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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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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
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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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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 06 - Contracts
1.
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
2.
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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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
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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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
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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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 06 - Contracts
Answers to ‘Hamer v. Sidway’ Questions (p. 243)
1.
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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any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
