BUSINESS LAW QUESTIONS

1. Connie decided to purchase a $1,000 laptop computer to use during school. When she went into Computer Retailer Inc., the salesperson also sold her a 5-year service agreement for $1,200 for a total price of $2,200. Nine months later, the laptop stopped working and Computer Retailer refused to perform on their service agreement. Explain whether this is a contract for goods or a common law contract?

2. In the above, assume that there was no service agreement, and nothing was said about any warranties, could Connie get her computer fixed at no cost to her? Explain fully, with the correct rule of law, and a complete explanation.

3. The Uniform Commercial Code implies a warranty of merchantability to protect buyers of goods. To comply with this warranty do the goods need to be fit for all of the purposes for which the buyer intends to use the goods? Explain your answer completely.

4. You purchased a new lawn mower from a big box store, and it said that the lawn mower came with no warranties whatsoever, because this was a closeout sale and there was also a sign that said as is. You have now used the lawnmower for the first time and due to a small gasoline leak the lawnmower catches on fire and burns your house down. You can show that the leak was caused by a defect in the lawnmower. Will you be able to recover your losses from big box store? Explain you answer fully with the correct rule of law.

5. Crawford owns Vineyards. He entered into firm sales agreements to sell 200 tons of Sirhan wine grapes to Hogue Winery on January 15 and 100 tons to St. Michelle Winery on February 15. The contract specified that all the grapes were to come from Crawfords vineyard. A very unusual mid-summer rain and thunderstorm occurred. There was lightning generated in the storm and it started a summer field fire in the vineyard where Crawford grew the Sirhan wine grapes. The fire destroyed all but 30 tons of Crawfords Sirhan wine grapes. Since Crawford cannot deliver all of the grapes contracted for, does he have an excuse to get out of the contract and not be liable to either of the parties? Explain fully, using the correct rule of law. Whatever answer you come up with must be fully defended based on the proper rule of law.

6. Now assume that the contract price to both Hogue and St. Michelle was $2300 per ton. Because of the fire, many of the Sirhan grapes in the region were destroyed, so the price of grapes has gone to $3000 per pound. Assuming that Crawford does not have a legal excuse, how much will Crawford have to pay to Hogue and to St. Michelles Wineries. Explain fully using the correct rule of law.

7. Now assume that the above lawsuit caused both Hogue and St. Michelle to wait for the outcome, which took one month and the price of grapes has risen to $3500 per ton, and it cost each lost profits due to the delay in the production of wine. Will they be able to recover the additional $500 per ton and/or the lost profits? Explain fully using the correct rule of law.

8. The Custom Furniture Company sells fine custom furniture. It has been encountering difficulties lately with some customers who have breached their contracts after the furniture they have selected has been customized to their order or the fabric they have selected has been cut or actually installed on the piece of furniture purchased. The company therefore wishes to resort to a liquidated damages clause in its sales contract to encourage performance or provide an acceptable amount of damages. Regarding the contemplated resort to a liquidated damages clause, what must Custom Furniture be aware of in construction the liquidated damages clause? Explain fully, using the correct rule of law.

9. Brown ordered 100 cases of Delicious Brand canned peas at list price from Smith Wholesaler. Immediately upon receipt of Browns order, Smith sent the peas. The peas arrived on 3-21-15. Brown put the peas on the stores shelves and started selling them on 3-22-15. Within a few days Brown received a lot of complaints from customers about the peas being spoiled and not edible. Brown has refunded all of the money to the customers and now wants to have some type of recovery from Smith. Describe fully what Browns rights are at this point, and what Smiths rights are at this point. You may not use any type of warranty for this answer. You must use the correct rule(s) of law for this answer.

10. Pretty Co. entered into a contract to sell an antique oriental carpet to Buyer for $20,000. One month before the designated delivery date, Pretty contacted Buyer and told them they needed to charge an extra $5,000 or Buyer should look elsewhere for a carpet. Buyer has found two similarly colored oriental carpets that were approximately the same size; one cost $15,000 but was of lower quality, and the other $40,000 although it was of a much higher quality than the one they expected to purchase from Pretty. What will Buyers remedies be against Pretty? You must explain fully using the appropriate rule of law.

11. Darrow ordered 100 sets of custom-made bookends from Benson Manufacturing Inc. Darrow made $5000 prepayment of the purchase price of $10,000. Benson is insolvent and has filed for bankruptcy on 3-25-15. The goods have been manufactured; they have not been delivered as promised. Darrow wants the bookends. What must Darrow do to be able to get the goods, and how many of the bookends would Darrow be able to recover? Explain fully using the correct rule of law.

12. Ace & Co. entered into a written contract to purchase 35 computer manuals from Lamb & Co. at $200 each. Ace was located in Seattle and Lamb in Boston, but the manuals were to be shipped from New York. Lamb hid the defective books in the bottom of the boxes. Upon receipt of the manuals, Ace only inspected the top manual and signed an acknowledgment of delivery. Nine days later it discovered that all the other books had been misprinted. Ace bought 35 manuals from another source to fulfill their contract with their buyer. The price for the replacement manuals was $250 each, and that was a fair price. Explain fully what Aces rights are against Lamb. You must use the correct rule(s) of law.