zo13 Spring Final Examinations Santa Barbara Campus Prof. Clifton

TWO HOUR FINAL EXAMINATION

Please be sure to READ THE eUESTIONS CAREFULLY before you start writing. Answer question one before question two. PLEASE WRITE LEGIBLY.

ANSWER THE CALL OF THI QUESTTON.

Your answers must be well organized for format, content, and structure. strive for clariry, succinctness and coherence. These are factors in grading. While cases names need not be cited, if used they must not be a substitute for thinking and for stating the underlying rule of law. Any facts you assume must be clearly stated as being so and be consistent with the data in th problem.

Please use a separate blue-book to answer each question.

DO NOTWRITE YOUR NAME ON YOURANSWER BOOKS Ifyour name should appear on any ofyour blue-books your examination will be voided.

Use only the student ID# provided to you by the school.

Typists, please double space your typewritten answers. While taking this examination, you remain subject to the Honor Code ofour law school as stated in your student manual. Contracts II - FINAL Vcntura & Santa Barbara Prof. Goodrich Question I

Rose, a well-known florist whose flower arrangements has received numerous awards, enters into a valid written with Hotel to supply all of Hotel's flower requiremcnts for the next five years. In the contract Hotel agrees to purchase a quantity of flower arrangements of at least a minimum of 10 and up to a maximum of 100 units of flower arrangements per year.

The contract between Hotel and Rose contains a personal satisfaction clause.

Rose who dreamt of climbing Mount Everest sells her business to eFlowers a large, national flower supply chain. As part ofthe sale, Rose assigns all ofher contracts to eFlowers including the contract with Hotel. On the day Rose left the country, Rose sends an email to Hotel notifying Hotel that she sold her business to eFlowcrs and that eFlowers will be supplying their flower requirements in the future.

The following week, Hotel emails an order to eFlowers for ten assorted flower arrangements at the contract pricc of $5,000 to bc displayed in the Hotel's lobby for delivery in three days. eFlowers dclivers thc assorted tcn flower anangcmcnts on time.

However, the Hotel Manager upon inspecting the flower arrangements on the eFlowers' truck is extremely dissatisfied with the anangements and calls the eFlowers customer service department and describcs the flowers as "ugly" and "nothing like Rose's flower arrangements." The next day eFlowers delivers another ten assorted flower arrangements. Because the Hotel Manager was on vacation, the Assistant Manager places the flowers in the hotel lobby. When Hotel Manager retumed from his vacation one week latcr, he sees the flowers displayed in the hotel lobby and is again dissatisfied with the flowers, and contacts eFlowers to reject thc flowers.

eFlowers sends an invoice for $5,000 for the flowers. Hotel Manager calls eFlowers customer service that he is cancelling the contract and will not pay the invoice.

eFlowers sues Hotel for breach ofcontract.

For the lawsuit between eFlowers and Hotel discuss all rights, including both of rights and of duties, the applicable defenses to be raised in each case, and remedies that include any applicable pecuniary losses, loss of business profits, and a decree of .

Do not discuss contract formation issues- Contracts II - FINAL Vennlra & Santa Barbara Prof. Goodrich Question I

ISSUE SHEET

eFlowers v. Hotel

eFlowers will sue Hotel for for its failure to Dav for the flowers delivered and accepted.

UCC govems this transaction as the subject matter, flowers, is a movable good and Rose and eFlowers are merchants. Hotel is not a merchant.

contract formation issues are not to be discussed as the focus of the exam is contract performance and assignmenvdelegation issues. A valid, written contract is stated in the facts.

Requirements contract ucc d2-306 - A term which measures the quantity by the output of the seller or the requirements of the buyer means actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated cstimate or in the absence of a statcd estimate to any normal or otherwise comparable prior output or requirement may be tendered or demanded. Hotel and Rose entered into requirements type ofcontract as the parties agreed that Rose would supply all of Hotel's flowers for the next five years.

when Rosc sold her business to eFlowers and assigned hcr contracts to eFlowers, thcrc was an assignment ofthe entire contract between Hotel and Flower Shop which includes the transfer of contract duties and the transfer of contract riehts. Hotel will argue thar both the delegation and assignment were ineffective. The studcnt has the option to ansvr'er the exam question per UCC $2-210 or by using the framework provided below.

Delegation of Performance: Assignment of Rights UCC Q2-2 I 0 ( I ) A party may perform his duty through a delegate unless otherwise agrccd or unless the other party has a substantial interest in having his original promisor perform. No delegation of performance relieves the party delegating of any duty to perform or liability for breach. (2) Unless otherwise agreed all rights of either seller or buyer may be assigned except where thc assignment would materially change thc duty of the other party, or increase materially the burden or risk imposcd on him by his contract, or impair materially his chance of retum oerformance. CONITACIS II - FINAL Ventura & Santa Barbara Prof. Goodrich Question I

Delepation

Rose Delegator

Delegate Deregation eFlowers

A delegation is an authorization to another to render performance ofa legal dutv.

Is the Dutv Delegable?

As a general rule, all contractual duties may be delegated to a third person. The duty to supply flowers is a delegable contractual duty unless an exception applies. Hotel ;ill make the following arguments in support of their claim that the duty io supply flowers was not delegable: l) the duty involved personal skill; 2) the performance fro- eFlowers materially changed its expectancy under the contract. The original contract involved Rose's personal skills. Moreover, because flower arrangement can be viewed as custom- made and subject to personal taste, a large, national chain, such as eFlowers may deliver a much different good./performance than Rose which goes directly to varying Hotel's expeculncy under the contract. what is the effect of the delegation? If Hotel's arguments are not persuasive, Hotel, as th-e obligee must accept performance from the delegate, eFlowers and pay the invoice of $s.000. ContTACtS II - FINAL Ventura & Santa Barbara Prof. Goodrich Question I

Assignment

Hotel Flower Shop - obti

- Assignee eFktwers

Valid Present Assignment?

In order to assign contract rights, the assignor must sufficiently describe those rights and indicate a present intention to divest himself completely the same and set them up exclusively in the assignee. Here, when Rose sold her business and assigned her contracts to eFlowers, Rose indicated a present intent to divest herself completely and set up the associated contractual rights with eFlowers.

UCC 2-306 allows assignments if the quantity required is not altered in an unreasonably disproportionate way. Nothing in the facts indicate that the quantity of flowers to be supplicd would be varied as a result of the assignment ofthe contract.

Is the Right Assignable?

The general rule is that the law favors thc free assignability ofcontractual rights. However. the assignment will be denied where it would lt4lgrjaUyJarylbgjsk or duty of the obligor. Hotel will argue that its risk was materially varied when the assignment was made as receiving performance/goods from eFlowers is not same thing as receiving performance/goods from Rose who made award-winning flower arrangements.

Effect of Valid Assignment - Under an effective assignment eFlowers, the assignee, stands in the shoes of the assignor, and eFlowers must supply all of Hotel's requirement and now has the corresponding right to receive payment under the original contract between Rose and Hotel.

Defenses Contracts II - FINAL Ventura & Santa Barbara Prof. Goodrich Question I

Obligor Against Assignee - Obligor may assert against assignee all defenses which would have been available against the assignor, if there had been no assignment. Provided, that such defenses are based on facts which arose prior to the time that the obligor acquired notice of the assignment. Rose notified Hotel of the assignment when she emailed Hotel that she sold her business to eFlowers. In the event, the delegation and assignment are not barred by the , Hotel may assert any existing defenses available to it under the original contract between Rose and Hotel.

Express condition - An express condition is explicitly stated in the contract. The original contract contained a personal satisfaction clause. So long as Hotel applied good faith, any rejection based on the Hotel manager's personal tastes will be uphelcl-

Breach. Reoudiation and Excuse - eFlowers will argue that Hotel accepted the flowers pursuant to ucc $2-602 and $2-606 as the flowers remained in the lobbv for one week which goes to exercising ownership by the buyer. Therefore, pursuant t; $2-607 Hotel must pay for any goods accepted.

Seller's Remedies eFlowers will request damages in accordance with ucc $2-703 (seller's Remedies In General), g2-708 (Seller's Remedies For Non-Acceptance or Repudiation), g2_709 (Action for Price), and g2-710 (Seller's Incidental Damages). Prof. Bryan Clifton Contracts II Final: Spring 2012-2013 Santa Barbara & Ventura QUESTION #2

On March 1,2013, Writer emailed a manuscript to Editor, with a note that read:

Hello Editor:

I'd like you to review this manuscript before I send it to our friend, publisher, to be published. I'd like to kge.n.oyr previous agreement in place and pay you if tleimy manuscript published, which I can guarantee won't be until after N,taici l. z0ti.

Sincerely, Writer.

Editor received the manuscript and the note, and he immediatery spent 26 hours working on editing the manuscript.

Shortly thereafter, Editor got phone publisher - a call from Publisher. told Editor that he had a new job for Editor.

Publisher said he knew that writer had written a new manuscript and publisher wanted P9i:l^t edit_the manuscript before it was published. publisher said he woulJ-puy gai,o, $10,000, which was twice as much as Editor believed he was going to receive from writer. Publisher also said he wanted the work ro be completed within a w!ek. Eaito. ateea.

Editor then emailed the manuscript back to writer. Editor told writer: ..Even job, though I started. the I'm not going to finish it." Writer responded and said: .,Too you job. bad. started the We have a contract, so now you have to finish it.i Editor refused.

writer then sent the partially_edited manuscript publisher, . to Publisher. noting serious enors in the unedited portion, .,I told writer: u'n going to reduce your fee uy'sio,iro-o ,o p"y Editor to clean this up."

In the meantime' Editor went out to celebrate his new wealth, and he completery forgot ro do the editing job for Publisher. Publisher left several voicemails for Editor, wirich went unanswered, and finally ended up paying someone else $12,000 to do thejob.

Discuss Contact formation and Damages for both scenanos.

l. Writer sues Editor for breach ofcontract.

2. Publisher sues Editor for breach ofcontract.

Not Discuss "Tortious [Do Interference of contract, shourd you believe this to be presentl Q2 ISSUE SHEET Writer v. Editor Contract Formation

First' students l. should address Contract formation. There is a clear offer, but the terms are not definite. There is no time for perfonnance, or clear , however, it can be infened that there is an agreement based on "past dealings/past-Bonus performance.', students can look to the ucc for guidance, but this is non-binding. points for making the UCC connection.

Unilateral or Bilateral

2. Students need to assess whether this is a Unilateral, or Bilateral offer. Can the offer be accepted by communicating assent to the terms, or can it only be accepted by performance. It should be determined that this is a Bilateral Offer since it does not seem to inherently require performance. However, students shourd note, the job was neither finished, nor was acceptance directly communicated..

Acceptance by Performance v. Option Contract

3. Students should be able_to identifu the option contract. when Editor begins working on editing the manuscript, he creates a valid option contract, allowing him ti finish ttre.lob, even though he didn't communicate this performance to writer. edditionally, there is no issue as to writer breaching by having someone else do the work. After Eiitor spenas time on the contract, then-communicates his rejection of the offer, and does not accept Writer's offer. Partial performance on an offer, without communicating acceptance does not create a binding contract. This is a rejection ofthe offer. Condition Precedent

4. students should note that there was a condition precedent included in the offer. This gives another out in regards to contract formaiion. A brief discussion on this is appropriate.

Statute of Frauds

5. Primarily set as a red herring, but warrants discussion. There is no problem because it is not mandatory for this contract to be completed after a year, but is sinply likely to be completed after a year. Students should find the email warrants a writing, but there is nothing to indicate there was a signature. Damages

6. Since this is case a of no contract, students need to assess whether this qualifies as a quasi-contract. There is nothing to indicate that writer relied on any promise as there was no communication of assent. So there needs to be no Reliance anuty.ia. Since this is not a contract, we are not talking about Expectation damages. Instead, this is solely an issue of Restitution. 7. Oddly enough, when the facts are assessed, Writer may end up being liable to Editor for the time editor spent on the case. Writer has lost nothing, so no damages are going to be ordered, however, Editor is entitled to recover under "." Students may also point out that the amount spent by Publisher wasn't dependent on the work already done, and students may also argue that the editing by itselfhad no "benefit conferred" on Writer. However, this is a pure equity argument, and students need to assess that these damages exist, even if the amount is indeterminate.

Publisher v. Editor

Contract Formation

l. Contract formation is much clearer here, We have an offer to edit the manuscript in exchange for money. There is clear acceptance. There are definite terms ofthe contract.

Modification

2. Students need to assess whether this constitutes a modification of a pre-existing duty. Since Editor hasn't rejected Writer's offer at this point in the scenario, students can assess whether Editor has a pre-existing duty to Writer, and if Publisher's offer was a superfluous offer which did not constitute additional consideration on the part of Editor. Astute students should be able to analogize this case and conclude that Editor had an independent interest in completion of the contracl, and putting a time limit on the agreement constitutes additional consideration on both sides. This creates a valid contract.

Damages

3. This should be a clear application of Expectation damages. A brief calculation regarding the amount expected to be paid for the work, the amount actually paid, and the difference between the two. Students should be able to determine that the amount owed from Editor to Publisher is $2,000.