SOUTH TEXAS COLLEGE OF LAW

JEAN POWERS, PROFESSOR
1994 FALL SEMESTER
TUESDAY, NOVEMBER 29,1994

CONTRACTS I

PART I25 points ­ approximately 45 minutes

BigCity's professional football team, the BigCity Boilers is having its worst season in recent memory. BigCity's owner, Olin Oner, is considering firing the team's coach. He talks to Norm New coach about the position. He asks Norm if he would take the head coaching job for $350,000 per year. Norm replies that since he would have to leave his current position, and relocate his family, he could not really consider the job for that amount. Olin then asks him if $400,000 would be enough. Norm replies that it would. Olin responds, "Great. I'll get our attorney to write it up."

Olin then fires the current coach, agreeing to pay him the remainder of his salary. Olin sends a written employment agreement, signed by him, to Norm. Norm returns it without signing it. He attaches a signed letter. In it he states that he understood from their conversation that he would be offered the position for the remainder of the season as well as the next season. However, the written agreement guarantees only the current season, with a right on the part of Oner to renew for the following season. He also indicates dissatisfaction with other parts of the written agreement, related to retirement and other benefits.

The parties are unable to resolve these differences, and Norm refuses to go to work for the Boilers. Olin hires another coach for more money, and sues Norm.

(a) (18 points)

What arguments will be made by the parties, what result will be reached, and why?

(b) (7 points)

Now assume that after the above conversation, Norm moves to BigCity and begins coaching the team. Nothing is ever put in writing, although Norm has witnesses who will testify that he was promised the job for at least the rest of this season, and all of the next. Norm coaches in three games, all of which are lost by the Boilers. Olin tells him his services are no longer needed. Norm sues. How do the arguments, analysis, and likely result change under these facts?

PART II

Alice Attorney is a successful tax attorney. When Alice's daughter, Dana, and her best friend, Tina Teen, were light­hearted teenagers, they were a continued source of disappointment to the more serious­minded Alice. Once, when Alice was feeling especially dismayed by their apparent lack of ambition, she tried to talk to them about their futures. They generally laughed off her suggestions, saying they did not expect to need a lot of education to have a good life. When she tried to convince them otherwise, Tina gave her a big grin and said maybe she would be a lawyer. Alice replied, "Tina, if you actually become a lawyer, you have a job with me, guaranteed!" Dana giggled, and Alice sighed and left the room.

Shortly thereafter, Tina's father was transferred to another state, and Alice and Dana lost contact with her. Eight years later, Tina called Alice at her office. She told Alice she was finishing her second year of law school, and was looking for a summer job. She suggested that Alice hire her, since they would be working together after graduation anyway. Alice replied that she could hot use a summer employee, and had no intention of hiring Tina after graduation. Tina said she would find another job for the summer, but insisted that Alice must hire her after she graduates­ and passes the bar. Alice was equally insistent she is not bound.

Is Alice bound? Discuss and evaluate all issues raised and all arguments each will make.

PART III -- 20 points ­ approximately 35 minutes

Bob and Dave are two 17 year old high school students. They go to a concert in a neighboring city. During and after the concert they get very drunk. They cannot find their car when they get ready to go home, so they steal another car. After driving a couple of miles, they realize they must stop. They stop at a small motel and ask for a room. At first the owner refuses to rent them a room, but then, on spotting the expensive car outside, and noticing their expensive clothes, says he will give them a room if they will sign an agreement to pay a rate that is twice the posted rate for the room, and pay the amount billed for any room service. The boys accept. When they get to their room, they order a six­pack of beer, and breakfast the next morning, both of which are delivered, and billed at more than twice the usual rate.

When they get ready to check out, they are astounded at the charges, and refuse to pay. While they are discussing this with the manager, a police officer comes in and reports finding the stolen car in the parking lot. He asks the owner if he knows anything about it, and the owner says he does not. The officer leaves. The owner then tells the boys that he will report them it they do not pay as billed. They say they do not have the money with them, but sign a new agreement to pay the amount billed, promising to send the money as soon as they get home.

Fingerprints found on and in the car implicate the boys, and they are arrested the next day. They never pay the motel charges, and the owner sues. Discuss all issues raised, and all arguments that will be made. What result will be reached, and why?

PART IV

1. -- 10 points ­ approximately 15 minutes

Bill Byers visits Sarah Sellers' hardware store. He says he heeds a new shower unit for his bathroom. He gives her the measurements, and indicates he wants a unit with secure hand bars to assist him in getting in and out when his arthritis is bothering him. Sarah gives him a price list and circles the item she says he will need. The price is listed as $800. He says he will think about it, and leaves. The next morning, he calls her and tells her he has decided to buy the unit from her. She tells him it will be delivered in two weeks. She then sends a written confirmation, indicating the model number and price. The confirmation states that there are no warranties, express or implied. The unit is delivered two weeks later, but does not fit the space (although Bill's measurements were accurate) and does not have the hand bars discussed. However, it does conform to the model described on the price list and in the confirmation. Bill refuses to accept the unit or pay for it. Sarah sues.

What issues are raised (other than damages), what arguments will be made, what result will be reached, and why?

2. -- 10 points ­ approximately 15 minutes

Paulette Purchaser enters into a contract to buy a house from Vern Vendor. As Vern knows, she plans to remodel the house and operate it as a Bed & Breakfast. However, unknown to either Paulette or Vern, the city council voted a change in the zoning ordinance a couple of hours before the contract is signed, which prohibits the intended use.

(a) Paulette seeks to avoid the contract. What arguments will be made, what result will be reached, and why?

(b) How would your answer be affected if Paulette had heard that the zoning change was being considered, but had not really believed it would pass?

(c) How would your answer be affected if Paulette knew nothing about the change, but Vern was fully aware of all facts about it, and simply kept quiet?

(d) How would your answer be affected if Vern was fully aware of all facts about the zoning change, and lied to Paulette, telling her at the time of the contract signing, in response to a direct question by her, that the property was zoned for the intended use?

3. -- 8 points ­ approximately 10 minutes

Peggy Parishioner is an 88 year old widow in failing health. Her minister, Marv Minister, begins visiting her frequently, running errands for her, spending time talking to her, and praying with her. He frequently mentions the importance of her "getting right with the Lord" before it is too late. He convinces her to pledge her life savings to the church, and she signs a pledge card promising to make full payment within the next 30 days. When her children find out, they are very upset, and convince her this is a mistake. When she calls Marv, he tells her it is too late to change her mind, and assures her she has done the right thing. She refuses to pay the pledge, and the church sues. What arguments will be made, what result will be reached, and why?

4. -- 7 points ­ approximately 10 minutes

Emma Employer employs 6 employees who make Christmas items and decorations that she sells. The month of October was a very good month, so she tells her employees that due to the good job they have done, she is going to give each of them a $100 dollar bonus in December. She further says that if the month of November is as good, she will double the bonus to $200 each. November is in fact a little better than October. However, she refuses to pay any bonus. Is she contractually obligated to pay any bonus? Why or why not? Discuss and evaluate all arguments.