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Breach of contract scenario

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Select ONE of the scenarios below and explain the best solution. Include comments related to ethical issues that may arise.

Scenario 1

Standard preprinted forms are frequently used by merchants to negotiate sales contracts. These standard forms usually contain terms that favor the drafter. An offerer (seller) who sends a standard form contract as an offer to the offeree (buyer) may receive an acceptance drafted on the offeree's own standardized contract. This scenario is commonly called the battle of the forms, and it raises important questions.

Adams offers to sell Baker 2000 leaf blowers at $50 each with a one-year period for action on breach of warranty. Baker copies Adams's offer to his own form that contains a four-year period for action on breach of warranty preprinted on the back of the form, and sends the acceptance to Adams. Is there a contract? Why or why not? If so, what are its terms? Please be sure to cite to the Uniform Commercial Code (UCC), which provides guidance in answering these questions.

Scenario 2

Ada Fisher purchased a wheelchair from Access Industries, Inc. The wheelchair was customized for Ada and her home. When the wheelchair arrived, it was too wide to fit through the doorway of her home. Fisher refused the chair and refused to pay Access. Did either party breach the contract? What options are available to Fisher? Use citations to support your response

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Solution Preview

Access breached the contract because the goods delivered by the company did not conform to the terms of the contract. Fisher has several options. Fisher can ask for specific performance, ...

Solution Summary

Discusses options available for breach of contract.

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Breach of Contract Scenarios

You are the Chief Operating Officer of Littleco. Over lunch, the President of Bigco offers to sell Littleco a piece of fully depreciated manufacturing equipment you need for your production line for $1,000. You tell the President of Bigco that you will buy it, and you shake on it. The Bigco President later changes his mind and decides to keep the equipment. Littleco sues Bigco for breach of contract. Assume that the Uniform Commercial Code does not apply.

1. What remedies can Littleco seek against Bigco?
2. What defenses can Bigco assert?

Littleco sells widgets to Bigco that Bigco uses in its manufacturing process to make a final product, which Bigco sells to retail consumers. Bigco runs into financial difficulty, and Bigco stops making payments to Littleco. Because Bigco fails to make payments to Littleco, Littleco becomes insolvent and is forced to file a petition in bankruptcy. Littleco sues.

3. What remedies can Littleco seek against Bigco?
4. Littleco believes that Bigco should be punished for forcing Littleco into bankruptcy and demands punitive damages as well as payment of Littleco's costs and attorneys' fees related to both the lawsuit and the bankruptcy proceeding. Will Littleco be able to recover these damages? Why or why not?
5. Littleco wants to file for an injunction to prevent Bigco from selling products that include Littleco's widgets. Will the courts issue an injunction or restraining order? Why or why not?

Rural Hospital believes that it needs the services of a surgeon to serve its market. Rural Hospital invites the surgeon to come to its community for an interview. During the interview, the Hospital Administrator orally advises the surgeon that she believes that there are enough patients to create a successful surgery practice. Rural Hospital also offers to provide an eighteen-month income guarantee through which Rural Hospital will loan funds to the surgeon until the practice is successful, and the parties enter into a loan agreement and promissory note to memorialize the loan. The loan agreement provides that the loan will be forgiven if the surgeon remains in the community for four years. The surgeon and his family move 1,000 miles to relocate to the Rural Hospital community. However, the other physicians in the community decide that they do not like the surgeon, and the other physicians refer their patients to surgeons in urban medical centers. After six months, it is clear to the surgeon that he will be unable to develop a successful practice in the Rural Hospital community, and he is fortunate to be able to return to his old practice 1,000 miles away. Rural Hospital sues the surgeon for repayment of funds advanced under the loan agreement and promissory note.

6. What remedies will Rural Hospital seek from the surgeon?
7. What defenses could the surgeon raise?
8. What clause or clauses in the loan agreement should be reviewed by the parties to determine their respective rights and obligations?

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