This is an open book examination. You may use the casebook, the assigned
supplement, any additional materials distributed by the professor during
the semester and any notes you have made or developed in studying for the
course or the exam. You may use outlines or other notes developed by a
group of students enrolled in this course this semester if you played a
substantial role in the development of the group outline or notes. Except
as stated in the second and third sentences of this paragraph, you may
not use treatises, hornbooks, commercial outlines, other commercial works
or any other materials prepared by others.
This examination lasts three hours and has two parts. Part One consists
of four separate questions, each based on a separate fact pattern and each
requiring a relatively short answer. Part Two consists of a single fact
pattern, requiring a more intricate answer. The Parts are weighted as follows:
Part One -- 40%, with each of the four individual questions worth
10%.
Part Two -- 60%. You must decide for yourself how much time and effort to allocate
to each of the several aspects of Part Two.
Please keep in mind that "spotting issues" is only the first step in
doing a legal analysis. You must also take the issues you identify and
organize them into a coherent structure. Then, within that structure, you
must examine those issues (by applying the law you see as relevant to the
facts you see as relevant) and argue for some conclusion.
Please do not write about subjects that are not germane to your analysis.
Writing a "treatise" on some area of law that the question does not put
in issue wastes your time and conveys the unfortunate impression that you
do not understand which issues are relevant.
To the extent that your analysis involves a particular statutory or
Restatement provision, you MUST cite that provision. If your analysis involves
the construction (as distinguished from mere application) of a particular
word, phrase or provision, it may make sense to quote that word, phrase
or provision. Otherwise, do not waste your time quoting the statute or
Restatement at length. (On the other hand, if you can quote a piece of
a statute or Restatement faster than you can paraphrase it, feel free to
do so.)
There is no need to cite case names. If citing case names helps you,
feel free to do so. Do not, however, use case names as a substitute for
stating the law.
The grading rewards coherence. It will probably be worth your while
to take some time to think about the organization of your answer before
you begin writing. Ask yourself:
• whether you have identified
all the necessary parts to your analysis;
• whether all the issues
you have identified are actually necessary; and
• whether you have organized
your issues in a way that is likely to make sense to your reader.
Please write legibly. Please write on only one side
of each page. If legibility is not your strong point, please skip every
other line as you write.
Part One
A. Consider the following statement of facts from Lancoure v. Dupre,
an 1893 decision of the Minnesota Supreme Court:
The defendant, in the year 1877, sold to plaintiff the tract of land
described in the complaint, and executed and delivered to her his bond
for a deed. One half of the agreed purchase price was paid by plaintiff
about the time of the purchase. Plaintiff went into possession, and remained
until March 1, 1886, when she elected to rescind the contract, abandoned
the premises, and brought this action to recover damages because of the
failure and inability of defendant to convey a good title in accordance
with the conditions of his bond. . . . In 1882, the plaintiff, desiring
to make substantial improvements on the land, offered to pay the balance
of the purchase price to defendant, providing he would convey a good title
to her, but, discovering the defect before mentioned, she refused to accept
his deed solely because of such defect. Thereupon the defendant assured
her that he could and would [do certain specific acts necessary to] perfect
his own title, and would convey the same to plaintiff, and that she could
safely make the proposed improvements. At this time the balance of the
purchase price was not due, although plaintiff, at her option, could pay
it. Relying upon the . . . representations that the defendant was able
to convey a good title to the land, the plaintiff was induced to purchase;
and, relying upon his further statements and representations that he could
and would perfect his defective title, as well as upon the original statements
and representations, the plaintiff placed betterments upon the land in
1882 at a cost of $800, as was found by the court. She had also, while
in possession, paid the annual interest on account of the deferred purchase-price
payment, and had also paid the taxes as they fell due for several years.
The defendant was unable and has refused to perfect his title by deed or
otherwise, and in March, 1886, as before stated, plaintiff took such steps
as were essential to rescind the contract to purchase, and brought this
action.
Assume that (i) the plaintiff validly rescinded the contract, and (ii)
with a good title the tract would have had a market value at the time of
the sale (1877) of $3000 more than the contract price. What amounts, if
any, may the plaintiff recover from the defendant? Explain.
B. Recall Bigelow v. Barnes, the 1913 decision from the Minnesota
Supreme Court distributed as the "Take-Home Case." The defendant asserted
inter alia (among other things) that (i) the contract included a
promise by the Keefe-Davidson Company ("the Company") to continue publishing
Current Law "'so long as the Northwestern Reporters were published'
by the West Publishing Co," and (ii) since the publisher had breached that
promise, the defendant was not liable for anything on the contract, even
for volumes already "issued and delivered to him." In the decision's last
paragraph the Court rejects this assertion, using the phrase "a failure
of consideration." We did not particularly address that phrase during our
studies, but we did cover the concept asserted by the defendant in Bigelow.
Assume that the contract did indeed contain the promise for continued publication
and that the Company did breach that promise. Using concepts from and citations
to the Restatement (2d) of Contracts, explain:
1. the defendant's theory,
and
2. why the defendant's theory
fails as to the volumes already "issued and delivered to him."
C. Consider the following statement of facts, derived and modified from Rochon Corp. v. McGuire Mechanical Services, Inc., a 1998 unreported decision of the Minnesota
Court of Appeals:
Hennepin County advertised for bids to build the Hennepin County Sheriff's
Water Patrol Headquarters on Lake Minnetonka. Desiring to bid as prime
contractor, respondent invited subcontract proposals. Respondent [the prime
contractor] intended to calculate its prime contract bid by using the lowest
bid in each category of subcontract work.
The prime bid deadline was June 4, 1996 at 2:00 p.m. At 1:52 p.m. on
that day, appellant [the subcontractor] proposed to do all mechanical work,
except for fire sprinklers, for $252,290. This was one of several mechanical
subcontract bids.
When respondent reviewed the subcontract bids, it noticed that appellant's
proposal was $66,000, or 20%, less than the next lowest mechanical bid.
Respondent thought that discrepancy noteworthy but did not inform appellant.
Instead, respondent used appellant's proposal in calculating the prime
contract bid.
Respondent learned on June 4, 1996, that it was the lowest prime contract
bidder. One hour after receipt of this information, respondent notified
appellant that it was the lowest mechanical subcontractor.
On June 6, 1996, appellant notified respondent that, because appellant
had made a calculation error resulting in a bid $61,000 less than it should
have been, appellant was withdrawing its offer. At that point, respondent
had not yet accepted appellant's offer.
Respondent contacted the county to discuss its options, including the
possibility of withdrawing the prime bid. Because the county would not
indicate whether it would retain respondent's $87,000 bid bond until after
respondent formally withdrew its bid, respondent decided to let the bid
stand.
Six weeks later, the county awarded the prime contract to respondent,
who then found it necessary to hire two mechanical subcontractors to replace
appellant. The difference between appellant's bid price and the combined
price charged by the replacement subcontractors was $58,710. Respondent
sued appellant to recover that difference.
What result and why?
D. A blissfully happy couple ("Jack and Jill") enter into a written
agreement with Really Fancy Hotel ("Hotel") for Couple's wedding reception.
The agreement includes the following provision:
Really Fancy Hotel is not responsible for non-performance of this agreement
due to any act of God or any labor dispute.
One week before the wedding, all the service personnel at the Hotel
go out on strike. Fearful that the Hotel will be unable to perform, Jack
and Jill telephone the Hotel's catering manager and express their concerns.(1)
The manager replies, "Don't worry. We're open, and no matter what, we're
staying open. Worse case, we'll staff the reception with non-union folks
from a 'temp' service."
Jack and Jill are appalled. Jill is a union shop steward. She cannot
and will not cross a picket line, and neither will her friends. Jack and
Jill believe that they can find a substitute location and wish to cancel
the contract with the Hotel. Advise them as to getting out of the contract.
Part Two
Max was toiling as a second-year associate in a large, downtown law
firm. He was well-paid ($75,000 per year salary), but he worked very long
hours. Moreover, he had very little client contact, and he found most of
his work uninteresting and alienating. On several occasions he mentioned
his plight to his aunt, who always sympathized with him.
Eventually his aunt decided to do more than sympathize. She owned her
own business, and the business had substantial needs for legal services.
One evening she summoned Max to her office and advised him, "Listen, you're
a bright fellow, too bright to be toiling as someone else's lackey. You
should go out on your own, hang up your own shingle."
In that conversation, his aunt did more than advise Max. She also said,
"Look, if you'll quit that sweat shop and start your own practice, I'll
give you all of my company's legal work. I know that will amount to at
least $30,000 per year in fees."
When Max expressed reluctance at leaving the security of the large firm,
his aunt said, "Look, try it for three years. You'll have the security
of my fees and you'll be able in that time to know whether you're destined
to build from that base and establish a thriving practice of your own."
After several more conversations with the same theme, Max decided to
take his aunt's advice. (He also talked with an accountant friend, who
powered up her computer, did a few "down and dirty" calculations on her
spread sheet program and projected "best case scenario -- five years from
now you should be clearing $120,000; moderate case -- $80,000.")
Max resigned from the law firm, rented an office (in an office sharing
arrangement that included secretarial services) and bought office equipment.
His rent was set at $1200 per month, with the lease to run for two years.
The equipment cost him $6000.
Max's first year on his own went well enough. Fees from his aunt's business
totaled $40,000, and he managed to collect $15,000 from other clients.
The next year, however, matters changed substantially. Max's aunt sold
her business, without telling Max in advance. (She had another lawyer handle
the transaction, because, as she later explained to Max, "I thought this
deal was a bit too complicated." Fees for that lawyer's work totalled $18,000.)
The written agreement between the aunt and the buyer ("the Buyer") included
the following term:
Seller [i.e. the aunt] assigns to Buyer all of the contracts pertaining
to the Business(2) ("the Assigned Contracts").
Buyer agrees to assume responsibility for performance of Seller's obligations
under the Assigned Contracts, which include without limitation [here the
agreement listed the Business' contracts with its major customers, plus
the Business' lease on its office; the list did not mention any contracts
with persons who provided service to the Business].
Max learned of the sale only when his aunt introduced him to the new
owner (i.e. the Buyer). In that introduction, the aunt said, "This is Max.
He handles all our regular legal work."
The Buyer responded by saying, "Glad to meet you. I look forward to
working with you."
Unfortunately for Max, that work dried up very quickly. Within a month
the Buyer had shifted all the business' legal work to another firm. When
news got out that Max had lost his major client, two other clients decided
to seek other legal counsel. Together these two clients had accounted for
$12,000 in fees during the first year of Max's solo practice.
Max had no choice but to fold up his practice, just two months into
the second year of his solo adventure. He had collected nothing in those
first two months.
First enraged and then depressed by what he considered his aunt's betrayal,
he was psychologically unable to seek another job. Over the next two years
he spent $25,000 in fees for psychotherapy. A year into the therapy he
turned down the offer of an associate position paying $55,000.
Max had 10 months remaining on his lease, and the landlord refused to
let him out of it. He did sell the office equipment for $2000.
Max brought suit against his aunt and the Buyer.
1. Did Max's aunt breach
any enforceable obligation to Max? Explain.
2. Assuming Max's aunt did
breach some enforceable obligation, how much would Max be entitled to recover?
Why?
3. Did the Buyer breach some
enforceable obligation to Max? Explain. For this question, do not concern
yourself with the measure of recovery; i.e., do not do a damage analysis.
4. Hard pressed by his landlord
for the lease payments, Max agrees in writing to "assign to [the landlord]
any and all payments I recover from my litigation against the Buyer for
the Buyer's failure to provide the legal services as promised me." The
landlord promptly mailed a copy of the assignment to the Buyer. Meanwhile
Max approached the Buyer and pushed for a settlement. The Buyer initially
resisted, but gave in when Max said, "Listen, you don't want a lot of your
confidential business information to leak out, do you?" The Buyer and Max
then agreed to settle Max's claim for $9000. Later, when the landlord demanded
that the Buyer pay the $9000 to the landlord, the Buyer had second thoughts
about the settlement. Is the Buyer obligated to pay the landlord the $9000?
Explain.
1. Assume that the manager's words and actions are attributable to the Hotel. (That is, analyze the problem as if the Hotel did directly whatever the manager did.)