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These examination questions must be returned at the end of the examination. SANTA CLARA UNIVERSITY
The revised examination rules issued June 1993 apply to this examination, except that this is a limited open book examination. 1. This is a limited open book examination. During the examination you may consult your casebook, class notes and handouts, and any other notes, outlines, charts, or other form of your own written work
product. No other sources may be consulted. 3. I do not grade by awarding points and establishing a curve. Rather, I consider the net impression made by all of your answers. I look for ability to identify issues, demonstrated understanding of legal principles and relationships, accuracy, clarity and creativity of analysis, and organization and conciseness of response. 4. There are two questions on the examination. I estimate 1-1/2 hours for your response to Question 1 and 1-1/2 hours for your response to Question 2. You have an additional 1/2 hour to complete the exam.
QUESTION 1 On December 1, 1993, the City of Ecoville invited bids for the exclusive right to collect and dispose of the city's residential trash for a period of five years, commencing May 1, 1994. Sealed bids were to be submitted no later than January 30,1994. The bid invitation included a copy of the 30 page contract drafted by the city which would be signed by the city and the successful bidder. A portion of the bid invitation instructed
bidders to base their bids on "the current official map of the City of Ecoville available from the main branch of the Ecoville library." Prior to signing the contract, Mother Earth's president and representatives of the city discussed several aspects of the contract. As a result of these discussions, they made and initialed several handwritten changes to the typewritten contract before signing the contract. None of the changes so made bear any relevance to the dispute described below. Mother Earth, Inc. commenced operations on May 1, 1994. Within two weeks, city offices were deluged by hundreds of calls from angry residents complaining about missed or delayed trash collection. Investigation by city officials revealed two basic problems: (1) Elderly residents of 1000 households expected that trash collectors would carry trash cans from back yards to the trash trucks, consistent with the widely known practice of the previous
trash hauler. Mother Earth, Inc. did not follow this practice. As a result, trash from households of many elderly residents was not collected the first week of May and many residents of such households had
great difficulty in getting trash curbside during the second week of May. You are a lawyer representing Mother Earth, Inc. You are scheduled to meet with lawyers for the city tomorrow afternoon to discuss the problems which have arisen and seek a negotiated settlement of differences. In preparation for the meeting, you studied the 30 page typed contract with the city. Three paragraphs of the contract read as follows: 52. Supplementary services: Mother Earth, Inc. will assist disabled residents and other needy persons by carrying trash containers to the collecting vehicle from places in which such residents customarily locate trash containers, provided, however, that city shall furnish Mother Earth, Inc. with the addresses of such households. 66. No modification of this agreement shall be of any force or effect unless in writing signed by both parties. 73. This contract contains the entire agreement of the parties, to the exclusion of all other prior or contemporaneous agreements, written or oral. The contract makes no other mention of the kind of services referred to in paragraph 52. Your client has told you that it never agreed to provide such services to households with elderly residents and that to do so would significantly increase its costs. In addition, your client has told you that the city never furnished addresses of households with elderly residents. City officials maintain that at the meeting preceding the signing of the contract the president of Mother Earth, Inc. orally agreed to extend paragraph 52 services to households with elderly residents and that the parties simply forgot to clarify that point in the handwritten changes they made to the contract prior to signing it. The city also maintains that it didn't furnish addresses to Mother Earth, Inc. because in April, 1994, representative of Mother Earth, Inc. called the city and said: "We got the paragraph 52 addresses from the prior trash hauler." In preparation for the meeting you also learned from your client that, in preparing its bid, your client had studied the 1993 official map of Ecoville rather than the 1994 official map. The 1994 official map showed the new recently developed subdivisions referred to above. The 1993 official map did not show those subdivisions. The 1994 official map was published annually on January 2nd and was first available for reference at the main branch of the Ecoville library on January 15, 1994. Your client discovered the existence of the new subdivisions after signing the contract and before beginning performance. Because of its desire to preserve good relations with the city, your client refrained from mentioning its discovery to the city. Instead, it scheduled trash pick up from the new subdivisions on Wednesdays, and hoped (too optimistically, as it turned out) that trucks assigned to adjacent areas could, if assigned highly experienced crew, cover the additional residences without delay. In a letter to your client requesting the meeting, the city described the problems and also stated: "We must insist that you rectify these problems immediately, without additional charge. In the event you fail to do so, we will cancel our contract with you, hire another trash management company, and hold you responsible for damages". Your client is considering how it wishes you to respond to the city in the meeting scheduled for tomorrow. It wants your opinion as to its chances should the matter proceed to litigation, and the likely remedies for the prevailing party, should it refuse to accede to the city's demands. Provide that opinion and the legal analysis upon which it is based.
QUESTION 2 Federal regulations require that municipalities with populations in excess of 50,000 residents as of December 31, 1994, reduce the use of landfill for disposal of residential trash, beginning January 1, 1995, to 30% less than used for such purpose during the 1994 calendar year. Federal regulations vest discretion in the Environmental Protection Agency to withhold federal toxic cleanup funds from any municipality failing to meet the landfill reduction requirements. The City of Ecoville, expecting its population to exceed 50,000 by December 31, 1994, entered negotiations with ReCycleCorp (hereafter "RCC") to custom design and manufacture
recycling equipment for the city and to install such equipment in a waste recovery facility (hereafter "WRF") being built by the city. The equipment was to perform several functions, including
discrimination between several different kinds of plastic products and diversion of those different kinds of plastic products into different streams of recycled materials by means of cutting edge As a result of the negotiations, specifications for the equipment were drafted by RCC and initialed by both parties, the parties agreed on a price, but times for performance were left for further negotiation. Among other specifications, the equipment was to divert to recycling an average of 35% of all trash materials delivered to the WRF each day. Thereafter, without the further negotiations contemplated, the city sent a purchase order to RCC for the equipment. The purchase order incorporated the specifications by reference, named the price previously agreed, and stated the following times for performance: (1) Delivery and installation of the equipment by RCC no later than September 30, 1994, testing and adjustments of the equipment by RCC during October and November, 1994, and full and proper functioning of the equipment by December 31, 1994. (2) Specified progress payments by the city on October 1, 1994, December 1, 1994, and January 15, 1995. RCC responded to the purchase order with its Acknowledgment of Order. Pertinent portions of the Acknowledgment provided: "We hereby accept your purchase order, except that equipment to be fully operational per specifications no later than January 15, 1995." "This Acknowledgment shall not operate as an acceptance of your purchase order unless you agree to all of the terms of this Acknowledgment." The city did not respond to the Acknowledgment of Order. Nonetheless, RCC undertook performance. RCC timely manufactured and installed the equipment and timely undertook testing and
adjustments. By the end of October, 1994, it had determined that the electronic scanning portion of the equipment was not properly diverting enough plastic materials from the stream of trash and that, as a In early November, RCC notified the city of the difficulty and advised the city that it was seeking to replace the malfunctioning component part. Fearing loss of federal funding if RCC were unable to meet its commitment, the city notified RCC that it intended to withhold the December 1, 1994 progress payment unless assured of RCC's ability to meet its commitment. RCC responded in a letter in which it said: "We have contacted our supplier and demanded prompt replacement of the malfunctioning component part. We expect the replacement part to be available by December 15, 1994 and expect that the equipment will be fully operational by January 15, 1995. The city withheld the December 1, 1994 progress payment and RCC, in turn, notified the city that it was suspending its performance until the progress payment was received. The city operated the WRF with the equipment sold to it by RCC. The equipment continued to divert 28% of all trash for recycling. In early, 1995, the city sued RCC for breach of contract. RCC cross-complained for breach by the city. During discovery in the litigation, it has been determined that: (1) The city learned in September, 1994 of the prospective relocation of one of the major employers located in the City. As a result of this relocation the city could have reasonably predicted that the city would not reach a population of 50,000 until December, 1997. However, no city official undertook to revise its previous population estimate. (2) RCC has learned from the supplier of the component part that the technological problems with the component part cannot be solved until development of a new computer chip expected by the end of 1998. You are a judge assigned to a pre-trial settlement conference in the litigation. As part of your function in such a conference, you offer your assessment to the parties of likely liability and remedies. What is your assessment and what is the legal analysis upon which it is based?
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