Contracts I Exam 3 hours. Professor Bridgeman Fall Semester 2005 INSTRUCTIONS

Transcription

1 Contracts I Exam 3 hours Professor Bridgeman Fall Semester 2005 INSTRUCTIONS 1. This exam has 2 questions and 5 pages, including this cover page. Both questions are weighted equally, so allocate your time accordingly. You have three hours to complete the exam. 2. The exam will be graded blindly. Do not in any way identify yourself other than with the identification number the College of Law has assigned to you. Doing so is an honor code violation and will be treated accordingly. 3. If you are using blue books, place your identification number on each blue book. You must start each answer in a new blue book. Please write legibly, and only on one side of the page. Depending on your handwriting it may be a good idea to skip lines as well. 4. The examination is open book; you may use any written materials you wish. You may not, however, use any computerized source, whether on-line or not. Be sure to print out any materials stored on your computer that you may need before the exam begins. Computers may be used to type exams in accordance with Willamette s policies and using only the software authorized by the College of Law. 5. The exam will be graded for content, not form, but you should work towards concise, wellorganized answers. If relevant information is missing from a question, identify what you must learn and explain why it is relevant to the problem at hand. Do not spend too much time on trivial issues at the expense of harder ones. 6. Answer all questions based on your knowledge of the Uniform Commercial Code and general principles of common law. When dealing with issues that are treated differently in different jurisdictions, assume that the question is one of first impression in your jurisdiction. 7. In answering one question do not refer to your answer for the other question. I grade each question separately and you will receive no credit for such cross-references. 8. Avoid using abbreviations unless they are absolutely clear and unambiguous. 9. Professor Knutsen and I collaborated to some degree on the questions, but having covered different materials our exams are different as well. In other words, although your friends in his class may have had a similar exam, do not worry if they start talking about issue X and you didn t see issue X. Issue X may not have even been on your exam. 1

2 Question 1 Worth 50% Recommended time: 1 ½ Hours. Professor Main, well-known for his animated teaching of Civil Procedure, decided to go into business for himself teaching Civ Pro Tai Chi. (Tai Chi is a practice that is kind of like a cross between martial arts and yoga. The class performs various maneuvers and stances, and it does them in unison.) He put up a sign in the park that read as follows: COME LEARN CIV PRO TAI CHI! Find peace, relaxation, and the difference between substance and procedure. Every Saturday at noon right here. $50 a lesson. The first few Saturdays went quite well. Several people showed up and paid to take the class, and before long Main had quite a following. It was difficult, however, to be committed to the class every Saturday, so Main decided he needed a partner to lead the class some days. He hired Mitchell, his best student, to lead the class every other Saturday. He agreed to pay Mitchell $100 for each class that Mitchell led, but he insisted that Mitchell sign an agreement that he would not compete with Main anywhere else in the state for the next 10 years. Mitchell signed the agreement and began leading every other class. Unfortunately, conducting such a business in an open park soon proved to be problematic. One Saturday, Main was leading class when he noticed someone, whom he later learned was Weidner, off in the distance doing all the moves along with the class. After the class Weidner hurried off without paying. The next week another new face who turned out to be Priester had been walking by in a business suit, noticed the class, and began doing the maneuvers in exaggerated form. After two minutes he picked up his briefcase and continued on. This time Mitchell was leading the class, but Main had told him about the incident with Weidner and instructed him to be on the look out for interlopers. Mitchell chased Priester down to demand payment, but Priester laughed in his face and told him he had just been mocking the class. Mitchell, upset at having been insulted, got into a shouting match with Priester. By the time he returned to the class he was too flustered to continue. He told everyone the rest of the class was cancelled. Many of the participants were upset about this result, especially since while he was arguing with Priester he had left them in the uncomfortable Pennoyer position the whole time. One student, Powell, was particularly upset; having arrived a couple of minutes late, he had just changed from work shoes to tennis shoes when Mitchell cancelled class and did not get to participate at all. Most of them never returned again. When Main learned he had lost many of his students he immediately fired Mitchell. The next week when he showed up to lead class he discovered Mitchell had put up a sign fifty yards away announcing his own Civ Pro Tai Chi class at the same weekly time for $40 a session. Both sessions were sparsely attended. During the week, in an attempt to drum up business Main 2

3 handed out several Free Lesson tickets to passers-by on the street. Eventually, though, so few people were showing up that Main had to give up and stop conducting classes at all. Main has come to your law firm for advice. He wants to know what claims, if any, he might have against all parties, and what claims, if any, all parties might have against him. As the resident contracts expert you have been assigned to those issues. Ignore any potential tort claims (the less bright lawyers are working on those). End of Question 1 Continue to the Next Page for Question 2 3

4 Question 2 Worth 50% Recommended time: 1 ½ Hours. Jeffrey Lebowski decided what he really wanted in life was a recreation room built onto the back of his house. He had plans drawn up for the room, which would contain a bowling lane and a lounge/bar area. Lebowski then approached Walter Sobchak, among others, about being the general contractor. He showed Walter the plans, explained the bowling alley to him, and then showed him the swatch of carpet for the lounge area. The color he wanted was Psychedelic Green, which, Lebowski explained, would really tie the room together. Walter told him he would put together a bid. He invited bids for the roofing, wood floors of the bowling lane, and drywall work. Donnie Kerabatsos of Donnie s Flooring submitted a bid for the wood floors of the bowling lane. Donnie phoned in his bid for the work. Apparently no one else wanted such peculiar work, because no one else had submitted any bids, so Walter accepted Donnie s bid over the phone. Donnie then sent a written work order over confirming the bid. At the bottom of the page the memo said that Donnie s Flooring reserved the right to change the bid if it discovered any mistakes in calculating the bid. Walter used Donnie s bid in calculating his own bid, and eventually came to an agreement with Lebowski for the overall job. Walter then called around trying to find someone to do the flooring for a lower price, but couldn t find anyone. Unfortunately, Donnie soon discovered that he had miscalculated, and attempted to raise his price. In anticipation of his new paradise, Lebowski phoned Maude Lebowski (no relation), the artist and owner of the trendy new studio Maudern Art, and commissioned her to do three paintings for the room. He explained the purpose of the room to her and his passion for bowling. To prepare herself for the project Maude spent two weeks watching professional bowling tapes and listening to audio recordings of bowling balls rolling down lanes and hitting pins. When she finally felt she was in a proper creative state of mind, she poured paint of various colors over three canvases. Then she rolled a bowling ball back and forth over each. Finally, she donned bowling shoes and slid through the paint across each canvas several times. Exhausted, she pronounced the works finished. To help pay for the room, Lebowski decided to take on a roommate. He arranged a deal with his friend Smokey to rent the guest bedroom. They agreed that Smokey, who was also an avid bowler, would move in after construction of the recreation room was completed, which was expected to take a little over a year. He would have a month-to-month lease with the rent based on market price. Meanwhile, construction was well under way at Lebowski s house. However, Walter had waited longer than he probably should have to order the carpet. By the time he got around to it he learned that it would take six months to get the Psychedelic Green color. Unfortunately, that would put the entire project behind schedule, and special-ordering the carpet would be very expensive. Instead, he ordered and installed the similar Electric Kool Aid Green color. When Lebowski saw the carpet he went ballistic. Walter argued that there was no real difference, but Lebowski continued to insist over and over that the Psychedelic Green was totally different, and that it would have really tied the room together. When Walter refused to remove the Electric Kool Aid Green carpet Lebowski fired him. 4

5 By this point, Walter was almost relieved to be fired anyway. The job had been costing more than he expected, especially given the troubles with Donnie s Flooring, and he was likely to lose money on it. He had already spent $90,000 on the addition and the contract was only for $100,000. Lebowski soon learned that it would cost an additional $20,000 to complete the project with the current carpet, or $30,000 to special-order the Psychedelic Green carpet on time. Since most people in the marketplace are not quite so passionate either about bowling or about weird carpet, the extra room would only increase the value of the house by $80,000 with the Electric Kool Aid Green carpet or $75,000 with the Psychedelic Green carpet. Worried about his cash flow, Lebowski called Maude to cancel the paintings. Having just finished them, she was irate and insisted he pay for them, arguing that she wouldn t be able to sell bowling paintings to anyone else. Jeffrey Lebowski comes to you for advice. He needs to know what claims might he have against others, and what claims might they have against him. End of Question 2 End of Exam 5