Question 1 (Suggested Time: 45 minutes) (45 points out of a total of 120 exam points)

a. On October 4, 2010, Buyer contracts with Seller to purchase a 2002 Toyota Prius automobile for $2500. Seller had recently purchased this automobile for $2300. The contract was to be performed on October 6 with simultaneous delivery of the car and payment. On the morning of October 6, Buyer informs Seller that he is “canceling” the contract. That afternoon, Seller contracts with Newbuyer for the sale of the 2002 Prius for $2200. Both of these transactions take place in a state which had enacted Article 2 of the Uniform Commercial Code. What damages will Seller claim against Buyer and what response will Buyer make to that claim.

b. For this part of the question only, assume that in the contract between Seller and Buyer, there is a contract clause which says,

“Buyer will pay to Seller the sum of $1000 as a deposit on the purchase of the 2002 Prius. The parties agree that if Buyer breaches the contract, Seller can, in addition to other remedies provided by the Uniform Commercial Code, retain the deposit not as a penalty but as liquidated damages.”

What argument will Buyer make to avoid the application of this contract provision and what response will Seller make to this argument?

c. For this part of the question only, assume that a day after the contract is made between Seller and Newbuyer, Seller says to Newbuyer, “I have learned that it is not so easy to purchase a 2002 Prius and I think that you should pay me at least $2,500 and I am not going to deliver it to you for less.” Newbuyer responds, “I really want this car, so Iʼll pay you the $2500 you are demanding.” On the morning of October 6, Seller arrives with the car at Newbuyerʼs home intending to deliver the car. Newbuyer then tenders payment of $2200, the original purchase price. Seller refuses to deliver the car. Each claims that the other breached. What are Sellerʼs arguments that Newbuyer breached and Newbuyerʼs arguments that Seller breached?

Question 2 (Suggested Time: 1 hour 15 minutes) (75 points out of a total of 120 exam points)

Landscape Company (L) agrees to cut Ownerʼs (O) lawn for the 2010 grass growing season with the following arrangements: When O notifies L that the grass has reached 2 inches, L must mow to 1 inch within 1 week of receiving notice. If L mows lawn within that week, O will pay L $50.00, but if L doesnʼt mow within that week, but mows within 2 weeks of notice, O will pay L $35.00.

Spring arrives, the grass begins to grow and on May 15 O notifies L that the grass has reached 2 inches. L does not arrive to mow until 9 days after that notice. L mows grass to 1 inch and bills O for $50.00 which O pays, reminding L that he is supposed to come within 1 week after receiving notice. On May 30 O once again notifies L that the grass has reached 2 inches. L does not arrive until 12 days after that notice. O pays L $50.00 with another reminder about coming within 1 week after receiving notice. The next notice issued by O does not occur until June 30. When L arrives 10 days after receiving the notice, L says that he measures the grass to be 3 inches long and that O has breached the contract by not notifying him when the grass had reached 2 inches. He says he will mow the lawn for $75 and O agrees. He mows the grass, and bills O for $75.00. O responds to the bill with an offer to pay L $35.00 on the ground that L had not cut the grass within the first week after receiving the notice. L rejects that payment. Two weeks later, On July 15, O notifies L that the grass has reached 2 inches. On July 20, L sends a letter in response saying that he does not intend to mow Oʼs grass again. The letter gives no reason for its refusal.

Your Assignment: You represent O. O believes that L has breached its grass- mowing contract. Please provide an analysis of Oʼs contract claim against L. You must also analyze both Lʼs responses to Oʼs claim and any liability that O may have to L. Do not include any analysis of remedies.

END OF EXAMINATION