Examples of unenforceable oral contracts

Question

Assignment:

1. In March, William Tackaberry, a real estate agent for Weichert Co. Realtors, informed Thomas Ryan, a local developer, that he knew of property Ryan might be interested in purchasing. Ryan indicated he was interested in knowing more about the property. Tackaberry disclosed the property's identity and the seller's proposed price. Tackaberry also stated that the purchaser would have to pay Weichert a 10 percent commission. Tackaberry met with the property owner and gathered information concerning the property's current leases, income, expenses, and development plans. Tackaberry also collected tax and zoning documents relevant to the property.

In a face-to-face meeting on April 4, Tackaberry gave Ryan the data he had gathered and presented Ryan with a letter calling for a 10 percent finder's fee to be paid to Weichert by Ryan upon "successfully completing and closing of title." Ryan refused to agree to the 10 percent figure during this meeting. Tackaberry arranged a meeting, held three days later, where Ryan contracted with the owner to buy the land. Ryan refused, however, to pay the 10 percent finder's fee to Weichert. What, if anything, is Weichert entitled to recover from Ryan? Explain.

2. Alpha Corporation has outstanding four hundred shares of $100 par value common stock, which has been issued and sold at $105 per share for a total of $42,000. Alpha is incorporated in State X, which has adopted the earned surplus test for all distributions. At a time when the assets of the corporation amount to $65,000 and the liabilities to creditors total $10,000, the directors learn that Rachel, who holds one hundred of the four hundred shares of stock, is planning to sell her shares on the open market for $10,500. Believing that this will not be in the best interest of the corporation, the directors enter into an agreement with Rachel to buy the shares for $10,500. About six months later, when the assets of the corporation have decreased to $50,000 and its liabilities, not including its liability to Rachel, have increased to $20,000, the directors use $10,000 to pay a dividend to all of the shareholders. The corporation later becomes insolvent.

a. Does Rachel have any liability to the corporation or its creditors in connection with the corporation's reacquisition of the one hundred shares?

b. Was the payment of the $10,000 dividend proper?

3. McDonald's has an undeviating policy of retaining the absolute control over who receives new franchises. McDonald's granted to Copeland a franchise in Omaha, Nebraska. In a separate letter, it also granted him a right of first refusal for future franchises to be developed in the Omaha-Council Bluffs area. Copeland then sold all rights in his six McDonald's franchises to Schupack. When McDonald's offered a new franchise in the Omaha area to someone other than Schupack, he attempted to exercise the right of first refusal. McDonald's would not recognize the right in Schupack, claiming that it was personal to Copeland and, therefore, nonassignable without its consent. Schupack brought an action for specific performance, requiring McDonald's to accord him the right of first refusal. Is Schupack correct in his contention?

QUESTION 1 Which of the following duties would NOT be delegable?

• John has a contractual duty to pay Isaac $50.
• Karl has a contractual duty to deliver 50 bushels of corn to Michael by October 1.
• Jeffrey has a duty to mow Georgia's lawn at least once a week.
• Arthur has a duty to teach an accounting class at a community college during the fall semester.

QUESTION 2. Destruction of the subject matter has what effect on the offer?

• The offer is terminated.
• The offer is delayed until additional subject matter can be located.
• This creates an impossibility of fact that does not terminate the offer.
• The offer is merely delayed under the "Hardship Rule."

QUESTION 3 Fay, age 17, ordered a pair of skis on the installment plan. She paid $20 every month until she turned 18, the age of majority. The next day, she sold them to Sharon and disaffirmed the contract. What result?

• Fay is still liable since she had to disaffirm before her 18th birthday.
• Fay is still liable because selling the skis amounted to a ratification.
• Fay is still liable because she used the skis.
• Fay is not liable because skis are not necessaries.

QUESTION 4 Appraisal rights:

• belong to dissenting shareholders.
• can be exercised by a target company any time before acquisition.
• allow a target company to get a fair valuation of their assets before sale.
• always give all shareholders the fair market value of their shares.

QUESTION 5 Equitable remedies will NOT be granted when:

• the terms of the contract are fair.
• monetary damages would adequately compensate the injured party.
• fraud, duress, undue influence, or mistake are not present.
• All of the above.

QUESTION 6 Under the UCC, a(n) __________ is a practice or method of dealing regularly observed and followed in a place or vocation or trade.

• course of dealing
• usage of trade
• course of performance
• integrated document

QUESTION 7 Caroline signs a contract to work as a sales rep for Incellmed Corporation for a period of two years. This contract is governed by:

• Article 2 of the UCC.
• state common law.
• federal statute.
• the law of quasi contract.

QUESTION 8 Paul, a contractor, has a contract to build a new office building for Bill. The contract contains a provision requiring Paul to furnish a certificate of occupancy from the building inspector before Bill is required to pay. This provision is:

• an express condition.
• an implied-in-fact condition.
• an implied-in-law condition.
• a condition subsequent.

QUESTION 9 A misrepresentation is material if:

• it would likely induce a reasonable person to enter into a transaction.
• the maker knows it would likely induce the other party to enter into the transaction.
• it is made knowingly.
• Both (a) and (b).

QUESTION 10 Examples of unenforceable oral contracts are:

• an oral promise to guarantee the additional duties of another.
• an oral agreement to substitute different land for that described in the original contract.
• an oral agreement to extend an employee's contract for six months to a total of two years.
• All of the above.

QUESTION 11 Special state statutes to accommodate the needs of closely held corporations:

• are quite similar in content.
• are optional and must be elected by eligible corporations.
• do not address the limited liability of shareholders.
• require the corporation to operate with a board of directors, but it may consist of only one person.

QUESTION 12 The best and most reliable tool for preserving a partnership business after dissolution is:

• a court order.
• the filing of a request with the secretary of state's office in the state where the original partnership was located.
• a continuation agreement.
• There is no tool for preserving a partnership after dissolution. A new partnership must be formed after distributing all partnership property from the original partnership.

QUESTION 13 Alex sees Mona's ring, and he thinks it is very valuable. He uses physical duress to cause her to give him the ring, and he quickly sells it to unsuspecting Hanna's Antique Jewelry Shop for $5,000. A month later, Mona discovers her ring on sale at Hanna's. Can Mona get the ring back?

• Yes, since a true owner can always recover her own property.
• Yes, since Alex had voidable title to the ring.
• Yes, since Alex had void title to the ring.
• No, since Hanna was a good faith purchaser for value.

QUESTION 14 Federal trademark protection:

• lasts for ten years after registration.
• can be renewed an unlimited number of times.
• can be abandoned by non-use.
• All of the above.

QUESTION 15 Conglomerate mergers have been challenged only when:

• one of the merging firms would be highly likely to enter the other firm's market.
• the merged company would be disproportionately large, compared with the smallest competitors in its industry.
• All of these are correct.
• None of these are correct.

QUESTION 16 Which of the following would generally be considered to be a revenue-raising licensing law?

• A statute requiring that doctors be licensed.
• A statute requiring that salespeople be licensed, but not establishing any educational or training requirements.
• A statute requiring public school teachers to be licensed.
• A statute that requires insurance agents to pass a test before selling insurance in a state.

QUESTION 17 Bart sends Carla an offer by express mail. Carla receives it at 10 a.m. on Tuesday. At 11 a.m. on Tuesday, Carla delivers an acceptance to Speedy Mail-to-You Express, Inc., but due to their error, the letter is not sent out by the company until Wednesday at 8 a.m. At what time does the law consider the acceptance to be effective?

• At 10 a.m. on Tuesday.
• At 11 a.m. on Tuesday.
• At 8 a.m. on Wednesday.
• At the time Bart receives the letter.

QUESTION 18 Under Section 1 of the Sherman Act, which of the following is illegal per se?

• Vertical market allocations.
• Horizontal market allocations.
• Vertical price fixing.
• Both (b) and (c).

QUESTION 19 All of the following are true of promoters of a corporation EXCEPT:

• They solicit investors to begin the corporation.
• They prepare the formal documents of incorporation.
• They may make contracts in the name of the corporation.
• They continue to solicit capital whenever needed after incorporation.

QUESTION 20 Wanda has an idea for a novel, but she won't have time to write it until next year. She may protect it by means of:

• a patent.
• a copyright.
• registration of the idea.
• An idea that has not yet been developed into a tangible form cannot be protected.