Contracts S23

Question 1

UCC §§1-201(b)(20) - Good Faith

Answer 1

“Good faith,” except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing.

Question 2

UCC § 2-309. Absence of Specific Time Provisions; Notice of Termination.

Answer 2

(1) The time for shipment or delivery or any other action under a contract if not provided in this Article or agreed upon shall be a reasonable time.
(2) Where the contract provides for successive performances but is indefinite in duration it is valid for a reasonable time but unless otherwise agreed may be terminated at any time by either party.
(3) Termination of a contract by one party except on the happening of an agreed event requires that reasonable notification be received by the other party and an agreement dispensing with notification is invalid if its operation would be unconscionable.

Question 3

Leibel v. Raynor Mfg. Co. (FACTS)

Answer 3

Leibel was to have an exclusive dealer-distributorship for Raynor Garage Doors. (Oral Agreement)

Sales are not as expected, and Raynor terminates the contract after 2 years.

Question 4

Leibel v. Raynor Mfg. Co. (RULE)

Answer 4

UCC 2-309(3) provides that reasonable notice must be given, unless the contract is being terminated because of the occurrence of “an agreed event.”

Question 5

Rstmt § 205 - Duty of Good Faith and Fair Dealing

Answer 5

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

Question 6

Morin Building Prod. v. Baystone Const. (FACTS)

Answer 6

Baystone hired Morin to put up aluminum walls. The contract stated that all work was subject to final approval.

General Motors disapproved, and Baystone hired someone else and did not pay Morin.

Question 7

Morin Building Prod. v. Baystone Const. (RULE)

Answer 7

Rsmt 228: When it is a condition of an obligor’s duty that he be satisfied with respect to the obligee’s performance or with respect to something else, and it is practicable to determine whether a reasonable person in the position of the obligor would be satisfied, an interpretation is preferred under which the condition occurs if such a reasonable person in the position of the obligor would be satisfied.

Question 8

Rstmt § 228 - Satisfaction of the Obligor as a Condition

Answer 8

When it is a condition of an obligor’s duty that he be satisfied with respect to the obligee’s performance or with respect to something else, and it is practicable to determine whether a reasonable person in the position of the obligor would be satisfied, an interpretation is preferred under which the condition occurs if such a reasonable person in the position of the obligor would be satisfied.

Question 9

Locke v. Warner Bros. Inc. (FACTS)

Answer 9

Locke and Clint Eastwood entered into a settlement agreement, including Clint securing a deal between Warner and Locke.

Locke was to have the opportunity to develop movies with WB.

Eastwood agreed to reimburse WB if she did NOT produce or direct any projects (making it easy to ignore her work entirely because it wouldn’t cost them anything).

Locke provides evidence (Terry/Wellnitz testimony) that WB never intended to make any films with her.

Locke was paid in full under the contract but didn’t get any directing or producing opportunities.

WB claims no issue because they had no express or implied duty to develop her projects and claims they were all given due consideration.

Question 10

Locke v. Warner Bros. Inc. (RULE)

Answer 10

“Good faith” generally requires honesty in a person’s conduct in performing the agreement.

“Fair dealing” usually requires that a party cannot act contrary to the “spirit” of the contract, even if you give the opposing party notice that you intend to do so.

Question 11

Bayliner Marine Corp. v. Crow (FACTS)

Answer 11

Crow wanted to buy an offshore fishing boat.
In response to questions about the boat’s speed, the dealer gave Crow a prop matrix and brochure.

Prop matrix: the boat will go 30mph [under certain conditions]

Brochure: “delivers the kind of performance you need to get to the prime offshore fishing grounds.”

Crow bought a boat with a 20x17 propeller and had >2000# of equipment installed.

Crow used the boat for offshore fishing several times, as evidenced by the clock hours of engine use.

850 clock hours on the engine.
150 is the typical use for a boat

Unclear what qualifies as a good boat for offshore fishing.

Question 12

Bayliner Marine Corp. v. Crow (RULE)

Answer 12

2-315 requires (1) the seller (2) at the time of contracting; (3) has reason to know; (4) of a particular purpose for which the goods are required, and (5) the buyer relies on the seller’s skill or judgment to furnish appropriate goods.

Question 13

UCC § 2-315 - Implied Warranty: Fitness for Particular Purpose.

Answer 13

Requires (1) the seller (2) at the time of contracting; (3) has reason to know; (4) of a particular purpose for which the goods are required, and (5) the buyer relies on the seller’s skill or judgment to furnish appropriate goods.

Question 14

UCC § 2-313 - Express Warranties by Affirmation, Promise, Description, Sample.

Answer 14

(1) Express warranties by the seller are created as follows:
(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.
(2) It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.

Question 15

UCC § 2-314 - Implied Warranty: Merchantability; Usage of Trade.

Answer 15

(1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale.

(2) Goods to be merchantable must be at least such as
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may require; and
(f) conform to the promises or affirmations of fact made on the container or label if any.

(3) Unless excluded or modified (Section 2-316) other implied warranties may arise from course of dealing or usage of trade.

Question 16

UCC § 2-316 - Exclusion or Modification of Warranties.

Answer 16

(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (Section 2-202) negation or limitation is inoperative to the extent that such construction is unreasonable.
(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that “There are no warranties which extend beyond the description on the face hereof.”
(3) Notwithstanding subsection (2)
(a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is”, “with all faults” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty; and
(b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and
(c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.
(4) Remedies for breach of warranty can be limited in accordance with the provisions of this Article on liquidation or limitation of damages and on contractual modification of remedy (Sections 2-718 and 2-719).

Question 17

Crabtree v. Elizabeth Arden Sales Corp. (FACTS)

Answer 17

Crabtree entered into negotiations with Elizabeth Arden for employment as a sales manager.

Elizabeth Arden agreed to offer Crabtree a two-year contract with a salary of $20,000 for the first six months, $25,000 for the next six months, and $30,000 for the second year.

Crabtree replied that the offer was “interesting.”

Ms. Arden directed her personal secretary to draft a memorandum of the agreement as discussed with Crabtree. The agreement stated the salary, party names, and position to be offered to Crabtree. It did not expressly state the duration of the contract, but included the notation “2 years to make good.” The memorandum was not signed.

Crabtree accepted the position.

Arden drafted and initialed a “payroll change card” outlining Crabtree’s agreed-upon salary agreement.

After six months of employment, Crabtree’s salary was increased to $25,000.

After the next six months, however, Crabtree did not receive an additional increase.

He contacted Mr. Carstens, Arden’s comptroller, who drafted and signed an additional payroll change card detailing Crabtree’s salary arrangement. Ms. Arden refused to approve the increase.

Crabtree terminated his employment

Question 18

Crabtree v. Elizabeth Arden Sales Corp. (RULE)

Answer 18

A contract within the Statute of Frauds is enforceable if it is evidenced by any (1) writing, (2) signed by or on behalf of the party to be charged, which (3)
(a) reasonably identifies the subject matter of the contract,
(b) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and
(c) states with reasonable certainty the essential terms of the unperformed promises in the contract.

Question 19

Rstmt § 110 Classes of Contracts Covered

Answer 19

1) The following classes of contracts are subject to a statute, commonly called the Statute of Frauds, forbidding enforcement unless there is a written memorandum or an applicable exception:
(a) a contract of an executor or administrator to answer for a duty of his decedent (the executor-administrator provision);

(b) a contract to answer for the duty of another (the suretyship provision);

(c) a contract made upon consideration of marriage (the marriage provision);

(d) a contract for the sale of an interest in land (the land contract provision);

(e) a contract that is not to be performed within one year from the making thereof (the one-year provision).

Question 20

Rstmt § 130 Contract Not to Be Performed Within a Year

Answer 20

(1) Where any promise in a contract cannot be fully performed within a year from the time the contract is made, all promises in the contract are within the Statute of Frauds until one party to the contract completes his performance.

(2) When one party to a contract has completed his performance, the one-year provision of the Statute does not prevent enforcement of the promises of other parties.

Question 21

Rstmt § 131 General Requisites of a Memorandum

Answer 21

Unless additional requirements are prescribed by the particular statute, a contract within the Statute of Frauds is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which
(a) reasonably identifies the subject matter of the contract,

(b) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and

(c) states with reasonable certainty the essential terms of the unperformed promises in the contract.

Question 22

Rstmt § 132 Several Writings

Answer 22

The memorandum may consist of several writings if one of the writings is signed and the writings in the circumstances clearly indicate that they relate to the same transaction.

Question 23

Rstmt § 133 Memorandum Not Made as Such

Answer 23

Except in the case of a writing evidencing a contract upon consideration of marriage, the Statute may be satisfied by a signed writing not made as a memorandum of a contract.

Question 24

Rstmt § 134 Signature

Answer 24

The signature to a memorandum may be any symbol made or adopted with an intention, actual or apparent, to authenticate the writing as that of the signer.

Question 25

Beaver v. Brumlow (FACTS)

Answer 25

Buyer works for seller.

Seller purchases 24 acres of land.

Buyer asks to buy some of that land.

The sellers agree and make an oral agreement with the buyer.

The buyer builds on theland and mobile home, cement foundation, deck, stairs, and utilities.

Sellers drove buy the property daily and did not express that they did not intend to sell the land.

Buyer repeatedly requested to have their contract finalized and sellers responded “we’ll work it out.”

Buyer starts working for the sellers competition.

The sellers get petty and say they weren’t selling him the land and that the oral agreement is barred by the statute of frauds.

Question 26

Beaver v. Brumlow (RULE)

Answer 26

To win, Brumlow must prove that they took actions that were “unequivocally referable” to the alleged land sale transaction. Meaning that an objective third party would “naturally and reasonably” conclude that a contract existed

Where an oral agreement contract not enforceable under the statute of frauds has been performed to such an extent as to make it inequitable to deny effect thereto.

Question 27

Rstmt §129 Action in Reliance; Specific Performance

Answer 27

A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement.

Question 28

Rstmt § 139 Enforcement by Virtue of Action in Reliance

Answer 28

(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds if injustice can be avoided only by enforcement of the promise. The remedy granted for breach is to be limited as justice requires.
(2) In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are significant:
(a) the availability and adequacy of other remedies, particularly cancellation and restitution;
(b) the definite and substantial character of the action or forbearance in relation to the remedy sought;
(c) the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence;
(d) the reasonableness of the action or forbearance;
(e) the extent to which the action or forbearance was foreseeable by the promisor.

Question 29

Buffaloe v. Hart (FACTS)

Answer 29

Plaintiff wants to buy and sell tobacco barns.

Defendant agrees for $5000.

Plaintiffs check had no party names, was not endorsed, had 5 barns.

Defendant changes their mind rips up the check and mails it back to Plaintiff.

Question 30

Buffaloe v. Hart (RULE)

Answer 30

A check may constitute a writing sufficient to satisfy 2-201 if it (1) contains writing sufficient to indicate a contract of sale between the parties; (2) is signed by the party or his authorized agent against whom enforcement is sought; and (3) states a quantity.

Question 31

UCC § 2-201. Formal Requirements; Statute of Frauds.

Answer 31

(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.

Question 32

Totem Marine Tug & Barge v. Alyeska Pipeline Srvc. (FACTS)

Answer 32

Totem is a new tug company.

Totem entered into a contract with Alyeska to transport pipeline materials.

Aleyeska took out several loans in order to purchase the equipment necessary to fulfill contract with Alyeska.

After several delays, Alyeska retrieves its stuff off of Totem’s boat prematurely and does not follow protocol, barring an insurance claim by Totem.

Alyeska soon after terminates the contract.

Totem follows up with termination invoices, and Alyeska says they will pay.

Totem needed the money ASAP to pay the loans they took out to start the business.

Totems lawyer told Alyeska and Alyeska offers 97,500. (on a 260-300k tab)

Question 33

Totem Marine Tug & Barge v. Alyeska Pipeline Srvc. (RULE)

Answer 33

Where one party wrongfully threatens to withhold goods, services, or money from another unless certain demands are met, the availability on the market of similar goods and services, or other sources of funds, or legal remedy provides an alternative to succumbing yo the coercing party’s demands.

**An available remedy is not adequate where the delay would cause immediate and irreparable loss to one’s economic or business interest.