Contracts 2o13 Spring Final Examinations Ventura Campus Prof. Goodrich TWO HOUR FINAL EXAMINATION Please be sure to READ THE QUESTIONS CAREFULLY before you start writing. Answer question one before question two. PLEASE WRITE IEGIBLY. ANSWERTHE CALL oFTHE euEsrroN. Your answers must be well organized for format, content, and structure. Strive for clarity, 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. Staple all blue-books used ot the top Ieft corner. DO NOT WRITE YOUR NAME ON YOURANSWER BOOKS lfyour 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 of our law school os stoted in your student manual. Contracts II - FINAL Vcntura & Santa Barbara Prof. Goodrich Question 1 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 requirements for thc next five years. In the contract Hotcl agrees to purchase a quantity of flower arrangements of at least a minimum of l0 and up to a maximum of 100 units of flower arrangements per year. The contract betwecn Hotel and Rose contains a oersonal satisfaction clause. Rose who dreamt of climbing Mount Everest sells her business to eFlowers a large, national flower supply chain. As part of the sale, Rose assigns all of her contracts to eFlowers including the contract with Hotel. On the day Rose left the country, Rose sends an email to Horel notifring Hotel that she sold her business to eFlowers 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 price of $5,000 to be displayed in the Hotel's lobby for delivcry in tkee days. eFlowers delivers thc assorted tcn flower arrangements 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 describes 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 later, he sees the flowers displayed in the hotel lobby and is again dissatisfied with the flowers, and contacts eFlowers to reject the flowers. eFlowers sends an invoice for $5.000 for the flowers. Hotel Manager calls eFlowers customer service that he is cancclling the contract and will not pay thc invoice. eFlowers sues Hotel for breach ofcontract. For the lawsuit between eFlowers and Hotel discuss all rights, including both assignmcnt ofrights and delegation ofdutics, 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 Vcntura & Santa Barbara Prof. Goodrich Question I ISSUE SHEET eFlowers v. Hotel cFlowcrs will sue Hotel for breach of contract for its failurc to Dav for the flowers delivered and accepted. UCC governs this transaction as the subject matter, flowers, is a movable good and Rose and cFlowers are mcrchants. 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. Reouirements Contract UCC $2-306 - 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 comparablc prior output or requirement may be tendered or demanded. Hotel and Rose entered into requirements type of contract as the parties agreed that Rose would supply all of Hotel's flowers for the next five years. When Rose sold her business to eFlowers and assigned her contracts to cFlowers, thcrc was an 4591941494! of the entire contract between Hotel and Flower Shop which includes the transfer of contract duties and the transfer of contract rights. Hotel will argue that both the delegation and assignment were ineffective. The student has the option to answer thc cxam question per UCC $2-210 or by using the common law framework provided below. Delegation of Performance: Assignment of Rights UCC $2-21 0 - ( I ) A party may perform his duty through a delegate unlcss otherwisc agrecd 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 the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of retum nerformance. Contrace II - FINAL Ventura & Santa Barbara Prof. Goodrich Question I Delesation Delegate eFlowers Delegation A delegation is an authorization to another to render performance ofa legal dutv. Is the Duty 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 will make the following arguments in support of their claim that the duty to supply flowers was not delegable: l) the duty involved personal skill; 2) the performance from 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 expectancy under the contract. What is the effect of the delegation? If Hotel's arguments are not persuasive, Hotel, as the obligee must accept performance from the delegate, eFlowers and pay the invoice of $5.000. Contracts II - FINAL Ventura & Santa Barbara Prof. Goodrich Question I Assisnment Hotel Flower Shop - obti I Assignce eFlowers Valid Present Assignment? In order to assign contract rights, the assignor must sufficiently describc thosc rights and indicate a Dresent 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 quantify required is not altered in an unreasonably disproportionate way. Nothing in the facts indicate that the quantity of flowers to bL supplied would be varied as a result of the assignment ofthe contract. Is the Right Assienable? The gcneral rule is that the law favors the free assignability ofcontractual rights. However, the assignment will be denied where it would materially vary the risk or duty of the obligor. Hotel will argu€ that its risk was materially varied when the assignmenl was made as receiving performance/goods from eFlowers is not same thing as receiving performance/goods from Rose who made award-winning flower arrangements. Effeqt of Valid Assienment - 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 betwccn Rose and Hotel. Defenses Contracts II - FINAL Ventura & Santa Barbara Prof. Goodrich Question I Obliqor 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 upheld. Breach. Repudiation and Excuse - eFlowers will argue that Hotel accepted the flowers pursuant to UCC $2-602 and g2-606 as the flowers remained in the lobby for one week which goes to exercising ownership by the buyer. Therefore, pursuant to $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 l, 2013, writer emailed a manuscript to Editor, with a note rhat read: Hello Editor: I'd like you to review this manuscript before I send it to our friend, publisher, to be published.