Grading Form

Question I

(40 out of 120 total points; Suggested Time: One Hour)

Seller owned a house in the Northwestern corner of Massachusetts and wished to sell it in preparation for retirement and a move to Florida. Buyer is currently a graduate student at the University of California at Santa Cruz. Buyer has recently signed a contract to teach at Williams College in Williamstown, Massachusetts. The campus is about fifteen miles from Seller’s house. The negotiations were carried on largely by telephone after a brief visit to the house by Buyer during a trip made by Buyer as part of Buyer’s final job interview at Williams College.

Buyer and Seller engaged in extensive negotiation by telephone between California and Massachusetts. While they were still negotiating, Buyer cancelled a second trip to Massachusetts originally planned by Buyer to look at other possible houses that Buyer might buy. Buyer was confident that a final arrangement would be made for the purchase of Seller’s house, particularly after Buyer received from Seller a letter stating that the $100,000 price offered by the Buyer in their last telephone call  represented a reasonable price for the house. Buyer responded to that letter with a letter to Seller expressing pleasure at learning that the Buyer’s last offer was acceptable to Seller. Upon receiving that letter, Seller called Buyer and suggested that each retain the services of an attorney to draft a contract of purchase and sale. Buyer agreed to this suggestion. Buyer retained our firm and Seller retained the firm of Metes & Bounds.

The real estate attorney in our firm, after talking at some length with Buyer about provisions that Buyer wished to place in the contract, undertook negotiations with Metes & Bounds. After several negotiating sessions, it became clear that in one respect each of the attorneys had received instructions from their client which were in conflict. Buyer insisted that a wood burning cook stove currently in the house was an important part of the house and that the contract should specifically mention that the cook stove was to be left in the house and was included in the sale price. Seller would not agree to that clause and indicated its intention to remove the wood burning cook stove from the house. This came as a special shock to Buyer because during Buyer’s visit to the house, Seller had drawn Buyer’s attention to the wood burning cook stove and had pointed out how unique it was to have the original wood burning cook stove still in the kitchen and still in operating condition for the one hundred and fifty years since the house had been built.

You have done some research in Massachusetts real property law and have concluded that decisions about what is a “fixture” and, therefore, included in the real estate as contrasted with “personalty” and not included in the real estate, are not clear enough to form the basis of a legal argument about whether this wood burning cook stove would or would not be regarded as part of the real estate if this matter were to be litigated. In any event, our client, Buyer, has made it clear that the contract must specifically include the wood burning cook stove or the Buyer is not willing to buy. Seller has informed Metes & Bounds that under no circumstances will it agree to a contract provision including the wood burning cook stove, though Seller has no objection to the contract remaining silent on this point (presumably leaving to litigation the question of whether the wood burning cook stove is included in a contract for the sale of the home).

We have produced a draft contract which specifically includes the wood stove as part of the sale. Seller has refused to sign it. Seller has produced a draft contract which does not mention the wood stove, but is otherwise identical to our draft.  Buyer has not signed that version of the contract.

Since negotiating the price of this house and the subsequent abandonment of efforts to find another house, the price of housing has gone up by 10%. Presumably for this reason, Seller is not arguing that there is a contract of sale. Indeed, Seller has taken the position that there is no contract of sale. Buyer has asked us to look into the question of whether or not there is any action which Buyer can bring against Seller either to force Seller to convey the property to Buyer (either with or without the cook stove) or at least to compensate Buyer for the fact that Buyer will now, without doubt, have to pay at least 10% more for a comparable house. Please advise Buyer about what claims Buyer may have against Seller and what remedy may be available. Be sure to anticipate the responses that Seller may have to such claims.

Question II

(50 out of 120 total points; Suggested Time: One Hour Fifteen Minutes)

Dogwood Inc. is a computer software company. Its principal business is in writing “vertical applications,” that is, computer software designed to assist companies doing business in a particular trade or business. One of Dogwood’s newest products is a computer software program which is designed to assist companies entering bids in response to Department of Defense invitations for bids to manufacture and supply products for military use. Uniforms Inc. is a company which manufactures uniforms. Among the products manufactured by Uniforms Inc. are uniforms for bus drivers, for police officers, for nurses and for restaurant workers. When the Department of Defense announced that it intended to request competitive bids for military uniforms, the President of Uniforms Inc. decided that, for the first time, the company would participate in the competition to secure this contract. On the other hand, the President of Uniforms was aware of the complexity of Department of Defense bidding rules, and wished to make sure, without it costing too much, that any bid Uniforms might enter would comply with these rules.

Having heard about Dogwood’s product from a friend at a monthly Chamber of Commerce breakfast, the President contacted Dogwood to discuss purchase of Dogwood’s software with a Dogwood salesperson. The President was impressed by representations made by Dogwood that its software had assisted its customers in entering bids which were successful and were profitable. Phone calls by the President of Uniforms to several of Dogwood’s customers confirmed these representations. Dogwood assured the President of Uniforms that use of the Dogwood software would enhance the likelihood that Uniforms would make a bid that would be accepted by the Department of Defense and assured the President that if its bid was accepted, the contract would certainly prove to be profitable. Uniforms then purchased the Dogwood software at a cost of $7500.

Making use of the software, Uniforms composed and submitted a bid to the Department of Defense and was delighted to hear that it had won the bid and that its offer had been accepted by the Department of Defense. That delight, however, turned to dismay when it became clear that Uniforms Inc.’s bid was significantly less than the next lowest bid and that it was quite likely that performance of this contract would leave Uniforms Inc. with a significant loss on this transaction. Investigation of how Uniform’s bid could have been so unrealistically low revealed that, in the judgment of Uniform’s President, Dogwood’s software contained a serious error which resulted in the omission of the cost of raw materials from the bottom line calculation of the bid. Therefore, the  bid submitted by Uniforms Inc. had excluded the cost of the raw materials out of which the uniforms would be manufactured. When the President of Uniforms made an angry telephone call to the Dogwood salesperson, the salesperson responded that in contract bidding procedures, the Department of Defense always required separation of raw material costs from the other elements of the bid and then awarded its contracts by adding together the raw material costs and other components of the bid. The salesperson asserted that Dogwood’s software followed this practice.

That same day, the President of Uniforms called the contracting officer at the Department of Defense and explained its problem. The contracting officer agreed with the Dogwood salesperson’s general description of Department of Defense bidding procedures,  but pointed out that in bidding for contracts for the purchase and sale of military uniforms that practice had never been followed. Instead, the Department of Defense made its decisions on the basis of the “bottom line” figure, which was supposed to state the final price of the uniforms. Uniforms’ bottom line figure did not include the cost of materials. While expressing sympathy for the difficulties presented by the contract for Uniforms Inc., the contracting officer insisted that the government would hold Uniforms Inc. in breach of contract if it failed to supply uniforms in accordance with its bottom line figure.

The subject of warranties had not been discussed during negotiations for the purchase of Dogwood’s software. However, included in the software package, along with the computer disks and documentation, the following provisions were printed on a card inside the book describing how to use the software:

6.     No Other Warranties. DOGWOOD INC. DOES NOT WARRANT THAT THE DOGWOOD SOFTWARE IS ERROR FREE. DOGWOOD DISCLAIMS ALL OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITYAND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SOFTWARE, THE ACCOMPANYING WRITTEN MATERIALS OR DISKETTES.

7.     No Liability for Consequential Damages. IN NO EVENT SHALL DOGWOOD BE LIABLE TO YOU FOR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL, OR INDIRECT DAMAGES OF ANY KIND ARISING OUT OF THE USE OF THE DOGWOOD SOFTWARE, EVEN IF DOGWOOD HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL DOGWOOD’S LIABILITY FOR ANY CLAIM, WHETHER IN CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY, EXCEED THE PURCHASE PRICE.

8.     Entire Agreement. This is the entire agreement between the purchaser and Dogwood which supersedes any prior agreement, whether written or oral, relating to the subject matter of this Agreement.

The President of Uniforms has told you that he had not seen these provisions prior to the purchase of the software, but the President acknowledges that the Dogwood salesperson had offered the entire software package, including all documents, for inspection prior to the time the agreement for sale was made. The President had declined, stating that such an examination of the software would not be helpful in deciding whether to buy. The purchase decision was made on the basis of the reports that the President had heard from other Department of Defense contractors about the usefulness of Dogwood’s software in the submission of bids. It now turns out that none of these other contractors had bid on contracts for military uniforms.

(1) Please advise the President of Uniforms Inc. about possible recovery against Dogwood Inc. and what positions the President of Uniforms must anticipate will be taken by Dogwood.

(2) Please advise the President of Uniforms Inc. about possible legal defenses Uniforms might assert against claims made by the Department of Defense and the responses to those claims which are likely to be advanced by the Department of Defense.

Assume, for the purposes of this question, that Article II of the Uniform Commercial Code, as set out in the Supplement to this examination, is the law applicable both to the Uniforms – Dogwood contract and to the Uniforms – Department of Defense contract.

Question III

(30 out of 120 total points; Suggested Time: 45 Minutes)

Following a national trend, the XYZ School of  Law decides to make pro bono service a required part of law school and imposes a requirement that every student work at either the District Attorney’s Office (the office that prosecutes crimes) or the Public Defender’s Office (the office that represents indigent  persons accused of crimes) as a prerequisite for graduation. The law school does so by requiring each of its students to enter into a contract with the law school which states that it is a condition of graduation  that the student shall volunteer not less than twelve hours per semester for three semesters  either for the District Attorney or for the Public Defender.

During Sam Student’s  last year in law school, Professor Ann Advocate, a criminal law professor at the law school who is a renowned criminal defense attorney, undertook the defense of a person  who allegedly shot the President of the United States’ dog as an act of protest against  legislation favored by the President creating a national Cat’s Day on March 30 of each  year. (The President supported the legislation after a poll found that cat lovers were critical of the  President for having publicly displayed his affection for his dog and never, in his many  years in office, having said a nice word about cats.) Professor Advocate took the case without  fee (despite her usual practice of insisting upon a fee of $100,000) because the accused  was indigent. Sam Student became Professor Advocate’s unpaid assistant in the preparation of the  defense.

The hours required by the case were so great that Sam discontinued his service at the Public  Defender’s Office, devoting all of his time to Professor Advocate. As a result, Sam  found it impossible to comply with his contractual commitment under the pro bono program.  Nevertheless, he was shocked when the Associate Dean told him that he was not going to  graduate. The Associate Dean had known throughout the year of Sam’s work for  Professor Advocate and had known that Sam had discontinued working for the Public Defender’s  Office. Sam was even more shocked when he received a letter from the Public Defender  stating that he, Sam, was in breach of his obligation to the Public Defender’s Office, as  spelled out in Sam’s contract with the law school, and demanding that he either serve the remainder of the promised hours or compensate the Office for its cost in hiring a student to work those hours.

Please advise Sam with respect to his claim against the law school that he should be allowed to graduate and with respect to his defense to the charge by the Public Defender’s Office that his failure to complete his pro bono  service represented a breach of a contractual duty to the Public Defender’s Office.