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These examination questions must be returned at the end of the examination. SANTA CLARA UNIVERSITY
Contracts Spring semester
The revised examination rules issued June 1993 apply to this examination, except that this is a limited open book examination. Instructions: 1. This is a limited open book examination. During the examination you may consult your casebook, Selections for Contracts, Drafting Contracts, class handouts, and any notes, outlines, charts, or other form of your own written work product. No other sources may be consulted. 2. In Questions 1 and 2, provide analysis which supports the conclusions you reach. Question 3 requires drafting and commentary. 3. In determining an appropriate grade for your examination, I look for ability to identify issues, demonstrated understanding of legal principles and relationships, skill in using the statutory law we have studied, accuracy, clarity and creativity of analysis, organization and conciseness of response, good English expression, and, in Question 3, drafting skills. 4. Recommended time allocations:
Question2:1-1/2 hour(11:00 a.m.-12:30 p.m.) Question3:1/2 hour(12:30-1:00 p.m.)
Question 1 (Recommended time: 1-1/2 hour) First she bought a parcel of undeveloped real property. After building her home, she engaged an architect to design the pool. In a written agreement with the architect the architect agreed to design and prepare specifications for the pool, to oversee construction of the pool, and to issue certificates of satisfaction at stages of the construction if the construction complied with specifications. The architect prepared a design and specifications. Specifications included Olympic length dimensions (to the inch) and one inch mosaic tile lines across the width of the bottom of the pool located precisely ten yards from each end of the pool. The lines are intended to alert a swimmer that she is nearing the end of the pool and must prepare to execute a precisely timed turn. The architect set forth the design and specifications in a 20 page document containing a blueprint and 27 numbered paragraphs. Some of the paragraphs contained specifications peculiar to this project. Some of the paragraphs contained routine specifications used in most pool construction. Some of the paragraphs contained boilerplate, including a standard merger clause. Rodriguez reviewed the document and approved the design and specifications. She read the merger clause but did not understand it or ask what it meant. After soliciting bids for construction of the pool, Rodriguez engaged a contractor to build the pool. In a written agreement with contractor the contractor agreed "to build the pool in accordance with the 20 page document furnished by architect attached hereto and incorporated herein by this reference." Rodriguez agreed to pay a total of $150,000 for the work, $75,000 payable after completion of half of the work, upon the architect's issuance of a preliminary certificate of satisfaction, and $75,000 payable upon completion of the work, upon issuance of the architect's final certificate of satisfaction. A few days prior to execution of the agreement with the contractor, Rodriguez told her architect that she wanted the pool to include a system of underwater cameras built into the sides of the
pool as an aid to her training. She authorized the architect to act on her behalf in accomplishing this objective. Thereafter, but before Rodriguez and the contractor executed their written agreement, the
architect had a After execution of the agreement by Rodriguez and contractor, construction proceeded. After 1/2 of the work was completed, the architect, following inspection of the project, issued a preliminary certificate of satisfaction and Rodriguez paid $75,000 to contractor. In inspecting the construction and in issuing the preliminary certificate of satisfaction, architect failed to notice: 1. The absence of necessary preparation for installation of an underwater camera system; 2. That the length of the pool was 3 inches short of specifications; 3. That the mosaic tile lines at the bottom of the pool were 9 instead of 10 yards from each end of the pool. Upon completion of the project, the architect failed to notice the same problems and issued a final certificate of satisfaction. However, Rodriguez did notice the problems and refused to pay the remaining $75,000 to the contractor. Threatened with suit by the contractor, Rodriguez has sought your advice. What are her rights and remedies against or her obligations and liabilities to contractor?
Question 2 (Recommended time: 1-1/2 hour) Note: Article 2A of the Uniform Commercial Code applies to leases. The following question involves both a lease and a sale. However, you should assume for purposes of the question that Article 2, rather than Article 2A, applies to the entire transaction. Duplitex, the manufacturer of duplicating machines, was anxious to win a contract from University to lease duplicating machines to University. During negotiations Duplitex suggested that it might be possible to allow University a discount on the purchase of paper for the duplicating machines, for the entire term of the lease, if University agreed to lease duplicating machines from Duplitex for a five year period. At the close of one negotiating session Duplitex gave University a copy of its standard form printed lease agreement. The lease agreement contained several blank spaces in which to fill in the name of the lessee, the number of duplicating machines, the period of the lease, the starting date of the lease, and the amount of the monthly rental. The lease agreement included several other clauses, including the following clause: 13. In connection with the lease of said duplicating machine(s), Duplitex shall sell duplicating paper to lessee at ___ % of its standard price. Duplitex reserves the right to discontinue this discount upon six months prior written notice. Lessee shall purchase all of its duplicating paper for said duplicating machines from Duplitex. Should lessee not buy paper from Duplitex for any reason whatsoever, lessee shall remain obligated for the lease of duplicating machines. After investigating other alternatives, University sent a signed letter to Duplitex reading, in pertinent part, as follows: ``We would like to enter into a lease agreement for 25 duplicating machines for a period of five years at the $100,000 figure previously discussed and pursuant to attached. If not pursuant to attached, we would not be desirous of proceeding." The attachment referred to in the letter was the standard form lease agreement which Duplitex had given to University. University had not written anything in the blanks on the form lease agreement with the exception that it added the figure 75% to clause 13 and lined through two sentences of clause 13 such that clause 13 looked as follows: ``In connection with the lease of said duplicating machine(s), Duplitex shall sell duplicating paper to lessee at 75% of its standard price. Two years into the lease agreement, Duplitex notified University in writing that the discount on purchase of paper would be eliminated during the last two years of the lease. University promptly responded: "We have received your notification but fully expect you to continue offering us the agreed discount for the remaining period of the lease term." Two months after responding to Duplitex, University entered into a more favorable lease agreement with another lessor of duplicating machines. It sent a letter to Duplitex cancelling
the lease with Duplitex and inviting Duplitex to pick up its duplicating machines. The cancellation letter sent by University crossed in the mail with a letter from Duplitex to University in which Duplitex
said that, upon reconsideration, it would continue the discount for the entire term of the lease.
Question 3 (Recommended time: 1/2 hour) You represent a husband and wife who wish to have a child. The wife is incapable of bearing children. However, it is possible for them to conceive a child through in vitro fertilization and, under the law of the relevant jurisdiction, it is legal for a surrogate mother, for compensation, to give birth to the child and surrender it to the genetic parents. Your clients have located a surrogate mother. They have drafted a short surrogacy contract containing only provisions dealing with the obligation of the surrogate mother to bear and
surrender the child and the obligations of your clients to supply a fertilized egg, arrange for implantation, pay for medical expenses, and pay the surrogate mother a fee for her services. a. Activities or behavior of the surrogate mother to be prohibited during the pregnancy and activities or behavior of the surrogate mother to be required during the pregnancy; b. Representations by the surrogate mother about herself, including her health, behavior and experiences. Your clients see the wisdom of your suggestions and ask that you draft appropriate provisions for their review and consideration. Draft provisions which you think will appropriately respond to the issues mentioned in paragraphs a and b, above. In addition, comment on your draft in ways which will help me understand: choices you made in language, structure or style; reasons for deliberate omissions or vagueness; and problems not yet adequately resolved in your draft.
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