Question I
(50 of 100 points; Suggested Time: One Hour)
Noble Ames, who had been a law professor for 30 years, inherited a considerable sum of money from his great uncle Midas. Professor Ames determined that he would use a substantial portion of this money to influence the study habits of law students which, he believed, had become less rigorous since he began teaching the the 1960s. Accordingly, in the first issue of the law school newspaper in the Fall of 1996 he published the following advertisement, which he paid for.
Law students who can provide evidence that they have spent at least two hours in class preparation for each one hour of class for a full academic year will, on submission of that evidence, be awarded the sum of $500.
I, Noble Ames, will make this payment in the name of my Uncle Midas who taught me the lesson of diligence in pursuit of knowledge.
A group of ten first year students, who had formed a study-group they called the Holmes group after Justice Oliver Wendell Holmes, immediately upon publication of this advertisement decided that they would take up the challenge offered by Professor Ames’ advertisement. They set up a book-keeping system by which each could account for every hour of the day during the academic year. By Thanksgiving time, after examining all of their records, it seemed clear to them that if they maintained their studying schedules they would be able to qualify for the awards.
At around the same time, at the end of November 1996, Professor Ames became concerned that he had no way of knowing how many students were planning a response to his advertisement. He therefore placed another advertisement in the law school newspaper, this one appearing on December 6, 1996. It stated as follows:
I believe that my earlier advertisement has influenced quite a few law students to increase their studying during this semester. If any student intends to qualify for the award previously announced, please inform me in writing by December 10.
All members of the Holmes study group responded immediately to Professor Ames with notification of their intention to qualify. They included photocopies of their records of their study hours up to the Thanksgiving recess.
Professor Ames was pleased, but startled, to learn that over 25% of the student body was responding to him with the stated intention of qualifying for an award. Pleased, but dismayed by the probable cost of his generosity, he placed the following advertisement in the law school student newspaper appearing December 13, 1996:
The overwhelming response I have received to my two prior advertisements has made it necessary for me to reduce the award suggested in my first advertisement. Accordingly, I hereby inform all that those qualifying will receive an award of $250 each upon the presentation of satisfactory evidence of their study hours in accordance with my prior advertisement.
The Homes group has asked you for your legal advice about whether, assuming they maintain their current study hours (which clearly qualify under Professor Ames’ initial advertisement), they will become entitled to the $500 mentioned in the first advertisement. In your response to their request for advice, please consider all arguments which Professor Ames might make in support of his position that he has the right to reduce the amount of the award.
Question II
(50 of 100 points; Suggested Time: One Hour)
Our client Dennis Dribble is a well-known professional basketball player.Being familiar with the success in image-marketing that had come to such other well-known players as Michael Jordan, Dennis approached Kids Network a cable network producer of made-for-television cartoon shows, about developing a cartoon around a basketball player with his name. The cartoon figure would, as proposed by Dribble, be an accurate likeness of Dribble. The cartoon figure would become involved in various plots which would involve an evil character named Bugsy Better who attempts in each show to “fix” a basketball game so that he can make money gambling on the team he knows will be the winner. On each show, the cartoon likeness of Dennis Dribble will prevent Bugsby from being successful in this criminal effort. Each show would end with a demonstration by the real Dennis Dribble of some basketball shot or play or move with Dennis’ own comment explaining the nature and purpose of the act he just demonstrated. Finally, an action figure based upon the cartoon figure of Dennis Dribble would be promoted for direct sale as part of the show. These figures would be manufactured for Dennis Dribble at his specification by the Matter Toy Company which agreed to manufacture as many as he ordered each month for a year for the price of $10 each.
Kids Network was enthusiastic about his ideas. Dennis Dribble then contracted with Kids Network to air these shows for 40 weeks. The agreement with Kids Network called for payment to Dennis Dribble of $20 for each Dennis Dribble action figure which they sold and $5,000 for each program that they broadcast. Kids Network promised to pay Cartoon, Inc. $10,000 for each Dennis Dribble cartoon they broadcast.
In the first three months of this arrangement, Cartoon, Inc. produced and Kids Network put on the air 10 of the Dribble cartoon shows. Much to the surprise of Kids Network, they sold 10,000 action figures during this same period even though they had made no effort to market them through any retail outlet. These sales were entirely direct sales by an 800 number set up by Kids Network for the sale of the Dennis Dribble action figures and other items sold in similar fashion.
Dennis Dribble, realizing how profitable the Dennis Dribble action figure had been, decided that he could make a great deal of money by persuading McDuffy’s, a major international fast food restaurant, to give the Dennis Dribble action figure as an incentive in marketing their famous Whoppo Burger. McDuffy’s responded enthusiastically, offering him payment of $1 million for the rights to include Dennis Dribble figures with their meals and to advertise that offer. However, their offer required him to cease all other sale or distribution of these figures. Dennis agreed to this proposal.
Kids Network, upon being informed by Dennis Dribble that there would be no more Dennis Dribble action figures for them to sell, notified him that they would sue him for breach of contract for terminating the Dennis Dribble/Kids Network arrangment for the sale of the action figures. Furthermore, they informed him that his breach of the contract for the supply of action figures to them justified their terminating their contract with him to produce 40 Dennis Dribble cartoon shows. When Dennis informed the Matter Toy Company that he did not wish to buy any other action figures from him, they too informed him that they would sue him for breach of contract.
Your research has led you to the conclusion that Dennis Dribble is in breach of both his contract with Kids Network and with the Matter Toy Company. That research has also led you to the conclusion that Kids Network may not be correct in stating that Dennis Dribble’s breach in not supplying action figures justifies their terminating their contract with him for the production of cartoon shows and associated payment.
1. Matter Toy Company v. Dribble. Assume that this contract is within Article 2 of the Uniform Commercial Code. Please analyze Dennis Dribble’s remedial liability to the Matter Toy company. Provide both Matter Toy Company’s arguments maximizing recovery and arguments you would make for Dennis Dribble trying to minimize Matter Toy Company’s recover against him.
2. Kids Network v. Dribble. Assume that this contract is within Article 2 in its entirety (on the theory that sale of goods is the major component of the contract). What damages will Kids Network assert against Dribble and what response would you make in Dribble’s behalf? Keep in mind that we are not certain whether Kids Network is in breach of contract in terminating its production of cartoon shows and payments to Dribble.
3. Kids Network v. Dribble. Assume that this contract is within the common law (on the theory that service is the major component of the contract). What damages will Kids Network assert against Dribble and what response would you make in Dribble’s behalf? Keep in mind that we are not certain whether Kids Network is in breach of contract in terminating its production of cartoon shows and payments to Dribble.