QUESTION 1 – Please answer (a) (b) and (c) separately
Marc's Beverage Company purchases bottles from Bob's Bottling Company at the rate of 10,000 bottles per week. Bob's Bottling Company produces bottles for many customers, not just Marc. Working with minimal inventory (Just In Time Inventory Control) Marc will suffer severe losses (in excess of $6000 per week) if his ability to deliver product to his distributors is interrupted. Marc typically contracts with the lowest responsible bidding bottlers for six month contracts.
Marc's contract with Bob reads Marc to pay Bob $3000 per week for 26 weeks. Bob is to produce 10,000 bottles per week for 26 consecutive weeks. However, the contract states Marc is not to pay Bob until the end of the 26 week contract.
Bob produces bottles for the first 9 weeks of the contract. In week 10, Bob does not produce any bottles. Bob claims that his machines were jammed for one day and that by the time he finished other customer bottling, he could not do Marc's except on overtime. As he bid very competitively on Marc's work, he would lose money if he did such work on an overtime shift.
Marc, in a rage, declares a breach of the contract, tells Bob to stop all further work, and refuses to pay for any of the past or future work. Marc then contracts with Carol's Bottling Company to produce bottles for the remaining 16 weeks at $3100 per week. Of the $3000/week charged by Bob, $2700/week was used to cover costs. Marc and Bob bring suit against each other for breach.
1a. • Who wins, how much, and WHY?
1b. Same facts as Question 1, but the contract contains a clause permitting Marc to terminate the contract at will without cause. Bob, of course is obligated unless the contract is terminated by Marc.
• Who wins, how much, and WHY?
1c. • Discuss all appropriate rules of law raised by questions 1a and 1b.
QUESTION 2 – Please answer (a) and (b) separately
On 3/15/09, A orally agrees to pay $500 in return for B's providing snow plowing services for the 2000-1 season from 11/1/09 to 4/1/10. On 10/15/09, B sends a letter to A stating that due to the breakdown of his truck, the prior oral agreement (terms are stated) is canceled. A does not reply, but hires C's snowplow service agreeing orally to pay $600. At the end of the season, A pays C the $600 and sues B for the additional $100 expense.
2a. • Who wins, how much, and WHY?
2b. • Discuss all appropriate rules of law raised by this question.
EMGT 652 WINTER 2011 PLOTNICK – MIDTERM – your name ______________________________________
QUESTION 3 – Please answer (a) and (b) separately
On 12/15/10, John, age 25, contracts to sell a case of imported dandelion wine to Joe, age 18, for $700, delivery and payment to be made 1/5/11. The State age of majority to enter into contracts is 18. The State legal age for purchase (including entering contracts to purchase) of liquor, at that time, was 18. On 12/16/10, Joe finds an alternate vendor who will sell for $600, but John refuses to cancel the contract. On 12/20/10, the legislature changes the age requirement with regard to purchase of liquor to 19, effective 12/31/10. On 1/5/11, Joe refuses to accept or pay for the wine from John.
3a. • What remedies (if any) are available to John? WHY?
3b. Same facts as above, except the State changes the legal age back to 18 on 1/3/11.
• What remedies (if any) are available to John? WHY?
QUESTION 4 – Please answer (a) and (b) separately
On 12/15/10, John, age 25, contracts to sell his record collection to Jim, age 18, for $700, delivery and payment to be made 1/5/11. The State legal age of majority is 21. On 12/20/10, the legislature changes the age of majority to 18.
4a. • On 1/5/11, is the contract enforceable by John? WHY?
4b. • On 1/5/11, is the contract enforceable by Jim? WHY?
QUESTION 5 – Please answer (a) and (b) separately
On 3/1/09, Alice contracted with Carol to build a house for Alice on her vacant lot, to be completed on 9/1/09. On the contract form, signed by both parties, Alice checks the box to order an optional powder room, but a clerk in Carol’s office fails to copy this to the project database. Alice neither attempts, nor would be permitted on the work site during construction (due to insurance issues.) On 9/1/09, Alice takes possession (having settled on the sale of her prior residence that morning,) but noting that grading and landscaping in the rear of the house are incomplete, and that Carol had failed to include a powder room on the first floor as required, refuses to pay Carol anything.
Carol offers to complete the grading and landscaping, stating that he would require an additional two weeks. Alice refuses, stating that it is past the contractual deadline, prohibits Carol from entering the property and hires Larry to complete the landscaping for $750. Carol offers to reduce the price of the house, but refuses to add the forgotten powder room. Alice obtains three competitive bids to add the powder room, which entails a great deal of work, including tearing down several walls, the lowest of which is $5,000. Alice has NOT, as of the date of the trial, had said work performed, citing lack of funds.
The contract price for the house is $65,000. The price of a similar house in the neighborhood, not having the first floor powder room, is $63,500. Carol's estimate of the remaining landscaping costs, had she been permitted to finish, is $300. Motel costs which would be (but has not yet been) incurred by Alice while the corrective work was being performed would be $600.
5a. • Carol sues for the entire $65,000. Alice countersues. Who wins, how much, and WHY?
5b. • Discuss all appropriate rules of law raised by this question.
QUESTION 6 – Please answer (a) and (b) separately
Ace Construction Company ("A") mails a "request for bid" to Baker Steel Fabrication Company ("B"). The request asks for bids for providing steel for a construction project being erected by A, including delivery to the site. B enters a bid by mail, for $400,000 with an exception stating that delivery is not to be included. A mails a letter to B stating, "Your bid is accepted, however, delivery is to be included although you may adjust your price to cover shipping charges." B immediately begins fabrication, notifying A of such. 29 days later B mails a letter to A stating, "In accordance with the provisions of our bid, we will not, under any circumstance, assume the responsibility of shipping and the associated risks of loss or damage to the steel in transit. If you name your shipper, we will be happy to assist him in picking your shipments up at our facility. It is the firm policy of our company to never accept responsibility for our product after it leaves our plant."
After several phone calls between A and B, A mails a letter to B stating, "As you cannot comply with the bid requirements which are incorporated in our contract, we have no choice but to consider you in breach and notify you that we are hiring another firm to perform your contract, at your expense." Due to the shortened period of time, the best bid A can get from other fabricators is $500,000, which he pays. (A delay to the project would have cost more.) B, having partially completed the work, now has a yard full of specially fabricated steel. B estimates the cost-to-date of fabrication was $100,000. The scrap value of the steel is now $20,000. B's cost of shipping would have been $15,000, and the cost of all risk insurance during the shipment would have been $3,000. B's anticipated profit would have been $50,000. A sues B. B sues A.
6a. • Who wins, how much, and WHY?
6b. • Discuss all appropriate rules of law raised by this question.
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