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Answer Key 2011
1. Assume Buccafusco made an offer to Sowle regarding placing banner
advertisements on The Way of Ways? Was offer revocable by Buccafusco
on Thursday?
Actual
Possible
The offer was irrevocable on Thursday if there was an option contract
to hold the offer open to Friday.
Was there an option contract?
An option contract is a promise to hold an offer open?
Did Buccafusco promise to hold the offer open to Friday when he
said, “I intend to keep the whole offer—the terms in the agreement
and the Super Banner Ads price reduction—open until Friday”?
The objective intent test: The words are a promise to hold the offer
open to Friday if a reasonable person in the circumstances would so
interpret the words.
Without special circumstances, a reasonable person would not
interpret an expression of intent as a promise.
Therefore, Buccafusco did not promise to hold the offer open to
Friday.
The lack of consideration argument: there is no consideration for the
promise, but that does not matter as option contracts are
enforceable without consideration (although the Restatement
requires a written recitation of consideration signed by the party to
be charged).
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The offer is irrevocable if Buccafusco invited acceptance by
performance and Sowle tendered or began performance.
Would a reasonable person in the circumstances interpret
Buccafussco as inviting acceptance by performance?
No, the exchange of written documents and the conversation show
that a promissory acceptance was invited.
In addition, Sowle did not tender or begin performance. Instead, he
indicate his intention to provide a promissory acceptance by Friday.
But, as argued above, Buccafusco did invite a promissory
acceptance.
Sowle relied on the offer, and Sowle’s reliance makes the offer
binding as an option contract to the extent necessary to avoid
injustice.
Given Sowle’s reliance, which Buccafusco intended to create, it would
be unjust not to find an option contract to hold the offer open to
Friday.
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2. Assume that when he revoked the offer concerning banner
advertising, Buccafusco breached a promise to keep the offer
open until Friday. Make the best argument you can that the
court should grant specific performance by ordering
Buccafusco to reduce the click-through rate to $0.05.
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Specific performance is available at the discretion of the court only
when money damages are inadequate?
To see that money damages are not adequate, calculate the
expectation damages.
Contract performed position: Sowle would have been able to accept
a an offer with a click-through rate of $0.05.
Assume it was proper mitigation to enter the contract at a rate of
$0.10 a click-through. As a result of the breach, Sowle has lost
$0.05 a click-through.
Since the contracts are otherwise identical, there are no other losses.
Then over the life of the contract, we have to give Sowle $0.05 a
click-through.
We can either calculate that amount with reasonable certainty or
not.
If not, expectation damages will be $0 and hence undercompensatory. This is a good argument that money damages are
inadequate.
It is extremely unlikely that we will be able to establish the number
of click-throughs to the extent needed to prove damages with
reasonable certainty.
If we can do so, we would have to award Sowle at the time of the
breach $0.05 times the total number of click-throughs over the life of
the contract.
This will put Sowle in a better position than he would have been if
the offer had not been revoked. He gets a lump sum now to
compensate for expenditures that would have been spread out over
the life of the contract. The over-compensation is an argument that
money damages are inadequate.
3. Does the Train-Ways agreement contain a warranty of
merchantability? Start your analysis with Sowle’s sending
Buccafusco the signed written Train-Ways agreement.
Assume Sowle and Buccafusco are merchants. Assume that
any expression of acceptance was definite and seasonable.
Was Sowle’s sending the signed written agreement an offer?
Sowle’s sending the agreement is a manifestation of a willingness to
enter a bargain so made as to justify Buccafusco in thinking his
assent will conclude the bargain.
Sowle’s sending the agreement is manifestation of a willingness to
enter a bargain.
The agreement is definite and complete enough to qualify as a
bargain.
Buccafusco is justified in thinking his assent will conclude the bargain
given
the signed agreement
in the context of the conversations.
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Was Buccafusco’s signing and returning the agreement was an
expression of acceptance?
An acceptance is a manifestation of a willingness to enter the bargain
proposed by the offer.
Buccafusco’s signing and returning the agreement was an attempt to
accept in this sense.
It does not matter that he added the note disclaiming the warranty
of merchantability.
Under 2-207(1), a definite and seasonable expression of acceptance
operates as an acceptance even if it contains terms that differ from
those in the offer, unless the acceptance is made expressly
conditional on assent to the different terms.
It is given that the expression of acceptance is definite and
seasonable.
Therefore Buccafusco accepted even though he included the
additional term about the disclaimer
unless the acceptance was made expressly conditional on assent to
the different terms.
There is no language indicating the acceptance was made expressly
conditional on assent to the different terms. That would require
language like “This acceptance is expressly conditional on assent to
the inclusion of the disclaimer.”
Under 2-207(2), between merchants the terms of the acceptance are
the terms of the agreement unless
(a) the offeror limited the terms of the agreement to the terms of
the offer, or
(b) the additional terms materially alter the terms of the offer, or
(c) the offeror timely objected.
(a) is not the case.
(c) is not the case.
The inclusion of the disclaimer materially alters the terms of the
offer.
Thus the disclaimer is not part of the agreement.
Under the knock-out rule, the assertion of the warranty is also not
part of the agreement.
Thus, the resulting contract neither asserts or denies the warranty.
In such a case, the warranty is implied by law under UCC 2-316.
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4. Assume that, prior to executing the Train-Ways
agreement, Sowle and Buccafusco enter an oral agreement
for Buccafusco to join Sowle on The Sowle Train. Assume the
Train-Ways agreement an enforceable contract and is a
complete integration. Does the parol evidence rule make that
oral agreement unenforceable?
Under the parol evidence rule, the oral agreement is unenforceable if
it contradicts the Train-Ways agreement, or the Train-Ways
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agreement is a complete integration and the side agreement is in its
scope.
A contradiction is a commonsense contradiction that cannot be
explained away.
Here there is not even a commonsense contradiction.
It is given that the Train-Ways agreement is a complete integration.
Is the oral agreement in the scope of the written agreement?
Under the normal inclusion test, the oral agreement is presumptively
in the scope of the written agreement if the parties would normally
have included the agreement in the written agreement.
The presumption is reputable.
The parties would not normally have included the oral agreement in
the written agreement.
So it is not even presumptively in the scope of the written
agreement.
So the parol evidence rule does not render the oral agreement
unenforceable.
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5. Assume the Train-Ways agreement is an enforceable
contract. Did Buccafusco breach the contract when he
refused delivery of the second 500 copies of Get on Board!? If
so, what are Sowle’s damages? Assume that Buccafusco paid
the amount due for 1000 copies of Visions of the WhateverAfter: My Personal Story and 500 copies of Get on Board!.
Assume there are no incidental or consequential damages.
Buccafusco breached if Sowle had a right to cure.
Sowle delivered the books before the 16th delivery date, so under 2508(1), he as until the delivery date to deliver 500 copies of Get On
Board! as long as he seasonably notifies Buccafusco of his intention
to cure.
Sowle did seasonably notify Buccafusco of his intention to cure.
Therefore he has up to the 16th to deliver the books.
Thus when Buccafusco refused the delivery, he breaches.
Sowle is entitled to 2-706 damages, resale price minus contract
price; there are no incidental or consequential damages.
The resale price is the same as the contract price, so the damages
are $0.
6. Assume the agreement to display 100 banner
advertisements a day at a charge of $0.05 a click-through is
an enforceable contract, and that Buccafusco breached that
contract when he delivered only 50 advertisements a day for
two months. What are Sowle’s expectation damages? Sowle
has undisputable evidence that, in those two months, he
averaged an increase of $50 in attendance fees for each 50
advertisements displayed, and he also has undisputable
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evidence that additional banner advertising would have
increased attendance at approximately the same rate.
The contract performed position: 100 advertisements displayed a
day for two months with an increase in attendance fees of $100 a
day.
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Result of the breach/mitigation: 50 advertisements displayed a day
for two months with an increase in attendance fees of $50 a day.
We subtract loses Sowle can avoid by proper mitigation.
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Award: $50 a day over the two month period (minus what was
avoided by proper mitigation) if reasonably foreseeable and
provable.
Reasonably foreseeable by Buccafusco at the time of contracting?
The damages would not occur in the ordinary course of things, but
Sowle informs Buccafusco of the special circumstances that give rise
to the damages.
Provable with reasonable certainty? Given that they are.
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