L5M3 Managing Contractual Risk Paper *4

Most colleges could only afford minimal amounts of this hardware, which restricted program sizes and limited the number of engineering graduates. ICT's CEO, Cruz, wrote to the heads of several universities, stating: “If your institution commits to accepting every junior-year undergraduate who wishes to pursue an engineering degree, ICT will provide all the necessary electronic hardware to train these students. Our engineers have informed me that one set of equipment (i.e., one of each machine used by ICT in production) is sufficient for five students. Therefore, for every five additional engineering majors you accept beyond your current enrollment, ICT will supply one set of equipment.”

Jackson, chancellor of Seaport College of Engineering (SCE), also received this letter from Cruz. The letter arrived during SCE's annual budget review, where Jackson had to decide how much of the college’s limited funds to allocate for engineering equipment. Upon receiving Cruz’s letter, Jackson informed the budget committee that no funds would be required for engineering equipment in that year’s budget. A few days later, while preparing to send an acceptance letter to ICT, Jackson received a second letter from Cruz stating that the ICT equipment program was canceled due to an influx of qualified foreign engineers in the United States. Since the budget was already approved, and all available funds had been allocated elsewhere, Jackson sent the acceptance letter regardless, and it was received by Cruz at ICT.

If SCE files a breach of contract suit against ICT, what would be the likely outcome?

The price was set at $1,000 per ton, with delivery scheduled on or before September 15. In August of the same year, George entered into a similar contract with Vinnie’s Vintner Co. to sell 300 tons of premium-quality pinot chardonnay grapes. George completed his harvest by September 10 and had 800 tons of premium-quality grapes. However, on September 11, an unexpected rainstorm ruined 400 tons. George promptly notified Walter and Vinnie on that day that he would only be able to deliver 250 tons to Walter and 150 tons to Vinnie.

On September 14, Vinnie purchased an additional 150 tons of premium-quality pinot chardonnay grapes from Godfrey, one of several other suppliers of premium-quality pinot chardonnay grapes. These grapes, along with the 150 tons from George, provided Vinnie with the 300 tons he required.

On September 15, what legal position does Walter's Winery hold concerning George's failure to deliver the 500 tons of grapes as required by his contract?

Christine's father offered to drive them in his van, but when they loaded it up, they realized there was only room for two passengers. Christine then asked her boyfriend, Harry, to drive her in his car while Christine’s father and Zelda rode in the van. About halfway to the college, while both the van and Harry's car were traveling on the freeway with the van in front, the van suddenly swerved out of control and veered off the highway, ultimately ending up on its side in the center divider.

When Harry stopped his car and Christine ran to the van, she discovered, to her horror, that her father had died. Zelda appeared to be injured, though not severely. Christine, knowing her father had previously experienced heart trouble, assumed he had suffered a heart attack while driving. However, a later investigation revealed that the accident was caused solely by a defect in the van's steering mechanism. Filled with guilt, Christine told Zelda, "I’m so sorry about this. I’ll make good on any losses you suffer because of this accident."

Later, when Christine learned Zelda planned to seek treatment from Dr. Winston, she wrote a letter to the doctor stating that she would be responsible for all of Zelda's medical expenses. Dr. Winston received the letter the following day.

Assume for this question only that, several months after the accident and within the applicable statute of limitations, Zelda discovered she had sustained a spinal injury that would prevent her from ever playing basketball again. Zelda had been a scholarship basketball athlete at college and was expected to be a high draft pick for the newly formed women’s professional basketball league upon graduation. Zelda then filed a lawsuit against Christine seeking several million dollars in damages.

What would be Christine's best defense against Zelda's claim?

Upon leaving the hospital two days later, Victim was presented with a bill from the hospital for  4,000 to settle his  victim issued a negotiable promissory note to the hospital for$ 4000 , payable within 30 days , and assigned the settlement memorandum from from insurer to the hospital as collateral. The hospital promptly transferred  both the promissory note and the settlement memorandum to holder, , who acquired the note as a holder in due course.

Subsequently, Victim falsely informed Insurer that he had lost the original settlement memorandum and requested a replacement. Insurer issued an identical memorandum, which Victim then assigned to ABC Furniture to secure a 5,000 credit purchase .  ABC immediately notified  insurer of it's claim to the assignment. Lter, it was discovered that the hospital had overcharged victim by $1,000 and that Tortfeasor was an irresponsible minor. Considering Tortfeasor’s age and irresponsibility at the time Insurer issued his liability policy, can Holder and ABC Furniture enforce their claims on the respective assignments?

The account was issued solely in Prodigal's name, but Mater retained possession of the passbook, and Prodigal was unaware of the account's existence at that time. Later, Mater became dissatisfied with Prodigal's behavior and decided to transfer the account entirely to her beloved adult daughter, Distaff. Under the terms allowed by Vault Savings and Loan, Mater arranged this change through an agreement with Vault, leaving the passbook in Vault's possession. Soon after, Prodigal learned about the original account in his name and the subsequent transfer to Distaff. If Prodigal now sues Vault Savings and Loan for $10,000 plus accrued interest, will his lawsuit be successful?

After extensive negotiations, it was orally agreed that TM would redesign the food production area of MacDougall’s restaurants, including modifying cooking equipment if necessary, so that savings in labor costs would result from a reduction in the restaurant's cooking staff using existing MacDougall’s food products.

MacDougall's lawyers subsequently drafted a written agreement and sent it to TM. TM’s lawyers modified the draft and returned it to MacDougall. This modified writing, signed by both parties, stated in its entirety: “Provided that at least 2,000 work-hours per restaurant are eliminated, MacDougall Corporation will pay TM within 90 days of installation of new food production systems at MacDougall’s restaurants in Richmond a first installment of $1 million.upon installation of new food production systems nationwide , Macdougall corporation will pay TM a second and final installment of $1.5 million. Nationwide installation must be completed by January 15, 2005. Any amendments to this agreement must be in writing, signed by both parties.”

TM immediately began work on restructuring MacDougall’s food processing methods. On September 5, 2004, a radical change in the layout of MacDougall’s kitchen area and new personnel assignments were designed, and TM demanded payment of the first installment

$1 million. MacDougall Corporation refused , but negotiations between the parties resulted in an oral agreement that MacDougall would pay of  $750,000 immediately, followed by the  $1.5 million second installment as originally agreed after nationwide installation of the new system.

The restructured food production system was installed and operational in all Richmond MacDougall's restaurants by october 1, 2004. Subsequent audits revealed that the new system enabled Macdougall Corporation to eliminate 1,500 work hours per restaurant , the corporation $90,000 in labor costs for all Richmond restaurants. The new system required MacDougall’s to increase the length of the famous MacDougall Dog by three centimeters and make the "Mother MacDougall Hot Apple Fritters" in a rectangular shape instead of the traditional round form.

Nationwide installation of the new system in all MacDougall’s restaurants was completed on January 30, 2005. The 1,500 work-hour savings per restaurant was projected to save MacDougall Corporation $1.8 million per year. TM sent a certified letter to the CEO of MacDougall Corporation requesting certification that the new food production system was in place and operating as promised, and demanding the $1.5 million second installment. The CEO refused to certify and refused to make any payment, stating in his reply letter that the system had not been installed by January 15, 2005, and that it did not use the existing MacDougall’s food products as promised by TM.

Assume, for the purpose of this question only, that an express condition of MacDougall Corporation’s duty to pay the contract price failed and that TM was in breach for failing to complete the nationwide installation of the food production system by January 15, 2005. If TM brings an action to recover the reasonable value of its services, will it likely succeed?

This limitation restricted program sizes and reduced the number of applicable engineering degree candidates. ICT's chief executive officer, Cruz, wrote the following letter to the heads of several universities: "If you commit your institution to accepting into your engineering degree program every junior-year undergraduate who wishes to pursue that major, ICT will provide your institution with all the necessary electronic hardware to instruct such students. Our engineers have informed me that one set of equipment (i.e., one of each machine used by ICT in its production process) is sufficient for use by five students; therefore, for every five engineering degree majors you accept in excess of your current engineering degree population, ICT will provide one such set of equipment."

Marchand, chancellor of Middle States University ("MSU"), received a letter from Cruz and immediately mailed a reply letter accepting ICT's generous offer. A few weeks later, Marchand received another letter from Cruz explaining that the response to his original letter had been so overwhelming that schools such as MSU, which had no history of supplying graduates to ICT as employees, would have to be omitted from ICT's equipment program.

If MSU brings an action for breach of contract against ICT, what would be the likely result?

I. Breach of the implied warranty of fitness for a particular purpose.

During the construction of the only housing development undertaken by the partnership, Lehman discovered that Sanders had taken most of the money invested by the limited partners and all of the money paid to the partnership by purchasers of the homes in the development, and lost it gambling in Las Vegas. When confronted by Lehman, Sanders admitted everything, then went to his apartment and committed suicide.

When news of Sanders's suicide became public, Lehman was besieged by creditors of the partnership and people who had purchased homes. The jurisdiction statutorily limited the liability of limited partners for the debts of the partnership or acts of the general partner to the extent of their investment in the partnership. However, being unaware of this, Lehman believed he was personally liable to all who had claims against Bountiful Homes. He told Wolcott, a single mother whose house was partly completed, that he would make good any losses caused by his nephew's actions. Lehman then orally agreed with Smith, a contractor, to pay for the completion of Wolcott's house. Lehman also told Brubaker, an unsecured creditor of Bountiful Homes, that if Brubaker would hold off filing an involuntary bankruptcy petition against the partnership, Lehman would pay the partnership's debt.

In a bankruptcy action filed by the secured creditors of the partnership, the assets of the partnership, which were very small, were consumed by the costs of the proceedings, and no creditor received any payment. Sanders himself left no assets and was, in fact, heavily indebted personally due to his compulsive gambling.

If Smith did not complete construction of Wolcott's house and Wolcott brings an action against him for breach of contract, which of the following would be an effective defense for Smith?

I. Smith's contract was with Lehman.
II. Wolcott furnished no consideration.
III. Any agreement between Wolcott and Smith was discharged by novation because of the agreement between Smith and Lehman.