Exam 3: Formation of a Valid Contract

Jackson Excavation Ltd.provides services to contractors by supplying heavy machinery and operators for excavation and various types of fill for building lots.Jackson managed to obtain for the first time a contract with a prominent residential builder for work on a 10-home development.The value of the work and fill was $60,000,which was agreed upon as the contract price.After the work was completed and the invoice sent,Jackson learned that the builder had just been granted approval for a 50-home subdivision.Hoping to secure the excavation work for this project as well,Jackson immediately sent a letter to the builder stating that it would accept $50,000 as payment in full for the job just completed.Jackson also mentioned in the letter that he hoped they would continue to do business together. What legal problems does this situation present and how might the parties solve them?

Mark and his wife Jean had recently built a country home on a one acre lot.Initially overwhelmed by the size of the lawn,Mark arranged for Stanley,a neighbouring farmer,to cut the lawn with his riding mower.The first cut was difficult and time consuming as there were many tall grasses and weeds to cut through.On this occasion Stanley charged $300.One week later Stanley cut the lawn again and charged Mark $200.Reflecting on the substantial expense this represented,Mark thanked Stanley for his services and informed him that he planned to purchase his own lawn mower and take over the job himself.Mark also told Stanley that if he were stuck in the future he would call Stanley to help him out.Shortly thereafter Mark and Jean took a two-week vacation and on arriving home discovered that Stanley had mowed their lawn in their absence.There was an invoice stuck to their door stating $200 for mowing services and $100 for weed spraying.When questioned about the bill,Stanley explained that he understood Mark wanted him to mow the lawn if he were unable to. What legal issues does this situation raise and what arguments would be used by the parties involved?

A small company,Software Design Limited,was indebted $150,000 to a sole individual,with payment now due.This individual was an investor and former classmate of the firm's president,Angela.Owing to a reversal of fortunes for the company,Software Design could now repay only $100,000.With her investor chalking up the affair to experience,Angela intended the firm to repay what it could now,then she would wind up the company.A few weeks after paying off her creditor at $100,000,but before she could wind up the company,a new investor with both ideas and money approached her,and encouraged Angela to continue on in the business.Once Angela's former classmate heard of the new investor,she demanded the balance due on her loan.Angela briefly considered repaying more,but her new investor demanded a hard-line approach.Angela was holding the repaid note in her hands as her later investor said "Neither you nor she could see the future when she agreed to accept $100,000.But accept she did.Business is business."

A Canadian multinational was interested in developing a market in a developing country that had once been communist,and was moving to a free enterprise system.The multinational negotiated with the government to buy and resurrect the fledging state-owned automobile industry.After signing a contract under seal,the company got cold feet and decided to back out of the deal.The contract will be enforced against the company because the application of a seal together with a signature is considered to represent consideration for the contract.

Darryl,a non-swimmer,fell off a boat into the lake."Help!" he cried."$100 to the person who saves me!" Frances then jumped in and held Darryl's head above water until the boat's dinghy could reach them.

Paulette Paulson Furs advertises mink coats for sale at 30 percent off.The demand was much greater than anyone could have predicted,and 14 people who came to the store could not be provided with one of the sale coats.Since they had accepted Paulson's offer,she will have to find coats for them or be in breach of their contracts.

"Public policy" can be defined as the bundle of rules that protect the interests of society.

Busy Corp.sent a letter on January 12 to Slow Co.offering to sell its main office building for $250,000,stating that its offer was open only until January 20,and it must have a response from Slow Co.by then.Slow Co.received the letter on January 14 and prepared a letter of acceptance on that day,but did not mail it.The next morning Busy Corp.called and said that it has changed its mind and was withdrawing its offer.

Zev and John were neighbours.Before Zev left on a holiday,he asked John to "keep an eye on his house." While Zev was on holidays,John noticed that Zev's lawn was in need of cutting,and proceeded to cut the lawn.On Zev's return from his holiday,John demanded $10 for cutting the lawn. -If John should take legal action against Zev to collect the $10,and the court agreed that he was entitled to recover quantum meruit,he would not necessarily be entitled to the $10,but only to a reasonable price for his services.

Discuss the significance of Carlill v.Carbolic Smoke Ball Co. ,[1893] 1 Q.B.256 (text p.65)for modern-day marketing practice.Give some examples to illustrate your points.

Mabel,a young woman aged 17,went shopping.She purchased a new coat on credit at a clothing store.Later the same day,she took her expensive watch to a jewellery shop to have a new watch band installed.While in the shop,she purchased on credit an additional watch for herself,and a silver bracelet as a gift for a friend.When the merchants later requested payment,Mabel refused to pay. -Mabel is not bound by the contract to purchase the silver bracelet,because it is a non-necessary item for a minor.

Tom offers to buy Jenny's fishing tackle for $500,but she says she wants $600.Tom then proposes a price of $550,but Jenny says she is not interested.Tom is afraid she will walk away from a deal,so he says "OK.I'll accept your offer to sell for $600." There is now a contract between them.

Corbin sold his retail clothing business to Austin.The business was located in a small town,and most of the customers lived within a radius of five miles of the clothing shop.As a part of the sale agreement,Corbin agreed not to set up a similar business in competition with Austin for a period of five years or within a radius of five miles of the shop. -The agreement that restricts Corbin's right to set up a business in competition with Austin will be enforceable only if it is reasonable and necessary.

Ted rented a store in a mall owned by Oscar.During the two busiest months of the year,renovations to the stores on either side of Ted's caused him to lose a great deal of money.A clause in the commercial lease for the store says that the mall owner is not liable for any losses caused by repairs or renovations,but Oscar agreed to allow Ted to pay only two-thirds of his rent for the following six months because Ted was now in financial difficulties since he had not made the profits he relied on to carry him through the slow period.Three months later,Oscar lost a lot of money speculating in the commodities market and he told Ted that he needed Ted to revert to paying the full amount of the rent under the lease.Ted objected,having had put all the money he would have used to pay the rent in full into an advertising campaign to try to make up his losses.Oscar got angry and demanded that Ted pay the back rent also.Ted will go bankrupt if he has to do this and he comes to you to ask if he must do it.What will you tell Ted about Oscar's rights and what Ted can do about the situation?

Janine,a dental student,does some dental work for a friend even though she is not yet licensed.Since the work,though not negligent,did not achieve the promised results,Janine's friend can sue her for breach of their contract.

Ruth sold her craft shop to Mary.The contract of sale had a clause that said that Ruth could not open a similar store for two years within a three-mile radius. -This kind of clause is called

Kesler,while in a drunken state,purchased a large sailboat from Mullen. -If Mullen was unaware that Kesler was intoxicated at the time that the contract was made,Kesler would not be permitted to avoid the contract.

Anderson,a city employee,collected garbage along Smith's street on Thursday of each week.One day Rick said to Anderson: "You have done such a good job,I will give you $10 when you come by next week." The next week,when Anderson made his regular garbage pickup for the city,he met Rick and asked for the $10.Rick refused to pay. -Rick is obliged to pay Anderson the $10,because he promised him the money.

A small municipality advertised in several newspapers a call for tenders to complete road construction.After the tenders had been submitted the job was not awarded to any of the prospective bidders.The municipality,on the recommendation of a neighbouring township,contacted another firm and awarded it the contract on the basis of price and reputation.After learning of this development the companies that had bid on the advertised tender joined forces and brought a suit against the municipality.They will be successful.

Anderson,a city employee,collected garbage along Smith's street on Thursday of each week.One day Rick said to Anderson: "You have done such a good job,I will give you $10 when you come by next week." The next week,when Anderson made his regular garbage pickup for the city,he met Rick and asked for the $10.Rick refused to pay. -Anderson would be unable to show consideration because,as a city employee,he was already bound to collect Rick's garbage as a part of his duty to his employer.