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9. In an action against the petroleum dealer for breach of contract, the wife probably will
During the first month of the contract, the taxi fleet owner purchased substantial amounts of his gasoline from a supplier other than the petroleum dealer, and the petroleum dealer thereupon notified the wife that he would no longer place his advertising with her agency.
The owner of a fleet of taxis contracted with a dealer in petroleum products for the purchase and sale of the taxi fleet owner's total requirements of gasoline and oil for one year. As part of that agreement, the petroleum dealer also agreed with the taxi fleet owner that for one year the petroleum dealer would place all his advertising with the taxi fleet owner's wife who owned her own small advertising agency. When the wife was informed of the owner-dealer contract, she declined to accept an advertising account from the soap company because she could not handle both the petroleum dealer and the soap company accounts during the same year.
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The principal use of constructive conditions is in bilateral contracts. In a bilateral contract, each party makes one or more promises to each other, and each party's substantial performance of his promise is generally a constructive condition to the performance of any subsequent duties by the other party. The parties to a bilateral contract do not always make clear the order in which performance is to occur.
In the normal bilateral contract, a court will presume that the promises are in exchange for each other and will treat the promises as being mutually dependent, meaning each party's duty of performance is constructively conditional upon the other's substantial performance of all previous duties.
For purposes of a constructive condition, where one performance will take a period of time to complete while the other can be completed in an instant, completion of the longer performance is a condition precedent to the shorter performance. A party's obligation to perform a contractual duty is excused if the other party fails to satisfy a condition precedent.
Implicit in a requirements contract for the purchase and sale of a good is the buyer's obligation to purchase all of its requirements for the good exclusively from the seller for the duration of the contract.
An intended beneficiary benefits from a contract by acquiring rights under the contract. Intended beneficiaries also have the ability to enforce the contract once those rights have vested.
A promise is supported by consideration if two things are true: (i) the promisee is giving up something of value, or circumscribes his liberty in some way to suffer a legal detriment; and (ii) the promisor makes his promise as part of a bargained-for exchange for the promisee's legal detriment.
C is correct. The taxi fleet owner's agreement to purchase its total requirements for gasoline and oil from the petroleum dealer for one year rendered its purchase of substantial amounts of gasoline from a competitor a material breach. This material breach justified the petroleum dealer's repudiation of its obligation to place advertising with the wife.
A is incorrect. Even if the wife was considered an intended third party beneficiary, the petroleum dealer can raise any defense against her that he can raise against the taxi fleet owner (i.e., that the taxi fleet owner committed a material breach).
B is incorrect. The facts show that only the taxi fleet owner was party to the contract with the petroleum dealer; the wife was, if anything, only an incidental beneficiary. An intended beneficiary benefits from a contract by acquiring rights under the contract. Intended beneficiaries also have the ability to enforce the contract once those rights have vested.
D is incorrect. The consideration supporting the petroleum dealer's obligation to the wife was the taxi fleet owner's promise pursuant to the requirements contract.