Final Examination 2010-2011
Wednesday June 15, 2011
I have posted the Final Examination, Spring 2011, in the examination section (click on Resources) of this website. The grading form is linked to the Final Examination.
After I finished drafting the examination, I sat down and attempted to write an answer to it. This is not a perfect answer but it will, I hope, help you understand the somewhat cryptic notes that I have included in the grading form. I am including, without changes, the answer I wrote. I plan on appending to this blog a video podcast with some comments about how the class went about answering these questions and what I have learned from what you wrote. But first, my draft answer:
Question 1
At the heart of this matter is interpretation of the agreement reached between HH and AA. The printed words on the document signed by HH were “lawn care contract.” Since this is a service contract, analysis of rights and liabilities of the parties will be determined by application of common law. For HH, we will we will want to introduce evidence that “lawn care contract” includes clean up of fallen branches. To do so we will want to introduce evidence that this was discussed during the negotiation of the contract by HH and AA. We will argue that the words “lawn care contract” are somewhat ambiguous and that the parol evidence rule permits introduction of evidence of negotiating history to clarify ambiguities in the instrument even if it is a complete integration. Furthermore, this was obviously a form supplied by AA and since the only written words related to payment and not to AA’s performance, it should be regarded as a partial integration, permitting noncontradictory evidence to be introduced. Evidence of their discussion about the work on HH’s yard does not contradict the printed words “lawn care” but rather clarifies its meaning. So either because the evidence clarifies an ambiguous term in a form contract or because this is a partial integration and the evidence does not contradict the written terms, introduction of the evidence would not be precluded by the parol evidence rule. AA’s attorney will argue that the agreement, signed by both parties, is a complete integration of their agreement and that HH is trying to introduce evidence of an additional promise - a promise to pick up fallen tree branches - that was not embraced by the words “lawn care.” Introduction of such evidence, AA will argue, is excluded by the parol evidence rule. Even if the agreement were found to be a partial integration, inclusion of another performance obligation without appropriate compensation contradicts the agreement. Finally, AA’s attorney will argue that there is nothing ambiguous about “lawn care.” That phrase would include lawn mowing, fertilizing and fall leaf removal, but not removing large branches from the property.
Assuming that we prevail in this argument, we will then argue that there was no consideration supporting the modification in which HH agreed to pay twice the hourly price for a cleanup that was within the HH-AA contract. AA was already contractually obligated to pay $20 per hour for this work and the increase to $40 was without consideration. Furthermore, the demand for more money to do that for which he was already contractually obligated is a breach of the obligation on all parties to perform their contract in good faith. This obligation is explicit in the Uniform Commercial Code and has influenced courts in common law proceedings to impose the obligation of good faith. AA’s response will focus on the special urgency insisted upon by HH on this occasion and that by agreeing to act on short notice AA was offering performance which was in addition to its contract obligation to HH and was therefore consideration for the increased pay.
HH will argue that even if the modification is enforceable, that modification had included an express condition that the work had to be completed by May 5. If AA does not satisfy that condition, then HH does not have to pay the $40 per hour sum which had been made an express condition of the modification. AA will acknowledge that HH wanted the work done by May 5, but will say that it would be far more appropriate to consider this to be a promise rather than an express condition. As a promise, it is subject to the substantial performance rule and even though not all the cleanup of the branches would be done by May 5, most of it would be and therefore AA would have substantially performed and HH’s performance - payment of $40 per hour - would have to be made.
Question 2
This is a sale of goods contract which falls within Article 2 of the UCC. On behalf of our client TW, we will argue that the buyer WNEC has engaged in an anticipatory repudiation of the contract between WNEC and TW. Since TW only has a telephone call from Dean Gibe to rely upon, it might be wise to demand in writing an assurance of performance from WNEC under 2-609. Failure of WNEC to respond adequately assuring their intention to perform would then clearly allow TW to declare that under 2-610 there has been a repudiation of the contract by WNEC.
However, it is likely that WNEC will argue that since these goods were of a value of $500 or more, UCC 2-201 applies and its requirement of a writing is not satisfied by the contract alleged to exist by TW. The facts as described by TW, WNEC will argue, show that the contract was arrived at orally and there was no written agreement. We will respond by agreeing that 2-202 must be satisfied, but that it satisfied by WNEC’s failure to object within 10 days to the invoice we sent to WNEC on April 8 which contained both the price and the quantity of tablets. That invoice, signed by Tom Wilson was sufficient to constitute a writing making the agreement enforceable against TW and therefore, against WNEC when it did not make a timely objection. WNEC will respond that it does not believe that it is a merchant and therefore the provision does not apply to it. It does not regularly trade in electronic tablets. TW will respond that all colleges buy high tech equipment of all kinds and are therefore merchants. We will also argue for TW that even if WNEC is not a merchant, since these goods were not ordered until after the contract with WNEC was made, 2-201(3)(a) makes the contract enforceable even against a non-signing buyer because the tablets are being made for WNEC. WNEC will respond that even though the tablets were not ordered until after the TW-WNEC contract, the fact that double the number in that contract were being made for TW shows that they were not “specially manufactured” for WNEC within the meaning of 2-201(3)(a).
Assuming that 2-201 is satisfied, WNEC can be expected to argue that a contingency has occurred, namely the radical fall in applications to WNEC, which have made its contract performance impracticable and that that the non-occurrence of that contingency had been a basic assumption upon which the contract was made. TW will argue that the basic provision of 2-615 has not been satisfied because it made no assumptions whatsoever about WNEC’s enrollment. Perhaps if WNEC was not going to have 500 students next year, that might have been such an unexpected occurrence which might make the contract impracticable, but there are clearly more than 500 students at the college and the financial difficulties of WNEC should not be considered by the court to fall within 2-615. They are not the kind of unexpected circumstance which the section was designed to accommodate. If the college facilities had been destroyed by fire or flood, that would fall within 2-615, but not an unexpectedly lower admissions rate.
Assuming that neither the defense of the failure to satisfy 2-201 nor the defense of impracticability is successful, TW can either wait a commercially reasonable time for WNEC to retracts its repudiation under 2-611 or can immediately demand damages under 2-610(b). Since the facts state that there have been no buyers of the EDTAB other than WNEC, we may be able to argue for TW that the tablets purchased by WNEC can not be sold to anyone else. Under such a circumstance, TW can sue WNEC for the $250,000 contract price of the tablets under 2-709(1)(b). In the alternative, TW could seek damages under 2-708(1), the difference between the contract price and the market price as determined under the provisions of 2-723(1). The market price would have to be determined as of the day of the repudiation (or perhaps within a reasonable time after repudiation). Since there have been no buyers other than WNEC, there may be no market price. That would, however, justify TW’s claim for the price under 2-709(1)(b).
TW might be best off offering to release WNEC from its liability in exchange for $25,000. This would at least provide TW compensation for its lost profit on this transaction and it is an amount which WNEC might be willing to pay in exchange for getting a release. This demand may or may not all within 2-708(2), but it is consistent with its spirit and may be a good basis for settlement of the claim.
Question 3
Ben Buyer v Philip Kale
Since Philip has refused to deliver the cat ceramic to Ben Buyer, we can anticipate a suit by Ben against Philip. It seems probable that he will ask for specific performance of the contract. We will argue that Ben is not entitled to the cat ceramic either at law or in equity. Since this is a sale of goods, the UCC will apply.
The facts show that Ben Buyer called Philip on May 2 and said he would not purchase the ceramic cat. Then, on May 3 Ben called Philip to say he would be coming to Philip’s house to pick up the ceramic cat on May 13. The May 2 call was an anticipatory breach within the meaning of 2-610 which permits the party notified of an anticipatory repudiation not only to suspend his own performance but also to resort to any remedy for breach provided by the UCC. On May 3, immediately after receiving Ben’s call, Philip accepted Sam Second’s offer to buy the ceramic cat. That action was not only permitted by 2-706 (seller’s resale) but also terminated the right to retract an anticipatory repudiation recognized by 2-611. UCC 2-611(1) permits retraction of a repudiation “unless the aggrieved party has since the repudiation materially changed his position or otherwise indicated that he considers the repudiation final.” Philip’s call to Sam Second clearly indicated that he considered the repudiation final. Ben will argue that since Sam Second said he wouldn’t buy the ceramic cat, he could still retract his repudiation and did so in his call to Philip on May 3 in which he affirmed his intention to perform the contract. Ben’s theory would be that since Philip would not have a contract with Sam on these facts, Philip would not have changed his position under 2-611(1). We will respond that even if that is true, the conversation with Sam showed that Philip had “indicated that he considers the repudiation final.”
Ben will argue that Philip knew that Ben, in his call on May 2, was not repudiating but rather that he was arguing that because the contract was founded on a mutual mistake that the contract was void. Both Ben and Phillip believed it was a Marge Brown ceramic and that was a material element in their contract. As of May 2 it appeared that they were both mistaken and that is the only meaning of his call. Ben’s call on May 3 was therefore not an attempt to retract a repudiation, it was an affirmation that since it turned out that they were not mutually mistaken about the creator of the ceramic, their contract was not void but was fully enforceable. Philip will answer that since Ben bore the risk of who the creator of the ceramic was, he had no right to avoid the contract and therefore his call on May 2 was, in fact, an anticipatory repudiation of a valid contract.
Ben will assert a right to specific performance on the ground that the ceramic cat is a unique object and that under 2-716(1) the uniqueness of the subject of the sale gives him a right to specific performance. Philip will argue that even if he is contractually bound to sell the ceramic figure to Ben, Ben’s behavior, switching back and forth on the question of whether he was willing to perform his contract, demonstrates that he is unworthy to receive from the court the discretionary equitable remedy of specific performance.
Sam Second v. Philip Kale
Sam will argue that he made an offer to buy the ceramic cat for $10,000 and that on May 2 Philip called him and accepted his offer. He therefore had a contract right to purchase the ceramic figure for $10,000. Philip will argue that the offer made by Sam had been in a face to face conversation. He responded that the cat had already been sold. That response was a rejection of the offer. Even if it was not a rejection of the offer, the offer had died when the conversation ended since offers made face to face must be accepted during the conversation or else they expire. Philip will argue that his call to Sam was therefore an offer to sell the ceramic cat to Sam for $10,000, an offer which Sam had rejected. Therefore when Sam called to “confirm his purchase” of the ceramic cat, that conversation was at most a renewal of his offer to buy the figure for $10,000, an offer which Philip rejected.
If the court finds that Philip’s call to Sam was the acceptance of an offer, Philip will argue that his acceptance was based upon a mistake - a belief that the cat was not created by Marge Brown. That mistake went to the heart of the agreement to sell the ceramic to Sam for $10,000. The mistake was certainly not the result of negligence on his part and, apart from missing out on a windfall gain, there is no adverse impact on Sam in permitting Philip to avoid the contract based on the doctrine of mistake.
Sam will petition the court for specific performance. Philip will argue that justice would not be served by delivering the ceramic cat to Sam for a price that did not reflect the value of the ceramic cat and when the reason this had happened was because of a unilateral mistake by Philip.
Video Comments
After I finished drafting the examination, I sat down and attempted to write an answer to it. This is not a perfect answer but it will, I hope, help you understand the somewhat cryptic notes that I have included in the grading form. I am including, without changes, the answer I wrote. I plan on appending to this blog a video podcast with some comments about how the class went about answering these questions and what I have learned from what you wrote. But first, my draft answer:
Question 1
At the heart of this matter is interpretation of the agreement reached between HH and AA. The printed words on the document signed by HH were “lawn care contract.” Since this is a service contract, analysis of rights and liabilities of the parties will be determined by application of common law. For HH, we will we will want to introduce evidence that “lawn care contract” includes clean up of fallen branches. To do so we will want to introduce evidence that this was discussed during the negotiation of the contract by HH and AA. We will argue that the words “lawn care contract” are somewhat ambiguous and that the parol evidence rule permits introduction of evidence of negotiating history to clarify ambiguities in the instrument even if it is a complete integration. Furthermore, this was obviously a form supplied by AA and since the only written words related to payment and not to AA’s performance, it should be regarded as a partial integration, permitting noncontradictory evidence to be introduced. Evidence of their discussion about the work on HH’s yard does not contradict the printed words “lawn care” but rather clarifies its meaning. So either because the evidence clarifies an ambiguous term in a form contract or because this is a partial integration and the evidence does not contradict the written terms, introduction of the evidence would not be precluded by the parol evidence rule. AA’s attorney will argue that the agreement, signed by both parties, is a complete integration of their agreement and that HH is trying to introduce evidence of an additional promise - a promise to pick up fallen tree branches - that was not embraced by the words “lawn care.” Introduction of such evidence, AA will argue, is excluded by the parol evidence rule. Even if the agreement were found to be a partial integration, inclusion of another performance obligation without appropriate compensation contradicts the agreement. Finally, AA’s attorney will argue that there is nothing ambiguous about “lawn care.” That phrase would include lawn mowing, fertilizing and fall leaf removal, but not removing large branches from the property.
Assuming that we prevail in this argument, we will then argue that there was no consideration supporting the modification in which HH agreed to pay twice the hourly price for a cleanup that was within the HH-AA contract. AA was already contractually obligated to pay $20 per hour for this work and the increase to $40 was without consideration. Furthermore, the demand for more money to do that for which he was already contractually obligated is a breach of the obligation on all parties to perform their contract in good faith. This obligation is explicit in the Uniform Commercial Code and has influenced courts in common law proceedings to impose the obligation of good faith. AA’s response will focus on the special urgency insisted upon by HH on this occasion and that by agreeing to act on short notice AA was offering performance which was in addition to its contract obligation to HH and was therefore consideration for the increased pay.
HH will argue that even if the modification is enforceable, that modification had included an express condition that the work had to be completed by May 5. If AA does not satisfy that condition, then HH does not have to pay the $40 per hour sum which had been made an express condition of the modification. AA will acknowledge that HH wanted the work done by May 5, but will say that it would be far more appropriate to consider this to be a promise rather than an express condition. As a promise, it is subject to the substantial performance rule and even though not all the cleanup of the branches would be done by May 5, most of it would be and therefore AA would have substantially performed and HH’s performance - payment of $40 per hour - would have to be made.
Question 2
This is a sale of goods contract which falls within Article 2 of the UCC. On behalf of our client TW, we will argue that the buyer WNEC has engaged in an anticipatory repudiation of the contract between WNEC and TW. Since TW only has a telephone call from Dean Gibe to rely upon, it might be wise to demand in writing an assurance of performance from WNEC under 2-609. Failure of WNEC to respond adequately assuring their intention to perform would then clearly allow TW to declare that under 2-610 there has been a repudiation of the contract by WNEC.
However, it is likely that WNEC will argue that since these goods were of a value of $500 or more, UCC 2-201 applies and its requirement of a writing is not satisfied by the contract alleged to exist by TW. The facts as described by TW, WNEC will argue, show that the contract was arrived at orally and there was no written agreement. We will respond by agreeing that 2-202 must be satisfied, but that it satisfied by WNEC’s failure to object within 10 days to the invoice we sent to WNEC on April 8 which contained both the price and the quantity of tablets. That invoice, signed by Tom Wilson was sufficient to constitute a writing making the agreement enforceable against TW and therefore, against WNEC when it did not make a timely objection. WNEC will respond that it does not believe that it is a merchant and therefore the provision does not apply to it. It does not regularly trade in electronic tablets. TW will respond that all colleges buy high tech equipment of all kinds and are therefore merchants. We will also argue for TW that even if WNEC is not a merchant, since these goods were not ordered until after the contract with WNEC was made, 2-201(3)(a) makes the contract enforceable even against a non-signing buyer because the tablets are being made for WNEC. WNEC will respond that even though the tablets were not ordered until after the TW-WNEC contract, the fact that double the number in that contract were being made for TW shows that they were not “specially manufactured” for WNEC within the meaning of 2-201(3)(a).
Assuming that 2-201 is satisfied, WNEC can be expected to argue that a contingency has occurred, namely the radical fall in applications to WNEC, which have made its contract performance impracticable and that that the non-occurrence of that contingency had been a basic assumption upon which the contract was made. TW will argue that the basic provision of 2-615 has not been satisfied because it made no assumptions whatsoever about WNEC’s enrollment. Perhaps if WNEC was not going to have 500 students next year, that might have been such an unexpected occurrence which might make the contract impracticable, but there are clearly more than 500 students at the college and the financial difficulties of WNEC should not be considered by the court to fall within 2-615. They are not the kind of unexpected circumstance which the section was designed to accommodate. If the college facilities had been destroyed by fire or flood, that would fall within 2-615, but not an unexpectedly lower admissions rate.
Assuming that neither the defense of the failure to satisfy 2-201 nor the defense of impracticability is successful, TW can either wait a commercially reasonable time for WNEC to retracts its repudiation under 2-611 or can immediately demand damages under 2-610(b). Since the facts state that there have been no buyers of the EDTAB other than WNEC, we may be able to argue for TW that the tablets purchased by WNEC can not be sold to anyone else. Under such a circumstance, TW can sue WNEC for the $250,000 contract price of the tablets under 2-709(1)(b). In the alternative, TW could seek damages under 2-708(1), the difference between the contract price and the market price as determined under the provisions of 2-723(1). The market price would have to be determined as of the day of the repudiation (or perhaps within a reasonable time after repudiation). Since there have been no buyers other than WNEC, there may be no market price. That would, however, justify TW’s claim for the price under 2-709(1)(b).
TW might be best off offering to release WNEC from its liability in exchange for $25,000. This would at least provide TW compensation for its lost profit on this transaction and it is an amount which WNEC might be willing to pay in exchange for getting a release. This demand may or may not all within 2-708(2), but it is consistent with its spirit and may be a good basis for settlement of the claim.
Question 3
Ben Buyer v Philip Kale
Since Philip has refused to deliver the cat ceramic to Ben Buyer, we can anticipate a suit by Ben against Philip. It seems probable that he will ask for specific performance of the contract. We will argue that Ben is not entitled to the cat ceramic either at law or in equity. Since this is a sale of goods, the UCC will apply.
The facts show that Ben Buyer called Philip on May 2 and said he would not purchase the ceramic cat. Then, on May 3 Ben called Philip to say he would be coming to Philip’s house to pick up the ceramic cat on May 13. The May 2 call was an anticipatory breach within the meaning of 2-610 which permits the party notified of an anticipatory repudiation not only to suspend his own performance but also to resort to any remedy for breach provided by the UCC. On May 3, immediately after receiving Ben’s call, Philip accepted Sam Second’s offer to buy the ceramic cat. That action was not only permitted by 2-706 (seller’s resale) but also terminated the right to retract an anticipatory repudiation recognized by 2-611. UCC 2-611(1) permits retraction of a repudiation “unless the aggrieved party has since the repudiation materially changed his position or otherwise indicated that he considers the repudiation final.” Philip’s call to Sam Second clearly indicated that he considered the repudiation final. Ben will argue that since Sam Second said he wouldn’t buy the ceramic cat, he could still retract his repudiation and did so in his call to Philip on May 3 in which he affirmed his intention to perform the contract. Ben’s theory would be that since Philip would not have a contract with Sam on these facts, Philip would not have changed his position under 2-611(1). We will respond that even if that is true, the conversation with Sam showed that Philip had “indicated that he considers the repudiation final.”
Ben will argue that Philip knew that Ben, in his call on May 2, was not repudiating but rather that he was arguing that because the contract was founded on a mutual mistake that the contract was void. Both Ben and Phillip believed it was a Marge Brown ceramic and that was a material element in their contract. As of May 2 it appeared that they were both mistaken and that is the only meaning of his call. Ben’s call on May 3 was therefore not an attempt to retract a repudiation, it was an affirmation that since it turned out that they were not mutually mistaken about the creator of the ceramic, their contract was not void but was fully enforceable. Philip will answer that since Ben bore the risk of who the creator of the ceramic was, he had no right to avoid the contract and therefore his call on May 2 was, in fact, an anticipatory repudiation of a valid contract.
Ben will assert a right to specific performance on the ground that the ceramic cat is a unique object and that under 2-716(1) the uniqueness of the subject of the sale gives him a right to specific performance. Philip will argue that even if he is contractually bound to sell the ceramic figure to Ben, Ben’s behavior, switching back and forth on the question of whether he was willing to perform his contract, demonstrates that he is unworthy to receive from the court the discretionary equitable remedy of specific performance.
Sam Second v. Philip Kale
Sam will argue that he made an offer to buy the ceramic cat for $10,000 and that on May 2 Philip called him and accepted his offer. He therefore had a contract right to purchase the ceramic figure for $10,000. Philip will argue that the offer made by Sam had been in a face to face conversation. He responded that the cat had already been sold. That response was a rejection of the offer. Even if it was not a rejection of the offer, the offer had died when the conversation ended since offers made face to face must be accepted during the conversation or else they expire. Philip will argue that his call to Sam was therefore an offer to sell the ceramic cat to Sam for $10,000, an offer which Sam had rejected. Therefore when Sam called to “confirm his purchase” of the ceramic cat, that conversation was at most a renewal of his offer to buy the figure for $10,000, an offer which Philip rejected.
If the court finds that Philip’s call to Sam was the acceptance of an offer, Philip will argue that his acceptance was based upon a mistake - a belief that the cat was not created by Marge Brown. That mistake went to the heart of the agreement to sell the ceramic to Sam for $10,000. The mistake was certainly not the result of negligence on his part and, apart from missing out on a windfall gain, there is no adverse impact on Sam in permitting Philip to avoid the contract based on the doctrine of mistake.
Sam will petition the court for specific performance. Philip will argue that justice would not be served by delivering the ceramic cat to Sam for a price that did not reflect the value of the ceramic cat and when the reason this had happened was because of a unilateral mistake by Philip.
Video Comments