Question 6

Assume that Sarah sage is a 60 year old long time security guard at Rice University. Over the years, she had saved a little money like each year, and now has $25,000 in her savings account.

Walt's Wizard of wizard enterprises was awarded the subcontract to provide carpeting for the new physics lab building. One day, while talking with sage, wasare noted to Sarah that she could make some extra money at home at night by becoming a phone solicitor for wizard's line of rug for the home. Wizard said to sage, " you buy the rugs from me for $50 per rug, and then turn around and sell them for $100 per rug. These are good quality rugs so people will buy from you. I will give you a list of prospective customers to call. Once the order is placed, you give me the order and I will take care of the delivery myself. If you sell just three rugs a day you will sell over 1000 a year and make more than $50,000 profit (1,000 x $50 profit per rug). Get an initial set of 400 rub, and you will be on your way."

Thinking that this deal looked good, Sarah said she called wizard and agreed to purchase 400 rugs for $20,000. Four days later, sage received from wizard a full contract, signed by wizard, in confirmation of their agreement. That contract had twenty f o u r paragraphs, 12 on the front side and 12 on the back side. Paragraph 23 provided, "any disputes in this agreement will be submitted to arbitration." Paragraph 24 provided, "all these put in this agreement will be resolved in New York City, the corporate headquarters of wiser enterprises." These Clauses were not pointed out to sage, nor did Wizard mention these clauses to sage during their discussions. Sage never signed this document, but merely placed it in her desk without looking at it.

Upon delivery, it turned out that the carpets were of low quality, but probably not below UCC 2-314'S merchantability standard of "fit for ordinary use." After two months of trying, sage could only sell 40 rugs, for an average of $50 each. Sage wants to rescind the contract, return the remaining 360 rocks to wizard, and get back her remaining $18,000($20,000 minus the $2000 she got for the 40 rugs which were sold). If she has to arbitrate, she wants the arbitration to take place in Houston, where she lives and where the contract is being performed not New York City wizard has taken the position that the contract is valid as written, including the arbitration clause with forum selection in New York City.

These cause these strengths and weaknesses of sage's possession and Wizard's response. Be sure to address (1) what the contract terms might be under UCC 2.207, and (2) whether sage has any defenses, including the statute of frauds, misrepresentation, or unconscionability, to the enforcement of this contract, which would justify rescission of the contract and restitution as the appropriate remedy.