Ike and Tina made a great couple because both were compulsive entrepeneurs. One evening they sat on their penthouse roof deck, overlooking the...

F6.      Ike and Tina made a great couple because both were compulsive entrepeneurs. One evening they sat on their penthouse roof deck, overlooking the twinkling Des Moines skyline. Ike sipped a decaf coffee while negotiating, over the phone, with a real estate developer in Lubbock. Tina puffed a cigar as she bargained on a different line with a toy manufacturer in Chicago. They hung up at the same time. "I did it!" trumpeted Ike, "I sold the 50 acres in Texas for $300,000 more than it's worth. They dashed indoors.

           Tina quickly scrawled a handwritten memo, which said, "Confirming our deal - 100,000 Force Majeure Robots - you deliver Des Moines - end of summer." She didn't mention a price, or an exact delivery date, or when payment would be made. She signed her memo and faxed it to the toy manufacturer. Ike took more time. He typed a thorough contract, describing precisely the land he was selling, the $2.3 million price, how and when each payment would be made and the deed conveyed. He signed the contract and faxed it, along with a plan showing the surveyed land. Then the happy couple grabbed a bottle of champagne, returned to the deck, and placed a side bet on whose contract would prove more profitable. The loser would have to cook and serve dinner for six months.

           Neither Ike nor Tina ever heard again from the other parties. The toy manufacturer sold the Force Majeure Robots to another retailer at a higher price. Tina was forced to buy comparable toys elsewhere for $9 each. She sued the manufacturer. And the Texas property buyer changed his mind, deciding to develop a Club Med in Antarctica, and refusing to pay Ike for his land. Ike sued. Only one of the two plaintiffs succeeded. Which one, and why?

ANSWER: Tina did not succeed because she did not have a valid contract. A valid contract needs a valid offer. A valid offer comes with a price, quantity, time and method of payment. Her fax did not contain price and date so it was invalid. Ike on the other hand had valid contract because it included all the details like the type of land, the price, when payments would be. This created a contract that needed to be responded to by the Texas property buyer.

F7. Ted is the President of Chip Co, a small company that makes computer chips for the secondary personal computer market. In the regular course of Chip Co's business Ted did the following. Ted sent an e-mail to his daughter Pam, a Vice President of Chip Co, which stated: "This is to confirm our conversation of the other day wherein you agreed to make your home garage available next week to Chip Co for storage of Chip Co items. You will be paid $5.00 per year." Pam e-mailed back, stating, "That's right, Dad; the garage is clean and ready for storage." Is there adequate consideration for this agreement to form a binding contract? Explain.

ANSWER:

F8. Ted also sent an e-mail to Dave, a customer of Chip Co, which stated, "We agree to replace our defective chip in your computer, but only if you agree not to bring any legal action against Chip Co." Dave sent a return e-mail stating that he agreed to these terms. If this is an attempted modification of their original agreement, will it be effective? Explain why.

ANSWER:

F9. You are JoeCo's GM. George owns a small, retail used-computer store in Duluth. You meet him one day at a systems training session and get to talking about your respective businesses. In the conversation, you say that sometimes you have used computers left over from contracts that the customer doesn't need. As you part, you suggest that George stay in touch because you could sell him 12-15 computers a year at a discount.

Six weeks later and without any further contact, George signs and sends a fax to you at JoeCo, that says, "Confirming our agrmt-I pick any 15 comptrs fr yr invty-30% below your cost."

You read the fax, laugh, and throw it away. Two weeks later, George arrives and demands to purchase 15 of JoeCo's computers.

Are we obligated to sell to George? What legal arguments does George have that we have an enforceable contract? What are our defenses?

ANSWER: