30 - CONTRACTS MID-TERM EXAMINATION Santa Barbara/Ventura...

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CONTRACTS MID-TERM EXAMINATION Santa Barbara/Ventura Colleges of Law FALL 2004 Instructor: Craig Smith QUESTION 1 Every year, Moe operated a pumpkin patch from October 1st to October 31st. In the August preceding this particular pumpkin season, he started looking around for a source of pumpkins. He made several calls, one of which was to Curly, a well known wholesaler of Pumpkins. Moe and Curly had never done business with each other before. Moe asked over the phone "What's your best price on a truckload of pumpkins this year?" Curly quoted him a price “for immediate shipment” of $3,500 for a truckload. Moe stated "That sounds pretty good, can I have some time to think about it?” Curly replied, "Sure, my price will remain firm through the end of this pumpkin season.” Moe made several other calls that day but no one could beat Curly's price. The next day he faxed the following note to Curly: "Per our telephone conversation of yesterday, please enter my order for one truckload of pumpkins at $3,500. (Signed) Moe." After Moe transmitted the note by fax to Curly, he followed up by placing the original note in the mail correctly addressed to Curly at his usual place of business. Curly received Moe's fax. He immediately read it upon receipt and immediately faxed back: "Dear Moe, Thank you for your pumpkin order. Due to unforeseen difficulties I cannot offer the truckload of pumpkins at the quoted price of $3,500. However, I can ship the truckload immediately for the price of $4,200. (Signed) Curly.” In small print below Curly's signature, the following appeared: “Seller disclaims all warranties express or implied as to the merchantability of pumpkins. All pumpkins are sold "AS IS, WITH ALL FAULTS." Moe was at the post office mailing the original note to Curly when Curly’s fax came through on Moe’s fax machine at home. When Moe returned home, the fax was waiting for him. When Moe read this fax he was fuming. He immediately faxed the following back to Curly: "You promised that your prices would remain firm through the end of pumpkin season. I expect you to immediately ship the pumpkins at the original price of $3,500." Curly received this document and decided that the only way he could fulfill the order at the $3,500 price was to ship a truckload of "second-quality" pumpkins. Although the
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Contracts Mid-Term Examination Fall 2004 Page 2 of 9 pumpkins were suitable for making a squash soup they were not suitable for carving into jack-o-lanterns. The truckload of pumpkins was delivered to Moe. He is unhappy with the quality of the pumpkins. Discuss fully the following: (1) Is there a contract between Curly and Moe? (2) Assuming that there is a contract, what is the price of the pumpkins? (3) Assuming that there is a contract, is the disclaimer of warranties a part of the contract?
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Contracts Mid-Term Examination Fall 2004 Page 3 of 9 QUESTION 2 The Anaheim Angels are a professional baseball team. Three years ago they entered into a 30-year lease with the City of Anaheim to lease the city’s municipal stadium for an annual rent of $1.00 per year. A formal written contract
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