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ANSWER KEY Part 2 Contract Law
Chapter 7 The Essentials of Contract Law
Opening Case Questions
1. The four elements of a contract are mutual assent, consideration, capacity, and legality. Because
2. Eventually, in this case, the court ruled that enforcement of the contract will be based on
promissory estoppel. This means that, even though no contract actually existed between Vulcan and
Janke, the court will force Vulcan to live up to its promises. Once this is decided, the writing argument
3. As noted above, the argument raised by Janke is promissory estoppel. According to promissory
estoppel, when one party makes a promise to the other party, and the second party relies on that
4. The courts are clear that the objective of contract law is rehabilitation. This means that the courts
will place an innocent party, Janke in this case, back into just as good a position as it would have been
5. Incidental damages are those that are paid by the breaching party to make up for any expenses
paid by the victim to prevent any additional loss. The Jankes asked for incidental damages to reimburse
them for those meetings in Madison and Milwaukee. The court, however, decided not to honor that
request because those losses did not result from the Jankes’ reliance on Vulcan’s false promises
A QUESTION OF ETHICS-1
Special Directions to the Instructor: Most instructors will be unable to predict the many answers that
students will give for the ethical questions asked in the first Question of Ethics feature in this chapter,
especially since the students are required to answer a very open ended question. Nevertheless, it is
fairly crucial, in this feature, for students to see that the interaction of the political CAS with the legal
A QUESTION OF ETHICS-2
Special Directions to the Instructor: It is extremely difficult (impossible?) for an instructor to predict
with confidence the wide variety of answers that students will provide for the ethical question asked in
Questions for Review and Discussion
1. A contract is an agreement between two or more competent parties based on mutual promises and
2. As Harold J. Berman explains in his landmark study, Law and Revolution: The Formation of the
Western Legal Tradition, mercantile law originated among the merchants themselves who needed a
3. As the courts in England began to handle more and more cases that involved commercial
transactions, common law was forced to incorporate many of the principles inherent within the law
merchant. These courts included the staples courts, the fair courts, and the admiralty courts. The entire
5. The underlying objective of contract law is to determine whether the parties to the contract
entered the agreement freely. If the court determines that the parties willingly entered the agreement,
7. All contracts are agreements, but not all agreements are contracts. An agreement may or may not
be legally enforceable. To be enforceable, an agreement must conform to the law of contracts. This
8. The general rule of contract law is that the parties must stand in privity to one another. Privity
9. These six include (1) contracts that cannot be completed within one year; (2) contracts involving
land; (3) contracts in consideration of marriage; (4) contracts made by executors to pay a debt of the
Cases for Analysis
1. The appeals court should reverse the ruling of the lower court. The clause is ambiguous enough to
require the trial court to look at factual evidence to determine the actual intent of the parties. If the case
2. No. The contract in this case is between Stewart’s corporate employer and the bank. The bank
breached the contract with the corporate employer. Since Stewart was not in privity with the bank, he
3. Yes. The court agreed with Copeland and required that Anderson pay for the use of the
tractor for eleven days. The court stated that under the circumstances, the law would imply the
4. Yes. A contract to perform an illegal act is void. This contract was void because the city made no
5. (a) The agreement to “take over all executory contracts” would itself be executed at the
time these contracts were taken over.
(b) This part of the contract would be executory until such time as payment was made
6. Answers will vary here depending upon a student’s religious values. However, we can hazard a
guess based on the fact that most religions have the Golden Rule, or some variation of that rule, at
the heart of their ethical system. Thus, a religious establishment might oppose capitalism because the
profit making motive associated with capitalism can lead people to hoard their earnings, rather than
7. Mers has an excellent promissory estoppel case because (a) Mers’ employer made a promise; (b)
8. Yes. Shawn and Doug’s can use an implied-in-law (aka quasi contract) argument in this situation.
END CHAPTER SEVEN
