Memorandum
Date: May 12, 1998
To: Sales Transactions students
From: Avery Katz
Re: Feedback on Spring 1998 exam
I have put on reserve the top two student answers to each of the questions to the final exam, along with a copy
of the exam itself. What made these answers the best was their coverage of arguments, detail and sophistication
in use of facts, and clarity in organization and explanation. If you drew different inferences from the given facts
than I did or than the top answers did, you wouldn't have lost points, unless your inferences were unsupportable.
Here is a (very) brief outline of how I thought the questions should have been approached.
You can get a copy of your individual exam from me or from my assistant, Ms. Nadine Baker, if you leave either
of us a message in advance. I have not made many marks on the exams themselves; instead, I kept a score sheet
for each exam containing my own notes. If after reading this memo and the top answers you want to discuss your
exam, please feel free to contact me. I will be in New York thru the end of June, and back at Georgetown Law
Center after that.
It was a pleasure teaching the class and I wish you all well. Please keep in touch.
Question 1
The VCR is plainly unmerchantable, and the sales ticket does not effectively disclaim the implied warranty of merchantability
under 2–316. Thus, unless Bart has accepted the VCR under 2–606, he is entitled under 2-601 to reject it. There
is room for factual argument here, but given Bart's consumer status and the complex nature of the goods, probably
not enough time has passed to constitute an acceptance. Alternatively, the question arises whether Bart can revoke
under 2–608 on the grounds of substantial impairment (i.e., not being able to tape the Olympics and having his
faith shaken in the model's reliability, though both of these are a bit of a stretch factually.)
In either case, though the situation is slightly more complicated following a revocation and the individual elements
of 2–508(2) need to be satisfied, Solar should get an additional reasonable time to cure. Whether one week is
a reasonable time is, again, open to factual argument, given the upcoming Olympics, the promotion under which Bart
bought, and the uncertainty regarding when additional models will actually arrive in the store. If cure fails,
however, Bart should be able to buy conforming goods from Corona and collect either contract–market damages under
2–713, or damages for cover under 2–712, plus incidentals. Other interesting issues are whether Bart can reject
the functioning TV along with the nonfunctioning VCR (probably yes; the test under 2–601 is whether the two are
a "commercial unit") and whether the "exclusive warranty" language deprives Bart of the right
to reject (probably not).
The most common pitfall in answering this question was in spending too much time on the warranty issue, which is
straightforward, at the expense of acceptance, revocation, cure, and other remedies, which are more complicated.
In the case on which the question was loosely based, Wilson v. Scampoli, 228 A.2d 848 (D.C. App. 1967),
the appellate court reversed the trial judge's award of recission, and permitted the seller to cure.
Question 2
The threshold issue is whether C-Thru's attempt to prove that Midland was obligated to provide a sample run of
bottles is barred by the parol evidence rule. The written contract has a merger clause and thus appears integrated,
though other evidence might show that the parties did not really mean to adopt it as an integration of their agreement.
But under 2–202(a), trade usage stands on a different footing than other parol evidence, and like course of dealing
and course of performance, is always available to explain or supplement an agreement. The fact that Midland denies
knowledge of the usage is relevant but not dispositive, since according to 1–205(3), trade usage binds all those
who should know about it, not just those who do know about it. Thus, C-Thru has most likely offered enough evidence
to survive a summary judgment motion.
The testimony of Midland's witness may also be relevant in this regard, though it is not by itself sufficient to
prove a modification, as the contract contains a no–oral–modification clause pursuant to 2–209 (and since the parties
are merchants there is no requirement of a separate signature for such a clause). Similarly, the statements could
not be a waiver, since they represent a willingness to take on additional duties, not to excuse a defect in the
other party's performance. If the statements were actually made and relied on, however, they could form the basis
for a claim of estoppel under 1–103.
Under any of these scenarios, Midland would be obligated to produce a sample run of bottles. Whether its refusal
to do so constituted a repudiation justifying C-Thru's recission of the contract, however, is a separate issue.
Since Midland claimed to stand ready to produce bottles, repudiation is a factual question to be decided under
2–610, and possibly under 2–612 if the contract called for delivery in installments. (An alternate possibility
would be to interpret C-Thru's insistence on a sample run as a demand for adequate assurances under 2–609, but
on the reported facts, it does not appear that C-Thru ever complied with 2–609's formal procedures.)
If Midland's refusal is not a repudiation, then C-Thru is in breach, since it agreed to purchase its bottle requirements
from Midland. Zero requirements is probably unreasonably disproportionate under 2–306, given the estimated range
of 500,000 to 900,000 bottles provided in the written contract. There may also be an issue of good faith, since
the fact that C-Thru managed to purchase its bottle requirements at a lower price raises questions about its motives
in wanting to get out of its agreement with Midland.
In the actual case on which the question was based, C–Thru Container Corp. v. Midland Mfg. Co., 533 N.W.2d
542 (Iowa 1995), the appellate court reversed the lower court's award of summary judgment for Midland, and remanded
with directions to consider the trade usage evidence at trial.
Question 3
On this question there was a lot of room for individual choice. In my view, the most important differences between
the UCC and the CISG for the purposes of this client are the CISG's lack of a parol evidence rule, and the CISG's
preference for the remedy of specific performance; but of course there are many other differences and if you explained
them well and related them to the client's situation you received credit. It would also have been worth mentioning
that eliminating the customer's clause does not suffice to avoid being governed by the CISG, since the CISG applies
to all US/Canada contracts by default. Instead, it is necessary to contract out of the CISG explicitly.
Key to symbols used to mark exams:
v good point or argument
! excellent point or argument
~ fair point, or incompletely or unclearly expressed
– weak point
… point needs elaboration
" point already made, repetitive
? unclear
?? very unclear, confused, mixing together separate points
x mistake of law, misstatement of fact, misuse of term
x? point appears mistaken
# irrelevant or tangential point
#? point's relevance unclear
ns non sequitur: conclusion does not follow
ff fighting facts: contradicting stated facts or making assumptions inconsistent with them
ll laundry list: throwing in relevant and irrelevant arguments alike, without distinction