BUS311_chapter_07

00 per gallon increase to help defray part of its

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Unformatted text preview: ar gasoline to Norma’s Gas City for a year at a fixed price of $3.00 per gallon. A month into the contract, armed conflict once again erupts in the Persian Gulf and the price of crude oil increases by 50 percent over a short period of time. Noxxe Oil, which can still find all the oil it needs on the spot market but at a much higher price than originally anticipated, asks Norma if she would be willing to agree to a temporary $1.00 per gallon increase to help defray part of its increased costs. Norma agrees to the temporary increase and begins paying the higher price immediately. A. If Norma changes her mind a month later, can she enforce the original agreement? B. Would your answer be the same if this were not a contract for the sale of goods (e.g., a service contract or a contract to purchase real estate)? Why? C. If Norma refuses to accept the higher price, will Noxxe be able to force her to do so? Case 5. Joan agrees to sell her business product inventory to Kari for $250,000. When the parties set down the terms of the agreement in a signed writing, the amount is mistakenly written as $25,000. Neither party notices the mistake at the time that the contract is signed. A. If Kari wants to enforce the contract as written, will Joan be able to present parol evidence to explain that a mistake was made? B. If Joan purposely writes down $350,000 as the consideration to be paid for her business inventory on the written agreement and gets Kari to sign it, can Kari present parol evidence to prove the price agreed to was $250,000? Why? rog80328_07_c07_134-156.indd 155 10/26/12 5:52 PM Section 7.6 Chapter Summary CHAPTER 7 C. Would your answer be the same if Joan held a gun to Kari’s head as she signed the contract? D. If Kari claims that at the time the contract was signed Joan orally agreed that she would have the inventory packaged at Joan’s expense, can Kari present witnesses’ testimony to this effect? Key Terms admission When a party admits in pleadings, in testimony, or otherwise under oath pursuant to a legal proceeding that a promise was made. confirming memorandum A written document that contains the material terms of an agreement, generally sent after an oral agreement was made. goods Tangible, movable objects that can be owned. statute of frauds A law that specifies that certain types of contracts must be in writing. unconscionable contract An agreement with grossly unfair terms that usually involves a situation where the parties do not have equal bargaining power. An unconscionable contract can be voided at the court’s discretion. merchant A person who regularly deals in good of the type involved in the contract. rog80328_07_c07_134-156.indd 156 10/26/12 5:52 PM...
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