978-0078023866 Chapter 6 Internet Exercise and Supplements Part 1

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Chapter 06 – Contracts

Internet Exercise and Supplements

Answer to Internet Exercise (p.273)

1. Hairtech International has filed a $35 million breach of contract action against Paris Hilton

Student Projects

1. Imagine you want to start your own small business. You decide you want written contracts with

each of your employees. Go to http://smallbusiness.findlaw.com/business-forms-contracts and

find a contract that you can read; make a list of the kinds of provisions you might want to include

in your own contract.

2. Remember the last (or one of the last) contracts you yourself signed. Who were the parties? What

was the general topic area? Is it currently an executed or executory contract? Was it required to

be written by the Statute of Frauds? (If you can’t remember signing a contract, ask a family

member, friend or colleague about their last signed contract and answer the questions relative to

their contract.)

Answers

Answer to ‘Can I Change My Mind?’ Question (p. 236)

The New South Wales state Supreme Court ruled that the eBay Auction formed a binding contract

between Thomas and Smythe. Thus, Thomas could not change his mind in face of a better offer, and

Answers to ‘Gambling’ Questions (p 237)

Since Blackford was banned from the casino, it is against the rules for him to be present or to gamble

at that casino. All agreements, or contracts that arise along with the bets placed by him at the casino

Answer to ‘A Jet Fighter from Pepsi?’ Question (p 237)

1. The Second Circuit affirmed the district court decision granting Pepsico summary judgment for

Answers to the ‘Toy Yoda’ Questions (p.251)

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Chapter 06 – Contracts

1. Plaintiff claims breach of contract and fraud.

2. Hooters, the employer, responds that it was a joke. Generally, if both parties are joking, then a

3. The prize was so grand that a reasonable person would have understood that no genuine offer

was intended.

4. Plaintiff accepted the offer by performance, followed by a drawing.

5. Hooters may argue that there was no consideration since the plaintiff was already obligated to

Answers to ‘$4,934 Discount on Alitalia’ Questions (p.252)

1. This can be a good discussion based question. Alitalia did not hesitate to honor the mistaken

price. Perhaps Alitalia’s executives learned a lesson from United Airlines, that received

2. Issues to consider include: Did Alitalia make a legal offer or was the web language merely an ad

calling for a customer offer? Did Alitalia S make a unilateral error? Should the error have been

Answer to ‘Modern Family Contract Feud’ Question (p.253)

The issue would be whether the prohibition of personal service contracts extending for more than

Answers to ‘Practicing Ethics: 2010 Gulf Oil Disaster: BP Contracts

Unfair/Unconscionable? Questions (p. 257)

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Chapter 06 – Contracts

a. The line between driving a hard bargain and driving an “unfair” bargain built on superior

resources can be difficult to draw. Generally, the law looks at such things as the relative

b. This is an opinion-based question. Perhaps students should think about whether they, too,

would not have been anxious to protect BP and thus themselves by invoking contract

a. This is an opinion-based question.

b. This is an opinion-based question. Most of the students may agree that they have done so;

either consciously or unconsciously. Instructors can ask students: Does a different set of

c. This is an opinion-based question.

Answers to ‘E-mail Exchanges and Statute of Frauds’ Questions (p.259)

1. Advantages of allowing e-mail exchanges to satisfy the Statute of Frauds include:

2. Disadvantages of allowing e-mail exchanges to satisfy the Statute of Frauds include:

Student answers will vary. However, students should address the points mentioned above.

Answer to ‘Contract’s Terms: Paper versus Website?’ Question (p. 260)

In this case one should take into consideration the fact that websites are updated on a regular basis.

Answers to ‘Whose Ring?’ Questions (p.266)

1. Robyn contended the ring was an unconditional gift. Barry argued that it was conditional, given in

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Chapter 06 – Contracts

2. The modern trend is to find that the gift was conditional, which condition is not met. Thus, such

gifts in anticipation of marriage must be returned regardless of which party is at fault in the

3. Barry gets the ring—the gift would not become absolute until the marriage occurred.

Answers to ‘Duke University Breached Its Contract with a Student?’ Questions

(p.267)

1. The Court rejected Giuliani’s oral contract claim because the “statements do not show a meeting

of the minds” and do not “establish definite and certain terms.” The Court labeled Coach Myers’

2. The plaintiff, Khem Bissessur, was expelled from Indiana University’s School of Optometry after

allegedly receiving poor grades and failing a clinical rotation. The Court rejected his breach of

contract claim because he produced no evidence of specific promises made to him by the

Answers to ‘Not a Fan?’ Questions (p. 271)

1. Whether firing the construction worker because he was wearing a Sooner’s jersey resulted in a

2. Decision depends on the type of contract and the conditions that the parties have agreed upon.

Answer to ‘Practicing Ethics: Bloggers Work for Free’ Question (p.273)

This is an opinion based question. Obviously, the contributions were entirely voluntary. Doubtless, the

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Chapter 06 – Contracts

contributors received what they initially bargained for—professional exposure, personal pride, political

advantage. When the start-up became extremely valuable, however, one could argue that a re-visiting

Cases and Answers

Vian v. Carey, 1993 U.S. Dist. Lexis 5460 (U.S. Dist. Ct. S.D.N.Y. 1993) (p. 238)

Syllabus

Mariah Carey, the famous pop musician, was sued by her step-father, who claimed they had

an oral contract licensing him to market dolls in her image which would play some of her most

popular songs. The court states that, fundamental to the creation of a contract, the parties

must have intended to form a contract, as evidenced by objective circumstances. Further,

even with intention, there can be no meeting of the minds where essential terms of the

contract are missing. Here, the parties never negotiated, rather, on at least three occasions

the step-father made comments such as “I get the Mariah dolls,” and on at least one occasion,

Carey responded, “okay.” Further, no terms were ever discussed, let alone agreed upon,

including the price or royalty amount, the duration or geographic scope of the agreement,

Carey’s right to approve the dolls. The word “license” was never even used between the

parties. Held: there is no evidence of intent to form a contract and no sufficiently definite

terms. Summary judgment for Carey.

Answers to ‘Vian v. Carey’ Questions (p. 239)

1. Because the terms of the contract were insufficiently definite. There was no indication that Carey

intended to form a contract, there was no meeting of the minds, essential material terms were

2. No. The court found that Carey did not intend to form a contract and there was no basis for

3. The court ruled that the contract was too uncertain to be enforced.

Hamer v. Sidway, 27 N.E. 256 (N.Y. 1891) (p. 242)

Syllabus

Nephew promised his uncle to refrain from drinking, using tobacco, swearing and playing

cards or billiards for money until he reached his 21st birthday. Uncle promised to pay him

$5000 if he fulfilled his promise. After turning 21, his uncle sent him a letter acknowledging the

debt, but suggesting that he kept the money on deposit, earning interest for nephew. Uncle

later died and the administrator of his estate refused to pay the funds to nephew. The court

upheld the obligation, indicating that nephew had paid the necessary consideration when he

limited “his legal freedom of action” in exchange for his uncle’s promise.

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Chapter 06 – Contracts

Answers to ‘Hamer v. Sidway’ Questions (p. 243)

a The nephew gave up his legal right to drink, using tobacco, swearing, playing cards or

billiards for money etc.

b. Presumably, peace of mind, satisfaction and the nephew’s good will.

c. No. At least in most jurisdictions, the promisor need not receive a benefit if the promisee has

suffered a detriment. In the usual case, the two would accompany each other.

2. Since Lampley was an at-will employee, he could have left his employment at any time. The

company’s announced profit-sharing plan was an added fringe benefit, consideration for which

was that Lampley continue to be the employee of the company. In the words of the court, “the

plan was established as an inducement to Celebrity’s employees to remain in its workforce and to

perform more efficient and faithful service. Such result would be of obvious benefit to Celebrity,

and thus consideration was present.”

3. The appellate court affirmed the trial court’s holding. Thomas offered persuasive evidence tending

to prove that she provided Hoffman with excellent care, valuable services, and companionship

during the time she was with him. The trial court found Thomas’s services were rendered

gratuitously, however, and thus were not compensable under an implied contract theory. Further,

the trial court implicitly found that Hoffman did not accept nor retain the benefit of Thomas’s

services under circumstances making it inequitable for the existence of no return payment. The

appellate court, while acknowledging that a reasonable fact-finder could have differed with these

reasonable conclusions, affirmed the district court’s rulings.

Dodson v. Shrader, 824 S.W. 2d 545 (Tenn. S.Ct. 1992) (p. 246)

Syllabus

Dodson, 16, purchased a used truck from defendants. The truck developed mechanical

problems, which Dodson did not fix. He continued to drive the truck until it became inoperable,

at which time he left the vehicle parked. He contacted defendants seeking to rescind the

contract and requesting a full refund and then sued when they refused to accept his tender of

the truck. In the meantime, a hit-and-run driver did more damage to the parked truck. The

court adopted a minority view, requiring an offset against the purchase price in vendor’s favor

for reasonable compensation for the use of, depreciation, and willful or negligent damage to

the goods. Remanded for a determination of whether Dodson’s continued use of the truck until

it became inoperable was gross negligence or intentional conduct and for a determination of

the damage caused by the hit-and-run accident.

Answers to ‘Dodson v. Shrader’ Questions (p. 248)

1. “Whether the minor is entitled to a full refund of the money he paid or whether the seller is entitled

to a setoff for the decrease in value of the pickup truck while it was in the possession of the

minor.”

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Chapter 06 – Contracts

2. Minority laws covered in this case, both, call for a deduction from the full purchase price based

upon the benefit the minor derived from the use of the item. One further extends the minor’s

liability to include any depreciation or deterioration in the value of the item.

3. To achieve justice in contract cases involving a minor and an adult, one would want to know

whether the minor has been “overreached” in any way? Was fraud or undue influence involved?

Was the contract fair and reasonable? Broadly, was the minor taken advantage of?

4. a. The court may have been influenced by that fact, given that White’s business was quite

profitable and the equipment was a necessity for his business. However, the record explicitly

concluded that White’s personal necessities were provided by his family. Hence, he was not

emancipated and his business was not necessary to his welfare.

b. The court found for Valencia. It found he had not taken advantage of White in any way. It

adopted the minority view that the minor in such cases should be responsible for the benefits

derived under the contract. The disassembled engine and other parts in possession of Valencia

were to be returned to White. White had received a value of nearly $20,000, had paid $7,100,

leaving a balance of nearly $13,000 of value which White was required to pay to Valencia.

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