Contracts Hypo....suggestions appreciated

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SKlei
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Joined: Mon Dec 05, 2011 1:01 pm

Contracts Hypo....suggestions appreciated

Postby SKlei » Tue Dec 06, 2011 8:03 pm

Anyone want to go through this and tell me what issues they find, and how they would approach?


Allen owned a BMW which he has to sell to raise cash for his business. On October 15, 2011 Allen was negotiating at his home with Barry for the sale of the car for a purchase price of $25,000. Barry wanted to buy the car as a gift for his wife. At the time Allen was unaware that his wife brought to car to the service shop the we before for repairs and it already had been repaired at a cost to Allen for $4,500. When Barry asked about the condition of the car, Allen, who believed that the car needed some repairs, told Barry that the car needed at least $1,000 in repairs. Barry then said he would buy the car for $25,00 but asked Allen to deliver the BMW to his wife. Allen said he would deliver the car to Barry's wife the next day.


As soon as Barry left Allen's home, Allen had second thoughts about the deal. Early the next day, Oct 16th, Allen learned from his wife that the car had been repaired at a cost to him of $4,500, and was upset. He immediately consulted a lawyer and upon lawyer's advice, Allen went to see Barry and told that the deal is off. Barry told Allen that he was breaching their contract. Allen disagreed. At that point Allen said he would sell the car to Barry if Barry, who was a painter, also agreed to paint Allen's home. Barry agreed and Allen gave Barry's wife the keys to the car.

A few days later Barry separated from his wife. Barry suddenly realized that he was not receiving any economic benefit under the deal he made with Allen. Accordingly, Barry refused to do the paint job or to pay Allen for the purchase price.

State whether or not Allen has any contract rights against Barry for the paint job and the $25,000 purchase price and why.

HWS08
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Re: Contracts Hypo....suggestions appreciated

Postby HWS08 » Wed Dec 07, 2011 3:50 pm

I'd say Allen does have a right against Barry for the paint job and purchase price. Allen and Barry had negotiated and come to an agreement on the terms of the deal, then modified it. I don't think there is a problem with the modification. The same consideration can be used to support multiple promises, so the fact that Barry was still just getting the car and Allen was getting both the money and now a paint job too doesn't matter because there was still a bargained-for exchange for both parties.

The fact that Barry's circumstances have changed are irrelevant. Changed circumstances only excuse performance when they make performance impossible or impracticable, and that is not the case here. Barry can still perform, he just doesn't want to. He has to uphold his end of the deal even though his soon-to-be ex-wife is getting 100% of the benefit of it.

rghneck016
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Joined: Mon Feb 14, 2011 7:14 pm

Re: Contracts Hypo....suggestions appreciated

Postby rghneck016 » Wed Dec 07, 2011 5:11 pm

There was no consideration for the paint job. The bargain was the BMW for $25,000 and once the K was made, Allen had a duty to perform. So, because Allan had a pre-exisitng duty to perform under the original K, he can't than go to Barney and refuse to honor the K unless Barney agrees to paint his house, because there is NO CONSIDERATION for Barney painting the house. You would be wise to discuss 2-201 SOF issues as well, as this would be covered under subsection(1)

HWS08
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Joined: Wed Jul 22, 2009 10:32 am

Re: Contracts Hypo....suggestions appreciated

Postby HWS08 » Thu Dec 08, 2011 6:57 pm

rghneck016 wrote:There was no consideration for the paint job. The bargain was the BMW for $25,000 and once the K was made, Allen had a duty to perform. So, because Allan had a pre-exisitng duty to perform under the original K, he can't than go to Barney and refuse to honor the K unless Barney agrees to paint his house, because there is NO CONSIDERATION for Barney painting the house. You would be wise to discuss 2-201 SOF issues as well, as this would be covered under subsection(1)


Are you sure? Our prof taught us that R2C Sec. 89 says if a promise to modify an executory contract when it is not fully performed on either side IS binding even though there is no consideration for the modification if: a. the modification is fair and equitable in view of circumstances not anticipated by the parties when the agreement was made; b. to the extent provided by statute; or c. to the extent that justice requires enforcement in view of material change in position in reliance on the promise.


You'd have to decide if either requirement a,b or c is met (doesn't seem like they would be) but it's possible a court would say Allen's later realization that the car had been repaired fits "a" so now the buyer has to pay money and paint the house. So it seems like it's not really accurate to say that he Allen couldn't renegotiate the contract with Barney and then have that new duty enforced even without additional consideration.

Good call on SOF, that didn't even cross my mind. Good thing my K exam isn't for another 12 days!

rghneck016
Posts: 12
Joined: Mon Feb 14, 2011 7:14 pm

Re: Contracts Hypo....suggestions appreciated

Postby rghneck016 » Sat Dec 10, 2011 1:26 pm

My understanding is that under Rest. 2nd Sect. 89 both sides need to mutually agree to the modification. Allan threatening to breach the K unless Barney provided additional consideration would constitute duress, and thus the modification is not "fair and equitable". You may be able to argue Rest. 2nd Sect. 153 on a unilateral mistake issue that the entire K could be rescinded

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bk1
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Re: Contracts Hypo....suggestions appreciated

Postby bk1 » Sat Dec 10, 2011 1:42 pm

Issues I see:

1. Statute of Frauds
2. Mutual Mistake (though it seems likely that A bears the risk of mistake since he should be talking to his wife)
3. First K - Offer/Acceptance/Consideration
4. Anticipatory Repudiation/Retraction of AR (by A, K may have been rescinded due to mutual mistake)
5. Exceptions to Preexisting Duty Rule (UCC 2-209/RST 89)
6. Duress
7. Modification or Rescission+Second K
8. Frustration of Purpose (to please wife, though it seems unlikely that B would be able to win on this)
9. Promissory Estoppel (even if no K, he already gave the keys to B's wife)




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