Question 1

(40 points; Suggested Time: One Hour)

 

Glen and Gloria, Harry's mom and dad, decided that this year they would have a birthday party for Harry at a swimming pool. They wanted to have the party on April 6. They did not know where there were pools that might be available for parties. The telephone book did not provide much help, but several of their friends made some suggestions and they pursued them eagerly. They quickly discovered that in general the pools that were available for parties limited the number of guests to 15. Glen and Gloria knew that there would be more guests than that and began to despair of finding the right place for the party.

In looking through a local newspaper on March 3, however, they found an advertisement from HealthPlace, a local physical fitness center. The advertisement said:

Rent our pool and party room for your next party. We can accommodate up to twenty-four persons to celebrate a special occasion. Just $200 for an hour of pool time and an hour in our party room. The price includes a cake, drink and party gifts for all. All Sunday afternoons in April are available.

Harry's parents were overjoyed. They immediately mailed a check for $200 to HealthPlace with a letter that stated as follows:

We have read your offer of your facilities for birthday parties. Please reserve Sunday afternoon, April 6, from 2:30 p.m. to 4:30 p.m. for a birthday party for our son Harry and twenty of his friends. Our payment is enclosed.

One week later, they received the following response from HealthPlace:

We are sorry to say that the advertisement to which you responded contains an error. The price for the pool and party room is $300, not $200. Please advise.

Glen and Gloria were uncertain about what to do. The price now quoted by HealthPlace was more than they had intended to spend on the party. On the other hand, they had no alternative. They wrote back to HealthPlace one week after they received the HealthPlace letter. Their letter simply said:

We want to have the party at HealthPlace so please reserve the pool and party room as stated in our prior letter.

There was no further communication between Harry's parents and HealthPlace until one week before the party was to take place. On March 27 a representative of HealthPlace called to say that there had been a problem with the pool and the pool had to be drained. They assured Glen and Gloria that the pool would be refilled by the sixth of April, but they acknowledged that the water would probably be extremely cold.

Harry's parents decided that they had better look around for another place to hold the party. They were told by a friend of another party place with a pool and they immediately made arrangements to use that place. They called HealthPlace, told them of their decision, and asked for the return of their $200. Today they received a letter from HealthPlace's lawyer informing them that they breached their contract with HealthPlace and owed HealthPlace $100, the unpaid balance of the $300 contract price.

Glen and Gloria have retained you as their lawyer. Please advise them of their legal position in this matter. Remember that to do an effective job as their attorney you must not only develop legal arguments on their behalf, but must also anticipate the legal arguments that will be made by HealthPlace's lawyer.

Question 2

(40 points; Suggested Time: One Hour)

 

Donald and Peter had enjoyed a friendship over many years. One of the bonds between them was a love of cigars. They were both experienced business people. Donald owned and operated a chain of liquor stores. Peter was a successful insurance company executives who, among his other jobs, lobbied both his state legislature and Congress on behalf of his insurance company seeking favorable legislative treatment for his company. On his last visit to Washington, D.C., Peter heard from a "reliable source," that the President intended to introduce legislation ending the United States embargo of Cuban goods. The same source told him that Congress was likely to pass such legislation quickly if it was supported by the President. On his return, he reported the information to Donald. Both men were interested in the information because the end of the embargo would mean the possible availability of Cuban cigars for their enjoyment. Donald and Peter talked of how much they looked forward to the ending of the embargo and their belief that many other cigar smokers would feel the same way.

The next day Donald left for a scheduled wine-buying trip to France. When he arrived at his hotel, he found a fax from Peter which read as follows:

Got an idea. If there is an announcement from Washington that the President is going to ask Congress to end the ban on imports from Cuba, buy as many Cuban cigars in Europe as you can. I'll pay you a nice profit.

Donald purchased 1000 boxes of Cuban cigars and paid a total of $460,000 for them. He arranged to have the cigars stored by the seller in France at no cost until they could be legally shipped to the United States once the embargo was lifted. On his return to the United States, he found a telephone message from Peter which he promptly returned. Peter said, "The President has just asked Congress to end the embargo on Cuban goods. Did you buy the cigars?" Donald said, "Yes – 1000 boxes of Cuban cigars." Peter said, "Great, I'll pay you $500,000 for them." Donald said, "No." Peter said, "What do you mean by that – they are my cigars." Donald said, "No, they are mine and they are going to be worth a lot more than $500,000."

Peter has hired you as his attorney. He would like to bring an action against Donald so that when the embargo has ended he can sell the cigars in the United States. He is certain that he can sell the 1000 boxes for at least $600,000. He figures that he could make $100,000 on the transaction.

Please advise Peter of his legal rights against Donald. In doing so, you must consider the legal arguments that Donald's attorney will make on behalf of Donald.

Question 3

(40 points; Suggested Time: One Hour)

 

Barbara Byer wanted to add a second bathroom to her three bedroom home. She contacted Sarah Sink, a plumbing contractor, and asked her to develop plans for the bathroom. The job involved using two large closets plus some space taken from a bedroom as the site for the new bathroom. Barbara was pleased with the plans and asked for a quotation of the price. Sarah told her that she had recently changed the way in which she conducted her business. Instead of quoting the total price of a bathroom, she would quote the price for the job without the fixtures (the sink, toilet and bathtub/shower). That way her clients could select whatever units they wished. Sarah simply supplied the size specifications. She was also willing to act as the seller of the fixtures and she would sell them at 15% over her cost. If her clients wished to buy fixtures from someone else, they were certainly free to do so.

Sarah submitted a proposed contract to Barbara for her approval. The proposed contract was signed by Sarah. In relevant part, the contract read as follows:

Sarah Sink (hereinafter the Contractor) promises to construct a bathroom in accordance with the attached plans for the sum of $20,000. This sum does not include the cost of the sink, toilet or bathtub/shower which will be supplied by Barbara Byer (hereinafter the Owner).

This agreement between Contractor and Owner represents the final agreement of the parties and there are no other promises, expressed or implied, made between the parties with respect to the construction of a bathroom at the home of Owner.

Barbara signed the proposed contract and then undertook a search for the right fixtures for the new bathroom. She was amazed at how expensive the fixtures were. She now knows that the fixtures will cost her at least $5,000. She had assumed all along that most of the cost of the job would be accounted for in the contract she entered into with Sarah Sink. Now she realizes that she confronts much higher costs. When she expressed her concerns to Sarah, Sarah said that she might be able to help out. Plumbing suppliers usually charge, she said, double the wholesale cost. She could, she said, sell the fixtures to Barbara for just one-third over wholesale cost. Barbara said, "But you told me that you would sell me fixtures for 15% over your cost." Paula said, "I said that at one point, but you didn't take me up on that and it is not in our contract."

Barbara has come to you for legal advice. Now that she understands the probable total price, she would rather not do the job at all. She would be willing to go ahead with the job, however, if Sarah Sink would sell her the fixtures for 15% over wholesale cost. But otherwise she just can not afford the cost of the new bathroom.

Please advise Barbara. Remember that thorough analysis of Barbara's legal situation requires that you anticipate the arguments that you expect to be made by Sarah Sink's attorneys.