MIDTERM EXAMINATION

Page | 1 Contracts 616, Midterm, Turner 9318 MIDTERM EXAMINATION (Essay Question) 1. Otto sues Devin for breach of contract. Discuss 2. Brent sues Devin for breach of contract. Discuss Otto vs. Devin Issue: Breach of Contract  Otto, an antique car dealer, is shown a 1968 Ford Shelby Cobra Mustang automobile by Devin, who just inherited the car from his uncle. Impressed by how pristine the automobile was, Otto orally proposes that Devin give him an exclusive contract to sell the automobile . As part of the proposal, Otto represented he could get between $100,000 to $125,000 for the automobile requested a fee of 20% of the gross sales price , and stated that he would conduct all advertising to promote the 1968 Ford Shelby Mustang and to be given 16 months to find a buyer.  Devin agreed but because he felt 20% of the gross sale price was high, he requested Otto to receive only 10% of the gross sales price.  Otto agreed and stated that he would send Devin a written contract setting forth these terms "to verify our agreement." Devin receives the written contract, which recites the terms of the oral understanding but fails to sign it.  Devin having second thoughts since he feels he should receive all of the proceeds from the automobile since he was the one that inherited the car advertises the 1968 Ford Shelby Mustang automobile. Rule:  According to Restatement §3, " An agreement is a manifestation of mutual assent on the part of two or more persons ." Similarly, UCC §1-201((b)(3) defines " agreement" as " the bargain of the parties ."  On the other hand, according to Restatement §1, " A contract is a promise or a set of promises for the breach of which the law gives a remedy ." Similarly, UCC §1-201((b) (12) defines a " contract " as " the total legal obligation that results from the parties' agreement ."  UCC§2-104 defines a merchant as a person who deals in   goods   of the kind or otherwise by his occupation and holds himself out as having knowledge or skill

Page | 2 Contracts 616, Midterm, Turner 9318 peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.  §2-105(1) states that goods are all things (including specially manufactured goods) which are movable at the time of identification to the   contract for sale   other than the money in which the price is to be paid.  Contract is an enforceable agreement between two parties. Therefore, a valid contract can be formed; as long as the four general elements of a legally enforceable contract have been met. Those four elements are offer, consideration, acceptance, and mutuality .  Legality of a contract is that it must follow the law. All of the elements in the sale and purchase of the automobile must be lawful.  Capacity is being of a sound mind and being of legal age.  Statute of Frauds defines that certain kinds of contracts are unenforceable unless they are in writing. There are five categories of contract which fall within the Statute of Frauds and must therefore be in writing. The first is a contract made up of consideration of marriage, the second is a contract that is not to be performed within one year, a land contract, the third is a contract of an executor, the fourth is the sale of goods for $500 or more, and the fifth contract that must be in writing is the suretyship contracts.  U.C.C. Written Confirmation Writing indicates a contract for sale quantity between merchants, is binding partly unless he objects within 10 days even without having signed the written contract.  A breach of contract is when one party fails to perform the obligations they have agreed to in a contract.  Unjust enrichment is a cause of action that is closely related to breach of contract as both causes of action can emanate from a single transaction. Unjust enrichment occurs when the defendant receives a benefit at the plaintiff’s expense without giving anything in return.  

Page | 3 Contracts 616, Midterm, Turner 9318  Breach unjust is the failure to perform, goes to the essence of the contract. Here the facts show that all the elements to form an enforceable contract were not met. Therefore, there was no breach of contract. Analysis:  The U.C.C. govern contracts that are for the sale of goods. Goods are defined as all things that are moveable at the time of the contract formation. Common law governs all other contracts including those for services. Therefore, Otto offered his services to sell Devin’s 1968 automobile. Otto is an antique car dealer [a merchant]. The agreement is for Otto’s car selling services [which is special knowledge].  Contract is an enforceable agreement between two parties. Here, Otto and Devin agreed verbally to an exclusive contract for the sale of Devin’s 1968 Ford Shelby Cobra Mustang for $100,000. The written contract would be sent to Devin setting forth the terms to verify their agreement. There are four general elements of a legally enforceable contract; they are offer, consideration, acceptance, and mutuality.  The offer is a promise that one party makes to another party. Otto [the offeror] orally proposes that Devin [the offeree] give him an exclusive contract to sell the automobile in 16 months. Offers are a manifestation of willingness to enter into a bargain. And the offer must be (1) communicated, (2) intent to be bound, and (3) have definite terms. First, Otto orally proposed that Devin gives him an exclusive contract to sell the automobile. As part of the oral proposal, Otto states he could get between $100,000 and $125,000 for the automobile and requested a fee of 20% of the gross sales price. Otto also states he will conduct all the advertising to promote the automobile and to be given 16 months to find a buyer. Thus, the offer had been communicated. There was intent to be bound and the price, the fee, and the time to find a buyer are the definite terms of the offer. Therefore, there was a valid offer for the automobile.  Sometimes, the offeree will counteroffer to negotiate for more beneficial terms. Devin agreed but because he felt that the 20% of the gross sale price was too high [that Otto had proposed], he[counteroffered] requested Otto to receive only 10% of the gross sales price.  Consideration is the exchange of something of value with each party suffering a legal detriment. Consideration is the bargained-for exchange of a “ legal detriment ” between