INSTRUCTIONS

This is a closed book exam. There arc TWO PARTS to this examination -- MULTIPLE CHOICE and ESSAY.

PART I, the MULTIPLE CHOICE segment, contains 16 questions and is WORTH 1/3 of your grade. Indicate the best answer on the ParSCORE Test Form provided.

PART II, the ESSAY segment is WORTH 2/3 of your grade. Remember to take your time. Read, think, analyze and organize your answer before you begin to write. If you believe you lack sufficient facts to answer the question, please specify what additional information you require and how it will affect your answer.

The total time for this exam is 3 hours. You may allocate your time as you wish.

Turn in all questions, scratch paper, blue books, and your multiple choice answer sheets after the conclusion of the exam.

Good luck and have a great summer!

1. Assume the UCC does not apply to the following transaction:

Because of previous dealings with an insurance company, Sardo the jeweler thought he had learned more than he ever wanted to know about the American legal system. He didn't want to pay legal fees so he drafted his own company documents including a sales receipt which said in full:

"Received from _______________ the sum of $_______________.

Final sale.  No refunds or exchanges."

On February 10, Sardo sold a two carat diamond engagement ring to his niece's boyfriend, Benny. Sardo helped Benny pick out the very nicest stone he could afford. Sardo assured Benny that, if things didn't work out with his niece Nellie, the jeweler would give a full refund.

When Nellie discovered she wasn't pregnant after all, she turned down Benny's offer of marriage in favor of attending law school in California. When Benny asked Sardo for the promised refund, Sardo refused. Now Benny is suing Sardo.

Who will prevail? Why?

2. Sardo hired Manuel, who operates a mail order company, to distribute flyers to promote his business. The advertisement featured a heart-shaped locket, retail value $175, available for purchase with the coupon at a price of $99. The flyers were to be distributed on or before January 31. Unfortunately, the flyers were not distributed until February 21 because of dely in getting copies of other advertisements from the
printer. When only one customer presented the coupon (on February 24), Sardo refused to pay Manuel the contract amount of $1,500. Manuel has sued Sardo in small claims court.

Who will prevail? Why?

3. Before Sardo opened his jewelry store, he signed a lease with Laura to rent a small retail space. The lease was for a term of fifteen years. One provision of the lease (#13.4) was somewhat unusual. At the end of five years, Laura agreed to make whatever leasehold improvements she and Sardo could agree upon at a cost not to exceed $10,000. If Sardo and Laura failed to agree on leasehold improvements, either party had the option to cancel the remainder of the lease. The provision was inserted at Sardo's insistence because he thought the premises were rather tawdry, but Laura insisted she didn't have the money to spiff the place up right away. She thought she might in a few years.

At the end of five years, Sardo contracted Laura to discuss leasehold improvements. Laura, forgetting the terms of the lease, told Sardo she wasn't making enough on the deal to justify the expense; he would just have to stay where he was and like it or be liable for breach if he went elsewhere. Sardo sent Laura a formal notice to cancel the lease pursuant to provision 13.4 and signed a lease for a shop in a new strip mall.

Laura is furious because she is unable to get a new tenant who will pay rent equal in amount to Sardo's for premises in such poor condition. She is suing Sardo for breach of contract.

Who will prevail? Why?