PART I. When is a contract formed?

The T-Shirt Factory is a company that owns a chain of retail clothing stores in the US. Its CEO was visiting Hong Kong and saw an advertisement for a Bruce Lee exhibition at the Hong Kong Cultural Museum. The advertisement was on the side of a city bus. The CEO knew it would be very popular in the US with teenage boys, because Bruce Lee is a hero to many teenage boys in the US now.

The T-Shirt Factory CEO paid a visit to the museum and talked to its director, who had full authority to make decisions for the museum. After explaining his interest, the following conversation took place:

(1) CEO: I would like a license to use that design on T-shirts, including the words and images.

(2) Director: I will license of the design for T-shirts only.

(3) CEO: OK, I will pay $50,000.

(4) Director: OK, the money is fine, but for how long will you get to use this design?

(5) CEO: For one year, as many as I can make in that year.

(6) Director: OK, but only one style of T-shirt, as many as you make that year.

(7) CEO: OK.

(8) Director: I agree.

(9) The two men then put this all in writing. Assume nothing in the writing was different than the terms just stated.

QUESTIONS:

1. At what point in the meeting, if ever, was a contract between T-Shirt Factory and the Hong Kong Cultural Museum formed? Explain your answer.

2. What were the terms? List them.

PART II What does the contract mean?

After the T-Shirt Factory CEO signed a contract with the museum allowing his company to have the right to copy the Bruce Lee advertisement, he signed another one with a Chinese manufacturer to make the T-Shirts. The former Hong Kong manufacturer, now located in Shenzhen, is called HKM.

Delivery will be made at the site and location specified in Addendum A.

The T-shirts will be white with a design imprinted on the front as specified in Addendum A.

The T-shirts will be in the standard mix of sizes.

If the T-shirts are delivered after the date specified in Addendum A, Manufacturer will pay one dollar a day per standard weight box as a late fee for every day any standard weight box is delivered.

Talk of Addendum A suggests you need something else to complete the contract and to make it fit this specific case and that these terms, above, were pre-written, standard terms. Assume that to be so. We want to know what those terms mean.

QUESTIONS:

3. The terms standard mix and standard weight box are not defined. What will a court do to determine what a standard mix is? Would if affect your answer if you found out the two men NEVER discussed the meaning of these terms before a dispute arose about HKMs performance? Explain your answer.

4. What sort of dollars will be used? Explain your answer.

PART III -- The contract is broken, how can we remedy the breach?

As you also will recall, the T-Shirt Factory CEO entered a contract with HKM to manufacture the Bruce Lee T-shirts. HKM wrote into the contract a clause stating that if the T-shirts were unacceptable in quality HKM would refund payment to T-Shirt Factory, but otherwise expressly waiving all other warranties. T-Shirt Factory agreed to pay HKM 1 HKD per shirt.

In turn, the T-Shirt Factory entered into a contract with the Bruce Lee Fan Club in the U.S. to sell the fan club 100,000 T-shirts to be delivered in time for the fan clubs convention that began on June 10, 2017. The fan club agreed to pay $10 (80 HKD) per shirt.

The T-shirts all arrived on time, and the fan club distributed them to their members at the convention. They were a big hit with the club members, who were surprised to get them. When they signed up for the convention they did not know they were going to receive anything as a souvenir from the club. The enrollment form stated that The enrollment fee of $35 entitles enrollee member to attend all sessions and enter all exhibits at the 2017 convention, for the entire three days of the convention, from June 10 to June 13, 2017.

However, right after the convention the member began to complain to the Fan Club. The shirts shrank in the wash by as much as 20%, and the design began to flake off after the T-shirts were put in a clothes dryer. The members threatened to sue the club.

QUESTIONS:

5. Do the members have a colorable claim against the club? If so, describe that claim, and explain your answer.

6. Do the members have a colorable claim against T-Shirt Factory? If so, describe that claim, and explain your answer.

7. Does the club have a colorable claim against the T-Shirt Factory? If so, describe that claim, and explain your answer.

8. Does the T-Shirt Factory have a colorable claim against HKM? If so, describe that claim, and explain your answer.

9. For any party you said could make a claim, explain how to calculate their damages.