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Two Hour Final Examination Contracts 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 contract 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 assignment of rights and delegation 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 specific performance. 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 breach of contract 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 common law 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 court, 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.
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