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Cards In This Set
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Bible did legal work for Jones and billed $4,000 ($200/hr. X 20 hrs.). Jones emailed Bible: “I agree with the hours you billed but you said you would bill $150/hour.” After further discussions, Jones decided to compromise and sent Bible a check for $3,500 on which he wrote “Full payment for legal services.” On receipt, Bible drew a line through Full, wrote Partial, and cashed the check. Later, Bible demanded the remaining $500 he said he is owed. True-False: Bible is entitled to the $500.
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False – This is an unliquidated debt because the amount is disputed. Bible accepted Jones’ offer when he cashed the check; substituting Partial for Full had no effect because he cannot unilaterally change the terms of the offer. So the result is an accord and satisfaction supported by bargained-for consideration – Jones gave up the right to litigate whether he owed less than $3,500 and Bible gave up the right to litigate whether he was entitled to more. Because the accord and satisfaction is enforceable, Bible has no right to the $500.
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X University sent Smith an offer to be accepted by June 15 with duties to begin on August 1. On June 5, Smith replied, “I accept your offer but I cannot begin until August 8. If I do not hear from you by June 10 I will conclude that this is acceptable.” True-False: If June 10 passes with no reply from X, a court would likely rule that X accepted Smith’s terms.
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False – unless there is a history of dealings between the parties so that silence could be deemed an acceptance, silence is not regarded as an acceptance of an offer.
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. X University sent Smith an offer to be accepted by June 15 with duties to begin on August 1. On June 5, Smith replied, “I accept your offer but I cannot begin until August 8.” X received this letter on June 7. On June 8, Smith wrote X, “Disregard my June 5 letter. I can begin on August 1.” X replied, “Sorry, we offered the job to someone else.” True-False: Smith accepted X’s offer before June 15 so he and X have a contract and X is in breach if it hires someone else.
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False – Smith’s June 5 letter was a counteroffer under the mirror-image rule. It became effective on June 7 when X received it. The counteroffer extinguished the original offer, so when Smith tried to accept that offer on June 8, there was no offer to accept. X did not accept Smith’s counteroffer or agree to his attempted acceptance of the original offer, so no contract was ever formed.
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Abel’s car hit Baker’s. Baker sued for negligence. On June 1, Jones, Abel’s attorney, mailed Baker a settlement offer of $8,000. Baker received this on June 3 and mailed his acceptance. Later that day he called Jones’ office and told his clerk, “I sent a letter accepting Jones’ offer but I changed my mind. I need at least $10,000 to settle.” On June 2, Jones sent Baker a letter with a new offer of $12,000. When Baker received this on June 4 he called Jones to accept but by then Jones had received Baker’s June 3 letter, so he told Baker that the $8,000 figure was binding. True-False: On June 2, Jones revoked his June 1 offer and made a new offer of $12,000 which Baker accepted on June 4, so Baker is entitled to $12,000.
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The answer was meant to be false – per the common law mailbox rule Baker accepted Jones’ offer on June 3, the instant he mailed his acceptance. Later he tried to revoke his acceptance, but it was already effective. Jones attempted to revoke his June 1 offer and substitute a new one on June 2, but revocations and offers become effective only on receipt by the other party, which was June 4, one day after Baker accepted the $8,000 offer.
I realized, however, that although mailing the letter on June 3 did accept the $8,000 offer, one could argue that Jones’ June 2 letter was a new offer which effectively revoked the first offer and which Baker accepted on June 4 before Jones said he was going to hold Baker to the first offer. The bottom line is that this ended up being far more complicated than I meant for it to be, which is why I told you to write down True.
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Acme Widget had employee Bob drive a shipment from Dallas to Austin. In Waco he stopped at a 7-Eleven on the frontage road; while still on the road about to re-enter IH 35 he hit a car. The driver sued Bob for negli-gence and joined Acme as co-defendant under respondeat superior. The trial jury found Bob liable. True-False: Acme is not liable. Bob was in the course and scope of employment only when he was on IH 35.
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False – Bob was in the course and scope of employment while driving the shipment on IH 35 because this was in furtherance of Acme’s business. He took a slight detour when he left IH 35, but stopping for a break, to get a snack, etc., while involved in a long-distance drive would be foreseeable to Acme, so the detour did not take Bob outside the course and scope of employment. Thus, Acme is liable for Bob’s negligence. Bob and Acme are jointly and severally liable for any damages the jury awards to the plaintiff.
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Joe’s Parasailing requires customers to sign a contract with this underlined waiver: “Customer agrees to hold Joe’s harmless for any injury suffered regardless of the cause.” Tom, a customer, was hurt when a line broke and he fell; examination revealed the line was frayed. Tom sued Joe’s for negligence; Joe’s defended based on the waiver. True-False: Based on Texas Supreme Court criteria, a court would likely enforce the waiver, allowing Joe’s to escape liability for any negligence on its part.
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False – The Texas Supreme Court has held that hold-harmless agreements are enforceable if they are conspicuous and explicitly relieve the party seeking enforcement of liability even if it is guilty of negligence. Global phrases like “regardless of the cause” do not satisfy the express negligence rule; one must say something like “Customer agrees to hold Joe’s harmless for any injury suffered in parasailing, including one attributable to the negligence of Joe’s” or words to that effect. Thus, although this waiver is conspicuous (it is underlined) it violates the express negligence rule and therefore is unenforceable
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Mogul Productions wanted a six-month option on the movie rights to a book written by Tom. Tom agreed to accept $15,000 for not selling the rights to anyone else in the six-month period. Ultimately MP did not buy the rights. All discussions between the parties were verbal. True-False: This appears to be an enforceable option and Tom is not obligated to return the $15,000.
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True – each party gave consideration (Tom, in accepting $15,000 for agreeing not to sell the rights for six months, and Mogul, in agreeing to pay $15,000 for the right to have six months to decide whether to buy the rights) so this is an enforceable option contract. It need not be written to be enforceable under the Statute of Frauds because it not only can, but will, be fully performed in less than a year. Mogul is not entitled to the return of the money because that was the price it paid for the right to decide whether to buy the rights during the six months.
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When ABC Widget hired Joe they signed a contract. One paragraph said that on termination of the relation-ship Joe would not, for two years, go to work with another widget company in Texas; in exchange ABC agreed to provide him with special training. Joe was a salesperson whose territory was central Texas cities. Six months after leaving ABC he joined XYZ Widget as (1) production manager or (2) a salesman whose territory was far south Texas cities. ABC sought an injunction. True-False: The ancillary and consideration require-ments are met, but in (1) and (2) a court would likely void the non-compete. ABC likely cannot prove it has any valid competitive interest in prohibiting Joe from working for XYZ in cities other than those in which he worked for ABC or in a different capacity than salesperson.
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True – a non-compete is enforceable only if it is ancillary to an otherwise enforceable agreement; this one is, because the other agreement to which it is ancillary is the employment agreement formed when ABC hired Joe. It must also be supported by bargained-for consideration; this one is, because in exchange for agreeing to the non-compete Joe will receive special training. In addition, a non-compete must be reasonable in scope and duration; the person seeking enforcement must show that it has a valid competitive interest in enforcing the restriction on employment in the non-compete. ABC can’t do this in either instance: a salesperson who goes to work for a competitor in an area unrelated to the one in which he originally worked poses no competitive threat to the original employer, nor will any threat be imposed if the employee goes to work for a competitor in a position different from the one he originally held.
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Bob sold Bob’s Widget, in Round Rock, to Sam. Part of the agreement states that Bob would not, for a year, open a competing widget business in a 75-mile radius. A year later Bob opened a new widget business in San Marcos (within the radius) so Sam sued for an injunction. A market survey shows that .04% of the customers at the Round Rock business come from San Marcos. True-False: Although the non-compete is a hardship on Bob, a court would likely enforce it as it is written and reflects a meeting of the minds of the parties.
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False – Sam has no competitive interest in prohibiting Bob from starting a competing business in an area from which only a miniscule amount of the business that Sam may expect comes, so this non-compete is unenforce-able to the extent that it imposes such a prohibition. A court would void it or reform it by rewriting it to cover only the area in which Sam can prove that he has a valid interest in prohibiting competition from Bob
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Jon sent Bob a letter saying, “Will sell you my car for $5,000. Offer accepted only on my receipt of a letter to that effect by May 1.” On April 15 Bob emailed his acceptance and followed up by sending an acceptance letter that Jon received on April 17. On April 16 Bob received a letter from Jon saying, “Offer revoked.” True-False: There is a contract because Bob accepted the offer before Jon revoked it. Jon tried to eliminate the common law mailbox rule but the law does not permit this to be done.
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False – generally, common law contract principles exist to deal with situations that the parties do not address. The mailbox rule is one such principle and it can be negated by the offeror. The offeror did that here. Because he said that the offer could be accepted only on (1) receipt of (2) a letter, both conditions have to be satisfied for the acceptance to be effective. The offeror received the letter on April 17, so that is when the offer was accepted. The April 15 email was meaningless.
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Bill hired Jon to perform legal services for $250/hour. True-False: Jon may, without Bill’s consent, assign to Joe his right to any compensation he is entitled to receive from Bill for his services (giving Joe standing to sue to challenge or enforce the contract), but if he becomes overburdened with work and wants to delegate his duty to perform the services to another member of his law firm, he must obtain Bill’s consent to do so.
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True.
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Dell Corp. and Jo signed a contract. Par. 16 says: “Jo is an independent contractor.” It is in red 14-point font; the rest of the contract is in black 11-point font. Later, Jo sued Dell under the Americans with Disabili-ties Act [ADA]; in arbitration Jo claimed the ADA applied because she was actually a Dell employee. True-False: Because par. 16 is conspicuous and uses the term independent contractor, the arbitrator should rule that Jo is an independent contractor as a matter of law and dismiss the ADA claim.
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False – whether one is an employee or an independent contractor is a question of fact to be resolved by using the criteria discussed in the text. Labeling one an independent contractor or securing his agreement that he is one are not conclusive
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A store sold an iPhone to Bill, age 16, for $199.50. On his 18th birthday, Bill returned to the store and told the manager he was disaffirming the purchase and wanted the price returned. True-False: Bill is too late; under Texas law, he had three days from the date of purchase to disaffirm. (333)
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False – Minors may disaffirm most contracts until they become adults, and for a reasonable time thereafter. (333)
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In #13 assume that Bill disaffirmed one day after the purchase, when the iPhone’s value had depreciated to $100.00. True-False: Bill is entitled to recover his full purchase price of $199.50. (333)
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False – this is the old common law rule, which has been replaced in most jurisdictions, including Texas, with a rule stating that the minor can disaffirm but is liable for any diminution in value of the item. (333)
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As a favor, Jon let Ron leave his golf clubs in Jon’s garage while Ron was out of town. Overnight, Jon left the garage door open and the clubs were stolen. Ron sued for damages. True-False: At most, Jon owed Ron a duty not to be grossly negligent in not returning the clubs in the condition in which they were left, so if Jon was guilty of ordinary (not gross) negligence in leaving the door open, he has no liability to Ron.
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True – because Jon received nothing for allowing Ron to leave his clubs, Jon was a gratuitous bailee; at most, he is liable only for gross negligence.
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