrington's humanitarian act 'voluntarily performed, is not such consideration as would entitle her to recover at law.'

The Restatement takes a contrary position regarding such situations and provides that a promise after the rendering of emergency services is binding even if not supported by consideration. Section 86, comment d. Harrington v. Taylor, 225 N.C. 690, 36 S.E.2d 227 (1945).

Jonnel Enterprises, Inc., contracted to construct a student dormitory at Clarion State College. On May 6, Jonnel entered into a written agreement with Graham and Long as electrical contractors to perform the electrical work and to supply materials for the dormitory. The contract price was $70,544.66. Graham and Long claim that they believed the May 6 agreement obligated them to perform the electrical work on only one wing of the building, but that three or four days after work was started, a second wing of the building was found to be in need of wiring. At that time Graham and Long informed Jonnel that they would not wire both wings of the building under the present contract, so a new contract was orally agreed upon by the parties. Under the new contract Graham and Long were obligated to wire both wings and were to be paid only $65,000, but they were relieved of the obligations to supply entrances and a heating system.

Graham and Long resumed their work, and Jonnel made seven of the eight progress payments called for. When Jonnel did not pay the final payment, Graham and Long brought this action. Jonnel claims that the May 6 contract is controlling. Is Jonnel correct in its assertion? Illusory Promises.

To agree to do something and reserve the right to cancel the agreement at will is no agreement at all. By the valid addition to their oral agreement, Baker had an unconditional right to terminate the contract at will. His promise under the agreement, then, was merely illusory. As such, it was insufficient consideration to support Ballantine's promise of an exclusive agency to Baker. Baker & Co., Inc.

Ballantine & Sons. Supreme Court of Errors of Connecticut.

680, 20 A.2d 82. Entered into an oral agreement with Quaintance Associates, an executive 'headhunter' service, for the recruitment of qualified candidates to be employed by PLM.

As agreed, PLM's obligation to pay Quaintance did not depend on PLM's actually hiring a qualified candidate presented by Quaintance. After several months Quaintance sent a letter to PLM, admitting that it had so far failed to produce a suitable candidate, but included a bill for $9,806.61, covering fees and expenses.

PLM responded that Quaintance's services were only worth $6,060.48, and that payment of the lesser amount was the only fair way to handle the dispute. Accordingly, PLM enclosed a check for $6,060.48, writing on the back of the check 'IN FULL PAYMENT OF ANY CLAIMS QUAINTANCE HAS AGAINST PLM, INC.'

Quaintance cashed the check and then sued PLM for the remaining $3,746.13. Red Owl Stores told the Hoffman family that, upon the payment of approximately $118,000, a grocery store franchise would be built for them in a new location. Upon the advice of Red Owl, the Hoffmans bought a small grocery store in their hometown in order to get management experience. After the Hoffmans operated at a profit for three months, Red Owl advised them to sell the small grocery, assuring them that Red Owl would find them a larger store elsewhere.

Although selling at that point would cost them much profit, the Hoffmans followed Red Owl's directions. Additionally, to raise the money required for the deal, the Hoffmans sold their bakery business in their hometown. The Hoffmans also sold their house, and moved to a new home in the city where their new store was to be located. Red Owl then informed the Hoffmans that it would take $124,100, not $118,000, to complete the deal. The family scrambled to find the additional funds.

However, when told by Red Owl that it would now cost them $134,000 to get their new franchise, the Hoffmans decided to sue instead. Should Red Owl be held to its promises? Promissory Estoppel. All the requirements of promissory estoppel are present in these facts. 1) Was the promise one which the promisor should reasonably expect to induce action or forbearance of a substantial character by the promisee; 2) Did the promise in fact induce such action or forbearance; and 3) Can injustice be avoided only by enforcement of the promise?

Note that the promise need not be so definite as to translate into an offer were consideration exchanged. Red Owl Stores, Inc., 26 Wis.2d 683, 133 N.W.2d 267 (1965). Ben Collins was a full professor with tenure at Wisconsin State University in 2002. In March of 2002 Parsons College, in order to lure Dr.

Collins from Wisconsin State, offered him a written contract promising him the rank of full professor with tenure and a salary of $55,000 for the 2002-03 academic year. The contract further provided that the College would increase his salary by $2,000 each year for the next five years. In return, Collins was to teach two trimesters of the academic year beginning in October 2002. In addition, the contract stipulated, by reference to the College's faculty bylaws, that tenured professors could only be dismissed for just cause and after written charges were filed with the Professional Problems Committee. The two parties signed the contract, and Collins resigned his position at Wisconsin State. In February of 2004, the College tendered a different contract to Collins to cover the following year.

This contract reduced his salary to $45,000 with no provision for annual increments, but left his rank of full professor intact. It also required that Collins waive any and all rights or claims existing under any previous employment contracts with the College.

Collins refused to sign this new contract and Parsons College soon notified him that he would not be employed the following year. The College did not give any grounds for his dismissal; nor did it file charges with the Problems Committee. As a result, Collins was forced to take a teaching position at the University of North Dakota at a substantially reduced salary. He sued to recover the difference between the salary Parsons College promised him until 2007 and the amount he earned.

Will Collins prevail? Legal Sufficiency. Yes, judgment for Collins.

The College's promise to employ Collins permanently (with tenure), at a specified salary with increments to 2001, must be supported by consideration from Collins to be enforceable. Collins did not promise to serve permanently or even until 2001 in exchange for the College's promise. Consideration, however, may consist of a detriment to the promisee (Collins) and benefit need not move to the promisor (the College). Parsons College promised Collins tenure, knowing that he would have to resign his permanent, tenured position at Wisconsin State.

Therefore, Collins' surrender of his former position to accept the College's offer constituted binding consideration. Anna Feinberg began working for the Pfeiffer Company in 1960 at age 17. By 1997 she had attained the position of bookkeeper, office manager, and assistant treasurer. In appreciation for her skill, dedication and long years of service, the Pfeiffer Board of Directors resolved to increase Feinberg's monthly salary to $1,400.00 and to create for her a retirement plan. The plan allowed that Feinberg would be given the privilege of retiring from active duty at any time she chose and that she would receive retirement pay of $700.00 per month, although the Board expressed the hope that Feinberg would continue to serve the company for many years.

Feinberg, however, chose to retire two years later, in 1999. The Pfeiffer Company paid Feinberg her retirement pay until 2006. The company discontinued payments alleging that no contract had been made by the Board of Directors since there had been no consideration paid by Feinberg, and that the resolution was merely a promise to make a gift.

Feinberg sued. Is the promise supported by consideration? Is the promise enforceable?

Past Consideration/Promissory Estoppel. Judgment for Feinberg.

The law is clear that past services performed do not constitute valid consideration for the formation of a contract. Here, promises made in appreciation of Feinberg's many years of work do not render those promises enforceable against the company. However, a promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise. This doctrine is called promissory estoppel. Feinberg reasonably relied on the promise of $700 per month retirement pay, and thereby abandoned her opportunity to continue in gainful employment. At the time payments were discontinued, Feinberg was 63 years old.

Her chance of finding satisfactory employment, much less a position comparable to the one she gave up when she retired, is virtually nonexistent. Feinberg's reasonable and detrimental reliance upon the company's promise has created an enforceable contract. Rodney and Donna Mathis (Mathis) filed a wrongful death action against St. Alexis Hospital and several physicians, arising out of the death of their mother, Mary Mathis. Several weeks before trial, an expert consulted by Mathis notified the trial court and Mathis's counsel that, in his opinion, Mary Mathis's death was not proximately caused by the negligence of the physicians. Shortly thereafter, Mathis voluntarily dismissed the wrongful death action. Mathis and St.

Alexis entered into a covenant-not-to-sue in which Mathis agreed not to pursue any claims against St. Alexis or its employees in terms of the medical care of Mary Mathis. Alexis, in return, agreed not to seek sanctions, including attorney fees and costs incurred in defense of the previously dismissed wrongful death action. Subsequently, Mathis filed a second wrongful death action against St. Alexis Hospital, among others. Mathis asked the court to rescind the covenant-not-to-sue, arguing that because St.

Alexis was not entitled to sanctions in connection with the first wrongful death action, there was no consideration for the covenant-not-to-sue. Are they correct in this contention? Unilateral Contracts: Consideration. No, they are wrong, and so the trial court granted summary judgment for St. A promise to forbear pursuit of a legal claim can be sufficient consideration to support a contract when the promisor has a good faith belief in the validity of the claim. Mathis argues that any sanctions award should have been against Mathis' attorney. However, under the rules of civil procedure an award of reasonable attorney's fees may be made against a party, his attorney or both.

Therefore, sanctions could have been awarded against Mathis. Mathis also argues that St. Alexis has not shown that Mathis engaged in any frivolous conduct. However, the standard for evaluating the validity of a foreborne claim is a subjective one.

Alexis sufficiently asserted a good faith belief in the validity of its sanctions claims. Alexis asserted that its belief in the validity of its sanctions claim was based on Mathis' complete failure to produce any expert testimony on the issue of proximate cause.

Since the only expert testimony presented on the issue indicated that St. Alexis' actions did not proximately cause Mary Mathis' death, St.

Alexis' belief in the validity of its sanctions claim was reasonable. Thus, foregoing the claim would constitute sufficient consideration for the covenant-not-to-sue. Johnson and Wilson were the principal shareholders in XYZ Corporation, located in the city of Jonesville, Wisconsin. This corporation was engaged in the business of manufacturing paper novelties, which were sold over a wide area in the Midwest. The corporation was also in the business of binding books. Johnson purchased Wilson's shares of the XYZ Corporation and, in consideration thereof, Wilson agreed that for a period of two years he would not (a) manufacture or sell in Wisconsin any paper novelties of any kind that would compete with those sold by the XYZ Corporation or (b) engage in the bookbinding business in the city of Jonesville.

Discuss the validity and effect, if any, of this agreement. Common Law Restraint of Trade. (a) The agreement to refrain from doing business in the State of Wisconsin was no more than necessary to prevent competition upon the part of Wilson. The restraints as to both time and territory are reasonable. See Restatement, Second, Sections 186 and 188. The view has been taken, however, in some cases that agreements to refrain from doing business in an entire state, even though no more than necessary to prevent competition, are invalid and unenforceable for the reason that it is against the policy of the state that the people of the whole state should be deprived of the industry and skill of a person in an employment useful to the public, or that such person should be compelled either to engage in another business or move from the state and cease to be a citizen thereof. (b) Even if contracts in general restraint of trade are deemed void, as being contrary to public policy, contracts in partial restraint of trade are valid if the restraint imposed is reasonable both as to time and as to limits of the area in which such restraint is imposed.

Agreements not to engage in a particular business within a city for a period of two years have generally been held to be valid and enforceable. The second portion of Wilson's agreement would be binding upon him. Wilkins, a resident of and licensed by the State of Texas as a certified public accountant, rendered service in his professional capacity in Louisiana to Coverton Cosmetics Company.

He was not registered as a certified public accountant in Louisiana. His service under his contract with the cosmetics company was not the only occasion on which he had practiced his profession in that State. The company denied liability and refused to pay him, relying upon a Louisiana statute declaring it unlawful for any person to perform or offer to perform services as a CPA for compensation until he has been registered by the designated agency of the State and holds an unrevoked registration card.

Provision is made for issuance of a certificate as a CPA without examination to any applicant who holds a valid unrevoked certificate as a CPA under the laws of any other State. The statute provides further that rendition of services of the character performed by Wilkins, without registration, is a misdemeanor punishable by a fine or imprisonment in the county jail, or both. Discuss whether Wilkins would be successful in an action against Coverton seeking to recover a fee in the amount of $1,500 as the reasonable value of his services. Licensing Statute.

Decision in favor of Coverton Cosmetics Company. The statute is a regulatory measure designed to protect the public by permitting only persons with the necessary qualifications to practice accounting. The statute declares that it shall be unlawful for a person to perform services as a CPA for compensation without a license, and prescribes a penalty for its violation. Contracts for the rendition of services as a CPA by an unlicensed person are void and incapable of enforcement. Where the statute does not contain an express provision rendering void a contract entered into by one not qualified under its provisions but, as in the problem, imposes a penalty for its violation, it is generally held that the penalty implies the prohibition. Restatement, Second, Contracts, Section 181.

Common Law Restraint of Trade. The question is whether the restraint is reasonable and therefore binding upon Dear Corporation. Since Dear Corp. Sells harvesting machines throughout the country, the nationwide restraint arguably amounted merely to reasonable protection to the purchaser of the business, the ABC Company.

The purchaser of a business may protect the good will by exacting a restrictive covenant that is reasonable with respect to the area within which it operates. The controlling fact that determines the reasonableness of the area is the territorial extent of the business of the purchased company.

Restatement, Second, Contracts, Section 188. A more serious problem to the validity of the restraint is the fact that the covenant is not limited as to its duration, but lasts into perpetuity. Thus, the covenant is of dubious validity. An argument that can be raised in favor of its validity is the fact that it prohibits the manufacture but not the sale of machines in the United States. Charles Leigh, engaged in the industrial laundry business in Central City, employed Tim Close, previously employed in the home laundry business, as a route salesman on July 1, 1984.

Leigh rents linens and industrial uniforms to commercial customers; the soiled linens and uniforms are picked up at regular intervals by route drivers and replaced with clean ones. Every employee is assigned a list of customers.

The contract of employment stated that in consideration of being employed, upon termination of his employment, Close would not 'directly or indirectly engage in the linen supply business or any competitive business within Central City, Illinois, for a period of one year from the date when his employment under this contract ceases.' On May 10 of the following year, Leigh terminated Close's employment for valid reasons. Thereafter, Close accepted employment with Ajax Linen Service, a direct competitor of Leigh in Central City. He commenced soliciting former customers whom he had called on for Leigh and obtained some of them as customers for Ajax. Will Leigh be able to enforce the provisions of the contract?

Carl, a salesman for Smith, comes to Benson's home and sells him a complete set of 'gourmet cooking utensils' that are worth approximately $300. Benson, an eighty-year-old man living alone in a one-room efficiency apartment, signs a contract to buy the utensils for $1,450, plus a credit charge of $145, and to make payment in ten equal monthly installments. Three weeks after Carl leaves with the signed contract, Benson decides he cannot afford the cooking utensils and has no use for them. What can Benson do? Unconscionable Contracts.

Benson is not bound to his obligation. The doctrine of 'unconscionability' as set forth in the UCC would probably apply here. If it did, Benson could obtain release from the obligation for that reason. Smith may have used high pressure tactics and taken advantage of Benson's malleability as evidenced by the unreasonable price agreed to by Benson. As in Williams v.

Walker-Thomas Furniture Company, 350 F. 2d 445: Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. Whether a meaningful choice is present in a particular case can only be determined by consideration of all the circumstances surrounding the transaction. In many cases the meaningfulness of the choice is negated by a gross inequality of bargaining power. The manner in which the contract was entered is also relevant to this consideration. Carl, a salesman for Smith, comes to Benson's home and sells him a complete set of 'gourmet cooking utensils' that are worth approximately $300. Benson, an eighty-year-old man living alone in a one-room efficiency apartment, signs a contract to buy the utensils for $1,450, plus a credit charge of $145, and to make payment in ten equal monthly installments.

Three weeks after Carl leaves with the signed contract, Benson decides he cannot afford the cooking utensils and has no use for them. What can Benson do? Explain Consider the same facts as in problem 8, but assume that the price was $350. Benson, nevertheless, wishes to avoid the contract based on the allegation that Carl befriended and tricked him into the purchase. Exculpatory Clauses. Decision for Adrian.

Most courts would hold that this exculpatory clause is void against public policy. In deciding this question courts look at such factors as: '(1) It concerns a business of a type generally thought suitable for public regulation.

(2) The party seeking exculpation is engaged in performing a service of great importance to the public which is often a matter of practical necessity for some members of the public. (3) The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least any member coming within certain established standards.

(4) As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services. (5) In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation, and makes no provision whereby a purchaser may pay additional fees and obtain protection against negligence.

(6) Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents.' Regents of the University of California (1963) 60 Cal.2d 92, 32 Cal. Merrill Lynch employed Post and Maney as account executives. Both men elected to be paid a salary and to participate in the firm's pension and profit-sharing plans rather than take a straight commission. Thirteen years later, Merrill Lynch terminated the employment of both Post and Maney. Both men began working for a competitor of Merrill Lynch.

Merrill Lynch then informed them that all of their rights in the company-funded pension plan had been forfeited pursuant to a provision of the plan that permitted forfeiture in the event an employee directly or indirectly competed with the firm. Is Merrill Lynch correct in their assertion? Restrictive Covenants/Employment Relationship. Judgment for Post and Maney.

Employment contracts prohibiting competition create a tension between the freedom of individuals to contract and the reluctance to see one barter away his freedom. Nevertheless, the state will enforce limited restraints on an employee's employment mobility where a mutuality of obligation is freely bargained for by the parties. An essential aspect of that relationship, however, is the employer's continued willingness to employ the party while he does not compete. Where the employer terminates the employment relationship without cause, his action necessarily destroys the mutuality of obligation on which the covenant rests as well as the employer's ability to impose a forfeiture.

Thus the forfeiture of the pension benefits is unreasonable as a matter of law, and Post and Maney are entitled to the benefits due. Merrill Lynch, Pierce, Fenner & Smith, Inc., 48 N.Y.2d 84. Tovar applied for the position of resident physician in Paxton Community Memorial Hospital. The hospital examined his background and licensing and assured him that he was qualified for the position. Relying upon the hospital's promise of permanent employment, Tovar resigned from his job and began work at the hospital. He was discharged two weeks later, however, because he did not hold a license to practice medicine in Illinois as required by State law.

He had taken the examination but had never passed it. Tovar claims that the hospital promised him a position of permanent employment and that by discharging him it breached their employment contract. Licensing Statute. Judgment for Paxton Hospital. The purpose of the licensing statute is not to generate revenue but rather to protect the public by assuring them of adequately trained physicians. Since the purpose of the licensing requirements is to protect the public from unqualified persons, any contract relating to the licensed activity and entered into with an unlicensed person is illegal.

The contact between the hospital and Tovar was illegal, and therefore is unenforceable as against public policy. Paxton Community Memorial Hospital, 29 Ill. 3d 218, 330 N.E.2d 247 (1975). Carolyn Murphy, a welfare recipient with four minor children, responded to an advertisement that offered the opportunity to purchase televisions without a deposit or credit history. She entered into a rent-to-own contract for a twenty-five-inch console color television set that required seventy-eight weekly payments of $16 (a total of $1,248, which was two and one-half times the retail value of the set).

Under the contract, the renter could terminate the agreement by returning the television and forfeiting any payments already made. After Murphy had paid $436 on the television, she read a newspaper article criticizing the lease plan. She stopped payment and sued the television company. The television company has attempted to take possession of the set. Judgment for Murphy. The contract was unconscionable because the television company failed to inform Murphy of the true purchase price and required her to pay two and one half times the retail sales price.

Murphy was lured into a contract in which she had unequal bargaining power by the company's deceptive advertising. Moreover, it is usurious to charge a consumer with unequal bargaining power an excessive price; two and one half times the retail value of an item is excessive. McNamara, 36 Conn. 2d 170 (1979).

Exculpatory Clause. Judgment for Bennett. A valid exculpatory clause must be clear, explicit, unambiguous and comprehensible to both of the parties. The terms of the agreement also must apply to the specific misconduct of the defendant. In this case, Bennett waived the right to sue based on foreseeable misconduct on the part of the Federation. He did not, however, waive the Federation's liability for actions deviating from normal race procedures, including the presence of automobiles on the course. United States Cycling Federation, 193 Cal.

3d 1485, 239 Cal. In February, Brady contracted to construct a house for Fulghum for $106,850. Brady began construction on March 13. Neither during the negotiation of this contract nor when he began performance was Brady licensed as a general contractor as required by North Carolina law. Brady was awarded his builder's license on October 22, having passed the examination on his second attempt. At that time, he had completed two-thirds of the work on Fulghum's house.

Fulghum paid Brady $104,000. Brady brought suit, seeking an additional $2,850 on the original contract and $28,926 for 'additions and changes' Fulghum requested during construction. Is Fulghum liable to Brady? Licensing Statute. Judgment for the Fulghums. Generally, contracts entered into by unlicensed general contractors, in violation of a statute passed for the protection of the public, are unenforceable by the contractor.

Since a contractor must rely on his illegal act (contracting and working without a license) to enforce the contract, courts have held that there is no legal remedy for that which is illegal itself. Furthermore, the contract cannot be validated by the subsequent procurement of a license.

Even though Brady eventually obtained his license before completing the house, he did not have one when he negotiated the contract or began construction. Also, Brady is not entitled to recover for extras, additions, or changes made pursuant to this contract. However, it must be noted that the contract is not void. Others not regulated by the licensing contract, which was passed for their own protection, do not act illegally in becoming parties to such contracts. Therefore, other parties may enforce the contract against the unlicensed contractor.

Fulghum, 308 S.E.2d 327 (N.C. Abramowitz obtained a one-year mortgage loan from Barnett Bank for $400,000 at 9 percent interest with a 1 percent 'point' or service fee. The maximum lawful rate of interest on such a loan is 10 percent. The bank deducted the $4,000 service fee from the loan proceeds, actually disbursing only $396,000 to Abramowitz. During the one-year term of his loan, Abramowitz was charged and he paid $36,347.78 in interest. He claims the loan was usurious since the $4,000 'service fee' plus the $36,347 interest charge exceeded the 10 percent limit on total interest. Is the loan usurious?

Usury Statutes. Judgment for Abramowitz. If the $4,000 was 'interest,' Abramowitz paid more than $40,000, or 10 percent in total interest charges on his $400,000 loan.

If the loan was a 'discount' loan, with interest paid in advance, then the rate should be properly gauged on the amount of principal disbursed to Abramowitz plus the legitimate expenses incurred by the bank. These expenses must be the actual, reasonable expenses of making this particular loan and may not include the general overhead of the bank.

The only reasonable, legitimate expense the bank suffered in making this loan amounted to $300. Thus the lawful amount of interest on Abramowitz's loan is $39,630 (10 percent of the actual principal disbursed plus the $300). But Abramowitz paid $36,347 plus the interest in advance of $37,000 ($4,000 less the $300 expense) which is greater than the lawful amount of $39,630. Abramowitz v. Barnett Banks of West Orlando 394 So.2d 1033 (1981). Michelle Marvin and actor Lee Marvin began living together, holding themselves out to the general public as man and wife without actually being married. The two orally agreed that while they lived together they would share equally any and all property and earnings accumulated as a result of their individual and combined efforts.

The Amazing Spider Man Game Rhino Dlc 2. In addition, Michelle promised to render her services as 'companion, homemaker, housekeeper and cook' to Lee. Shortly thereafter, she gave up her lucrative career as an entertainer in order to devote her full time to being Lee's companion, homemaker, housekeeper, and cook. In return he agreed to provide for all of her financial support and needs for the rest of her life.

After living together for six years, Lee compelled Michelle to leave his household but continued to provide for her support. One year later, however, he refused to provide further support.

Michelle sued to recover support payments and half of their accumulated property. Lee contends that their agreement is so closely related to the supposed 'immoral' character of their relationship that its enforcement would violate public policy. The trial court granted Lee's motion for judgment on the pleadings. Public Policy. Judgment for Michelle Marvin. Adults who voluntarily live together and engage in sexual relations can, nonetheless, make arrangements concerning their earnings and property rights. They cannot, however, contract to pay for the performance of sexual services; such a contract is essentially an agreement for prostitution and is illegal.

Here, the Marvins' agreement does not rest, explicitly or entirely, upon a promise of sexual services or any other illicit consideration. The allocation of their finances and property rights as they choose does not violate public policy.

Therefore, their agreement furnishes a suitable basis upon which a trial court can render relief. Richard Brobston was hired by Insulation Corporation of America (ICA) in 1995. Initially, he was hired as a territory sales manager but was promoted to national account manager in 1999 and to general manager in 2003. In 2005, ICA was planning to acquire computer-assisted design (CAD) technology to upgrade its product line. Prior to acquiring this technology, ICA required that Brobston and certain other employees sign employment contracts that contained restrictive covenants or be terminated.

These restrictive covenants provided that in the event of Brobston's termination for any reason, Brobston would not reveal any of ICA's trade secrets or sales information and would not enter into direct competition with ICA within three hundred miles of Allentown, Pennsylvania, for a period of two years from the date of termination. The purported consideration for Brobston's agreement was a $2,000 increase in his base salary and proprietary information concerning the CAD system, customers, and pricing. Brobston signed the proffered employment contract. In October 2005, Brobston became vice president of special products, which included responsibility for sales of the CAD system products as well as other products. Over the course of the next year, Brobston failed in several respects to properly perform his employment duties and on August 13, 2006, ICA terminated Brobston's employment.

In December 2006, Brobston was hired by a competitor of ICA who was aware of ICA's restrictive covenants. Can ICA enforce the employment agreement by enjoining Brobston from disclosing proprietary information about ICA and by restraining him from competing with ICA? If so, for what duration and over what geographic area?

Answer: Restrictive Covenants/Employment Relationship. Preliminary injunction affirmed to the extent it enjoins Brobston from disclosing trade secrets and reversed to the extent that it restricts Brobston from competing with ICA. In order for a 'non-competition' covenant to be valid, it must relate to a contract for employment, be supported by adequate consideration and be reasonably limited in both time and territory. More specifically, where a restrictive covenant has been entered into between an employer and its employee, courts have permitted the enforcement of post-employment restraints only where they are ancillary to an employment relationship between the parties, the restrictions are reasonably necessary to protect the employer, and the restrictions are reasonably limited in duration and geographic extent. Brobston's agreement was ancillary since it was supported by new consideration in the form of the $2,000 annual raise and a change in employment status from 'at-will' to a written year to year contract.

The more salient issue in this case is whether the restrictions in Brobston's contract were reasonable. The determination of reasonableness involves the weighing of competing interests--that of the employer's need for protection--against the hardship of the restriction upon the employee. Notably, there is a significant factual distinction between the hardship imposed by the enforcement of a restrictive covenant on an employee who voluntarily leaves his employer and that imposed upon an employee who is terminated for failing to do his job. In this case, Brobston was terminated for poor performance. Where an employer determines that an employee has failed to promote the employer's legitimate business interests, it clearly suggests an implicit decision on the part of the employer that its business interests are best promoted without the employee in its service. Such a determination by an employer diminishes the employer's need to protect itself and it is unreasonable as a matter of law to permit the employer to retain unfettered control over that which it has effectively deemed worthless to its business interests. Moreover, the non-disclosure agreement in this case renders the non-competition agreement unnecessary.

As the agreement states, its purpose was to protect the proprietary CAD technology. However, Brobston never actually received sufficient training to operate the CAD technology.

He had access only to sales and profit margin information, the security of which is addressed adequately by the non-disclosure agreement. Therefore in this case, ICA's interests are sufficiently protected without enforcement of the non-competition agreement. Henrioulle, an unemployed widower with two children, received public assistance in the form of a rent subsidy.

He entered into an apartment lease agreement with Marin Ventures that provided, 'INDEMNIFICATION: Owner shall not be liable for any damage or injury to the tenant, or any other person, or to any property, occurring on the premises, or any part thereof, and Tenant agrees to hold Owner harmless for any claims for damages no matter how caused.' Henrioulle fractured his wrist when he tripped over a rock on a common stairway in the apartment building. At the time of the accident, the landlord had been having difficulty keeping the common areas of the apartment building clean. Will the exculpatory clause effectively bar Henrioulle from recovery?

Exculpatory Clause. Judgment for Henrioulle.

The criteria used to identify when an exculpatory clause is invalid as against public policy include whether: (1) it concerns a business of a type generally thought suitable for public regulation; (2) the party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public; (3) the party seeking exculpation is in a superior bargaining position; (4) the exculpatory clause is part of a standard adhesion contract in which the terms of the contract are put on a 'take-it-or-leave-it' basis. Here, the transaction, a residential rental agreement, meets these criteria and, therefore, the exculpatory clause is invalid as contrary to public policy. Accordingly, Henrioulle is entitled to recover for his injuries. Emily was a Java programmer employed with Sun Microsystems in Palo Alto, California. Upon beginning employment, Emily signed a contract that included a non-compete clause that prevented her from taking another Java programming position with any of five companies Sun listed as 'direct competitors' within three months of terminating her employment. Later that year Emily resigned and two months later accepted a position with Hewlett-Packard (HP) in Houston, Texas.

HP was listed in Emily's contract as a 'direct competitor,' but she argues that due to the significant geographic distance between both jobs, the contract is not enforceable. Explain whether the contract is enforceable. Michael, a minor, operates a one-man automobile repair shop. Anderson, having heard of Michael's good work on other cars, takes her car to Michael's shop for a thorough engine overhaul. Michael, while overhauling Anderson's engine, carelessly fits an unsuitable piston ring on one of the pistons, with the result that Anderson's engine is seriously damaged. Michael offers to return the sum that Anderson paid him for his work, but refuses to make good the damage. Can Anderson recover from Michael in tort for the damage to her engine?

(a) On March 20, Andy Small became seventeen years old, but he appeared to be at least twenty-one. On April 1, he moved into a rooming house in Chicago where he orally agreed to pay $300 a month for room and board, payable at the end of each month.

(b) On April 4, he went to Honest Hal's Carfeteria and signed a contract to buy a used car on credit with a small down payment. He made no representation as to his age, but Honest Hal represented the car to be in A-1 condition, which it turned out not to be. (c) On April 7, Andy sold and conveyed to Adam Smith a parcel of real estate that he owned. On April 30, he refused to pay his landlady for his room and board for the month of April; he returned the car to Honest Hal and demanded a refund of his down payment; and he demanded that Adam Smith reconvey the land although the purchase price, which Andy received in cash, had been spent in riotous living.

Decisions as to each claim? Liability for Necessaries.

(a) Even where a minor is liable for necessaries he is not liable at the contract rate but only for the reasonable value. Here, Andy is liable for the reasonable value of the room and board for April. (b) Liability for Misrepresentation of Age.

Andy did not misrepresent his age. He may disaffirm the contract and, upon returning the car to Honest Hal, since he still has it, he will be entitled to a refund of his down payment, and will not be liable for the balance of the purchase price. Hal may be charged with fraudulent inducement if he had knowledge of the car's poor condition. (c) Disaffirmance.

Where a minor sells real property he may not disaffirm the transaction until his majority. Upon reaching majority and within a reasonable time thereafter he may disaffirm the sale. A minor need only return the consideration received, under the majority rule, if he still has it in his possession at the time of disaffirmance.

Although Jones could avoid the sale as against Stone, he could not recover the car from Tate who purchased the car in good faith and for value from Stone. At common law Jones, the minor, could recover the car from the third person, Tate, to whom Stone, the other party to the contract with Jones had transferred it, even though the third person did not know of the minority and purchased the car for value. However, the UCC repudiates this rule, Section 2-403(1) provides that 'a person with voidable title has power to transfer a good title to a good faith purchaser for value.'

On May 7, Roy, a minor, a resident of Smithton, purchased an automobile from Royal Motors, Inc., for $12,750 in cash. On the same day, he bought a motor scooter from Marks, also a minor, for $750 and paid him in full. On June 5, two days before attaining his majority, Roy disaffirmed the contracts and offered to return the car and the motor scooter to the respective sellers. Royal Motors and Marks each refused the offers. On June 16, Roy brought separate appropriate actions against Royal Motors and Marks to recover the purchase price of the car and the motor scooter. By agreement on July 30, Royal Motors accepted the automobile.

Royal then filed a counterclaim against Roy for the reasonable rental value of the car between June 5 and July 30. The car was not damaged during this period. Royal knew that Roy lived twenty-five miles from his place of employment in Smithton and that he would probably drive the car, as he did, to provide himself transportation. Decision as to (a) Roy's action against Royal Motors, Inc., and its counterclaim against Roy; (b) Roy's action against Marks?

Liability for Necessaries. (a) Roy, a minor, had the right to disaffirm the contract for the purchase of the automobile, if it is a non-necessary. On the other hand, if the car is considered a necessary, as in Rose v. Shehan Buick, Roy would either be liable for the reasonable value of the automobile or if allowed to disaffirm for the reasonable value of use and depreciation of the automobile. Here, since Royal accepted the return of the automobile it may have forfeited its right to the former: the reasonable value of the automobile. (b) Disaffirmance.

Decision for Roy and against Marks for the return of the purchase price of the motor scooter. The general rule that the contracts of a minor are voidable at his option applies to an executed contract between two minors. To hold the rule inapplicable, the court, in Hurwitz v. App., 193 A.2d 360 said: 'would convert the privilege of infancy, which the law intends as a shield, to protect the minor, into a sword to be used to the possible injury of others.' While Marks as a minor has the option of disaffirming the contract, this option cannot nullify any rights or privileges which Roy, also, a minor, is capable of asserting. Accordingly, Marks cannot destroy Roy's right to rescind, and the contract was therefore voidable by Roy. George Jones on October 1, being then a minor, entered into a contract with Johnson Motor Company, a dealer in automobiles, to buy a car for $10,850.

He paid $1,100 down and, under the agreement, was to make monthly payments thereafter of $325 each. After making the first payment on November 1, he failed to make any more payments. Although Jones was seventeen years old at the time he made the contract, he represented to the company that he was twenty-one years old because he was afraid that if the company knew his real age, it would not sell the car to him. His appearance was that of a man of twenty-one years of age.

On December 15, the company repossessed the car under the terms provided in the contract. At that time, the car had been damaged and was in need of repairs. On December 20, George Jones became of age and at once disaffirmed the contract and demanded the return of the $1,425 he had paid on it. On refusal of the company to do so, George Jones brought an action to recover the $1,425, and the company set up a counterclaim for $1,500 for expenses it incurred in repairing the car. Who will prevail?

Liability for Misrepresentation of Age. George Jones may disaffirm the contract even though he deliberately misrepresented his age. Most courts would hold that Jones is not estopped from asserting his minority in order to sue Johnson Motor Company. At the same time, many courts would not grant Jones the relief sought unless he offered to return the car and also to account to the company for depreciation and the value of the use of the car where he has falsified his age. Here, the car has already been repossessed by Johnson Motor Company.

This problem is based upon the leading case of Myers v. Hurley Motor Co., 273 U.S. 277, 71 L.Ed. 515, 50 A.L.R. 1181, where a minor appeared to be more than 21 but made no misrepresentation to induce the making of the contract for the purchase of an automobile. The seller repossessed the car, and the minor, after attaining his majority, sought to recover the amount paid on the purchase price. The seller sought to recover a somewhat larger amount for damages to the car while in the minor's possession.

The United States Supreme Court stated that: 'The defense, in effect, is that the plaintiff was guilty of tortious conduct to the injury of the defendant in the transaction out of which his own cause of action arose. In such case it is well settled that the relief is by way of recoupment.' The seller was held entitled to a setoff up to but not exceeding the amount of the plaintiff's claim. The company would be entitled to a setoff of $1,225, for depreciation in value, against the amount of Jones' claim. Rebecca entered into a written contract to sell certain real estate to Mary, a minor, for $80,000, payable $4,000 on the execution of the contract and $800 on the first day of each month thereafter until paid.

Mary paid the $4,000 down payment and eight monthly installments before attaining her majority. Thereafter, Mary made two additional monthly payments and caused the contract to be recorded in the county where the real estate was located. Mary was then advised by her attorney that the contract was voidable. After being so advised, Mary immediately tendered the contract to Rebecca, together with a deed reconveying all of Mary's interest in the property to Rebecca. Also, Mary demanded that Rebecca return the money she had paid under the contract.

Rebecca refused the tender and declined to repay any portion of the money paid to her by Mary Can Mary cancel the contract and recover the amount paid to Rebecca? Decision in favor of Rebecca. A minor may disaffirm a contract for the sale of real property made by him during minority within a reasonable time after attaining his majority and he may, by acts recognizing the contract after becoming of age, ratify it.

Since Mary had made two payments and caused the contract to be recorded, after she became of age, she arguably ratified the contract and will not be permitted to say that she performed these acts of ratification in ignorance of her right to disaffirm. She was not induced by fraud or misrepresentation to enter into the contract. The two payments after attaining her majority evidenced Mary's intention to comply with the contract and constituted a ratification of it, unless the fact that she did not then know the law authorized her to disaffirm thereafter. Mary is presumed to know the law, and cannot be heard to say that she was ignorant of her legal right in that respect. Anita sold and delivered an automobile to Marvin, a minor. Marvin, during his minority, returned the automobile to Anita, saying that he disaffirmed the sale. Anita accepted the automobile and said she would return the purchase price to Marvin the next day.

Later in the day, Marvin changed his mind, took the automobile without Anita's knowledge, and sold it to Chris. Anita had not returned the purchase price when Marvin took the car. On what theory, if any, can Anita recover from Marvin? Liability for Tort Connected with Contract. Marvin, the minor, having made a contract for the purchase of the car from Anita, and having received possession thereof, was the owner of the car, subject to disaffirmance. The act of disaffirmance, however, is not a new contract, which the minor, in turn, may disaffirm.

Upon disaffirmance he merely had the right to the return of the purchase price. Therefore, when Marvin changed his mind, he created no new rights in himself.

He had retransferred possession and title to the car to Anita. Marvin's taking the car constituted the tort of conversion, and Marvin would be liable in an appropriate action based upon his tortious act. Ira, who in 2005 had been found innocent of a criminal offense because of insanity, was released from a hospital for the criminally insane during the summer of 2006 and since that time has been a reputable and well-respected citizen and businessperson. On February 1, 2007, Ira and Shirley entered into a contract in which Ira would sell his farm to Shirley for $100,000.

Ira now seeks to void the contract. Shirley insists that Ira is fully competent and has no right to avoid the contract. Who will prevail?

Before you can get your driver’s license in Florida, you are required to take a Florida permit test consisting of a number of multiple choice questions. It’s highly recommended that you take a defensive driving test as well. When you go to lease or buy a new vehicle either through financing or a bank loan, you may save significantly if you have successfully completed one. In order to get a driver’s permit in Florida you must be at least 15 years old. You must pass a vision test in addition to Florida Permit Test which evaluates your knowledge of road signs and rules. Also if you’re under 18, your parent or guardian must sign a consent form. Once you get your Florida learner’s license you may only drive when accompanied by a licensed driver who is 21 years old or over.

This individual must sit in the front passenger seat next to you. As you are practicing your skills as a driver, please remember that driving in the state of Florida is a privilege. Before you take the Florida Permit Test, you should thoroughly familiarize yourself with the State Driver Handbook. The Handbook is a comprehensive guide to Florida road signs and rules. It is also strongly suggested that you take some Florida DMV practice test so that you have an understanding of what your driver’s test will consist of.

Start Your Florida Permit Test. • Know the Cost After determining the license that they need, people should then figure out the fees that they need • License Requirements Whether they are a teen, a new Florida resident or simply a person who wants to obtain a • Whether a person is new to Florida, new to driving or just needs to secure their replacement license, a trip Getting Ready for Your Florida Permit Test: What to Know Congratulations! You are eligible to take the Florida Permit Test to prepare for your Florida driver’s license! What do you need to know? • You can get your Learner’s License (also called a Learner’s Permit) when you are 15 years old.

• Remember that you are NEVER Drive Alone with a Learner’s Permit in Florida There must ALWAYSbe a licensed driver in the seat closest to you. Regardless of your age, if you have never had a drivers license in any state or country, you must complete the following in order to get a Florida Driver’s License: 1. Complete the DATA (Drug, Alcohol, Traffic Awareness) class online. This class is available at 123driving.com and HighSchoolDriver.com. There is a fee for this class; check the websites for more information.

The class takes at least four hours to complete. Study the Road Signs and Rules to prepare for the DMV Test. An optional Preparation for the DMV test is available at www.highschooldriver.com.

Before a Learner’s License or Driver’s License can be issued, you must pass the DMV test. You have two options for taking the DMV Test: • If you are under 18 years old, you can take the DMV test at www.123driving.com/dmv-test.shtml • If you are over 18 years old, you must take the DMV test at a DMV office. It’s best to make an appointment before you go. Arrive 15 minutes before your appointment, and plan on being at the DMV office for at least two hours. Take the written DMV test. The DMV test has 40 questions.

Twenty of the questions are road sign identification and 20 of the questions are about road rules. To pass, you must get at least 15 answers correct in each section. If you fail the DMV test, you will not be able to retake the test the same day. You must make another appointment and return for a second exam. What do you need to bring? • Your Certificate of Completion of the DATA Course • One of the following standard forms of identification: Original Birth Certificate, valid U.S.

Passport, or Florida State ID card • Your original Social Security Card • If you are under 18, a natural parent (or legal guardian) must sign a in front of the DMV examiner or a notary public What happens at the DMV Office? • You will get your photo taken • You must pass a vision test (20/40 or better vision in each and both eyes, with or without corrective lenses) • You will take a hearing test • You will provide a thumb print When you are finished at the DMV Office, you will receive your Learner’s License!

It seems like a lot, but you will be prepared to be a safe driver in Florida. If you would like more information on the Florida Permit Test, contact us today.