A. Consider the following excerpt from Howl's Moving Castle. Sophie was a 17 year old girl until a witch's spell transformed her into an 80 year old woman.
 

"This contract you're under," [Sophie] said. "It's with Wizard Howl, is it?"
 

"Of course," said the demon. Its voice took on a bit of a whine again. "I'm fastened to this hearth and I can't stir so much as a foot away. I'm forced to do most of the magic around here. I have to maintain the castle and keep it moving and do all the special effects that scare people off, as well as anything else Howl wants. Howl's quite heartless, you know."
 

Sophie did not need telling that Howl was heartless. On the other hand, the demon was probably quite as wicked. "Don't you get anything out of this contract at all?" she said.
 

"I wouldn't have entered into it if I didn't," said the demon, flickering sadly. "But I wouldn't have done it if I'd known what it would be like. I'm being exploited."
 

In spite of her caution, Sophie felt a good deal of sympathy for the demon . . . . "All right," she said. "What are the terms of the contract? How do I break it?"
 

An eager purple grin spread across the demon's blue face. "You agree to a bargain?"
 

"If you agree to break the spell on me," Sophie said, with a brave sense of saying something fatal.
 

"Done!" cried the demon, his long face leaping gleefully up the chimney. "I'll break your spell the very instant you break my contract!"*
 

"Then tell me how I break your contract," Sophie said.
 

The orange eyes glinted at her and looked away. "I can't. Part of the contract is that neither the Wizard nor I can say what the main clause is."
 

Assume that the demon and Sophie entered into a contract at the point marked by the asterisk.
 

    1. Was the contract unilateral or bilateral? Explain.
 

    2. Learning to her shock and dismay that the demon cannot provide her the crucial information she has requested, Sophie
        wants to "get out of" her contract with the demon. Can she? Explain.
 
 

Model Answer to Question A-1: The contract is bilateral. As their words indicate, the parties have exchanged promises.

The demon proposes "a bargain." Taken in the context of the prior conversation, this proposal seeks from Sophie a promise to break the Demon's contract with Howl. Sophie does not immediately accept the proposed bargain. Instead, she seeks clarification and makes what can be seen as a counteroffer. She will agree as requested "[i]f you agree to break the spell on me." The contract is formed when the Demon unequivocally accepts: "Done."
 

Noteworthy Mistakes for Question A-1: deeming the contract unilateral because the contract calls for one party to perform before the other party's obligation becomes due; characterizing the contract as unilateral and not reconciling that characterization with the Question's stated assumption (i.e., how could a unilateral contract be formed "at the point marked by the asterisk" when the requested performance has not yet occurred?)
 

Model Answer for Question A-2: Sophie has several theories through which she might avoid the contract.⁽¹⁾ First, she can assert incapacity due to her age. She may appear to be 80, but she has had only 14 birthdays. Under Restatement (Second) of Contracts ("Rest.2d") § 14, "a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the person's eighteenth birthday." Case law does recognize exceptions to this rule, especially when the other party has performed and would be unfairly prejudiced by rescission. However, no performance has yet occurred under the Sophie--demon contract.

Sophie might also claim unilateral mistake of fact. She would have to show that (i) at the time of contract formation she assumed that the demon could reveal to her the "main clause" of the Howl-demon contract; (ii) this assumption was basic to her entering into the contract; (iii) the demon's inability to reveal "the main clause" materially and adversely affects her bargain; (iv) she does not bear the risk of the mistake; and (v) either enforcement of the contract would be unconscionable or the demon had reason to know of the mistake or caused the mistake.

The facts demonstrate most of these elements. For example, Sophie's pre-formation question ("What are the terms of the contract? How do I break it?") shows both that she assumed that the demon could reveal the key provisions and that the demon had reason to know of Sophie's mistaken assumption.⁽²⁾

However, Sophie may have difficulty under Rest.2d § 154(b) showing that she did not bear the risk of mistake. In the words of that provision, Sophie was "aware, at the time the contract [was] made, that [s]he [had] only limited knowledge with respect to the facts." Indeed, she knew she lacked key knowledge of the terms of the Howl-demon contract. Nonetheless, she entered into the contract without making any further inquiry. She "treat[ed] [her] limited knowledge as sufficient." Id.

Sophie might also assert fraudulent non-disclosure. The contents of the Howl-demon contract are facts (including the prohibition on disclosing "the main clause"), and Sophie will be able to show both materiality and reliance. Her questions, both immediately before and after contract formation, evidence the importance she attached at formation to her assumption that the demon could provide her the key information. She must also, however, demonstrate that the demon had a duty to disclose the information prior to formation.

On this point, her strongest argument comes from Rest.2d § 161(b). Given Sophie's pre-formation question, the demon must have known Sophie was entering into the contract while mistaken about a basic assumption. The demon could have corrected that mistake with a single sentence. His failure to do so "amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing" -- even under a strictly subjective standard of honesty. In essence, the demon let Sophie walk right into a trap.
 

Noteworthy Mistakes for Question A-2: discussing only one method of escape; asserting that the promise was unilateral and then failing to note that, under a unilateral contract, Sophie had nothing to "get out of" [the offeree of a unilateral contract has no obligation to accept and perform]; asserting misrepresentation as a basis for avoiding the contract but not specifying what the demon misrepresented; treating non-disclosure as a misrepresentation without justifying that treatment; using contract formation analysis -- in particular, objective manifestation -- to assert that no contract was formed [if a reasonable person would have inferred from the manifestations that the demon was obliged to provide the information, that fact establishes breach -- not failure to form a contract; breach will not help Sophie "get out" of the contract unless the breach is material]; asserting impracticability [there are insufficient facts to support that theory; there is no way to tell how difficult it will be for Sophie to obtain the necessary information elsewhere]; asserting that the contract fails for indefiniteness because Sophie does not know an important term of the contract (i.e., that the demon cannot reveal how to break its contract with the wizard) [the fact that one party might be better off with an additional term does not make the contract indefinite; even without the supposed term the contract was sufficiently definite, for it indicated each party's obligations (break the contract, break the spell) and gave "a basis for determining the existence of breach," Rest.2d § 33(2)]
 
 

B. Recall Sterling Capital Advisors, Inc. v. Herzog, the recent decision from the Minnesota Court of Appeals distributed as the "Take-Home Case." Suppose that: (i) Minnesota followed the rule applied in K.M.C. Co. v. Irving Trust Co., and (ii) the stockholders had rejected a cash offer of $7.4 million merely because "we had changed our minds; we decided that we wanted to stay in the business." Would the outcome in Sterling Capital Advisors, Inc. v. Herzog have been different? Explain.
 
 

Model Answer: The outcome might well have been different, because Sterling and K.M.C. articulate and apply different rules for "good faith."

Sterling uses a purely subjective standard. Since the agreement gave the stockholders untrammeled discretion to reject all offers, they could exercise that discretion in any honest way they chose. Even with on offer substantially higher than the target price, the contract gave them the right to change their minds. They would breach their duty of good faith only if they acted out of malice -- e.g., from a desire to hurt the broker.

K.M.C., in contrast, requires both subjective and objective good faith. That case also involved a contract giving apparently untrammeled discretion to one party -- i.e., the lender's right to call the loan. The court, however, subjected that discretion to two standards -- not only "honest belief" but also commercial reasonableness.

Applying the latter standard to the modified Sterling facts might change the outcome. Given an initial decision to try to sell the company, an offer dramatically higher than the target price, and nothing to indicate that market conditions have changed since the initial decision -- would a reasonable business person have a mere change of mind? Absent some facts showing a reasonable purpose behind the change of heart, the K.M.C. rule might well produce a victory for the plaintiff.
 

Noteworthy Mistakes for Question B: failing to state the good faith formulation of Sterling [how can one compare the results of two different rules without first stating those rules?]; stating Sterling's formulation of the good faith rule but failing to note that Sterling articulates a subjective test; asserting that the contract's language of complete discretion precludes any good faith inquiry under the objective standard (thereby failing to see the effect that an objective standard would have on the court's analysis); analyzing the problem as if proper notice were the key issue; stating the two rules correctly but failing to apply the objective rule to the modified facts
 
 

C. Consider the following excerpt from Herold v. Schumann, Granahan, Hesse & Wilson, Ltd., a recent unpublished decision of the Minnesota Court of Appeals.
 

Lee Herold entered into a purchase agreement for the sale of his accounting and tax preparation business to Schumann, Granahan, Hesse & Wilson, Ltd. (Schumann). The agreement outlined the terms of a promissory note and a noncompete agreement to be signed at the closing, two months after the date of the purchase agreement. . . .
 

Between the signing of the purchase agreement and the closing, Schumann offered continued employment to many of Herold's employees. Herold's "key employee," Kelley Brenno-Carpenter, accepted a position with Schumann. Pending the closing, Herold and Schumann mailed an announcement of the sale to Herold's clients, encouraging them to use Schumann's services. Brenno-Carpenter approached Herold with a request to mail postcards to her individual clients notifying them of her decision to join the Schumann firm. Herold and Schumann agreed to Brenno-Carpenter's mailing.
 

At the closing, Herold signed the anticipated covenant not to compete and Schumann signed a promissory note, personally guaranteed by its partners, for the remainder of the $180,000 purchase price. . . .
 

Nine months after the closing, Brenno-Carpenter resigned and formed her own accounting firm. She used the client list that she had obtained from her earlier mailing to send Herold's former clients announcements of her new firm. Schumann sued Brenno-Carpenter for unfair trade practices and breach of employment duties. The suit was settled for $3,750. Herold was not a party to that action.
 

Ten months after the closing, Schumann failed to make a payment required by the note. Herold declared the note in default, accelerated the payments according to the note's terms, and brought this action [to collect on the promissory note].
 

Assume that Brenno-Carpenter's departure and subsequent wrongful conduct destroyed for Schumann the value of the accounting and tax preparation business purchased from Herold. Does Schumann have a defense to Herold's action to collect on the promissory note? Explain.
 
 

Model Answer: Schumann's best chance is to claim frustration or impracticability, but neither claim will succeed. To succeed with either claim, Schumann will have to show that Brenno-Carpenter's departure and subsequent wrongful conduct was "the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made." Rest.2d §§ 261 (impracticability), 265 (frustration). Schumann will also have to show that the occurrence renders his performance impractical or at least substantially frustrates his principal purpose.

Schumann will be unable to meet these burdens. Most fundamentally, he will not be able to satisfy the "basic assumption" requirement. There is nothing in the facts to indicate that both parties considered Brenno-Carpenter to be of such pivotal importance. To the contrary, the facts indicate that Schumann sought and obtained a non-compete agreement from Herold but not from Brenno-Carpenter.

Moreover, Schumann will be hard-pressed to demonstrate that Brenno-Carpenter's conduct was so severely and unavoidably detrimental as to produce impracticability or frustration. These doctrines typically apply in the event of wars, riots, natural disasters, lengthy strikes, etc. The wrongful conduct of one employee hardly rises to that level -- especially when the party claiming impracticability and frustration settles with that employee for a few thousand dollars.
 

Noteworthy Mistakes for Question C: asserting that the selling owner's agreement to a non-compete made a key employee's non-competition a basic assumption of the bargain; misreading the facts and stating that the key employee had signed a non-compete; treating one party's basic assumption as sufficient; assuming that, just because a subsequent event prejudices one party, the non-occurrence of that event was assumed by both parties; viewing these doctrines as too easily available, i.e. as triggered by mere unanticipated bad fortune
 
 

D. Richie Rich ("Rich") is a fabulously wealthy first-year law student. Pressing business concerns will require him to miss two weeks of class. The prospect of missing two weeks of Contracts classes has the normally imperturbable Rich a trifle ruffled.
 

He therefore enters into a written agreement with a classmate ("Party of the Second Part") under which: (i) Party of the Second Part will take "copious, accurate and insightful notes" of the Contracts classes Rich will miss and will provide Rich with a copy of the notes immediately upon Rich's return, and (ii) Rich will pay Party of the Second Part $250 per class. The recitals to the agreement state inter alia, "Whereas Party of the Second Part is well known as an excellent note taker and has distinguished herself on the fall exams, receiving two grades of A and two grades of A-."
 

Shortly after Rich leaves town, Party of the Second Part decides that she's been working too hard. Convinced that she can afford to skip a week of classes, she decides to head for the lakes to go fishing. She contracts with another classmate ("Substitute Student") to take notes for Rich, agreeing to pay Substitute Student $25 per class.
 

1. Is Rich obligated to accept and pay for the notes prepared by Substitute Student? Explain.
 

2. Would your analysis change if you learned that Substitute Student is also known as an excellent note taker and had also done very well on the fall exams? Explain.
 

3. Would your analysis change if the agreement between Rich and Party of the Second Part did not involve note taking but instead required Party of the Second Part merely to audiotape the classes? Explain. (The additional facts stated in point #2, above, do NOT apply here.)
 
 

Model Answer to Question D-1: Since a party may ordinarily delegate performance, this question turns on whether Rich "has a substantial interest in having[Party of the Second Part] perform . . . the acts promised." Rest.2d § 318(2). If so, the delegation is improper, and Rich does not have to accept the delegated performance.⁽³⁾

The contract recitals suggest that Rich did have a substantial interest in having Party of the Second Part perform personally. Those recitals refer to Party's reputation as "an excellent note taker" and detail Party's fall semester grades. Moreover, note taking is a highly personalized endeavor. Even students who receive the same grades often take radically different notes. Party has no more right to delegate her note taking obligations than a portrait painter has the right to bring in a substitute artist. Rich is not obligated to accept and pay for the notes prepared by Substitute Student.⁽⁴⁾
 

Model Answer to Question D-2: The additional information would not change the analysis. Under Rest.2d §318(2), performance is either delegable or not. The rule does not contemplate a duty being delegable to certain types of persons and not delegable to others.⁽⁵⁾

Assuming, as discussed above, that Rich has a substantial interest in having "a particular person" render performance, Rest.2d § 318(2), that particular person may not delegate -- even to another particular person who has key characteristics similar to the original obligor.
 

Model Answer to Question D-3: The different information would change the analysis. The same rule would apply, but the different facts would compel a different conclusion. Audiotaping a class is a simple task, neither requiring any special competence nor giving play to any personal style. Despite the contract's recitals, Rich could not show that he had a "substantial interest" in having Party -- and only Party -- perform the service.
 

Noteworthy Mistakes for Question D: discussing assignment rather than (or in addition to) delegation; asserting that the characteristics of a would-be delegate are relevant to determining whether a contract may be delegated; seeing as relevant the disparity between the price paid Substitute Student and the price due Party of the Second Part; failing to grapple in Question D-2 with the similarities between Party of the Second Part and Substitute Student
 
 
 
 

Part Two⁽⁶⁾
 

Really Romantic Guy ("RRG") had been courting a lady for almost ten years. Finally, he decided it was time to "pop the question." It was RRG's belief, however, that the popping of such a question required the proper setting and circumstances. He therefore:
 

    1. decided to purchase a very large diamond engagement ring;
 

    2. take his intended on a week-long trip to Las Vegas;
 

    3. pay for several members of her family and his family to accompany them to Las Vegas; and
 

    4. present the ring and pop the question while in Las Vegas.
 

Being a traditionalist as well as a really romantic guy, RRG disclosed his plans to the parents of his intended and received both their permission and their blessing. Being a businessman, RRG shopped around quite a bit to find the right ring.
 

After lots of shopping and with only ten days remaining before the scheduled Las Vegas trip, RRG found the right ring at TrueLove Jewelers ("TrueLove"). TrueLove wanted $9000 for the ring, and RRG considered that price "a great deal." However, RRG was unable to pay the entire purchase price immediately. He wanted to pay $3000 prior to taking delivery and the rest in monthly installments. When TrueLove's manager suggested that perhaps RRG might wish to buy a less expensive ring, RRG explained his decade-long courtship, his great plans for Las Vegas and the expenses he would be incurring there. RRG insisted that he needed "a superb ring for a superb lady."
 

TrueLove was willing to sell on installments but planned to charge interest on the unpaid balance. RRG refused to pay interest and said, "No interest, or I walk." TrueLove agreed to RRG's position, and RRG and TrueLove signed a written agreement identifying the ring, noting the $3000 down payment and providing for monthly installments over the next four years.
 

RRG returned to TrueLove's store three days later and wrote a check for $3000. TrueLove's manager assured RRG that he could pick up the ring the next day. Later that afternoon, however, TrueLove's manager called the bank on which the check was drawn to make sure that RRG's account contained sufficient funds to cover the check. The bank informed the manager that the account had at that moment "less than $300." The bank also stated that "over the past 12 months this account has averaged in the low 3s [i.e., the balance has been in the low three figures -- a few hundred dollars]."
 

Visibly shaken by this information, TrueLove's manager called a local credit bureau and obtained a credit report on RRG. The report characterized RRG as "a questionable credit risk for any amount greater than $500."
 

Even more shaken, TrueLove's manager telephoned RRG, chastised him for writing "a rubber check" and told him that he would have to pay cash for the ring. Incensed, RRG yelled at the manager, "I was going to move money into that account tomorrow morning. The check would have been good. You have no right to renege on our deal. You know how important this is to me. I can be there tomorrow with the $3000 in cash."
 

TrueLove's manager was not persuaded and insisted on the full purchase price. RRG yelled, "You're ruining my trip. I have no time to get another ring anywhere else. You're ruining me."
 

TrueLove's manager held firm, and RRG had to go to Las Vegas without the ring. All the plane reservations were nonrefundable, so all the family came as well. Without the ring, RRG felt he could not propose. The trip was, in RRG's words, "a flop, a gigantic anticlimax." RRG's expenses for the Las Vegas trip came to $12,000.
 

When RRG returned to town, he received a phone call and then a visit from the owner of TrueLove. The owner expressed his sorrow at the misunderstanding and offered, "as a gesture of friendship," to sell the ring to RRG for $7500. RRG refused the offer. He later explained his refusal by saying that he unwilling to purchase from TrueLove on account of TrueLove's past conduct and feared that post-sales service might be inadequate. RRG later bought a ring of comparable quality from another jewelry store at the cost of $12,000. He then proposed to his intended, she accepted and they are happily married.
 

RRG has sued TrueLove, seeking direct, consequential and punitive damages, including damages for the distress he suffered and the diminution in the emotional value of the Las Vegas trip. Assume that (i) each action taken by TrueLove's manager and owner is attributable to TrueLove; (ii) RRG did have the $3000 to cover the check and would have moved money into the bank account but for the phone call from TrueLove's manager; (iii) the replacement ring was indeed of comparable quality to the original ring; and (iv) the market value of such rings is $10,500.
 

Analyze RRG's claims. Make sure that your answer includes a damages analysis, even if you decide that RRG is not entitled to damages.
 
 

Model Answer: A ring is a "thing[] . . . moveable at the time at the time of identification to the contract," UCC § 2-105(1), so Article 2 governs this question. UCC § 2-102. Whether RRG has any remedy under Article 2 depends on whether (a) RRG breached his contract with TrueLove, discharging TrueLove's obligation to perform, (b) TrueLove breached its obligation to RRG, giving RRG a claim for damages, and (c) what compensable damages, if any, RRG suffered. That last question itself has several parts: (i) what financial loss RRG suffered, (ii) whether RRG failed to act reasonably to mitigate his financial loss, and (iii) whether RRG's emotional distress is compensable.

This deal turned sour when RRG wrote a check without having funds in his account to cover the check at that precise moment. Under the contract, RRG was obliged to make a $3,000 down payment, so it could be argued that RRG's action breached the contract.⁽⁷⁾ That argument should fail, however, because the bank would have honored the check. The facts assume that RRG would have moved sufficient funds.

RRG's action did give TrueLove "reasonable grounds for insecurity," UCC § 2-609(1), and under that section TrueLove could have taken action to protect its "expectation of receiving due performance." Unfortunately for TrueLove, its actions did not comply with that section. TrueLove failed to demand adequate assurance in writing, and, more importantly, went far beyond suspending its own performance while demanding adequate assurance. TrueLove sought no assurances from RRG and demanded, in essence, a change in the contract terms. Only in extraordinary circumstances can a party to use § 2-609 to require the other party to accelerate performance.

TrueLove could reasonably have demanded that RRG make the downpayment in cash, but TrueLove's refusal to turn over the ring without full cash payment breached the contract. Unfortunately for RRG, however, that breach did not cause RRG any compensable damages.

RRG's claims for financial loss look initially promising.⁽⁸⁾ He might claim $3000 as the extra cost of "cover" (i.e., $12,000 [cover price] - $9,000 [contract price]). This claim is problematic, however. The "cover" remedy requires a "reasonable purchase," UCC § 2-712(1), and a $12,000 purchase seems unreasonable when the market price is only $10,500. Arguably, therefore, RRG's claim should be limited to the difference between the market price ($10,500) and the contract price ($9,000). See UCC § 2-713(1). That $1,500 difference is the financial benefit of RRG's bargain.

Even this claim will fail, however, because RRG had and spurned a reasonable opportunity to mitigate his financial loss. The owner of TrueLove offered to sell RRG the same ring at a price significantly below both the market price and the contract price. RRG's explanation for rejecting this offer is unpersuasive. There is relatively little post-sale service on a $9000 diamond ring and, in any event, RRG would have been able to find some alternate source for whatever minor service might have become necessary (e.g., cleaning, re-sizing).

RRG claims for emotional distress will also fail. Contract law rarely allows recovery for emotional distress. The contract must be of a type whose breach is almost certain to cause extreme emotional trauma -- e.g., contracts to handle dead bodies; contracts to deliver messages relating to death. Wedding-related snafus do not come within this category. (It is thus immaterial that RRG's distress may have been foreseeable, due to his explanations, made at the time of contracting, of his decade-long courtship and his grand plans for a proposal.)

RRG's claim for punitive damages will also fail. Breach of contract simply does not support punitive damages. The claimant must establish some tort or similar claim.

In sum, TrueLove breached, but RRG has no claim for damages.
 

Noteworthy Mistakes for Part Two: failing to apply the UCC; providing only a damage analysis; failing to consider whether RRG's apparently bad check justified TrueLove's refusal to deliver; giving inadequate attention to UCC § 2-609; asserting that RRG's claim for damages requires a showing of material breach; asserting that reliance damages include the loss of the benefit of the bargain; invoking UCC § 1-208 and asserting -- without any support in the facts -- that the contract for sale gave the seller the right to accelerate the buyer's obligation to pay; asserting that the buyer was entitled to consequential damages in the amount of $12,000 without: establishing how the breach had caused the damage, considering how much damage was caused (after all, the trip still took place), or recognizing that the damage was in essence emotional and therefore not recoverable; ignoring the market price while calculating direct damages

Attachment A -- Ramsey County Conciliation Court Case
 
 

To recover damages in this matter, Plaintiff must show: (i) the existence of contract, (ii) the unexcused non-performance of an obligation under that contract (i.e., a breach); (iii) damage suffered as a result of that breach which could not have been avoided through reasonable efforts at mitigation (i.e., efforts to obtain alternate performance). Plaintiff can certainly show the existence of a contract. The other issues are far more problematic.
 

For example, it is not clear that Defendant's sudden insistence on cash payment constituted a breach of the contract. The contract expressly allowed the Defendant to require full payment at any time in the proper circumstances. It is arguable that those circumstances existed when Defendant's employee contacted Plaintiff's bank and learned that, at the moment, Plaintiff's account contained far too small an amount to cover the three thousand dollar check. It is also arguable, to the contrary, that Defendant had an obligation to inform Plaintiff of Defendant's concerns and to seek adequate assurance from Plaintiff that the check would be good and that future installments would be forthcoming. See Minn. Stat. §336.2-609 (right to adequate assurance of performance). See also Minn. Stat §§ 336.1-203 (imposing an obligation of good faith) and 336.2-103(1)(b) (defining a merchant's duty of good faith).
 

However, even assuming that Defendant breached the contract, Plaintiff is not entitled to any recovery. Minnesota contract law does not allow recovery for emotional distress. Therefore, in no event can Plaintiff recover for the diminished emotional value of the trip to Las Vegas or for the emotional distress occasioned by not having an engagement ring to present to his intended.
 

Therefore, even assuming a breach by Defendant, Plaintiff is limited to the lost financial benefit of the bargain. In this respect, Plaintiff's claim is defeated by his failure to mitigate his damages. Plaintiff had a perfect opportunity to recapture the benefits of the bargain when, after the trip to Las Vegas, Defendant offered to sell Plaintiff the ring for $1500 less than the original contract price. Plaintiff refused that offer. Thus, Plaintiff has lost the benefit of the bargain not on account of Defendant's breach (if any) but rather because Plaintiff refused to avail himself of an opportunity to mitigate.⁽⁹⁾
 
 

JUDGMENT FOR DEFENDANT WITHOUT DAMAGES

1. It was important to recognize that Sophie has more than one plausible theory. At least three strong theories exist, and the model answer discusses each of them. However, for any student to have discussed all three theories in detail would have taken far more time than should have been allotted to this question. Therefore, answering the question involved a judgment call -- breadth vs. depth. Anyone who accurately applied at least two theories in some detail received full credit, as did anyone who discussed a larger number of plausible theories but to less depth.

2. This passage reflects a judgment call as to what to include. There was not enough time to apply each element of the legal rule to the facts. To allow time to focus on the controversial element -- i.e., the risk of the mistake -- the answer provides only a couple of examples of how the facts satisfy the non-controversial elements.

3. A more complete analysis might note that tendering improperly delegated performance constitutes a material breach, discharging Rich's obligation of performance. See Rest.2d §§ 241-242. However, given the time reasonably to be allocated to this question, I did not expect students to extend the analysis that far.

4. It was possible to argue plausibly to the opposite conclusion. The contract recitals do not indicate that Rich had ever seen Party's notes or had any particular knowledge about Party's note taking approach. Arguably, the recitals indicate only that Rich wanted notes from a student who had gotten excellent grades. This desire does not amount to a substantial interest in having "a particular person" render performance. Rest.2d § 318(2).

5. Classroom discussion of this issue apparently left many students believing the contrary. Answers that plausibly argued to the contrary received full credit.

6. This question was based on a case from Conciliation Court. The decision from that case is attached following the Model Answer and Noteworthy Mistakes for Part Two. Note that the actual case included facts not found in the Part Two of the exam.

7. Under UCC § 2-511(3)-- which we did not study -- this argument should fail. Students were not expected to find and apply § 2-511(3). What mattered at this point in the analysis was to consider whether RRG's action might have discharged TrueLove's obligations.

8. Because Article 2 applies, this portion of the Model Answer uses the relevant UCC sections. These sections were assigned during the spring semester, but not discussed in class. Full credit was given to answers that accurately applied the common law damage analysis.

9. At the hearing Plaintiff explained his refusal by saying that he: (i) was unwilling to purchase from Defendant on account of Defendant's past conduct, and (ii) feared that post-sales service might be inadequate. This argument is unpersuasive. There is relatively little post-sale service on a $9000 diamond ring and, in any event, Plaintiff would have been able to find some alternate source for whatever minor service might have become necessary (e.g., cleaning, re-sizing).