Contracts --
C, a building contractor, agreed to construct a building for D at a price of $500,000. The building was half completed, and then: (a) without justification, C refused to complete the building and D was forced to hire another contractor, F, to complete it. Advise D (b) without justification, D refused to permit C to complete the building and hired another contractor to complete it. How would a court fulfill the expectation interest of C?
(a) D would sue C for breach of contract and seek to recover the difference between 1/2 of the contract price with C ($250,000) - whatever he paid F to complete the construction. (b) C would sue D for breach of contract and seek to collect half the contract price, $250,000.
-CBS, Inc. v. Merrick: Merrick to produce TV movie. CBS paid Merrick $833k in advance AND paid director ($500k) and screenwriter ($250k) regardless if film was ever produced. Merrick breached contract and was never produced. Impossible to predict profit from the movie (no expectation interest). What damages awarded?
-Reliance: CBS paid director and screenwriter in reliance on Merrick completing the contract. ($750k). They also paid Merrick in advance ($833k). -Restitution: Merrick was unjustly enriched at the expense of CBS. ($833k) Can't be awarded twice
A retailer received a written firm offer signed by a supplier. The offer committed the supplier to providing the retailer with up to 10,000 tubes of toothpaste over the next 45 days at $1 a tube. Thirty days later, the supplier informed the retailer that the price per tube of toothpaste would be $1.10. The next day the retailer ordered 6,000 tubes of toothpaste from the supplier, which the supplier promptly shipped. Sixty days after the receipt of the offer, the retailer ordered another 4,000 tubes of toothpaste, which the supplier also promptly shipped. What price is the retailer permitted to charge the supplier for the toothpaste? A$10,000 (10,000 * $1), because the supplier's firm offer was effective for 90 days regardless of its terms. B$10,400 ((6,000 * $1) + (4,000 * $1.10)), because the supplier's firm offer was effective for only 45 days. C$11,000 (10,000 * $1.10), because the firm offer rule does not apply where the buyer is a merchant. D$11,000 (10,000 * $1.10), because the supplier informed the retailer that the price was increased to $1.10 before the retailer's placement of either order.
Answer choice B is correct. The supplier's written and signed firm offer was effective and irrevocable for 45 days, even though no consideration was provided by the retailer to the supplier for making the firm offer. Consequently, the price for the first shipment of 6,000 tubes of toothpaste was $1 per tube. Since the firm offer had expired prior to the placement of the second order, the supplier's price of $1.10 per tube was in effect with regard to this order. Answer choice A is incorrect because, while a firm offer made by a merchant may be effective up to 90 days, the merchant offeror, as with any offeror, is master of the offer. Consequently, the merchant offeror could set the time period for the firm offer at 45 days. Answer choice C is incorrect because the firm offer rule applies, even where the buyer is a merchant, as long as the seller is a merchant. Answer choice D is incorrect because, as noted with regard to answer choice B, the firm offer made by the supplier applies to the first order placed by the retailer because such offer was irrevocable.
A homeowner and his neighbor agreed that each would remove a dying tree from their yards. The homeowner entered into a contract with a tree service to cut down and remove his dying tree for $4,000. Through a mix-up, the tree service cut down and removed a similar dying tree on the neighbor's property. Upon coming home that evening, the neighbor discovered the absence of her tree and found the tree service's bill for $4,000 taped to her door. She called the tree service, revealed that she had planned to have the tree removed, and promised that she would pay the bill. The neighbor failed to pay the tree service. Of the following, which is the tree service's best argument to recover from the neighbor? AThe tree service and the neighbor entered into a unilateral contract, which the tree service accepted by performance. BThere was an implied-in-fact contract between the tree service and neighbor because the neighbor planned to have the tree removed. CThe neighbor made a promise to pay for a benefit received. DThe tree service was a third-party beneficiary of the agreement of homeowner and the neighbor.
Answer choice C is correct. When a party performs an unrequested service for another party that constitutes a material benefit, the person may be entitled to recover to the extent that the other person has been unjustly enriched. Note that if the benefit to the neighbor from the tree service's actions is less than $4,000, the tree service could only enforce the neighbor's promise to the extent of that benefit. Answer choice A is incorrect because, while a unilateral contract is accepted by performance, at the time of the tree service's performance, the neighbor did not extend any offer for the service to accept. Answer choice B is incorrect because the neighbor's plan to have the tree removed did not create an implied in fact contract. The neighbor was not aware of the tree service's cutting down and removing her tree until after these acts had been completed and thus could not be said to have tacitly consented to them. Answer choice D is incorrect because, under the First Restatement approach, the tree service was neither a creditor nor donor beneficiary of the agreement between the homeowner and his neighbor, and under the Second Restatement approach, the tree service was merely an incidental beneficiary of the agreement. Consequently, the tree service did not have enforceable rights as a third party beneficiary of the agreement.
A machinist was interested in purchasing high-grade aluminum stock from a metal distributor. The aluminum was used in the machining of custom valves. During a Friday evening dinner, the machinist said to the distributor, "Let me order 12,000 pounds of high" "grade aluminum from you." The distributor orally accepted the order, then took a paper napkin and wrote "CONTRACT: 12,000 LBS HIGH-GRADE ALUMINUM FOR MACHINIST" and signed the napkin, which the machinist retained. Over the weekend the market price for aluminum rose from $1 to $1.25 per pound. First thing on Monday morning, the machinist called the distributor. The parties immediately became embroiled in an argument as to the price to be charged for the aluminum, and the distributor refused to deliver the aluminum. The machinist filed suit for breach of contract. Is there an enforceable contract between the distributor and the machinist?
Because the agreement involves a sale of goods, the UCC governs. Under the UCC, a contract is formed if both parties intend to contract and there is a reasonably certain basis for giving a remedy. As long as the parties intend to create a contract, the UCC "fills the gap" when a contract is silent as to a term, such as the time or place for delivery, or even the price for the goods. Although under the Statute of Frauds a sale of goods contract for $500 or more must be evidenced by a writing in order to be enforceable, the writing need only i) indicate that a contract has been made; ii) identify the parties; iii) contain a quantity term; and iv) be signed by the party to be charged. These elements are satisfied by the writing on the napkin.
The owner of undeveloped land entered into a fully-integrated written contract to sell the land to a buyer for $500,000. The contract contained a description that accurately set out the boundaries of the land, but did not make reference to the specific acreage. Both the owner and the buyer mistakenly thought that the property encompassed 500 acres, on the basis of a negligent miscalculation made by a surveyor employed by the owner and contained in the surveyor's report. In fact the property encompassed 550 acres. The owner had sought, but the buyer had rejected, the inclusion of a provision in the contract that, in the event of a material error in the surveyor's report, the adversely affected party could cancel the contract. Can the owner cancel the contract?
No; the buyer (owner) assumed the risk of the mistake. The owner and the seller were mistaken as to the acreage being transferred, and this mistake is arguably material, since it constitutes 10 percent of the amount the parties thought was being transferred. However, the defense of mistake is not available where the party seeking to assert the mistake has assumed the risk of the mistake. The owner's failed attempt to have a provision included in the contract that would have given the owner the right to cancel the contract because of the surveyor's error indicates that the owner was aware of his limited knowledge as to the accuracy of the surveyor's report and that he entered into the contract despite such awareness. In the face of such conscious ignorance, the owner bears the risk of the mistake.
Completing an online form, a customer ordered a handmade colored glass ornament to hang in the window of her home. In a box labeled "Comments," the customer wrote, "red, please." Via email, the online retailer sent a notice acknowledging the order, but reserving the right to send an ornament in any color. The retailer shipped the customer a green ornament. Which of the following arguments would NOT support the customer's position that she does not have to pay for the ornament? A The retailer shipped nonconforming goods. BThe customer did not separately agree to receive an ornament in any color. CBecause customer was not a merchant, the retailer's additional term in acknowledgment is not part of contract. DThe retailer's acceptance did not mirror the customer's offer.
The mirror image rule, which states that acceptance must mirror the terms of the offer, does not apply to a sale of goods, such as a glass ornament. Answer choices A, B, and C are incorrect because they all support the customer's position that she does not have to pay for the ornament. Answer choice A is incorrect because the failure of the retailer to ship conforming goods (i.e., a red ornament) would constitute a breach of the retailer's contract obligations. Answer choice B is incorrect. Because the customer is not a merchant, any additional terms in the acceptance are treated as a proposal. This proposal must be separately accepted by the customer in order to become part of the contract. Answer choice C is incorrect because, if the acknowledgement is an acceptance, since the customer is not a merchant, a different term (i.e., an ornament of any color) is not part of the contract.
A grocery store and a farmer entered into a valid contract for 1,200 bottles of Grade A maple syrup, to be delivered over the course of a year in twelve equal installments of 100 bottles, delivered on or before the last day of each month, beginning in January and ending in December. From January to March the farmer delivered three shipments of conforming Grade A maple syrup. In April, on the last day of the month, the farmer delivered to the store 97 bottles of Grade A maple syrup. The grocery store rejected the syrup, and informed the farmer that the contract between them was canceled.
The store's rejection of the 97 bottles of Grade A maple syrup and cancellation of the contract were improper. In general, the UCC requires perfect tender of goods, and substantial performance will not suffice. However, the UCC does permit substantial performance with regard to an installment contract. In addition, when there is a nonconforming tender or a tender of nonconforming goods under one segment of an installment contract, the buyer may cancel the contract only if the nonconformity substantially impairs the value of the entire contract to the buyer. Here, the farmer made a tender of three fewer bottles of syrup than called for under the contract. However, shipping 97 out of 100 bottles of maple syrup likely qualifies as substantial performance, and the grocery store was not entitled to reject the shipment. Further, the shortfall of three bottles likely does not substantially impair the value of the entire contract to the grocery store.
A manufacturer of plywood ordered an adhesive from a commercial seller. The seller shipped the adhesive with an invoice. Printed on the invoice was a notice that limited the manufacturer's right to bring any action arising from the sale to one year after the accrual of the cause of action. The manufacturer paid the invoice without objection. The statutory period for bringing a cause of action based on sale of goods contracts is four years. The manufacturer filed a suit that arose from the contract two years after the cause of action accrued. Can the seller successfully challenge the suit as time barred?
Yes because the buyer failed to object within a reasonable time and this term is not a material term of the contract
Damages must be ______ to the seller at the time of breach
foreseeable Rest § 351
Cover UCC § 2-712
in the event of a breach by the seller, the buyer may "cover" any reasonable purchase of substitute goods, as long as the purchase is made in good faith and without significant delay