Question 1
(Suggested Time: One Hour)
Our
client, Paula, has presented to us the following problem and asked our advice.
Please consider the facts carefully.
In September 2000, Donald, wishing to persuade his daughter Paula to go to law school following her last year at college, said:
"Paula, if you decide to go to law school after your graduation in May 2001, not only will I pay the law school tuition and expenses but, if you will contribute out of your savings $2000 toward a car, I will give you a new car as a college graduation present."
Paula had been considering law school as one of her options following college, but had not yet reached a decision. Certainly the offer of tuition and expenses was attractive, but Donald had been paying college tuition and expenses and it had never crossed her mind that he wouldn't pay for graduate school tuition and expenses if she decided to continue her education after college. She really wanted a car, but she certainly didn't have $2000 in savings.
After
this conversation, Paula decided to take the LSAT and to apply to law school.
She says that at that point she had not yet decided whether to go to law school
if she were admitted to law school. She also began to save some money out of
the monthly payments sent to her by Donald in the hopes that she would be able
to save $2000 by May 2001. She thought that by spending less money on
entertainment and food and by saving the money Donald would send her as a
birthday present (he always sent money as his birthday present to her), she
might be able to accumulate the $2000 in savings.
In February 2001, Paula received her acceptance to Western New England College School of Law. She was pleased and decided to go to law school. Donald seemed pleased when she told him of her decision and gave her the money for the first deposit required by the law school. However in May his investments in gold mining stock suddenly lost a substantial part of their value. He had borrowed money to purchase the stock and the lenders were insisting upon repayment of the loans. He told her that he might well be unable to pay her law school tuition. She was surprised because she knew that Donald earned a substantial income as a senior partner in a large and profitable law firm. She asked him whether she could still hope for a car as her graduation gift if she managed to save the $2000 (she hadn't yet told him that she had, in fact, saved the $2000 by the end of April). He said that it was still his intention to buy her a car, but that it would have to be a used car. She was disappointed by this news, but said "OK."
Later
in May, just a week before graduation, he told her that he would not be able to
buy her a car at that time, but hoped to be able to do so some time in the
future. She expressed her unhappiness, but felt powerless to do more. He also
told her that he would be unable to pay her law school tuition. Paula then
arranged for student loans so that she could pay her law school tuition; she
realized that she would need the $2000 in
savings to help with other expenses of law school since it appeared that
her father might not contribute to those expenses.
Paula
is now a law student and is happy with her life at law school. But just last
week Paula discovered that Donald recently gave a young woman a very expensive
new car and had purchased a very expensive home for her. She has learned that
Donald had begun this relationship in March 2001. She now believes that the
stock market difficulties that Donald had identified as the reason why he could
not pay her tuition and purchase a new car for her were not, in fact, the real
reasons and that he had simply decided to re-direct his generosity from Paula
to this woman with whom he was having an affair.
Paula has now asked us to advise her about what claims she may have against Donald. She has acknowledged that, for personal reasons, she might not pursue those claims, but she wants us to tell her what claims she may have. Describe any legal arguments you would make on her behalf for a car. Describe any legal arguments you would make on her behalf for tuition. If she has any claim for a car, would the claim be valued by the cost of a new car or a used car? If she has any claim against him for tuition, for how many years of law school could she make that claim? As a good law student, she knows, and has advised us, that we must also tell her the arguments that Donald's lawyers will make in response to claims she would assert.
Question 2
(Suggested Time: One Hour)
Buyer contracted with Seller for one thousand (1000) 256MB memory boards which Buyer intended to incorporate in computers that he was assembling for sale to Leopard Direct Corporation (LDC) which would place its own label on the computers and sell them in its chain of retail stores. The price set in the contract for the purchase of the memory boards was $10 per memory board and the total contract price for the 1000 memory boards was $10,000. Delivery of the memory boards was required not later than December 1, 2001. Seller failed to deliver the memory that day. Seller called Buyer and said, "The price of the memory chips we use to make the memory boards is rising and I can't deliver memory to you at the contract price." When Buyer called you, his lawyer, on December 1 after receiving that call from Seller, you instructed Buyer to check to see at what price those memory boards could be acquired on the market. This morning Buyer called you with the results of his research. Buyer said that he would now have to pay $15 for each memory board
You
then asked Buyer to tell you more about the contract that he had with LDC
Corporation for the sale of computers. Buyer told you that he had quoted quite
a low price to LDC Corporation because he was eager to establish a business
relationship with them and that since his contract called for Buyer to deliver
500 computers with 512MB of memory in each, the difference in his cost of
assembling each computer would go up by $10 if he bought the memory on the
market. His profit margin on each computer was to be $10 and so if he bought
the memory at $15 per board he would make no money on the sale of the computers
to LDC. Furthermore, his contract with LDC contained a provision which excused
his performance on the contract if an increase in the price of any component
rose more than 10% between the time of contracting with LDC and the time of
delivery to LDC. Finally, Buyer tells you that Buyer has already expended $200
per computer in the assembly of the 500 computers for LDC and that the value of
these partially completed computers is $175 each. Finally, Buyer is concerned
that other potential purchasers of computers are demanding DDR memory, a newer
and faster form of memory and a form which would not be compatible with the
computers that Buyer has in process for LDC.
Buyer has asked you what he should do under the circumstances described. In particular, Buyer wants to know whether he should go ahead and buy the memory at the current market price, complete the computers and deliver them to LDC? Buyer wants to know what damages he can collect from Seller should he do so. Buyer knows that the UCC allows him to complete the manufacture if it is "commercially reasonable," but doesn't know what those words mean as applied to his circumstances. Furthermore, Buyer wants to know what damages he could seek from Seller if Buyer does not buy the memory and complete the manufacture of the computers, but instead asks LDC to excuse Buyer from the Buyer-LDC contract pursuant to its terms. Please anticipate for Buyer the probable responses of Seller's attorneys to the damage demands under each of these alternative courses of action.
END OF EXAMINATION