LAW 7107-02: CONTRACTS I
FINAL EXAMINATION -- FALL 1999

This exam consists of 3 questions. You have three hours in which to outline and write your answers. The questions count for various percentages of your grade for this exam, so I advise you to allocate your time accordingly.

I strongly suggest that before you begin writing an answer you 1) read the question carefully; 2) think about exactly which issues you need to address; and 3) outline your answer. Good organization and good analysis almost always go hand-in-hand.

Please write your exam number above and turn in this exam with your answers. Start your answer to each question in a new booklet and number the booklets so that I can easily follow their intended sequence. Write on one side only of each page, on every other line. For your benefit and my eyesight, please write as legibly as possible. I cannot grade what I cannot read.

This is an open book exam. You may use your casebook, statutory supplement, any material that I handed out in class, and any notes that you or your study group prepared. You may not use any other materials, such as nutshells or commercial outlines.

Unless otherwise indicated, all events described below take place in a common law jurisdiction where the legislature has enacted the UCC. If you think it necessary to assume a fact in order to answer a question you may do so, but you should clearly indicate that you are making an assumption and briefly explain why you think it reasonable to do so. If you have any procedural questions about taking this exam, please ask them now or contact me in my office during the exam.

Dr. Albert has for some years run a clinic offering free medical care to impoverished families. The clinic occupies a house owned by Ms. Cade and leased from her on a month-to-month basis. On May 1, Dr. Albert met with Ms. Cade to ask if she would like to sell him the house. "I'd consider selling it for $200,000," she replied.

"I think that I can raise $200,000--if you give me six months," said Dr. Albert. "But I will need to show potential donors proof that I can buy the house at that price."

In return for all that Dr. Albert has done for our community, I hereby promise that if he delivers $200,000 to me at any time between now and November 1 of this year, I will give him title to the building that houses his clinic.

Dr. Albert thanked Ms. Cade, took the note, and set to work raising the required money. In the meantime, real estate prices soared. On September 1, Ms. Cade told Dr. Albert that she was putting the house on the market. "I've raised $180,000 and will have the rest soon!" he insisted.

On October 1, Dr. Albert proudly presented Ms. Cade with a check for $200,000 and requested the title to the clinic building. With some embarrassment, she told him that she no longer held the title. "I just sold the house for $350,000."

Analyze Dr. Albert's rights against Ms. Cade under the law of contracts.

Ms. Putter, who owns and operates a golf range, sought an easy way to clean golf balls for reuse. She read a newspaper ad reading, "New and used appliances for sale. Used sold as is. Installation extra. Call Mr. Tinker: 111-1111."

Putter called Tinker and described her problem. "I'm pretty handy with welding torch," said Tinker, "I think I could retrofit an Eversuds 2000 washer to handle golf balls. It will run you $300 for the washer and $100 for the modifications."

"Great!" replied Putter, "I want the washer by next week and will pay you another $75 for installation."

"Ok," said Tinker.

After a few days, Putter brought a bucket of dirty golf balls to Tinker's workshop for a test-run. Tinker had not anticipated the heavy clay that clung to the balls, however. "I cannot guarantee anything," he said, "but I think that the washer might work if I weld a stiffer set of brushes into the tub." Putter agreed to pay Tinker another $100 to remove the old brushes install stiffer ones.

On the designated date, Tinker delivered and installed the retrofitted Eversuds 2000 and Putter paid him for it. Even the stiffer brushes failed to handle the heavy clay soil of Putter's golfing range, however, rendering the washer essentially useless. Putter subsequently learned that the Anti-Erosion and Soil Protection Act would have prohibited her from operating the washer as planned.

Analyze Putter's contract rights against Tinker.

You work as a legislative counsel to Representative Oris. She recently suffered some inconvenience when a home renovation company breached its promise to install marble counters in her kitchen. "They deliberately violated our agreement, saying that Senator Ligare had offered them twice as much money for the same work!" fumed Oris.

"It seems to me that someone who suffers such a deliberate breach ought to get more than simply expectation damages. Keeping one's word is a virtue, after all, and breaking it is a sort of fraud. I'm thus considering drafting legislation that will allow recovery of punitive damages against anyone who deliberately breaches a contract for financial gain."

Prepare for Oris an analysis of her proposed legislation.

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