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23 - CONTRACTS FINAL EXAMINATION Santa Barbara/Ventura...

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CONTRACTS FINAL EXAMINATION Santa Barbara/Ventura Colleges of Law Instructor: Craig Smith Spring 2007 QUESTION 1 17-year-old Moe was an aspiring rap artist. One night after playing a show at a club he was approached by Curly, the president of Bad Stooge Records, who had been in the audience and had seen the show. Curly was so impressed with Moe that he offered him a recording contract. Curly told Moe; "If you will agree to record five albums for my record label I'll pay you a million dollars a year as long as I like your music." Moe replied; “Sounds great, I’d love to” and the two shook hands on it that night. The very next day, Moe went to work recording his first album for Bad Stooge Records. The album sold moderately well but not up to Curly's expectations. Bad publicity regarding rap artists in general had depressed the sales of all artists of the rap genre. Nine months after first agreeing to the arrangement Curly decided that it would simply not be profitable to continue to have Moe under contract. Curly notified Moe that he was canceling the contract. Moe was furious. He rounded up his "crew" and went to pay Curly a visit. He told Curly that if he didn't keep his word he and his crew would see that Curly's reputation in the record business was ruined, and worse. It worked, Curly reluctantly agreed not to cancel the contract. Moe then recorded a second album for Bad Stooge that was also moderately successful. Three months after Moe turned 18 a competing company offered him a record deal. This deal was much more lucrative than the one he had with Bad Stooge Records paying him twice as much money. He agreed to the deal and informed Curly he would no longer be putting out records for him. This event coincided with a sudden upswing in the sales of Moe's records. Curly realized that Moe was suddenly the hottest rap artist in the country. He decided that he didn't want to let Moe out of his contract. Curly sues Moe in the local trial court for breaching their agreement. Discuss fully, who will prevail and why.
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QUESTION 2 Bonnie was the owner of a specialty coffee shop located in Ventura, California. She roasted her own beans that she purchased from Sam, a purveyor of wholesale coffee beans, located in Santa Barbara, California. When Bonnie needed beans she would call Sam to place an order. Sam would take the order by phone and then send a written acknowledgment form that listed the quantity of beans ordered and the price of the beans. On the back of the acknowledgment form a number of boilerplate terms were printed including one that stated, "in the event a dispute should arise between buyer and seller with respect to this purchase both parties shall be required to travel to New Delhi, India, where the dispute will be mediated by the Maharishi Mahesh Yogi.” On April 15th, Bonnie placed an order by phone, which Sam accepted. The next day he promptly sent out the usual acknowledgment form and promised to deliver the beans on or before May 15th. One day after doing so, he received a huge order from Gigantic Coffee Chain. He had
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