1. Is there a valid contract?

On May 17, 2000, David Holmes met with Clarence Burleson, a loan officer with the Bank of Milligan, to discuss borrowing $5,000 from the bank to start a new business. After learning that he did not qualify for the loan because of his weak financial condition, Holmes told Burleson that his former employers, the Clarks, would guarantee payment of the loan. Burleson called the Clarks who orally stated on the telephone that they would personally guarantee the loan to Holmes. Relying on this guaranty, the bank loaned Holmes the $5,000. The bank sent a written guarantee to the Clarks for their signatures, but it was never returned to the bank. When Holmes defaulted on the loan, the bank filed suit against the Clarks to recover on the guaranty contract. The bank's pleadings contain two arguments: 1) an enforceable express contract existed between the bank and the Clarks; and in the alternative 2) a quasi (implied-in-law) contract should be imposed to prevent unjust enrichment.

Using the IRAC method, discuss whether there was a contract as the bank claims and whether the Clarks are liable.

2. Parol Evidence Rule

Baine lived in Bristol Harbor, a resort area on the Atlantic coast. She entered into a written agreement to sell her daily catch of fresh lobster at an agreed price to a local restaurant during the tourist season. At the end of the tourist season, Baine sued the restaurant for an additional $2,000. She claimed that shortly before signing the contract, the restaurant owner orally agreed to pay a $2,000 bonus. Using the IRAC method, discuss whether Baine will prevail.

3. Goods vs. Services

Yates contracted with Waterworks, Inc. to have an above ground pool installed in his backyard. Waterworks specialized in the sale and construction of pools. The two parties entered into a contract that called for Waterworks to "furnish all labor and materials to construct a Wavecrest brand pool, and furnish and install pool with vinyl liners." The total cost for materials and labor was $3,690. There was no breakdown of costs between labor and materials. After the pool was installed, its sides began bowing out, the 2" x 4" wooden supports became rotted and misaligned, tilting the pool. Yates brought suit alleging that Waterworks had violated several provisions of Article 2 of the UCC.

a) Using the IRAC method, discuss whether the transaction was one involving "goods" making it subject to Article 2 of the UCC.

b) If we assume that Article 2 applies, under what warranty theory (or theories) might a lawsuit be brought (IRAC not required)?

4. Is there a contract and/or breach under the UCC?

Flint, a retail seller of TV's, ordered 100 Color-X TV's from Martin, a manufacturer. The order specified the price and that the TV's are to be shipped by Hummingbird Express on or before October 30^th. Martin received the order on October 5^th. On October 8^th, Martin wrote Flint a letter indicating that the order was received and that the TV's will be shipped as directed at the specified price. Flint received this letter on October 10^th. On October 28^th, Martin, in preparing the shipment, discovers it has only 90 Color-X TV's in stock. Martin ships the 90 Color-X TV's as well as 10 TV's of a different model, stating clearly on the invoice that the 10 different TV's are being shipped only as acommodation. Flint claims that Martin is in breach of contract. Martin claims that the shipment was not an acceptance, and, therefore, no contract was formed. Applying the IRAC method, discuss who is correct and why.

5. Battle of the Forms

Hiram Paint Company mailed a purchase order to ABC Can Company requesting 50,000 new paint cans. The order form contained a condition stating, "The buyer may reject any defective goods withing 20 days of delivery." ABC sent a return letter confirming the order. The letter contained a condition stating, "An objection to goods shipped must be made in writing within 4 days of receipt of the goods." On the 8th day after receipt of the cans, Hiram filed an objection because 5,000 cans were defective. Applying the IRAC method, discuss whether Hiram's objection was legally valid.

6. Determining Priority

Ramirez bought some used manufacturing equipment from Hurdle for $3,000, paying $1,000 in cash and the balance in a promissory note secured by a security agreement. Before Hurdle filed the financing statement, Ramirez used the equipment as collateral to obtain a loan from Allen, who immediately filed a financing statement. If Ramirez does not repay the loans, who has first priority in the equipment, Hurdle or Allen (IRAC not required)?