General Instructions

This exam will count as forty percent of your final grade in Contracts. The other sixty percent of the grade will be generated by your final exam at the end of the Spring Semester.

This is a closed-book examination. You may not use any material to assist you during the exam.

Read the facts carefully. Answer the questions that are asked. Examine and resolve each issue that is reasonably raised by the given facts even though you believe that the resolution of one issue will answer the question, but do not make up issues that don't exist. If you believe that you need additional facts, you may assume facts that are consistent with the given facts, but you must state your assumptions as such and explain why they are important. Don't repeat facts unnecessarily. If you believe that the same issue appears more than once in the exam, don't repeat an explanation that you have already given; simply refer to your previous explanation as you deal with the issue again.

This exam will be graded as a whole. The two questions are not necessarily of equal weight. You must determine how much time and effort to devote to each question.

There are no Uniform Commercial Code issues as such in this exam. Do not discuss damages.

You have two hours in which to write this exam.

Facts

Carpaccio Law School maintained a security force to patrol its campus and guard against the depredations of thieves and other miscreants. Deborah Dull was the chief security officer; she had authority to speak for the school in all matters involving the security force. Deborah promulgated strict rules governing the conduct of her security officers. These officers, though not members of any police department, all wore military-style uniforms. One of Deborah's strict rules was that each officer must begin and complete work on time. "I expect you to be here on time, and I expect you to leave promptly when your shift ends; we don't pay overtime," she had told them.

On Saturday, June first, she interviewed Christopher, a potential new member of the security force. After reviewing his credentials and explaining the nature of the duties, she said, "O.K., Chris, here's the deal: You will be on probation for a six-month period. If you work out all right, you will then have a permanent job. You start at $12.00 per hour; you work five eight-hour shifts per week; because you are the new guy, you get the dog watch--that is, your shift will be from midnight to eight in the morning, Monday through Friday. Here is a brochure explaining the benefits package. We provide the uniforms. What do you say?"

To this, Chris replied, "Let me talk to my wife. I have another very attractive opportunity, and I want to discuss with her which I should take." Deborah then said, "Look, Chris, I need somebody to begin on Monday at midnight. Send me a fax at this number no later than Sunday at 5:00. If you want this job, say so; if not, you don't have to bother to fax me." Deborah scribbled a number on a piece of paper, handed it to Christopher and left to take care of other duties.

At noon on Sunday, Christopher sent a fax to what he thought was the number that Deborah had given him. The fax read: "I would like the security job. Any chance of making it $13.00? If I hear nothing further, I'll be there at 11:30 P.M. to get my uniform." Unfortunately, because Deborah's hasty scribble was difficult to read, Christopher reasonably interpreted what Deborah had meant as a one to be a seven. Thus, the fax went through to the wrong number and Deborah never saw it.

Monday was an exciting day at the law school. Just as the 8:00 A.M. to 4:00 P.M. shift was about to end, a shifty-eyed, slightly dishevelled man, originally thought to be a peripatetic professor, who had been lurking near the library, smashed a display case and grabbed a valuable first edition, bound in limp leather, stamped in gold and autographed by the author, of Peterson on Property Tax, an acknowledged modern classic legal text. As the malefactor fled, Prudence, one of the security guards, consulted her watch as she rounded the corner nearby. "Oh boy," she sighed, "only five more minutes and I'll be out of here." Seeing the fleeing miscreant and instantly assessing the situation, she immediately gave chase, following the thief in hot pursuit.

Homer Grimshaw, the dour Dean of the law school, who had been standing nearby, shouted in a raspy voice, "Get the bastard, Prudence. There's an extra five hundred bucks in it for you if you do!" Though not known for his sense of humor, Dean Grimshaw turned to the crowd that had gathered and, his visage contorted by a wintry smile, croaked, "I hope she knows that I'm only kidding."

Although it took Prudence nearly an hour, she finally caught the thief a mile from the law school; she recovered the book and called the police. She learned from the police that Lisa, another victim of this "Rare-book Bandit," as the thief was known, had previously announced that she would give a one-thousand dollar reward to anyone capturing the thief and turning him in to the police.

When Christopher arrived at 11:30, Deborah, who had not received his fax, was incredulous to see him appear. "Hit the bricks, Sonny," she told Christopher, and stalked off.

Questions

1. Prudence has not received the reward from Lisa, nor has she received anything except a cold, dry handshake from the Dean. She asks you what to do. Advise her, explaining all theories of recovery that she might reasonably assert and all potential defenses that Lisa and the Dean might raise.

2. Christopher whines that he, expecting to have the job at the law school, has allowed the other job opportunity that he had to slip away. "Now I have nothing," he sobs, "and it's all Deborah's fault. What can I do?" Advise him, explaining all theories of recovery that he might reasonably assert and all potential defenses that the law school might raise.

1. A surprising number of students, apparently attributing occult powers to Prudence, suggested that she turned the thief "into" the police.

COMMENTS

General

Overall, the results on this exam weren't bad. While there were three grades in the D range, for the most part the students saw the issues pretty well and made a reasonable effort to discuss them. The major problems arose from a lack of explanation of basic principles. For example, a number of people talked about the pre-existing duty rule without explaining the fundamental principle of consideration; many students said that a person can not accept an offer of which she has no knowledge, but did not explain why this should be so.

As always, a number of students did not answer the question. In both questions, the student was asked to give advice; many students gave no advice, but simply talked about the issues, sometimes coming to no conclusion at all. Some students had difficulty with grammar or syntax, but in general the writing style wasn't bad.

First Question

The Dean, on Behalf of the Law School. The student must evaluate Prudence's likelihood of success if she asserts a claim against the law school. This is surely an offer for a unilateral contract: the dean offered an extra $500 to Prudence if she captured the thief. She could accept his offer by performing her part of the contract. It appears that she accepted the offer and that she should be entitled to the money. She will, however, have to overcome the dean's defense that the purported offer was not serious; therefore there was no mutual assent; thus there was no agreement; and so there could be no contract on which to base recovery.

The student should have discussed the objective theory of contract law, explaining that someone making what appears to the reasonable listener to be a serious offer will be held to that offer irrespective of his mental reservations, if the listener did indeed take the offer seriously. There is no reason to believe that Prudence did not take the dean seriously, especially in light of his reputation for dourness. Therefore, the "I was only kidding" defense should fail, at least if, as appears, Prudence did not hear the dean's comment to the crowd.

Every promise, if it is to be enforceable, must be supported by consideration. Consideration is defined as a legal benefit to the promisor or a legal detriment to the promisee or, in the more modern definition, something of legal value that is bargained for in exchange for the promise that is sought to be enforced. Here the dean sought, in exchange for his promise to pay $500, Prudence's act of bringing the thief to justice. She did what he asked. He may, however, argue that the pre-existing duty principle bars her recovery. The argument goes as follows: there was no consideration because Prudence did nothing that she was not already legally obligated to do by virtue of her employment obligation. She suffered no legal detriment because she did only what she was legally required to do, and the law school received no legal benefit because it only received what it was already legally entitled to.

Prudence was required to apprehend thieves and miscreants while she was on duty. The dean might argue that the pre-existing duty rule should apply because she had five minutes to go on her shift when the incident occurred and when he made his "offer." Although when she started the chase she was still on duty, the facts suggest that the school's policies forbid overtime work. Her response to the pre-existing duty argument is that she was on her own time and was doing what she was not otherwise legally obligated to do when she ran down the thief, away from the campus, after her shift had ended. The rule that prevents police officers and other public servants, who are considered to be on duty in a sense at all times, from recovering rewards should not apply to this private security guard situation, especially in light of the no-overtime policy. In fact, she might argue that the dean, knowing of the policies, made the offer to persuade her to continue the chase after her shift ended.

Some students had a little trouble with the bargained-for exchange discussion. They seemed to feel that a parties must negotiate or haggle in order for the standard to be met. This is not correct. If the promisor seeks something of legal value in exchange for his promise and gets it, the bargained-for requirement is met.

Lisa's Offer of a Reward. Almost everyone recognized this give-away issue. Prudence apparently did not know of the reward offer before she had completed the process of turning the miscreant over to the police.⁽¹⁾ Some students observed that the facts are a bit ambiguous, and suggested that if she had not yet turned in the thief when she learned of the reward, she still might qualify. The general rule is that a person claiming a reward must base that claim on a contract. The contract will come into being only if there is an agreement created by mutual assent. There can be no assent on the part of the person seeking the reward if the act was done in ignorance of the offer. One can't assent to something of which she has no knowledge.

It is true that assent will be presumed in the absence of evidence to the contrary if the person claiming the reward acted with knowledge of the reward. As some people observed, in some jurisdictions the rule is that as a matter of public policy a person is entitled to the reward even in the absence of knowledge of the offer if the reward is offered by a governmental body. That rule would not help Prudence in this case, however, as Lisa is, as far as we know, merely a private citizen.

Second Question

Here again, in advising the client, the student must consider two major issues. Christopher will have to argue that he had a contract with the law school by virtue of his misdirected fax response. Deborah made what appears to be an offer. She led Christopher to believe that the law school was willing to enter into a bargain and that his response of acceptance was invited and would conclude that bargain. Christopher responded in what he believed was the correct fashion, but the law school will probably argue that he did not accept by the required mode because he sent the fax to the wrong number.

Chris has to argue that some version of the mail-box, or dispatch, rule applies. His position must be that a proper mailing or dispatch in the mode prescribed by the offeror is effective as an acceptance upon dispatch even if it never reaches the offeror. He must overcome the argument that the mail-box rule only works if the offeree does all of the correct things: puts proper postage on the letter, mails it in a post-office mail box, correctly addresses the envelope. The law school will contend that he failed to meet these requirements because he did not "address" the communication correctly. He must argue that (1) in fact, he sent it to the right number--the number given by Deborah--because he reasonably interpreted her scrawl to be the number to which he sent the message; (2) in any case, the risk of the sloppy handwriting should be on Deborah, who has the power to dictate the method and timing of a proper acceptance.

If he has misaddressed the communication, he is out of luck. If, on the other hand, the number as he interpreted it is, in effect, the number that he was given, the dispatch rule should save him--if what he sent was an acceptance.

This gives rise to the other issue: is his communication in fact an acceptance, or is he, by asking about a higher salary, making a counteroffer? The common law mirror-image rule requires that a communication that purports to be an acceptance match the offer exactly. If it differs in any way, it is said to be a counteroffer. A counteroffer has two effects: it is a rejection of the offer, and it is a new offer running from the original offeree to the original offeror. The effect is to kill the original offer and reverse the roles of the parties.

Most students, properly, I think, observed that the message sounds like an acceptance coupled with an inquiry about the possibility of a higher salary, but that it does not say that Christopher will not take the job unless he gets the higher salary. Some people argued that the, "If I hear nothing further," language in the response suggests that Christopher considered the fax to be a counteroffer. If this argument were to prevail, of course, there would be no contract even if the mail-box rule would solve the other problem. Christopher could not successfully argue that the law school's silence was acceptance of his counteroffer. Indeed, if this is a counteroffer rather than an acceptance, the mail-box rule argument fails, because both a rejection and an offer must be communicated in order to be effective.

A few people suggested that by showing up for work Christopher had accepted the offer even if the fax was ineffective. This is almost surely a bad argument because the offeror prescribed a specific method and time-frame for the acceptance. The offeree is not at liberty to choose another method or extend the time. Some students said that the rule is that if the offeror interferes with the offeree's ability to meet the time requirements, the offeree is to have an additional reasonable time to act. This is, I think, wrong as a general statement. We did have an option case in the book in which the optionor frustrated the optionee's effort to exercise the option in a timely fashion, and the optionee was given an additional time in which to act, but the option, being a separate contract that stands on its own, is a different case. The exercise of the option rights is an attempt to enforce the option contract rather than a simple acceptance of an outstanding offer.

The last shot, which most people took, is the promissory estoppel argument. While we have cases in which courts have used a promissory estoppel theory to require offerors to keep their offers open in the bidding situations, this is a bit different. It seems unlikely that a court will use promissory estoppel to enforce a promise to employ Christopher because that promise was premised on Christopher's responding to the offer in a particular way and within a specified time, which he did not do. Deborah could hardly have expected Christopher to act to his detriment by letting the other job go unless he responded to the offer in the required manner. If, using the arguments laid out above, one concludes that he did respond in a proper way, a contract is formed and there is no place for promissory estoppel. A correct analysis of the facts would almost of necessity lead to a rejection of a promissory estoppel argument. Similarly, if the argument relates to the keeping of the employment offer open, there has been no breach of that promise; the offer was not withdrawn before the deadline. There is simply no promise to enforce.

Grade Spread

A 2

A- 1

B+ 8

B 2

B- 4

C+ 6

C 9

C- 8

D+ 2

D 1

n=43

Median = C+

Mean = 2.42