On your Texas essays, Article 2A.

On the MBE, common law -- a rental is not a sale of goods.

1. Offer says you can only accept by performing

2. Reward, contest, prize

Starbucks offers to buy all its requirements for coffee beans from Seller for $1/can.  Is that okay?

What result if Starbucks ordered 1000 cans/year from Seller for 3 years, but this year Starbucks requires 8000 cans?

1. Okay, it is an options contract. May be measured by buyer's needs if good faith.

2. Not okay. Starbucks cannot take Seller by surprise with such an increase in requirements, even if in good faith.

On Jan. 1, I offer to sell you my car for $5000.  The next day I sell it to Bob instead.  Can you still accept my offer?

What result if Bob told you he bought my car on Jan. 2?

1. Yes. I can't revoke my offer indirectly unless you are aware of my conduct that revoked the offer.

2. No. Now you're aware of my conduct and the offer is indirectly revoked.

I offer to sell you my car for $5000.  I also agree to leave the offer open for a week.  Can I revoke my offer before the end of the week?

What if you pay me $100 to keep the offer open?

1. Not a valid option -- in common law, need consideration for options.  NOTE: common law options have no time limit & could last forever.

2. Valid option -- $100 as consideration.

I offer to sell you a painting.  Before you accept, you have an expensive frame custom-built to fit the painting.  Can I still revoke my offer?

Yes. An offeror expects an offeree to accept, then rely on an offer.  Only rarely will an offer become revocable because the offeree foreseeably relied before accepting.

(i.e. when a contractor relies on subcontractor's bid when computing a bid on a project)

I offer you $1000 to paint my house.  My offer states that it can be accepted only by painting the house.  You start painting.  Can I now revoke?

What if you had just ordered paint?

1. No.  This is a unilateral contract, and once the offeree start performing, the offeror can't revoke.

2. Maybe.  Although mere preparation isn't enough to accept this contract & make it revocable, it could be offeree's foreseeable reliance before acceptance -- & thus irrevocable.

Carmax makes a written offer on Carmax letterhead to sell a 1971 BMW. The offer states that Carmax won't revoke for 2 weeks.  Can Carmax revoke?

What if the option length was 6 months?

1. No. Carmax made a firm offer.  In a sale of goods, if a merchant promises in a signed writing to keep an offer open, the offer is irrevocable.

2. Yes. A firm option has a 3 month limit.

Cf. common law options, which have no time limit but require consideration.

I offer to sell my house for $400,000.  You respond that you will only pay $350,000.  Can you later accept my $400,000 offer?

What if you had instead asked me if I would take $350,000?

1. No.  Your counteroffer terminated my initial offer.  Counteroffers operate as both a rejection & a new offer.

2. A question is generally mere bargaining, which is not a counteroffer.  You can still accept the $400,000 offer.

Buyer makes a written offer to buy 100 widgets from Seller for $1000.  The offer does not mention any warranties.  Seller's written acceptance disclaims all warranties.  Is there a contract?

Does the contract include Seller's disclaimer?

What is Seller had instead merely added "Saturday delivery"?

1. Yes. No mirror image rule in Article 2.

2. No. The disclaimer is a material change to the contract and would not be included.

3. Yes. This is not a material change.  In Article 2, an offeree's term is included in the contract if (1) both parties are merchants, (2) no material change, & (3) no objection within a reasonable time.

Note: seller could keep out even a minor change like this if he objects in time.

Dean Belk offers you $1000 to shovel the Law School steps on a snowy day.  Although his offer advises you to "make a plan," he does not specify how to accept.  You start shoveling.  Have you accepted the offer so that you are bound to finish the job?

What if Dean Belk told you that you could only accept by shoveling?  

1. Yes.  A bilateral contract may be accepted in any reasonable way.  Once you start, you have accepted the offer & must finish.

2. In a unilateral contract like this one, you have only accepted once you finish the job.  So you have no requirement to finish shoveling.

Ari orders a Britney Spears CD from CJ, who has built a CD empire.  CJ, embarrassed at Ari's bad tast, ships a Justin Bieber CD instead.  Has CJ accepted Ari's offer?

What if CJ had included a note saying "I'm out of Brit-Brit, but I'm sending Biebs instead to try to accommodate your needs."  Has CJ accepted?

1. Yes. She also breached.

2. No. If seller lets buyer know that she is sending the wrong goods as an accommodation, there is no acceptance & no breach.

Sean Penn agrees to sell his Harley to 17-year-old Harry Potter for $25,000.  Harry later refuses to pay.  Can Sean enforce the agreement against Harry?

Sean is gullible when it comes to ages. What if Harry told Sean he was 18?

What if Sean refuses to convey the Harley?  Can Harry now enforce the agreement against Sean?

What if Harry kept the Harley after he turned 18?

1. No.  17-year-old Harry can disaffirm the contract.

2. No, all that matters is that Harry was 17 at the agreement.

3. Yes.  All we care is about the Defendant's capacity.  Here, Sean is clearly over 18.

4. Implied affirmation -- Sean can enforce contract.

Yes, but only the reasonable value & not the contract price.  

An incapacitated party is liable for necessaries but only their reasonable value & not the contract price.

No, unless one party knew or had reason to know of the innocent party's meaning.  In that case, the innocent party's meaning prevails.

ambiguity/misunderstanding

No, the portrait is at the heart of the agreement.  

mutual mistake about a material fact

Dean Belk agrees to sell Dean Levi a bottle of aspirin for $500.  Both believe that the aspirin tablets contain meth; it is only after the agreement that they realize it is just normal aspirin.  Is their agreement enforceable?

What result if the aspirin did contain meth, but unfortunately just a less potent batch of meth?

1. No, the meth hidden in the aspirin is critical/at the heart of the agreement.

mutual mistake about a material fact

2. The mistake as to the potency is not material & thus Dean Levi is bound to the deal.

Ashlee Simpson agrees to sing on SNL for $25,000.  On arrival, she demands $30,000 or else she'll lip sync.  SNL initially agrees to pay the additional $5000 but then refuses to pay her after Ashlee "performs."  Is there consideration for SNL's promise to pay the extra $5000?

What if Ashlee agrees to do a fancy little jig in exchange for the extra $5000?

What if Lorne Michaels, not SNL, promised to pay the extra $5000?

1. No, Ashlee had a pre-existing duty to perform on SNL.  No new consideration for the extra money so no duty to pay.

2. The jig is new consideration beyond her pre-existing duty, so SNL is obligated to pay.

3. Ashlee had no pre-existing duty to Lorne, so his promise is new consideration.

Yes.  There was no consideration for Amex's promise to forgive the balance because Teresa already owed them.  

BUT if Teresa had agreed to pay early or there was a good-faith dispute, that is consideration & Amex could not recover the additional $500.

Ari's lease expires on June 30.  His landlord promises to renew, so Ari decides to channel his barbri frustration into building a new fence.  Landlord then refuses to renew.  Was there consideration for Landlord's promise to renew?

Can Ari enforce Landlord's promise to renew on any other ground?

1. No, LL did not ask for anything in return.

2. Yes, Ari can use promissory estoppel.  He relied on LL's promise, so it is enforceable.

In which of these situations does the Statute of Frauds require a writing?

• Rummy alleges that W orally agreed to sell him the Crawford ranch for $40M.
• Rummy alleges that W orally agreed to lease him a cabin on the rance.
• Condi, now a handy woman, alleges that W orally agreed to have her build a fence around the ranch.
• W authorizes Cheney, now a real estate agent, to sell the ranch.

• Writing!
• Writing! (all interests in real property, including leases & easements)
• No writing!  This isn't a transfer of real property
• Writing! Equal Dignities Rule

Sarah Burton alleges that on April 1, 2010, Catherine Middleton orally agreed to have Burton design a gown for an event of major international significance.  Is this agreement within SOF?

What if Burton doesn't actually finish the job until April 28, 2011?

1. No. Any task can theoretically be completed in a year, and thus outside SOF's one year performance requirement.

2. Doesn't matter.  As long as full performance was theoretically possible within a year, no writing is required by SOF.

Yes.

BUT the opposite would not be true.  SOF requires a satisfactory writing in a sale of goods to contain a quantity & be signed by the party to be charged with breach (i.e. D).

HLN signs this letter: "We agree to employ Nancy Grace for 3 years at a salary of $2M/year."  Then HLN fires Nancy without cause.  Nancy sues HLN for breach.  Does the letter satisfy SOF against HLN?

What if instead Nancy quit after a month?  Does the letter satisfy the SOF against Nancy?

1. Yes. It contains all material terms & was signed by D (HLN).

2. No, D Nancy did not sign the letter.

No.

Cases of part performance are exceptions to SOF.  To fulfill, must have 2/3 of these items:

-Some payment

-Possession

-Improvements

If so, part performance satisfied & no need for SOF writing.

Duke orally agrees to employ Bob Saget for 2 years for $50,000.  Bob works for 2 years, but then Duke won't pay.  Does Bob need a writing to satisfy SOF?

What if Duke fires Bob (for too many dirty jokes) after only 3 months?

1. No.  Bob has already worked for the full term & is shielded by the full performance exception to SOF.  No need for writing to prove contract.

2. Yes. Part performance is NOT enough to satisfy the full performance exception to SOF.  Without writing, Bob cannot enforce his contract with Duke.

(instead seek restitution)

A-Rod orally agrees to buy 50 bats for $100/each.  Seller takes A-Rod's check for $2000, but then he refuses to deliver any bats.  A-Rod sues.  Does Seller have a SOF defense?

What if A-Rod had given seller a $1000 deposit?

1. Not for the 20 bats that A-Rod already paid for, but yes for the other 30 bats.

2. No, a deposit takes the contract out of SOF.

Yes. Macy's lost the SOF defense by not responding within 10 days.

merchant's confirmatory memo

You buy a bike from Big Wheel Cycles.  Is there an implied warranty of merchantability?

What if Big Wheel sells you a delivery van?

1. Yes

2. No - they don't deal in vans

None, a seller can disclaim all IWs by using these magic terms.

NOTE: Otherwise, may disclaim IWs if disclaimer is conspicuous & uses "merchantability" to disclaim IWM.

Brenda buys an oven from Sears. The contract limits Sears' warranty to replacement parts. A defect in the oven causes a fire that destroys Brenda's house. Can Brenda get damages?

What if Brenda was injured in the fire?

1. Unclear -- we want to look to see if the limitation was unconscionable at the time of contract.

2. Personal injury so the limitation is presumed unconscionable -- consumer protection.

Sue contracts to buy a coffin from a funeral home. She is to pick it up from a loading dock. Before she can, it is destroyed by fire. Must Sue pay?

What if she bought the coffin at a garage sale & owner has only told her where & how to pick it up. Must Sue pay?

1. No -- funeral home is an Article 2 merchant & bears loss until Sue picks up coffin.

2. Yes -- owner is not a merchant. Sue bears ROL once seller tells her where coffin is & how to retrieve it.