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Contracts

ESSAY EXAM QUESTIONS

INTRODUCTORY NOTE

The essay questions that follow have been selected to provide you with an
opportunity to experience how the substantive law you have been reviewing may be
tested in the hypothetical essay examination question context. These sample essay
questions are a valuable self-diagnostic tool to enable you to enhance your issue-spotting
ability and practice your writing skills. It is suggested that you approach each question as
though under actual examination conditions. Note the issues as you see them, and then
analyze the issues before writing. The time allowed for actual writing is 60 minutes.
Should you prefer to forgo the actual writing involved on these questions, be sure to give
yourself no more time for issue spotting than you would on the actual examination.
After completing your own analysis of each question, compare your answer with
that provided herein. These are "passing" answers that show sufficient coverage to earn a
passing grade for the question. They are not "model" answers.

EXAM QUESTION NO.1

On Thursday, May 14, Tenant received the following letter from Shore: "Dear
Tenant, I will let you have my 'Shore House' for this June through August season, same
terms under which you occupied it last year. Please reply in a week." Tenant noticed
Shore's letter was postmarked May 11.
Earlier in May, Tenant had made inquiry at "The Cliffs," a mountain resort owned
by Cliff. In Cliff's absence, Joe, one of Cliff's caretakers, had shown Tenant two available
houses, "Hi- Vu" and "Lo-Vu," which Joe stated were listed for rent at $6,000 and $3,000
respectively, for one season.
On May 15, Tenant received a letter from Cliff which read, "This confirms
statements by Joe. You may have Hi- Vu at $6,000, or Lo- Vu at $3,000, for the season
June through August, all services included, payable in equal monthly installments."
On May 17, Tenant wrote to Cliff as follows, "I think your prices are high. Will you
take $5,000 for Hi- Vu? If not, then I'll have to settle for Lo- Vu, and I agree to pay the
$3,000 you ask, only I hope you may be willing to consider some concession if I pay the
whole $3,000 in advance."
On May 17, Tenant learned that Shore had sold Shore House to Jones for Jones's
immediate occupancy.
On May 18, Cliff received Tenant's letter and Cliff immediately telegraphed Tenant,
"No change in prices. See my letter of the 16th." Tenant received Cliff's telegram the
same day, May 18. Later that day Tenant also received Cliff's letter of May 16, which
read, "Our deal is off." Tenant immediately wrote Shore, "I'll take Shore House per your
letter of the 11th."
The normal course of post between Tenant and Shore and Tenant and Cliff was one
day.
You may assume that all requirements of the Statute of Frauds have been satisfied.
What rights, if any, does Tenant have against Shore and against Cliff? Discuss.
EXAM QUESTION NO.2

In response to Buyer's request for a firm annual price on fuel oil, Seller wrote Buyer
on December 20: "I offer to supply you with any #2 fuel oil ordered during next year
beginning January 1. Price: 641t per gallon, to be ordered only in 3,000-gallon tank cars.
Because of your past favors, this offer will not be withdrawn during the year." On
December 22, Buyer wrote: "I accept your offer." Seller received Buyer's communication
on December 24.
During January and February, Buyer ordered 400 tank cars of fuel oil, the oil was
delivered, and Buyer paid for it at the rate of 641t per gallon. Early in March, the market
price of #2 fuel oil rose to 671t per gallon. On March 9, Seller mailed a letter to Buyer
reading: "I revoke my December offer." Seller's letter was misdirected by the post office
and did not arrive until March 16. Buyer placed the following March orders, all by mail:
On March 10, for 50 tank cars; on March 17, for 50 tank cars; on March 30, for 100 tank
cars. Seller received all orders two days after mailing but refused to fill any of the March
orders.
On April 5, Buyer purchased 200 tank cars of #2 fuel oil from Petro (a competitor of
Seller) at Petro's regular price of 681t per gallon, although Buyer admits that by shopping
around he could have purchased the oil at 671t per gallon.
What rights (if any) does Buyer have against Seller? Discuss.

EXAM QUESTION NO.3

On April 1, Ann Star, a young television personality, signs a contract with Bland
Television Network to perform May 1 in a one-hour "live" T.V. show from 8 to 9 p.m.
Bland agrees to pay Star $1,000 for this performance. The contract also provides that if
for any reason Star does not appear as scheduled, she will "forfeit the sum of $25,000 to
Bland as liquidated damages."
On April 10, Star informs Bland that she is suffering from acute fatigue and that her
physician probably will not allow her to appear as scheduled. Bland immediately urges
her in writing to fulfill her contractual obligations.
On April 15, Star tells Bland that she has miraculously recovered and will appear as
scheduled on the May 1 show.
On April 23, Bland informs Star that, due to her unpredictability, it has hired actress
Prima Donna as of that date and will not require Star's services.
On April 28, Prima Donna breaks her leg in an accident. Bland immediately wires
Star that it has reconsidered the whole matter and will hold her to the original contract to
perform on May 1.
On the evening of May 1, Star appears at the studio ready to perform, but Bland,
acting under orders from the Federal Communications Commission, cancels the show in
order to broadcast a special address by the President of the United States.
Discuss the legal implications of the foregoing events.
EXAM QUESTION NO.4

P and D, who were casual acquaintances, resided in communities 100 miles apart.
On February 1, P wrote D as follows:

I have decided to give up my farm, Blackacre, and move to town. 1


thought you might consider buying it from me because you have often said
that you were going to move to a farm after retirement. 1 will sell you
Blackacre for $100,000. I'll let you have 10 days to think about it and to
talk it over with your wife. In other words, I'll keep the offer open and will
not withdraw it during this time.

Sincerely yours,

/s/P
February 1, 2003

As a result of a delay in the mails, P's letter did not arrive in the normal course on
February 2, but was received on February 4. On February 8, P deposited in the mail a
letter addressed to D in which he said, among other things, "Blackacre deal off." This
letter was not received by D until February 12, a few hours after D had posted an
acceptance of the offer. The letter of acceptance was received in due course on February
13. In the correspondence that followed, P denied that any contract resulted, and D did
not tender any money to P. On February 20, D delivered to A a writing that stated, "I
hereby transfer to A my right to Blackacre under my contract with P for $100, receipt of
which is hereby acknowledged. /s/D." On February 25, D gave a similar instrument to B,
who immediately presented it to P. The next day A presented his claim to P.
What are the rights and liabilities of all the parties? Discuss.