paulshortys10 wrote:Here's a variation of a contracts exam I got.
1. J begins employment at a private school at a salary of 50k for one year. The written employment contract provides a 50% discount off tuition at the school for J's 2 children, who were enrolled in the school. Tuition was ordinarily 10k a year per student. Another provision in contract provides that J is obligated to pay the tuition for the full year, even if she withdraws her kids, "because of difficulty in enrolling additional children once school starts". J quits the job at the beginning of the 2nd week, without notice. School finds a new teacher with equal skills and pays her 47k a year. The new teacher ALSO has 2 children enrolled in the school with the same tuition break as Theodora's children. The school has a capacity of 100 children, but had only enrolled 95 but the time J accepted employment. What are the school's rights against J?
2. P puts an add in the classified ads, on Oct 10, saying " free swingset to anyone that will the swingset from my backyard" P was trying to remodel the backyard and had no use for it anymore. On oct 13, H calls P and says she wants the swingset, without having seen it yet, and will pick it up oct 15; P gives H directions to her house. On Oct 14, Z goes straight to P's house and tells her she wants the swingset, and with P's permission removes it and takes it home. Does H have any rights?
3. X orally agrees to build a wall for Y for 16k. X quits the job after expending 4k on the job, and Y having already paid 2k towards the price. Y hires A for 15k to complete construction. X's total cost to complete job would've been 12. What are the rights of each party?
I'll take a crack at this:
1) I analyzed this as loss volume seller, though I see know that it could also be seen as liquidated damages issue.
J's best argument is that the school didn't suffer any loss. In fact, they gained money because they hired a new teacher with two children for $3000 less.
I don't think they are a lost volume seller because one requirement for LVS is that the seller would have made the subsequent sale even if buyer had not breached. In this case, it is unlikely the new teacher would have sent her children there if she hadn't been hired. And I doubt she would have been hired if J hadn't breached. So no lost volume seller.
I didn't notice unilateral/bilateral issue here-but good call!
I said: "H will have the most rights if he can sue under a contract theory. He will argue that H offered to take the swing-set, which P accepted by giving H directions. Thus, there was a valid contract.
P will argue there is no consideration. She wasn’t getting paid for the swingset. H might argue that his removal of the swingset from the yard, which would probably require some work, constituted consideration, as P didn’t have to do it himself.
However, courts would like construe the removal as a condition of the gift. They will likely say that P’s offer was purely gratuitous, and not meant to be construed as an offer to contract.
If H cannot sue under contract, he may assert promissory estoppel. The elements of promissory estoppel are: a promise, foreseeability of reliance, reliance, and remedies to prevent injustice. In this case, I’m not even sure there was a promise, but H could argue P’s giving her the directions was an implicit promise to give it to her. It is probably foreseeable that by giving her the directions, H was going to show up on October 15, since H said she wanted the swingset and gave a specific date. The hardest element for H to prove is justifiable reliance. Was H justified in thinking she has exclusive rights to the swingset? P will argue that he wasn’t justified. This was a public ad, so it is reasonable to assume other people will see and respond to it. Furthermore, it was a gift. Courts generally don’t want to make gifts enforceable, as we want to give people the ability to feel free to give a gift without fear of liability. H will argue that this wasn’t really a gift, in that H had to pick it up himself and P and H didn’t have a social relationship that warranted a gift.
H would prefer to sue under the contract theory because he can recover expectation damages. If he sues under the promissory estoppel theory, he can only obtain reliance damages, which are generally less than expectation damages. In this case, it isn’t clear that H had any reliance. If H went to buy tools or rented a truck in anticipation of removing the swingset, the court would probably award these damages if the found in the promissory estoppel theory."
Because X breached, Y can sue for expectation damages. In this case, Y ended up spending $17,000 for a wall he expected to cost $16,000. Therefore, Y should recover $1000.
Because X breached, he cannot sue his for his expectation damages; he has given up his rights to expectation. He can sue under restitution theory. He will argue he conferred a benefit of $4000 on Y. Since Y has only paid him $2000, then X should get $2000. However, restitution is limited by the contract price (some case we talked about in class), so X will recover nothing.