Legal Hypos

CARPET:

In September of 1988, Jane Pittsley contracted with Hilton Contract Carpet Co. for the installation of carpet in her home for $4,402. Hilton paid the installers $700 to put the carpet in Pittsley's home. After the carpet was installed, Pittsley complained to Hilton that some seams were visible, that gaps appeared, that the carpet did not lie flat in all areas, and that it failed to reach the wall in certain locations. Although Hilton made various attempts to fix the installation, Pittsley initially paid Hilton $3,500 on the contract, but refused to pay the remaining balance of $902.

Pittsley later filed suit, seeking rescission of the contract, return of the $3,500 and other damages. Hilton counterclaimed for the balance remaining on the contract of $902. The trial court found that the UCC did NOT apply, but that the common law of contracts applied. It found there was a 'minor' breach of contract, and found that Pittsley owed the $902 but minus $400 (damages suffered by Pittsley to repair or correct the installation defect). Pittsley appealed, claiming that the UCC applied, and that she had rejected the 'goods' and thus had the 'right to cancel the contract' (as described on page 320 of the text). She also claimed that she was entitled to the refund of the $3,500 plus damages based on 'right to cover' (as described on page 319 of the text). Who wins and why?

GOODS:

Which of the following contracts would not be governed by the UCC?
a. a contract for dentures
b. a contract for the purchase of an Arabian horse
c. a contract for the purchase of an oil painting for $550
d. a contract for the purchase of an ATR jet
e. All of the above are governed by the UCC.

ARGENTINA

The government of Argentina has taken over all the country's banks. No compensation has been paid. Some U.S. citizens and businesses had accounts in the banks. Absent treaty provisions, can the takeover be set aside by a U.S. federal court because no compensation was paid? Or is Argentina immune from review under the act of state doctrine?

BELGIUM:

Belgium arrests an American citizen, while he is visiting Brussels, on
suspicion that he is an international drug smuggler. After a thorough
investigation, Belgium realizes that it has arrested the wrong person. Can
the American citizen successfully sue Belgium in the United States for false
arrest?

*** Please use the FIRAC format.for this case and problem solutions.

Case Analysis
MARK REALTY, INC. v. ROGNESS
418 SO.2D 373 (1982)
District Court of Appeals of Florida

COWART, Judge

Tilman A. Rogness, owner, entered into four separate agreements with Mark Realty, Inc., a real estate broker. They were entitled 'exclusive right of sale' and gave the broker, for a stated period of time, the exclusive right to sell the property for a certain stated price and on certain terms. The broker sued on the four agreements for brokerage commissions, alleging that during the time provided in the agreements the owner had conveyed the four properties. The owner's answer alleged affirmative defenses to the effect that the owner had 'canceled, revoked, and terminated' the brokerage agreements before the properties were sold and that the broker had never performed under the agreements.

The trial judge construed the brokerage agreements to constitute mere offers to enter into unilateral contracts under which the broker would be entitled to a commission only if he performed by â??finding a purchaser of the above property.â? If the documents in question are merely offers limited to acceptance by performance only, the trial judge's analysis and conclusion would be correct.

We cannot agree that the documents were only offers for a unilateral contract. The documents illustrate what has been termed 'the usual practice' in the making of bargains. One party indicates what he will do and what he requires in exchange and the other then agree. These documents, when first executed by the owner and tendered to the broker, constituted offers which, when accepted by the broker by his execution, constituted contracts. The contract is bilateral because it contains mutual promises made in exchange for each other by each of the two contracting parties.

The most common recurring brokerage transaction is one in which the owner employs a broker to find a purchaser able and willing to buy, on terms stated in advance by the owner, and in which the owner promises to pay a specific commission for the service. Such a transaction as this is an offer by the owner of a unilateral contract, an offered promise to pay by the owner, creating in the broker a power of accepting the offer by actual rendition of the requested services. The only contemplated contract between the owner and broker is a unilateral contract -- a promise to pay a commission for services rendered. Such an offer of a promise to pay a commission for services rendered is revocable by the owner by notice before the broker has rendered any part of the requested service.

On the other hand, the transaction between the owner and the broker can be a bilateral contract. An owner who puts his land in the hands of a broker for sale usually clearly promises to pay a commission, but the broker rarely promises in return that he will produce a purchaser, although he often promises, expressly, or impliedly, that he will make certain efforts to do so. If the parties have thus made mutual promises, the transaction no longer has the status of an unaccepted offer â?" there is an existing bilateral contract and neither party has a power of revocation. During the term of such a contract the owner may withdraw any power the owner has given the broker to contract with a third party in the ownerâ??s name, but this is not a revocation of the contract between the owner and the broker and normally such action constitutes a breach of the brokerage contract.

In this case, the broker promised to inspect the property, to list the property with a multiple listing service, to advertise the property in the local newspaper or other media, to furnish information to inquiring cooperating brokers and prospective purchasers, to show the property, to make efforts to find a purchaser, to 'make an earnest and continued effort to sell,' and to direct the concentrated efforts of his organization in bringing about a sale.

In the instant case, the contract clearly provided that the brokerage commission would be paid 'whether the purchaser be secured by you or me, or by any other person.' Thus the contract granted the broker an exclusive right of sale and the trial court erred in construing the agreement as an offer of a unilateral contract revocable at will at any time prior to performance.

The final judgment is REVERSED.
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Problem Solutions

Contractor v. Newfield

Weldon Newfield was having a custom home built. He had a list of certain materials the contractor was to use in building the $270,000 home. Newfield was in Europe and the contractor could not find "Reading Copper Pipe" - one of the required materials. Since Newfield could not be reached and the contractor was under a time schedule, the decision was made to use another brand of copper pipe. When Newfield returned and learned of the problem, he refused to pay any remaining amounts due on the contract ($235,000). Can Newfield do that?