Case Study:
1. Interactive Data Corp. hired Foley as an assistant product manager, and over the next six years Interactive steadily promoted him. Interactive officers repeatedly told Foley that he would have his job as long as his performance was adequate. They also distributed an employee handbook that specified termination guidelines that included a mandatory seven-step pre-termination procedure. Foley learned that his supervisor was under investigation by the FBI, and he told Interactive officers. Shortly thereafter, Interactive fired Foley. He sued, claiming that Interactive could only fire him for good cause, after the seven-step procedure. Who wins?
a. Foley wins because he and Interactive had a bilateral, express employment contract that incorporated the seven steps.
b. Foley loses because he and Interactive had a unilateral, express employment contract that incorporated the seven steps.
c. Interactive loses because it had a unilateral, implied employment contract with Foley that incorporated the seven steps.
d. Interactive wins because the seven steps were only an implied, not express, conditions to its employment contract with Foley.
2. While George travels for two months, Mary agrees to house and care for George's three horses at her stables. The parties agree that Mary will pick up the horses on the first day of George's trip and George will pay Mary when he returns. George returns home from his travels and finds that Mary never picked up the horses. George sues. What result?
a. The court will apply common law and Mary will lose.
b. The court will apply the UCC and Mary will lose.
c. The court will apply common law and Mary will win.
d. The court will apply the UCC and Mary will win.
3. For the past seven years, Sommerset Storage, Inc. has hired Mountbattan Tax Associates to prepare its annual tax return. This year the parties agree to their usual $1,000 fee, but Mountbatten finds a loophole in the tax code and gets Sommerset a return four times the usual amount. Mountbattan then requests that Sommerset pay $4,000 to reflect the increased tax returns. There is nothing in their contract about increased fees, but Mountbatten argues it would be unjust for Sommerset not to pay extra. Sommerset refuses and Mountbatten sues. What result?
a. The court will apply a quasi-contract, and Mountbatten will win.
b. The court will find that there is an implied contract, and Mountbatten will win.
c. The court will rely on promissory estoppel and Mountbatten will win.
d. The court will uphold the original contract and Mountbatten will lose.
4. Chef Jacquie is scheduled to teach a cooking class to three students. The class tuition is $1,100 per student. In the class each student cooks a French meal under Jacquie's expert supervision, and receives a cookbook (worth $30) and a cooking pan (worth $150). Tory, one of the students, tells Jacquie the day before the class that she will be unable to attend and requests a refund. Jacquie denies the refund and Tory sues. Tory claims that the UCC should govern the contract, and Jacquie argues that it should be covered by the common law. Who is right?
a. Tory, because everyone in the class receives a cookbook, pan and food.
b. Tory, because the cost of the class was more than $500.
c. Jacquie, because the class is primarily a service.
d. Jacquie, because the agreement was a bilateral contract.
5. Olivia agrees that she will bring Desiree a cherry pie every Monday for a month in exchange for $15 per week. Olivia delivers a pie to Desiree for four weeks, and Desiree pays her each time. Olivia continues to deliver Desiree pies every Monday, and Olivia continues to pay, for another five weeks. On the tenth week, Olivia brings a pie and Desiree refuses to pay. Olivia sues for payment. What result?
a. Desiree will win. Olivia assumed the risk of not getting paid when she continued to bring pies longer than the month-long contract.
b. Desiree will win, because the contract was voidable by either party.
c. Desiree will win, because he contract was not express.
d. Olivia will win. The court will rule that they had an implied contract.