CONTRACTS
PROFESSOR JANICE KOSEL
Final Exam/Spring 2003

INSTRUCTIONS

1. You have three (3) hours to complete this exam. You may allocate your time as you wish.

2. This is a closed book exam. NO materials may be used.

3. There are two (2) parts to this exam.

4. Please allocate your time as you wish.

5. Write your exam number on your exam envelope, at the top of this exam question packet, your ParScore answer sheet and any used blue books. Do not use your name, student ID number or Social Security Number on any exam materials.

6. At the conclusion of the exam, return all exam materials to the exam envelope and submit it to the proctor. Do not seal the envelope.


Part II: Essay

Nellie was new to the neighborhood. Fortunately, she had a lovely real estate agent, Renata, who introduced her to the neighbors and made recommendations of babysitters, doctors, and other service providers. Unfortunately, two of those service providers did not work out very well.

A

Renata recommended Carlos the contractor to remodel the guest bathroom. Carlos prepared a contract describing the work and the price—$15,000. The contract contained the following provision: “This is the entire agreement between the parties.”

The day work began; Carlos came to Nellie wringing his hands. He showed her where his crew had begun the demolition work. When they pulled up the existing linoleum, they discovered that the toilet leaked – extensive water damage meant that the whole floor would have to be replaced at an additional cost of $3,000. Nellie wasn’t happy. Indeed, she wondered what fixed bids were for. But she told Carlos to proceed.

The work continued with no further problems until the very end when Carlos was ready to install the tile. He telephoned Nellie to check on the color of the grout (it was not specified in the contract). Carlos left a message telling Nellie that if he didn’t hear from her by 10:00 am he would use the standard color—white. Nellie didn’t get the message until 5:00 pm because she hade been in a meeting all day. Although she hadn’t yet communicated her decision to Carlos, she had chosen dark brown grout to hide the dirt and mold. When she got home that afternoon, the tile work was complete. Carlos refuses to redo the tile setting unless Nellie pays an additional $1,500.

Advise Nellie. If she had consulted you earlier, what would you have suggested?

B

Renata introduced Nellie to the members of the local gourmet club. They met monthly at different members homes to partake of delicacies and discuss food and wine and restaurants. Nellie’s idea of a home cooked meal was frozen pasta nuked in the microwave, but she enjoyed the gatherings—until it was her turn to host the third event. In a panic, she turned to Renata for a reference and was given the name of a new, reasonably priced caterer, Christine.

Renata explained the nature of the occasion to Christine and asked her advice. Christine suggested a meal with an international theme. Nellie agreed and left the details to Christine.

Nellie was enjoying the meal and her event until she noticed some of the guests smirking and then becoming strangely silent as she approached. She checked in the mirror to see if she had food on her tooth but that wasn’t the problem. And there was more than enough food. Indeed, people really weren’t eating all that much.

The next morning, Nellie was mortified when the president of the gourmet club called to tell her she wasn’t welcome at any future events. When Nellie asked why, the president explained that she had made a mockery of the event by telling everyone she had a private chef and then serving frozen taquitos, egg rolls and lasagna from Costco matched with a $3.99 Australian wine from Trader Joe’s.

Nellie is humiliated. She has already paid Christine $50 a head for a total of $2,000 for catering the meal. She has also booked Christine for her parents’ 50th wedding anniversary party next month. Advise Nellie.