Contracts : Week of September 3, 2007

Preparatory Reading

Questions on CLA pp. 44-45

  1. Two questions.
  2. Probably this is a service: at the end, Owner just owns a house, not the plans, so there was no sale by Architect. Incidentally, though, what does it mean to say that Architect "owns" the plans, even if Owner has their instantiation? Would Owner be prohibited from duplicating his own house? What about drawing out a floor plan?

  3. Commentary in class:
  4. Not under standard Article 2: there is no passage of title here (see § 2-106). But § 2A-103(j) defines a lease.
    Commentary in class:
  5. Two questions, really.
  6. Four questions, this time.
  7. "To build" is a service. We don't think of ourselves as buying a house from a contractor, generally. Might depend a bit on the language, though. Typically, contractors work on a T&M basis-- here it seems like a "turnkey" production of a house. If we can classify the house as a good, perhaps we can argue that this is the reverse (i.e., joining, not severing) of § 2-107. That seems procrustean, though.
    Commentary in class:
  8. Again, this depends on whether or not Buyer will be "severing" it from Owner's lot and moving it (§ 2-107). Otherwise it's not moveable, and therefore not a good.
    Commentary in class:
  9. There might be some issues with the disposition of goods, but otherwise it seems to me as though the "bad faith" allegation lacks substance. Franchise brand awareness is not a good.
    Commentary in class:
  10. Emotionally, I feel that the UCC or some close analogue should apply. In practice, it does not.
    Commentary in class:

Questions on CLA p. 48 [Expectation Interest & Apple Problems]

  1. This fits the description offered in § 2-703. In theory, Seller could recover $90 (100 * $8.00 - 100 * $7.10) plus reasonable resale costs (see § 2-708), but there's a possibility that by returning to the farm and keeping the apples, he's blown even that. Depending on the shelf life of crates of apples, and the sales cycle, he might be protected under § 2-706, but otherwise he might not have been "commercially reasonable" (see Comment 5 to § 2-706). Note that we do not know Seller's cost of production, so expected profit (§ 2-708(2)) is hard to calculate if apple resale is not an option.
    Commentary in class:
  2. If this difference in price changed the contracted sale price, then yes: Seller would probably recover only the cost of changing the sale venue (§ 2-708). But if the original contract involved Buyer speculating on an apple shortage, or paying a premium for a specific apple brand, then I don't see why there would be a difference.
    Commentary in class:
  3. Perhaps just $90 + resale costs (if any), as in the first example, because the $0.10/crate discount may not be "commercially reasonable" in the circumstances (§ 2-706(1)). But I don't know the apple business.
    Commentary in class:
  4. Was the buyer notified, and was there a need to do so (§ 2-706(3))? Is "the side of the road" a sufficiently "usual place" for apples sales (§ 2-706(4)(b))? Then we need to decide whether or not the side-of-the-road windfall consitutes a new fair market value, or "profit" under § 2-706(6).
    Commentary in class: