CONTRACTS

FALL, 1999

PROFESSOR KLEINBERGER

Model Answers and Noteworthy Mistakes ⁽¹⁾

Absentia: Say, I have to be out of town next Monday. Would you mind sharing with me the notes you take in Contracts class?

Egoist: Well, it's no extra work for me. As you know, for my own purposes I take notes that are awesome in their detail, comprehensiveness, accuracy, and insight. Still, I don't like the idea of giving you a "free ride." What's in it for me?

Absentia: What do you want?

Absentia: Okay, I'll do it.

Egoist: Okay. I'll let you look at it and copy my notes at any mutually convenient time after Monday's class.

Shortly after that conversation, Absentia finds another classmate who readily agrees to make notes available without any "what's in it for me" complications. Absentia then promptly informs Egoist that Absentia will not need Egoist's notes. Egoist retorts, "That's no skin off my back. The notes will be available to you as I promised, and you're obliged to bring me that coffee. You promised. We have a deal."

Which student is correct? Explain.

Model Answer to Question A

Egoist is correct. The two students entered into a binding bilateral contract. That contract rests on a bargained-for exchange of promises: Egoist's promise to provide access to class notes and Absentia's promise to bring the coffee.

Absentia's argument about consideration is wrong for several reasons. First, Egoist did offer a benefit to Absentia - i.e., access to class notes. It is not necessary that a promisee both provide a benefit to the promisor and suffer a detriment. Either one will suffice. Moreover, Egoist did suffer a detriment by committing him or herself to do something that, prior to the commitment, he or she was not legally obligated to do. Second, a peppercorn of consideration will suffice. Consideration analysis does not weigh the relative benefits of the consideration being exchanged. Third, Absentia's reference to reliance is a non sequitur. Reliance is relevant to promissory estoppel, not to consideration.

Noteworthy Mistakes: omitting the "detrimental reliance" issue; omitting the "peppercorn" analysis and thereby failing to address an issue raised by Absentia; construing the arrangement as an offer for a unilateral contract, without taking into account the language that indicated otherwise; ⁽²⁾ stating that no consideration ran to Egoist; analyzing whether consideration ran to Absentia (not in doubt) and ignoring the key question of whether consideration ran to Egoist; stating the rules for analyzing consideration but neglecting to apply those rules to specific facts; spending too much time on other aspects of formation analysis, when the dispute pertains solely to consideration.

B. Assume that: (i) Absentia and Egoist had the same initial discussion as described in Question A; (ii) Absentia had no subsequent discussion with any other student about this matter and did not seek to get out of the arrangement with Egoist; (iii) immediately after the initial discussion Egoist took a piece of note paper and scribbled the following words: "I take my regular, glorious, excellent notes in Monday's class and make them available to Absentia. Absentia then owes me a cup of Dunn Brothers coffee, to be delivered just before class on Thursday."; (iv) Egoist shows the scribbled note to Absentia, and Absentia nods in response; (v) Egoist keeps the note and does not give a copy to Absentia; (vi) Egoist performs as agreed; (vii) on the following Thursday, Absentia brings to Egoist a latte ⁽³⁾ from Caribou Coffee; and (viii) Egoist claims that Absentia has breached the contract. In the ensuing lawsuit:

1. Egoist seeks to testify about the initial conversation for the purpose of proving that the contract called for espresso. Is this testimony admissible? Explain.

2. Absentia seeks to testify that Absentia and Egoist have often met socially for coffee, sometimes at Dunn Brothers and sometimes at Caribou Coffee, whichever is more convenient. Absentia seeks to introduce this testimony to establish that the contract did not actually require Dunn Brothers coffee. Is that testimony admissible? Explain.

Model Answer to Question B

Both questions of admissibility turn on the parol evidence rule. Since Absentia has agreed to obtain and transfer ownership of a quantity of coffee and a container (both being "things . . . movable"), the transaction is a sale of goods governed by UCC Article 2. See UCC §§ 2-102 (stating that Article 2 "applies to transactions in goods . . .");, 2-105(1) (defining goods); and 2-106(1) (stating that a "'[c]Contract for sale' includes . . . a contract to sell goods at a future time"). Therefore, UCC § 2-202 applies. ⁽⁴⁾

The threshold question in any parol evidence analysis is the extent of integration intended by the parties. In the absence of a merger clause, parol evidence is admissible to determine the extent of integration. The evidence suggests that Egoist and Absentia viewed the scribbled note as the "final expression" of the matters covered in the note. UCC § 2-202. Egoist scribbled the note immediately after the parties had concluded their deal and then immediately showed the note to Absentia. What purpose could Egoist have had, other than to obtain Absentia's concurrence with the contents of the note? By nodding, Absentia provided that concurrence.

It seems less likely that the parties intended the note as the "complete and exclusive" expression of their arrangement. UCC § 2-202(b). The note contains no merger clause and omits a key term - namely, when Egoist is to make the notes available.

1. The court will likely allow Egoist to testify about "espresso." "Coffee" is a vague and very general term, especially given the wide variety of coffees now commonly available. Moreover, according to UCC § 2-202, Comment 1, explanatory evidence is admissible without any prior showing of ambiguity. Egoist could therefore offer the "espresso" evidence to explain the meaning of "coffee."

Egoist might also assert that the evidence of "espresso" is admissible to add a consistent additional term to a writing that is merely final. UCC § 2-202(b). Egoist would argue that "espresso" adds specificity.

Absentia would argue that the evidence is inadmissible, regardless of whether the writing is "a complete and exclusive statement" or merely a final expression. UCC § 2-202(b). From Absentia's perspective, the concept of espresso limits and therefore contradicts the more general, open-ended concept of coffee.

2. The evidence will likely be inadmissible. Absentia's best argument would be to characterize the social meetings as "a sequence of previous conduct between the parties . . .  which is fairly to be regarded as establishing a common basis . . . for interpreting their expressions . . .." See UCC § 1-205(1) (defining "course of dealing"). Absentia would then seek to admit the "course of dealing" evidence to explain what the writing means about the source of the coffee.

In response, Egoist will correctly argue that (i) a course of dealing may explain but not contradict the terms of a final or complete agreement, and (ii) the course of dealing evidence proffered by Absentia contradicts the specific, unambiguous language of the writing. Egoist might also argue that prior social engagements do not form a fair basis for explaining a subsequent business dealing. Neither the statutory text nor the comments command that interpretation, but a judge might accept it.

Noteworthy Mistakes: not dealing with the extent of integration as a threshold matter; considering the integration question but stating a bald conclusion without any use of facts; assuming that the writing was intended as at least a partial integration, without indicating how Absentia had adopted the writing; failing to consider the possibility that adding specificity is adding a consistent additional term; failing to consider that explaining a general concept by limiting its scope amounts to contradiction; failing to recognize Absentia's proffered evidence as reflecting arguably a course of dealing; failing to recognize that Absentia's course of dealing evidence contradicted the express language of the writing; arguing with respect to Absentia's proffered evidence that express terms control course of dealing; ⁽⁵⁾ applying rules of interpretation, when the question pertains only to admissibility; using the contra proferentem doctrine, which is (i) a rule of interpretation, not admissibility, and (ii) hardly applies to a hastily scribbled note.

C. This question concerns the Take-Home Case, Reeves & Co. v. Chandler.

1. Assume that: (i) after making the contract, Chandler (the buyer) learned that he could purchase a comparable threshing machine from another company at a much lower price; and (ii) this better deal was the sole reason that Chandler considered the threshing machine of Reeves & Co. not "satisfactory." Would the outcome of the case change? Explain. For this part of this Question, assume that Article 2 does not apply to the Take-Home Case. (The Take-Home Case was decided long before the enactment of Article 2.)

2. If Article 2 had been in effect when Reeves & Co. and Chandler entered into the contract, would Article 2 have applied to the transaction? Explain.

3. Consider the second jury instruction, stated in the Take-Home Case at *2. Assuming that Article 2 did apply to the transaction, would that jury instruction still be appropriate? Explain. For this part of this Question, use the facts as stated in the opinion and ignore the additional facts assumed for part #1 of this Question.

Model Answer to C-1

The outcome would probably change. The court's opinion takes an extremely "subjective" approach and interprets the "satisfaction" proviso to give the buyer absolute, untrammeled, unquestioned discretion as to matters of "feelings, taste or sensibility." That language seems to rule out even inquiries into whether the buyer was exercising "honest" dissatisfaction.

The new facts, however, seem to take the buyer's decision out of the realm of "feelings, taste or sensibility." If the buyer finds the threshing machine satisfactory but reneges merely on account of price, the buyer's decision seems to deprive the seller of any possible fruits of the bargain. That is, read as a whole the agreement seems to promise the seller a consummated sale at an agreed-upon price so long as the machine itself is satisfactory. To allow the buyer to withdraw - not because the machine is unsatisfactory to the buyer, but because the buyer dislikes the agreed-upon price - is to allow the buyer to rewrite the deal. ⁽⁶⁾

Noteworthy Mistakes: failing to understand the court's opinion as expressing an intensely subjective test; arguing "no difference" without explaining how a question of price could be a matter of taste.

Model Answer to C-2

Article 2 would certainly apply. According the UCC § 2-102, Article 2 "applies to transactions in goods." UCC § 2-105(1) defines goods as "things . . . movable," and a threshing machine qualifies. It is a piece of moveable farm equipment. Moreover, the contract involved a contract for sale of goods. See UCC § 2-106(1) (stating that a "[c]ontract for sale includes . . . a contract to sell goods at a future time").

Noteworthy Mistakes: failing to cite the relevant UCC sections; arguing that Article 2 applies because various of its specific, operative provisions might apply (e.g., arguing that Article 2 applies because UCC § 2-314 might apply to the sale by the merchant seller); applying to the transaction various operative provisions of Article 2 provisions, when this part of the question did not ask for that analysis.

Model Answer to C-3

If Article 2 applied to the transaction, the jury instruction would be incorrect. As quoted and discussed by the court, the jury instruction reflects an extreme subjective approach to matters of discretion and good faith. Under Article 2, the buyer's conduct would have to meet both a subjective and objective standard.

This conclusion follows from the buyer's status as a "merchant" and from the UCC's approach to merchant good faith. UCC § 1-203 imposes "an obligation of good faith" in the performance of any contract covered by the Code. At minimum, this obligation requires "honesty in fact . . .." UCC § 1-201(19). When a party is a merchant, UCC § 2-103(1)(b) requires in addition "the observance of reasonable commercial standards of fair dealing in the trade." Under UCC § 2-104(1), for the purposes of the good faith requirement, any person transacting business in a mercantile capacity qualifies as a merchant. See also UCC § 2-104, comment 2, last paragraph.

Noteworthy Mistakes: failing to provide citations to the relevant statutory sections; ignoring the UCC provisions on good faith; ignoring the special Article 2 provision on merchant good faith; failing to recognize the buyer might be a merchant; invoking inapposite provisions of Article 2 (e.g., 2-513) while ignoring the directly pertinent good faith provisions.

Rupert told none of his relatives of the sale, and they were shocked to learn of it after his death. Rupert's estate now seeks to set aside the land sale on the grounds that Rupert was mentally incompetent to make the sale. The evidence relating to Rupert's mental state at the time of contracting includes:

i. Thirty years before he died, Rupert was institutionalized in a mental institution for one year. After that time, Rupert was never again institutionalized and never again even met with a psychologist or psychiatrist. Rupert did have a reputation in the community as being "slow."

ii. Rupert never held a job, subsisting on Social Security Disability Payments.

iii. Eight years before his death, during a prairie fire, Rupert was observed connecting a garden hose to the house. Although an aunt scoffed at "my slow-witted nephew who thought he could douse a prairie fire with a garden hose," Rupert actually turned the hose on the house as the fire approached.

iv. Rupert spoke fluently English and Norwegian, although he lacked a sophisticated vocabulary in either language.

v. The fair market value of the house at the time of the contract was approximately $65,000. However, at that time the real estate market was quite slow and it might have taken Rupert several months to find a buyer willing to pay market price.

vi. During the month before Rupert entered into the contract, several of his relatives heard him express fear that his "time might be comin', might be comin' real soon."

vii. The buyer was aware of this concern and of Rupert's desire to get money to his favorite charity "right now, before anything happens to me."

viii. The buyer knew of Rupert's reputation as "slow," having grown up with Rupert and having attended the same elementary school.

ix. Rupert's niece, a second-year law student, had explained to Rupert several times that he could leave his house to his favorite charity, but Rupert never seemed to understand the concept.

Is the fact that Rupert was once institutionalized relevant to the issue of mental capacity? Is the contract voidable by the estate on grounds of lack of mental capacity? If so, is the estate liable for any or all of the $30,000 paid to Rupert?

Model Answer to Question D

The institutionalization is relevant. The fact that it occurred thirty years ago relates to weight, not relevance. As the Hauser court stated: "Almost any conduct may be relevant, as may be lay opinions, expert opinions and prior and subsequent adjudications of incompetency." ⁽⁷⁾

As for avoiding the sale, the estate must meet either the "cognitive" test, R.2d § 15(1)(a), or the reasonable behavior test, R.2d § 15(1)(b). The cognitive test allows the party to avoid a contract if at the time of the transaction, a person "is unable to understand in a reasonable manner the nature and consequences of the transaction . . .." R.2d § 15(1)(a). Although several facts point in this direction, each can be readily explained away. The estate's strongest argument pertains to Rupert's insistence on selling the house at less than half its market price despite his niece's explanation that he could leave the house itself to the charity. This seemingly irrational behavior may, however, reflect a reasonable assessment of "the nature and consequences of the transaction." For example, Rupert may have wished to get the money to the charity sooner rather than later. He may have distrusted his relatives, fearing that they might challenge after his death any bequest he made to a charity. He may have been unwilling to assume that a law student is competent to give legal advice.

As for Rupert's slowness, being slow does not mean that a person lacks the capacity to understand the nature and consequences of that person's actions. Rupert's slowness did not prevent him from arranging what was in essence a life estate in the home he sold. In sum, the estate is unlikely to prevail on the "cognitive" test.

The estate will also likely fail on the reasonable behavior test. That test has two elements: the person being "unable to act in a reasonable manner in relation to the transaction and the other party [having] reason to know of [the person's] condition." R.2d § 15(1)(b). The estate might succeed on the second element, by showing that the buyer knew of Rupert's slowness and was aware that Rupert was willing to sell at less than half the market price. However, essentially for the same reasons argued above, the estate should be unable to prevail on the first element. The fact that reasonable minds might disagree about the wisdom of Rupert's behavior does not mean that he was unable to adopt a reasonable approach to the sale. He had reasons for disregarding his niece's advice, and he did arrange to get what he wanted - namely, money immediately available for the charity and a home available for him as long as he lived. ⁽⁸⁾

However, if the estate succeeds in avoiding the transaction, the estate will not have to return the $30,000. Usually a party avoiding a contract must return any consideration received under the contract; in this instance the $30,000 received by Rupert. However, an exception exists to this status quo ante rule, when: (i) the contract is avoided for mental incompetence, (ii) the other party knew, had reason to know, or had reason to inquire about the incompetency, and (iii) the incompetent's proceeds from the transaction have been dissipated without any benefit to the incompetent. If the estate succeeds in avoiding the transaction, the estate should also be able to show the other two elements. The dissipation element is manifest. Rupert took the money and donated it to a charity. As for the buyer's state of mind, the buyer knew of Rupert's slowness and had to be aware of the very low price Rupert was willing to charge. In short, if the transaction is avoidable, the estate will have no obligation to return the purchase price.

Noteworthy Mistakes: ignoring the admissibility question; stating baldly that institutionalization was irrelevant because it occurred so long ago; with regard to the institutionalization issue, confusing admissibility and weight; discussing only one of the two rules for establishing incompetence; stating both rules but failing to differentiate between the rules when discussing the facts; treating the two rules as if they were conjunctive elements of one rule; discussing only facts that support one side of the argument and failing to recognize that countervailing facts existed; omitting the status quo ante analysis; missing the dissipation issue; failing to understand how the estate would succeed to Rupert's obligations and thus forgetting the several contract cases in which an estate was involved in just that fashion.

One week before Thanksgiving, Imposed-Upon mentions to Ingrate that Imposed-Upon's family has asked Imposed-Upon to bring home for Thanksgiving a large wedge of a particular, home-made Wisconsin cheese, available only in one particular store in Green Bay, Wisconsin. The store is not on the Web, does not accept mail or credit card orders, does not ship and will only sell to people actually in the store. Imposed-Upon expresses some exasperation, stating, "Like I really have time to haul myself to Green Bay just to pick up a hunk of cheese."

The two roommates then enter into a frenetic period of end-of-semester studying. Two days before Thanksgiving, and one day before their planned departure, Imposed-Upon asks Ingrate, "Say, did you ever get that cheese?"

Ingrate responds, "Oh, I forgot to mention it to you. I'm not going to go with you for Thanksgiving. I'm going to go stay with my new [boy/girl]friend's family. So, I didn't get you your cheese."

By this time it is too late for Imposed-Upon to get to Green Bay and buy the cheese. According to the material studied in this course this semester, does Imposed-Upon have any claim against Ingrate? Explain. Do not concern yourself with the appropriate remedy, if any. Analyze only whether a claim exists.

Model Answer to Question E

Imposed-Upon has no contract claim but does have a claim for promissory estoppel. Ingrate's promise to pick up the cheese did not create an enforceable contract, because Ingrate received no consideration for that promise. Consideration requires a bargained-for exchange. Although Ingrate may have been motivated by Imposed-Upon's prior offer of a Thanksgiving meal, Imposed-Upon did not make the cheese promise in exchange for the meal promise. Ingrate's specific reference to the meal promise does not change this analysis. Past consideration cannot support a promise. ⁽⁹⁾

A promissory estoppel claim does exist, however. To use that doctrine to enforce a promise, the promisee must show: (i) a promise; (ii) which the promisor should reasonably expect to induce reliance; (iii) justifiable reliance by the promisee on that promise; and (iv) a detrimental change in position by the promisee as a result of that reliance. The promise is enforceable to the extent justice requires.

Imposed-Upon can show all four elements. Ingrate made a promise to pick up the cheese. Given Ingrate's expression of gratitude and Imposed-Upon's statement about lack of time, Ingrate should have expected Imposed-Upon's reliance. Imposed-Upon's reliance was reasonable. What reason would Imposed-Upon have to doubt the word of a roommate expressing gratitude? Finally, Imposed-Upon relied to his or her detriment. It is now too late for Imposed-Upon to go and pick up the cheese.

Ingrate might argue in response that Imposed-Upon would not have gone to get the cheese in any event. Ingrate could point to Imposed-Upon's lack-of-time comment ("Like I really have time to haul myself to Green Bay just to pick up a hunk of cheese.") as indicating that Ingrate's promise did not cause Imposed-Upon to change position. Ingrate might also argue that a missed hunk of cheese hardly rises to the level of injustice. These arguments each require a factual determination, and each determination might go either way. ⁽¹⁰⁾

Noteworthy Mistakes: ignoring the consideration issue; mentioning the consideration issue, but providing no analysis; analyzing the consideration issue but ignoring the "past consideration" aspect of the issue.

Take-Home Question

Landlord and Tenant entered into a written lease covering an apartment and stating a term of one year, running from June 1, 1998 through May 31, 1999, and providing for monthly rent payments due on the first day of each month. By July, 1998, Tenant had encountered serious financial difficulties, in part because a salary check had been lost. Tenant paid only half of the rent due for August, 1998, and missed completely the rent for September, 1998.

In early September, 1998, Tenant wrote a note to Landlord, explaining the financial difficulties, apologizing for the overdue rent and suggesting that Tenant should move out by October 2, 1998. In response, the Landlord wrote and hand delivered a note to Tenant. A copy of that note is attached as Attachment 2. When Landlord delivered the note, the entire conversation was as follows:

Tenant: I'm really sorry about this.

Landlord: Read this. It's a way out, but you must be out and I have to have the back rent.

Landlord and Tenant had no further conversations on the subject.

Tenant firmly believed that the October 2 deadline pertained only to vacating the apartment and that Landlord's references to the back rent meant only that the Landlord was not waiving its claim to the back rent. Landlord meant the deadline to apply both to vacating the apartment and to paying the back rent.

Relying on its interpretation of the situation, Tenant vacated the apartment by the October 2 deadline. Tenant did not however, pay the back rent by that deadline. Assume that: (i)  on account of Tenant's failure to pay the August and September rent when due, Landlord could have used legal process (eviction through an "unlawful detainer" action) to force Tenant to vacate the apartment; (ii) such process would have been time consuming and expensive for Landlord; and (iii) Tenant would have had the right to insist upon a court hearing.

A. Given no other facts, is Tenant still liable on the original, one-year lease?

B. How, if at all, would your analysis and answer to Part A change if, within two weeks of moving out, Tenant tendered to Landlord full payment of the back rent?

C. How, if at all, would your original analysis and answer to Part A change if four months after vacating the apartment Tenant still had not paid the back rent?

Analysis of the Take-Home Question

The Take-Home Question is based on a Conciliation Court case. Instead of a model answer to the Question, below I have provided the relevant portion of a memo explaining the decision in that case. The facts are not completely identical, but are close enough so that the excerpt below can illustrate much of the analysis appropriate to the Take-Home Question.

In reviewing student answers to the Take-Home Question, I looked for identification and analysis of five issues: (i) the Landlord offered a unilateral contract to the Tenant; (ii) the disagreement between the Landlord and the Tenant as to the meaning of the offer is resolved according to the objective theory of contract formation and interpretation; ⁽¹¹⁾ (iii) the Tenant's moving out might constitute part performance of the requested act, in general part performance creates an option contract, but given the express time limit stated in the offer that option could not extend beyond the stated date; (iv) if the Tenant had properly accepted the Landlord's offer, the consideration would have supported the Landlord's promise because the Landlord had bargained for a real benefit (i.e., avoiding the hassle, delay and expense of bringing an unlawful detainer action) and the Tenant was giving up a legal right (i.e., the right to insist upon eviction through legal process); ⁽¹²⁾ and (v) the analysis of the second and third scenarios should be logically consistent with the analysis presented in answer to the first, main scenario.

Excerpt from Conciliation Court Memo

Whether the One-Year Lease Remained in Effect after the Tenants Vacated the Apartment - When the Tenants informed the Landlords that the Tenants would be unable to meet their rent obligations, the Landlords responded by making an offer for a "unilateral" contract to let the Tenants out of the lease. Under a "unilateral" contract:

• one party (here, the Landlords)

• offers a promise (here, the promise to let the Tenants out of the one-year lease)

• in return for the other party (here, the Tenant)

• performing specified, requested actions (here, the Tenants paying the back rent and vacating before October 2).

When a person offers such a "unilateral" contract, the other party can accept the offer and form the contract only by performing all of the required actions. In this case, the Tenants did not perform all of the required actions. The Tenants did vacate by the stated deadline, but they did not pay the back rent by that date.

At the hearing in conciliation court, the Tenants testified quite convincingly that they believed that the Landlords' offer: (i) required only that they vacate by October 2; and (ii) allowed them some additional time to pay the back rent. The Tenants' subjective (i.e. personal, individual) beliefs do not control the result, however. The Landlords testified (also convincingly) that they meant the October 2 deadline to apply both to vacating the apartment and to paying the back rent.

Given this honest difference between the"subjective" views of the Tenants and the Landlords, the law of contracts interprets the Landlords' offer "objectively" - by asking, in essence, what a reasonable person would think the Landlords meant. A reasonable and careful reading of the Landlords' note of September 24, 1999, leaves only one possible interpretation.

The note states: "[T]he only way we can work this out would be for you to pay the balance of your . . . rent . . . on or before October 2, 1999." This language clearly indicates that the deadline applies not only to vacating the apartment but also to paying the back rent.

One of the Landlords did have a brief conversation with one of the Tenants when the Landlords' note was delivered. That conversation was ambiguous and did not make clear that the deadline applied to the payment of back rent. However, the note leaves no room for doubt.

Even if the note were ambiguous (i.e., even if, despite the language quoted above, both the Landlords' and the Tenants' views were reasonable), the Landlords would still win on this issue. The Landlords take the position that the one-year lease is still in force. To overcome that position, the Tenants have to show that: (i) a new agreement came into existence, and (ii)  the new agreement required the Landlords to let the Tenants out of the one-year lease. At the hearing, the Tenants made precisely that argument -- that a new agreement was formed when they vacated the apartment before October 2 and under that new agreement the Landlords were obligated to let the Tenants out of the original one-year lease.

The best the Tenants can show, however, is that they and the Landlords had a reasonable disagreement about the meaning of the supposed new agreement. Assuming for the sake of argument that the Tenants have a reasonable view of that new agreement, the following situation exists:

• the Tenants claim the benefit of the new agreement to get them out of the original, one-year lease; and
• the two parties (i.e., the Tenants and the Landlords) have a reasonable disagreement about what was necessary to trigger the Landlords' obligation to let the Tenants out of the original lease.

In these circumstances, the law of contracts will not enforce the Tenants' view of the new agreement unless the Tenants can show that the Landlords either knew or should have known how the Tenants viewed the proposed deal. There was simply no evidence at the hearing to indicate that the Landlords had any idea, or should have had any idea, of the Tenants' view.

Therefore, the year-long lease remained in effect even after the Tenants vacated the apartment.

Noteworthy Mistakes: asserting that no consideration supported the Landlord's promise; noting correctly that the Tenant's payment of back due rent by itself could not constitute consideration, but then reading that requirement out of the Landlord's offer and concluding that simply by moving out the Tenant had accepted the offer; stating that part performance creates an option contract but ignoring the offeror's power to limit the duration of that option; ignoring the subjective misunderstanding over the meaning of the offer; noting that misunderstanding but failing to subject the Tenant's view to an objective analysis; invoking the parol evidence rule without addressing the threshold issue of integration.

1. These answers are aspirational. Given the time limitations and pressures of an in-class exam, I did not expect any student to reach the exemplified levels of accuracy, comprehensiveness and succinctness.

2. For example, this part of the initial conversation: "Absentia: Okay, I'll do it.//Egoist: Okay. I'll let you look at it and copy my notes at any mutually convenient time after Monday's class." (Emphasis added.) Also, from Egoist's remarks after Absentia repudiates: "You promised. We have a deal."

3. A latte contains steamed milk and froth and is therefore not pure espresso.

4. Most students ignored the "goods" aspect of the contract and applied the parol evidence rule as stated in the Restatement (Second) of Contracts ("R.2d"). I deducted no points for the R.2d approach, but did give extra credit to the few answers that recognized the "goods" aspect. The analysis presented in the model answer translates almost completely into a R.2d analysis; it would, of course, be necessary to change the citations and appropriate to replace the UCC concepts of final agreement and complete agreement with the R.2d concepts of partial and complete integration.

5. That point is accurate but inapposite. The question asks about admissibility, which requires a parol evidence rule analysis. The preference for express terms over course of dealing becomes relevant only assuming the course of dealing is admissible.

6. Most answers argued "no difference," stating simply that the court read the "satisfaction" clause to give the buyer absolute, untrammeled discretion. These answers failed to directly grapple with how a question of price could be a matter of taste and received, at best, one less point than answers that corresponded with the model answer. A few answers argued "no difference" and asserted that a buyer's satisfaction with a threshing machine could reflect a combination of the inherent characteristics of the machine and the price. These answers received the same number of points as answers taking the approach of the model answer.

7. It was not necessary either to cite the case or to quote the passage. However, since that case was the sole authority we had available on this subject and since the court stated the matter succinctly, I chose to quote the language as the most efficient way of stating the rule.

8. The model answer argues the facts in far more detail than I would expect a student to do under the time constraints of the exam. The answer provides greater detail merely to illustrate how many of the facts might have been argued.

9. Some answers discussed and rejected the material benefits rule, noting that at the time of the promise Imposed-Upon had not received a benefit and that the nature of the benefit, even if received, did not warrant application of that rule. Although precisely for those reasons it seemed to me that the material benefit rule was so far "off" that it did not require discussion, I gave credit for answers that discussed that rule in the manner just described.

10. This Model Answer ends without making a determination to illustrate the limited circumstances under which it is appropriate to "punt." Notice that up to this point the Answer has identified all the legal issues, applied the facts to each of those relevant rules and in almost every circumstance noted that the facts satisfy the relevant element. In those circumstances it is not a problem to note that a crucial element depends on the factual determination and the facts admit of different conclusions.

11. Some students attempted to use the parol evidence rule to deal with the conflicting understandings. I saw no plausible basis for arguing that both parties intended the Landlord's note as even a partial integration of an agreement, and, moreover, the note itself bespeaks a mere offer. I did not, however, deduct any points for application of the parol evidence rule and, in some circumstances, awarded points to answers that - despite the initial fallacy on integration - did a skillful job of applying the rest of the parol evidence rule.

Other answers resolved the dispute about interpretation by using R.2d rules on differing interpretations. I think this analysis is unnecessary, because I believe the Tenant's interpretation was objectively unreasonable. Nonetheless, I awarded full credit on this issue to those answers that skillfully applied the principles of interpretation relating to differences in meaning. (The Conciliation Court memo addresses the interpretation argument to demonstrate to the parties that the same outcome results even if the Court finds the Tenants' interpretation to have been reasonable.)

12. I hasten to point out that either of these rationales suffices to establish consideration running to the Landlord. It is not necessary that both exist.