1. A–1 Roofing Co. entered into a written contract with Jaffe to put a new roof on the latter’s
residence for $1,800, using a specified type of roofing, and to complete the job without
unreasonable delay. A–1 undertook the work within a week thereafter, but when all the roofing
material was at the site and the labor 50 percent completed, the premises were totally destroyed
by fire caused by lightning. A–1 submitted a bill to Jaffe for $1,200 for materials furnished and
labor performed up to the time of the destruction of the premises. Jaffe refused to pay the bill and
A–1 now seeks payment from Jaffe. Should A-1 prevail? Explain.
Answer: Impossibility. Yes. Decision for A-1 Roofing Co. As a general rule, and in the absence of
a provision to the contrary in the contract, if the act to be performed is necessarily dependent
2. By contract dated January 5, Rebecca agreed to sell to Nancy, and Nancy agreed to buy from
Rebecca, a certain parcel of land then zoned commercial. The specific intent of Nancy, which was
known to Rebecca, was to erect a manufacturing plant on the land; and the contract stated that
the agreement was conditioned upon Nancy’s ability to construct such a plant upon the land. The
closing date for the transaction was set for April 1. On February 15, the city council rezoned the
land from commercial to residential, which precluded the erection of the plant. As the closing
date drew near, Nancy made it known to Rebecca that she did not intend to go through with the
purchase because the land could no longer be used as intended. On April 1, Rebecca tendered the
deed to Nancy, who refused to pay Rebecca the agreed purchase price. Rebecca brought an
action against Nancy for breach of their contract. Can Rebecca enforce the contract?
3. The Perfection Produce Company entered into a written contract with Hiram Hodges for the
purchase of 300 tons of potatoes to be grown on Hodge’s farm in Maine at a stipulated price per
ton. Although the land would ordinarily produce 1,000 tons and the planting and cultivation were
properly done, Hodges was able to deliver only 100 tons because an unprecedented drought
caused a partial crop failure. Perfection accepted the 100 tons but paid only 80 percent of the
stipulated price per ton. Hodges sued the produce company to recover the unpaid balance of the
agreed price for the one hundred tons of potatoes accepted by Perfection. Perfection
counterclaimed against Hodges for his failure to deliver the remaining two hundred tons. Who
will prevail? Why?
Answer: Impossibility. Decision in favor of Hodges upon (a) his claim for the unpaid balance and
(b) the counterclaim of the Perfection Produce Company. Impossibility of performance may arise
from physical causes and excuses performance and discharges both parties from their contractual
4. On November 23, Sylvia agreed to sell to Barnett her Buick automobile for $7,000, delivery and
payment to be made on December 1. On November 26, Barnett informed Sylvia that he wished to
rescind the contract and would pay Sylvia $350 if Sylvia agreed. She agreed and took the $350
cash. On December 1, Barnett tendered to Sylvia $6,650 and demanded that she deliver the
automobile. Sylvia refused and Barnett initiated a lawsuit. May Barnett enforce the original
contract?
Answer: Accord and Satisfaction. No, the original contract may not be enforced. Decision for
Sylvia. The parties have entered into a valid accord and satisfaction which discharges the parties
5. Webster, Inc., dealt in automobile accessories at wholesale. Although it manufactured a few
items in its own factory, among them windshield wipers, Webster purchased most of its inventory
from a large number of other manufacturers. In January, Webster entered into a written contract
to sell Hunter 2,000 windshield wipers for $4,900, delivery to be made June 1. In April, Webster’s
factory burned to the ground and Webster failed to make delivery on June 1. Hunter, forced to
buy windshield wipers elsewhere at a higher price, is now trying to recover damages from
Webster. Will Hunter be successful in its claim?
Answer: Impossibility. Yes. Decision for Hunter. This is not a case of impossibility of performance
by Webster, Inc. Although Webster, Inc. may have expected to manufacture the windshield
6. Erwick Construction Company contracted to build a house for Charles. The specifications
called for the use of Karlene Pipe for all plumbing. Erwick, nevertheless, got a better price on
Boynton Pipe and substituted the equally good Boynton Pipe for Karlene Pipe. Charles’s
inspection revealed the change, and Charles now refuses to make the final payment. The contract
price was for $200,000, and the final payment is $20,000. Erwick now brings suit seeking the
$20,000. Will Erwick succeed in its claim?
7. Green owed White $3,500, which was due and payable on June 1. White owed Brown $3,500,
which was due and payable on August 1. On May 25, White received a letter signed by Green
stating, “If you will cancel my debt to you, in the amount of $3,500, I will pay, on the due date,
the debt you owe Brown, in the amount of $3,500.” On May 28, Green received a letter signed by
White stating, “I received your letter and agree to the proposals recited therein. You may
consider your debt to me canceled as of the date of this letter.” On June 1, White, needing money
to pay his income taxes, made a demand upon Green to pay him the $3,500 due on that date. Is
Green obligated to pay the money demanded by White?
8. By written contract, Ames agreed to build a house on Bowen’s lot for $165,000, commencing
within ninety days of the date of the contract. Prior to the date for beginning construction, Ames
informed Bowen that he was repudiating the contract and would not perform. Bowen refused to
accept the repudiation and demanded fulfillment of the contract. Eighty days after the date of the
contract, Bowen entered into a new contract with Curd for $162,000. The next day, without
knowledge or notice of Bowen’s contract with Curd, Ames began construction. Bowen ordered
Ames from the premises and refused to allow him to continue. Will Ames be able to collect
damages from Bowen? Explain.
Answer: Anticipatory Repudiation. Judgment for Bowen. An anticipatory repudiation constitutes a
breach that discharges the nonrepudiating party’s duty to perform and permits her to bring suit
9. Judy agreed in writing to work for Northern Enterprises, Inc., for three years as superintendent
of Northern’s manufacturing establishment and to devote herself entirely to the business, giving it
her whole time, attention, and skill, for which she was to receive $72,000 per annum in monthly
installments of $6,000. Judy worked and was paid for the first twelve months, when, through no
fault of her own or Northern’s, she was arrested and imprisoned for one month. It became
imperative for Northern to employ another, and it treated the contract with Judy as breached and
abandoned, refusing to permit Judy to resume work on her release from jail. What rights, if any,
does Judy have under the contract?
Answer: Material Breach. None. Judy’s arrest and imprisonment constituted a substantial breach of
the contract, which justified Northern Enterprises, Inc., the employer, in treating the contract as
10. The Park Plaza Hotel awarded its valet and laundry concession to Larson for a three-year term.
The contract contained the following provision: “It is distinctly understood and agreed that the
services to be rendered by Larson shall meet with the approval of the Park Plaza Hotel, which
shall be the sole judge of the sufficiency and propriety of the services.” After seven months, the
hotel gave a month’s notice to discontinue services based on the failure of the services to meet its
approval. Larson brought an action against the hotel, alleging that its dissatisfaction was
unreasonable. The hotel defended on the ground that subjective or personal satisfaction may be
the sole justification for termination of the contract. Who is correct? Explain.
Answer: Condition Precedent. Decision for Park Plaza Hotel on the assumption that its
dissatisfaction with the services of Larson, while not reasonable, was nevertheless in good faith.
11. Schlosser entered into an agreement to purchase a cooperative apartment from Flynn Company.
The written agreement contained the following provision:
This entire agreement is conditioned on Purchaser’s being approved for occupancy by
the board of directors of the Cooperative. In the event approval of the Purchaser shall
be denied, this agreement shall thereafter be of no further force or effect.
When Schlosser unilaterally revoked her “offer,” Flynn sued for breach of contract. Schlosser
claims the approval provision was a condition precedent to the existence of a binding contract
and, thus, she was free to revoke. Decision?
Answer: Condition Precedent. Judgment for Flynn Company. The critical question in this case is
the legal effect of the contract provision. In this case the contract provision is a condition
12. Jacobs, owner of a farm, entered into a contract with Earl Walker in which Walker agreed to
paint the buildings on the farm. As authorized by Jacobs, Walker acquired the paint from Jones
with the bill to be sent to Jacobs. Before the work was completed, Jacobs without good cause
ordered Walker to stop. Walker made offers to complete the job, but Jacobs declined to permit
Walker to fulfill his contract. Jacobs refused to pay Jones for the paint Walker had acquired for
the job. Explain whether Jones and Walker would be successful in an action against Jacobs for
breach of contract?
Answer: Prevention of Performance. Judgment for Jones and Walker. By her order to Walker to
cease work and by refusing to permit either Walker or Jones to complete the work, which they
were willing to do, Jacobs breached the contract and excused further performance on the part of
13. On August 20, Hildebrand entered into a written contract with the city of Douglasville whereby
he was to serve as community development project engineer for three years at an “annual fee” of
$19,000. This salary figure could be changed without affecting the other terms of the contract.
One of the provisions for termination of the contract was written notice by either party to the
other at any time at least ninety days prior to the intended date of termination. The contract listed
a substantial number of services and duties Hildebrand was to perform for the city; among the
lesser duties were (1) keeping the community development director (Hildebrand’s supervisor)
informed at all times of his whereabouts and how he could be contacted, and (2) attending
meetings at which his presence was requested. Two years later, on September 20, by which time
Hildebrand’s annual fee had risen to $1,915.83 per month, the city fired Hildebrand effective
immediately, citing “certain material breaches . . . of the . . . agreement.” The city specifically
charged that he did not attend the necessary meetings although requested to do so and seldom if
ever kept his supervisor informed of his whereabouts and how he could be contacted. Will
Hildebrand prevail in a suit against the mayor and city for damages in the amount of $5,747.49
because of the city’s failure to give him ninety days’ notice prior to termination?
Answer: Substantial Performance. Yes, Hildebrand will prevail. The only way the city could
repudiate the contract without giving proper notice is in response to a material breach or
14. Walker & Co. contracted to provide a sign for Harrison to place above his dry cleaning
business. According to the contract, Harrison would lease the sign from Walker, making monthly
payments for thirty-six months. In return, Walker agreed to maintain and service the sign at its
own expense. Walker installed the sign in July, and Harrison made the first rental payment.
Shortly thereafter, someone hit the sign with a tomato. Harrison also claims he discovered rust on
its chrome and little spiderwebs in its corners. Harrison repeatedly called Walker for the
maintenance work promised under the contract, but Walker did not respond immediately.
Harrison then notified Walker that, due to Walker’s failure to perform the maintenance services,
he held Walker in material breach of the contract. A week later, Walker sent out a crew, which did
all of the requested maintenance services. Has Walker committed a material breach of contract?
Explain.
15. Barta entered into a written contract to buy the K&K Pharmacy, located in a local shopping
center. Included in the contract was a provision stating that “this Agreement shall be contingent
upon Buyer’s ability to obtain a new lease from Landlord for the premises presently occupied by
Seller. In the event Buyer is unable to obtain a lease satisfactory to Buyer, this Agreement shall be
null and void.” Barta planned to sell “high-traffic” grocery items, such as bread, milk, and
coffee, in order to attract customers to his drugstore. A grocery store in the shopping center,
however, already held the exclusive right to sell grocery items. Barta, therefore, could not obtain
a leasing agreement meeting his approval. Barta refused to close the sale. In a suit by K&K
Pharmacy against Barta for breach of contract, who will prevail? Explain.
16. Victor Packing Co. (Victor) contracted to supply Sun Maid Raisin Growers 1,800 tons of raisins
from the current year’s crop. After delivering 1,190 tons of raisins by August, Victor refused to
supply any more. Although Victor had until the end of the crop season to ship the remaining 610
tons of raisins, Sun Maid treated Victor’s repeated refusals to ship any more raisins as a
repudiation of the contract. In order to prevent breaching its own contracts, Sun Maid went into
the marketplace to “cover” and bought the raisins needed. Unfortunately, between the time
Victor refused delivery and Sun Maid entered the market, disastrous rains had caused the price of
raisins to skyrocket. May Sun Maid recover from Victor the difference between the contract price
and the market price before the end of the current crop year?
Answer: Anticipatory Repudiation. Sun Maid may bring suit immediately, and treat the anticipatory
17. In May, Watts was awarded a construction contract, based on its low bid, by the Cullman County
Commission. The contract provided that it would not become effective until approved by the state
director of the Farmers Home Administration (now part of the U.S. Department of Agriculture
Rural Development Office). In September, construction still had not been authorized and Watts
wrote to the County Commission requesting a 5 percent price increase to reflect seasonal and
inflationary price increases. The County Commission countered with an offer of 3.5 percent.
Watts then wrote the commission, insisting on a 5 percent increase and stating that if this was not
agreeable, it was withdrawing its original bid. The commission obtained another company to
perform the project, and on October 14, informed Watts that it had accepted the withdrawal of
the bid. Watts sued for breach of contract. Explain whether Watts will prevail and why or why
not.
18. K & G Construction Co. was the owner of and the general contractor for a housing subdivision
project. Harris contracted with the company to do excavating and earth-moving work on the
project. Certain provisions of the contract stated that (a) K & G was to make monthly progress
payments to Harris; (b) no such payments were to be made until Harris obtained liability
insurance; and (c) all of Harris’s work on the project must be performed in a workmanlike
manner. On August 9, a bulldozer operator, working for Harris, drove too close to one of K & G’s
houses, causing the collapse of a wall and other damage. When Harris and his insurance carrier
denied liability and refused to pay for the damage, K & G refused to make the August monthly
progress payment. Harris, nonetheless, continued to work on the project until mid-September,
when the excavator ceased its operations due to K & G’s refusal to make the progress payment. K
& G had another excavator finish the job at an added cost of 1,$450. It then sued Harris for the
bulldozer damage, alleging negligence, and for the $1,450 damages for breach of contract.
Harris claims that K & G defaulted first, having no legal right to refuse the August progress
payment. Did K & G default first? Explain.
Answer: Concurrent Conditions/Material Breach. No, K & G did not default. Judgment for K & G
Construction Co. Contractual obligations are either independent of each other or mutually
dependent. They are independent if the parties intend that performance by each of them is in no
19. Mountain Restaurant Corporation (Mountain) leased commercial space in the ParkCenter Mall
to operate a restaurant called Zac’s Grill. The lease specified that the lessee shall “at all times
have a non exclusive and non revocable right, together with the other tenants and occupants of . .
. the shopping center, to use the parking area . . . for itself, its customers and employees.”.
Zac’s Grill was to be a fast-food restaurant where tables were anticipated to “turn over” twice
during lunch. Zac’s operated successfully until parking close to the restaurant became restricted.
Two other restaurants opened and began competing for parking spaces, and the parking lot
would become full between 12:00 and 12:30 P.M. Parking, however, was always available at
other areas of the mall. Business declined for Zac’s, which fell behind on the rent due to
ParkCenter until finally the restaurant closed. Mountain claims that it was discharged from its
obligations under the lease because of material breach. Is Mountain correct? Explain.
Answer: Breach/Substantial Performance. No, Mountain was not discharged from its obligations.
Judgment for ParkCenter Mall. Mountain Restaurant argues that the location of parking was very
important because in a lunch-oriented business customers will not walk very far from their cars to
20. In late 2010 or early 2011, the plaintiff, Lan England, agreed to sell 258,363 shares of stock to
the defendant, Eugene Horbach, for $2.75 per share, resulting in a total price of $710,498.25.
Although the purchase money was to be paid in the first quarter of 2011, the defendant made
periodic payments on the stock at least through September 2011. The parties met in May of 2012
to finalize the transaction. At this time, the plaintiff believed that the defendant owed at least
$25,000 of the original purchase price. The defendant did not dispute that amount. The parties
then reached a second agreement whereby the defendant agreed to pay to the plaintiff an
additional $25,000 and to hold in trust 2 percent of the stock for the plaintiff. In return, the
plaintiff agreed to transfer the stock and to forego his right to sue the defendant for breach of the
original agreement.
In December 2013, the plaintiff made a demand for the 2 percent stock, but the defendant refused,
contending that the 2 percent agreement was meant only to secure his payment of the additional
$25,000. The plaintiff sued for breach of the 2 percent agreement. Prior to trial, the defendant
discovered additional business records documenting that he had, before entering into the second
agreement, actually overpaid the plaintiff for the purchase of the stock. The defendant asserts the
plaintiff could not enforce the second agreement as an accord and satisfaction because (1) it was
not supported by consideration, and (2) it was based upon a mutual mistake that the defendant
owed additional money on the original agreement. Is the defendant correct in his assertions?
Explain.
Answer: Accord and Satisfaction. No, the defendant is not correct. An accord and satisfaction arises
when the parties to a contract mutually agree that a performance different than that required by
the original contract will be made in substitution of the performance originally agreed upon and
21. An artist once produced a painting now called The Plains of Meudon. For a while, the parties in
this case thought that the artist was Theodore Rousseau, a prominent member of the Barbizon
school, and that the painting was quite valuable. With this idea in mind, the Kohlers consigned
the painting to Leslie Hindman, Inc., (Hindman), an auction house. Among other things, the
consignment agreement between the Kohlers and Hindman defined the scope of Hindman, Inc.’s
authority as agent. First, Hindman was obliged to sell the painting according to the conditions of
sale spelled out in the auction catalog. Those conditions provided that neither the consignors nor
Hindman made any warranties of authenticity. Second, the consignment agreement gave
Hindman extensive and exclusive discretionary authority to rescind sales if in its “sole
discretion” it determined that the sale subjected the company or the Kohlers to any liability
under a warranty of authenticity.
Despite having some doubts about its authenticity, Thune was still interested in the painting but
wanted to have it authenticated before committing to its purchase. Unable to obtain an
authoritative opinion about its authenticity before the auction, Leslie Hindman and Thune made
a verbal agreement that Thune could return the painting within approximately thirty days of the
auction if he was the successful bidder and if an expert then determined that Rousseau had not
painted it. Neither Leslie Hindman nor anyone else at Hindman told the Kohlers about the
questions concerning the painting or about the side agreement between Thune and Hindman. At
the auction, Thune prevailed in the bidding with a high bid of $90,000, and he took possession of
the painting without paying. He then sent it to an expert in Paris who decided that it was not a
Rousseau. Thune returned the painting to Hindman within the agreed upon period. Explain
whether the Kohlers would be successful in a lawsuit against either Hindman or Thune.
Answer: Anticipatory Breach. The district court ruled that Hindman, Inc. and Thune were entitled
to judgment on all of the Kohlers’ claims against them. Indeed, all of the Kohlers’ claims depend
ANSWERS TO “TAKING SIDES” PROBLEMS
Associated Builders, Inc., provided labor and materials to William M. Coggins
and Benjamin W. Coggins, doing business as Ben & Bill’s Chocolate Emporium,
to complete a structure on Main Street in Bar Harbor, Maine. After a dispute
arose regarding compensation, Associated and the Cogginses executed an
agreement stating that there existed an outstanding balance of $70,000 and
setting forth the following terms of repayment:
It is agreed that, two payments will be made by the Cogginses to
Associated Builders as follows: Twenty Five Thousand Dollars
($25,000.00) on or before June 1, 2012, and Twenty Five Thousand
Dollars ($25,000.00) on or before June 1, 2013. No interest will be
charged or paid providing payments are made as agreed. If the
payments are not made as agreed then interest shall accrue at 10%
per annum 6gured from the date of default. It is further agreed that
Associated Builders will forfeit the balance of Twenty Thousand
Dollars and No Cents ($20,000.00) providing the above payments are
made as agreed.
The Cogginses made their first payment in accordance with the agreement. The
second payment, however, was delivered three days late on June 4, 2013.
Claiming a breach of the contract, Associated contended that the remainder of
the original balance of $20,000, plus interest and cost, were now due.
(a) What arguments would support Associated’s claim for $20,000?
(b) What arguments would support the claim by the Cogginses that they
were not liable for $20,000?
(c) For what damages, if any, are the Cogginses liable? Explain.
ANSWER:
(a) Associated could argue that (i) time was of the essence; (ii) the late payment was a material
breach of the accord; (iii) it could recover damages for either breach of the accord or the
