27 - CONTRACTS FINAL EXAMINATION Spring 2005 Santa...

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CONTRACTS FINAL EXAMINATION Spring 2005 Santa Barbara/Ventura Colleges of Law Instructor: Craig Smith QUESTION 1 Each year, the Great American Cross-Country Bicycle Race is held. The race starts in Los Angeles, California and ends in New York City. The promoters of the race, “Mellow Velo, Inc.,” offer a first prize of $100,000 to the rider who is the first to reach the finish line in New York City. They also offer a $20,000 bonus for the first racer to reach Denver, Colorado and another $20,000 bonus for the first racer to reach Chicago, Illinois. Jock Cardio is a professional bicycle racer who has entered this year’s race and is determined to win. The record time for finishing the race is six days. Riders typically spend 21 hours a day on the bike. Jock has purchased three bicycles, hired a three-person support crew and rented an RV for purposes of competing in the race. The Race starts on July 4th and Jock indeed is one of the competitors getting off to a fast start. He is the first competitor to reach both Denver and Chicago. On July 8th, when Jock is about two- hours east of Chicago and heading towards New York City, Mellow Velo determines that due to unforeseen financial difficulties, they will not be financially able to award any of the prize money, including bonuses to the competitors. They have no bond nor insurance to cover this contingency. They promptly notify each competitor by calling their respective support crew and telling them that they will be unable to pay any of the prize money and that they are canceling the race. Jock’s team manager promptly relays the message to him. At this point, Jock has expended $15,000 in costs to compete in the race. Jock expects to spend another $2,500 each day he continues in the race in expenses. Rather than immediately cease competing Jock decides to forge ahead to New York City. All other competitors abandon the race. Two days later Jock crosses what would have been the finish line in Times Square. Jock feels he is entitled to the $100,000 first prize as well as the bonus money for being the first competitor to reach Denver and Chicago. Mellow Velo has refused to pay any portion of the prize money. Discuss fully whether or not Jock is legally entitled to an award of any compensation from Mellow Velo.
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QUESTION 2 Moe was new to Stoogeville and needed a place to live. He particularly wanted to find an apartment that was no further than 10 blocks from his new place of employment, the Stoogeville Art Museum (SAM). Being new in town he had never actually been to his new place of employment, so he consulted a map to determine SAM’s location. After pinpointing SAM on the map he then set out to locate an apartment. After diligently searching the classified ads he found what he believed to be the perfect apartment. He met with the landlord, Curly and decided to rent it. Curly produced a 36-page lease for Moe to sign. Rather than read the lease Moe decided to ask Curly a few questions. He told Curly he was the owner of a Great Dane and asked if pets were permitted. Curly told him that pets were okay. Moe went ahead and signed the one-year lease.
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