La Puma-2011-fall-specialproblems-contracts-torts-answer2

La Puma-2011-fall-specialproblems-contracts-torts-answer2 -...

Info icon This preview shows pages 1–10. Sign up to view the full content.

Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 4
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 6
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 8
Image of page 9

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ID: Exam Name: SPCT__F|NAL_LSN_La_Puma_201 1 FL Instructor: La Puma Grade: 1) Choice of Law The UCC governs contracts for the sale of goods. Goods are moveable personal property. Wheels are moveable personal property. Therefore, the UCC will govern. Additionally, there are special rules for merchants. Wheel and Skate have the bargaining power of merchants and are manufacturing companies. As they are merchants. the special UCC rules will apply. good Valid Contract In order to have a valid contract there must be mutual assent/meeting of the minds demonstrated through an offer. acceptance. and consideration. 1/15 Communication Offer An offer is a present intent to be bound with definite and certain terms communicated to an identified offeree. Definite and certain terms are price, quantity. subject matter. time of performance, and parties. Here. there is price (85¢), quantity (10,000). subject matter (wheels). time of performance (each month for ten months beginning 3/1), and parties (Wheel and Skate). Communicated to an identified offeree - Wheel and Skate spoke with each other. There was a writing. Intent to be bound - by identifying all of the terms and creating a writing, there is an intent to be bound. As all the elements are met. there is a valid offer on 1/15. Acceptance ....can be demonstrated by a promise or performance. Here there is a writing signed by both parties, thus there is an agreement. Could have discussed the above as mutual assent here. Consideration ...is a bargained for exchange. Here, there is money for wheels. Therefore consideration. As all the elements for a valid contract are met, Wheel and Skate are bound to the written signed agreement on January 15. nstallment Because this is a contract to be performed over the course of 10 months with delivery occuring each month. This is considered an installment contract, thus each month is considered an independent contract. This will affect the determination of breach and remedies/damages. Nice. Statute of Frauds (SofF) Under the SofF, certain agreements have to be in writing, including those that are for goods valued at over $500. Here, the sale of goods exceeds the $500 - 10,000 times .85 over 10 months = $85k. Therefore, the agreement between the parties must be in writing. Here, the 1/15 was in writing and signed and therefore the SofF was not violated. Veg nice. 2/1 Modification When there is a'modification to a contract, it also has to comport with the SofF xi Deleted: 1| and may require additional consideration. It also has to be in good faith. Under the UCC no new consideration needed but need good faith. SofF - If the original agreement is in writing. then the modification must also be in writing. However. under the UCC there is no requirement for writing when the goods are specially manufactured. An oral agreement is enough. On 2/1, Wheel notified Skate that they could not afford to sell the wheels at the agreed price, but could do it for 90¢. Skate orally agreed. Though the goods are valued over $500, because the wheels are "specifically described" this modification does not need to be in writing. The SofF is not violated and this is a valid agreementgjg problem solving but its unclear if these were specifically manufactured goods. You would need to see someone's logo on it and then don't tell you this. They iust say they are specifically described. Consideration - Under the CL. there must be consideration for modifications to a contracts. The UCC does not require additional consideration. As the UCC controls, (goods and merchants), there was no need for there to be extra consideration when Wheel changed the price of the wheels. Therefore the modification is still valid. Good Faith — is when a party does not attempt to deceive or fraud another party, but has a legitimate reason for altering the duties udner the contract. Here, the facts stipulate that the Wheel notified Skate in good faith that they could not afford the agreed upon price. There is no question as to whether they acted in bad faith. The modification is still valid. Merchant Confirmatom Memo ...is when a merchant puts into writing a confirmation of the agreement and/or modification to an agreement. Wheels sent Skate a merchant confirmatory memo after their 2/1 conversation and modification. The memo stated that the price of the wheels was 91¢ and not 90¢ as agreed upon. Wheels will argue that this memo controls the modification and the price of the wheels was 91¢. However. Skate will argue that this does not comport with their oral agreement/modification and should not be controlling - the conversation on 2/1 should control the price. Further. they will argue that Wheels acted in bad faith. However, the prior dealings of the parties indicate that they have acted in good faith and that this was just a mistake by Wheels' secretary. The court will most likely agree with Wheels. It was on Skate to read the memo and their failure to do so is not the fault of Wheelsgood Therefore, the Merchant Confirmatory Memo will control and the price of the wheels is 91¢. Breach There are two types of breach. minor and material. A minor breach is when the contract has been performed, but not identically to the terms. A material breach is one that substantially affects the terms of the contract. Here. there is a material breach because Wheels anticaptorily repudiated. Anticagtory Redpudiation ...is when a party notifies the other contracting party that they will not be able to perform their duty under the contract before the time of performance. Prior to 3/1. the time performance was to begin. Wheels notified Skate that they would be unable to deliver any wheels because it had just contracted to sell its entire output to Surfco at $1.10 per wheel. Skate thus had the option to sue Wheels at the time of notification or wait until time of performance for breach of contract. Skate choose not to sue for breach until October 1, 7 months after Wheels notified Skate that they would be unable to perform. It is on the non- breaching party to mitigate damages at the time of notice. Therefore. Skate should have mitigated at the point, which they were able to do by May 1. Therefore. it is unreasonable that they choose not to sue until October 1. which will thus limit their damages as will be explained under remedies. Vem good. Discharge of Dug A legal duty to perform can be discharged if there is evidence of impossibility. impracticability, or frustration of purpose. (Or fraud, duress, illegality, or incapacity - none of which are present). A contract is impossible or impracticle to perfor if circumstances outside of the breaching party's control occur that substanially impair the party's ability to perform on the contract. Here, Wheels has no wheels to sell Skate because they are selling them all to Surf. Because this is within Wheels control and they created the circumstance. there is no impossibility or impracticability and their duty is not discharged. Frustration of Purpose is when one performing on the contract would go against the purpose/intent of the contract. Skate would argue that Wheels frustrated the purpose of the contract through anticipatory repurdiation and thus there should be no discharge of duty. The court would agree with Skate. Third Parties Three types - beneficiaries. delegation of duty. assumption of rights. In order for any of these three to be triggered, there must be notification to all parties at the time of contract of this relationship. Skate will argue that B&B is a 3rd party beneficiary in that they would received the fully manufactured skateboards from Skate. which included the wheels from Wheels. However. they are not a donee (receiveing a gift) as the skateboards are being sold to them. They could be considered a creditor, in that Skate is indebted to them for goods. Further. if this was so important to Skate. they should have notified B&B of this and put it in as one of the contract terms. Regardless of their type of status of beneficiary. Wheels did not know nor had reason to know that B&B was an intended 3rd party beneficiary and thus would not be liable for any damages resulting from their breach to Skate. Damages Count 1 - $15K Skate wants $15k for the difference in contract price ($1.00 versus .85¢). However, the contract price is not .85¢, but rather 91¢ as explained supra. First. there was a modification in the change in price from 85¢ to 90¢ on 2/1, which was a valid modification. Second. there was a merchant confirmator memo that set the price at 91¢, which is controlling. Therefore. Skate would only be entitled to $9k - the difference between the Wheels contract price and the new suppliers' price. good Further, there is a timing issue. As this is an installment contract, each month would be considered independently for damages. Wheels breached before March 1, Skate mitigated by May 1, and did not sue untill October 1. At most, Wheels would be liable for the two months it took Skate to mitigate damages - ‘ $1800 or at a minimum, for the one month breach - $900. veg good. Count 2 - $600.000K As explained supra, Wheels did not know nor have reason to know that Skate had a contract with B&B that contained a liquidated damages clause and thus should not be held liable for these damages. Further, liquidated damages are those that are foreseeable at the time of contract and that are reasonable. Once again. these damages were not foreseeable and they are far from reasonable - $10k for skateboards each month. F urther. the courts typically reject liquidated damages clauses that put a number figure on the damages. How can a party be so certain of their damages? If for no other reason, Wheels would not be liable because the liquidated damages clause does not comport with remedies theories. Nicely done. Count 3 - $1,000,000 as punitive Punitive damages are not typically rewarded in contracts cases unless there has been extremely outrageous conduct such as gross negligence in a warranties claim. Here, 1 million is quite punitive and from a public policy standpoint would not be awarded. Further, Skate is seeking these damages because Wheels actions were malicious. There is no evidence that this is so. Wheels acted in good faith when they modifed the contract. They were timely in notifiying Skate of their breach - anticipatory repudiation. Therefore, there is no evidence of malicious behavior. Because there was no malicious‘activity and punitive damages are against public policy for contracts. Skate will not receive these damages. Wheels' Llability Limited to $9k As explained in count 1, their liability at most would be $1800 or at minimum $900 for the months that they were not able to perform and Skate mitigated damages under an installment and anticipaty repudiation theories. I Veg good exam. Nice iob. 80 END OF EXAM ...
View Full Document

  • Fall '
  • Gallagher

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern