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ANSWERS TO PROBLEMS
1. Owen telephones an order to Hillary's store for certain goods, which Hillary delivers to
Owen. Neither party says anything about the price or payment terms. What are the legal
obligations of Owen and Hillary?
Answer: Implied Contracts. Owen and Hillary’s agreement deals in goods, so the contract
falls within the UCC. Omission of a stated price would require payment of a
2. Minth is the owner of the Hiawatha Supper Club, which he leased for two years to
Piekarski. During the period of the lease, Piekarski contracted with Puttkammer for the
resurfacing of the access and service areas of the supper club. Puttkammer performed
the work satisfactorily. Minth knew about the contract and the performance of the work.
The work, including labor and materials, had a reasonable value of $2,540, but
Puttkammer was never paid because Piekarski went bankrupt. Puttkammer brought an
action against Minth to recover the amount owed to him by Piekarski. Will Puttkammer
prevail? Explain.
Answer: Quasi-Contract. No. Judgment for Minth. In order to establish a cause of action
for unjust enrichment, Puttkammer must be able to demonstrate that (1) a benefit was
conferred on Minth by Puttkammer; (2) Minth knew of or appreciated the benefit; and
(3) Minth accepted or retained the benefit under circumstances making it inequitable for
Minth to retain the benefit without paying for its value. Here, the first and second
3. Jonathan writes to Willa, stating “I'll pay you $150 if you reseed my lawn.” Willa
reseeds Jonathan's lawn as requested. Has a contract been formed? If so, what kind?
4. Calvin uses fraud to induce Maria to promise to pay money in return for goods he has
delivered to her. Has a contract been formed? If so, what kind? What are the rights of
Calvin and Maria?
5. Anna is about to buy a house on a hill. Prior to the purchase she obtains a promise from
Betty, the owner of the adjacent property, that Betty will not build any structure that
would block Anna's view. In reliance on this promise Anna buys the house. Is Betty's
promise binding? Why or why not?
6. Mary Dobos was admitted to Boca Raton Community Hospital in serious condition with
an abdominal aneurysm. The hospital called upon Nursing Care Services, Inc., to
provide around-the-clock nursing services for Mrs. Dobos. She received two weeks of
in-hospital care, forty-eight hours of postrelease care, and two weeks of at-home care.
The total bill was $3,723.90. Mrs. Dobos refused to pay, and Nursing Care Services,
Inc., brought an action to recover. Mrs. Dobos maintained that she was not obligated to
render payment in that she never signed a written contract, nor did she orally agree to
be liable for the services. The necessity for the services, reasonableness of the fee, and
competency of the nurses were undisputed. After Mrs. Dobos admitted that she or her
daughter authorized the forty-eight hours of postrelease care, the trial court ordered
compensation of $248 for that period. It did not allow payment of the balance, and
Nursing Care Services, Inc., appealed. Decision?
Answer: Quasi-Contract. These circumstances establish a contract implied in law or
"quasi contract," which is imposed by law to prevent the unjust enrichment of one party
at the expense of another. The principle of quasi contract is frequently applied in the
7. St. Charles Drilling Co. contracted with Osterholt to install a well and water system that
would produce a specified quantity of water. The water system failed to meet its
warranted capacity, and Osterholt sued for breach of contract. Does the U.C.C. apply to
this contract?
Answer: Contracts Outside the Code. The U.C.C. does not apply to contracts primarily for
services. The test for inclusion is whether the contract's predominant purpose is the
8. Helvey brought suit against the Wabash County REMC (REMC) for breach of implied
and express warranties. He alleged that REMC furnished electricity in excess of 135
volts to Helvey’s home, damaging his 110-volt household appliances. This incident
occurred more than four years before Helvey brought this suit. In defense, REMC pleads
that the Uniform Commercial Code’s Article 2 statute of limitations of four years has
passed, thereby barring Helvey’s suit. Helvey argues that providing electrical energy is
not a transaction in goods under the UCC but rather a furnishing of services that would
make applicable the general contract six-year statute of limitations. Is the contract
governed by the UCC? Why?
Answer: Uniform Commercial Code. There have been only a few cases addressing whether
electricity is considered goods. The courts are divided on the question. In the case upon
which this problem was based, the court held that, yes, this contract is governed by the
9. Jack Duran, president of Colorado Carpet Installation, Inc., began negotiations with
Fred and Zuma Palermo for the sale and installation of carpeting, carpet padding, tile,
and vinyl floor covering in their home. Duran drew up a written proposal that referred
to Colorado Carpet as “the seller” and to the Palermos as the “customer.” The
proposal listed the quantity, unit cost, and total price of each item to be installed. The
total price of the job was $4,777.75. Although labor was expressly included in this
figure, Duran estimated the total labor cost at $926. Mrs. Palermo in writing accepted
Duran’s written proposal soon after he submitted it to her. After Colorado Carpet
delivered the tile to the Palermo home, however, Mrs. Palermo had a disagreement with
Colorado Carpet’s tile man and arranged for another contractor to perform the job.
Colorado Carpet brought an action against the Palermos for breach of contract. Does
the UCC apply to this contract?
Answer: Uniform Commercial Code. The U.C.C. defines "goods" as "all things . . . which
are movable at the time of identification to the contract for sale" and defines a "sale" as
"the passing of title from the seller to the buyer for a price." In this case, the carpeting
10. On November 1, the Kansas City Post Office Employees Credit Union merged into the
Kansas City Telephone Credit Union to form the Communications Credit Union (Credit
Union). Systems Design and Management Information (SDMI) develops computer
software programs for credit unions, using Burroughs (now Unisys) hardware. SDMI
and Burroughs together offered to sell to Credit Union both a software package, called
the Generic System, and Burroughs hardware. Later in November, a demonstration of
the software was held at SDMI’s offices, and the Credit Union agreed to purchase the
Generic System software. This agreement was oral. After Credit Union was converted to
the SDMI Generic System, major problems with the system immediately became
apparent so SDMI filed suit against Credit Union to recover the outstanding contract
price for the software. Credit Union counterclaimed for damages based upon breach of
contract and negligent and fraudulent misrepresentation. Does the UCC apply to this
contract?
Answer: Uniform Commercial Code. Judgment for SDMI. We must determine whether
the oral agreement between SDMI and Credit Union was for goods or services. The test
11. Insul-Mark is the marketing arm of Kor-It Sales, Inc. Kor-It manufactures roofing
fasteners and Insul-Mark distributes them nationwide. Kor-It contracted with Modern
Materials, Inc., to have large volumes of screws coated with a rust-proofing agent. The
contract specified that the coated screws must pass a standard industry test and that
Kor-It would pay according to the pound and length of the screws coated. Kor-It had
received numerous complaints from customers that the coated screws were rusting, and
Modern Materials unsuccessfully attempted to remedy the problem. Kor-It terminated its
relationship with Modern Materials and brought suit for the deficient coating. Modern
Materials counterclaimed for the labor and materials it had furnished to Kor-It. The
trial court held that the contract (1) was for performance of a service, (2) not governed
by the UCC, (3) governed by the common law of contracts, and (4) therefore, barred by
a two-year statute of limitations. Insul-Mark appealed. Decision?
Answer: Contracts Outside the Code. The transaction is predominantly for the performance
of a service and, therefore, is not governed by the Sales article of the U.C.C. Where a
transaction is “mixed,” that is it involves both goods and services, the Sales article of the
U.C.C. will apply only where the “predominant thrust” of the transaction is a sale of
12. In March, William Tackaberry, a real estate agent for Weichert Co. Realters, informed
Thomas Ryan, a local developer that he knew of property Ryan might be interested in
purchasing. Ryan indicated he was interested in knowing more about the property
Tackaberry disclosed the property’s identity and the seller’s proposed price. Tackaberry
also stated that the purchaser would have to pay Weichert a 10 percent commission.
Tackaberry met with the property owner and gathered information concerning the
property’s current leases, income, expenses, and development plans. Tackaberry also
collected tax and zoning documents relevant to the property. In a face-to-face meeting
on April 4, Tackaberry gave Ryan the data he had gathered and presented Ryan with a
letter calling for a 10 percent finder’s fee to be paid to Weichert upon “successfully
completing and closing of title.” Tackaberry arranged a meeting, held three days later,
where Ryan contracted with the owner to buy the land. Ryan refused, however, to pay
the 10 percent finder’s fee to Weichert. Weichert sues Ryan for the finder’s fee. To what,
if anything, is Weichert entitled to recover?
Answer: Quasi Contracts. Judgment for Weichert Co. Realtors. A contract arises from
offer and acceptance, and must be sufficiently definite "that the performance to be
rendered by each party can be ascertained with reasonable certainty."
13. Max E. Pass, Jr., and his wife, Martha N. Pass, departed in an aircraft owned and
operated by Mr. Pass from Plant City, Florida, bound for Clarksville, Tennessee.
Somewhere over Alabama the couple encountered turbulence, and Mr. Pass lost control
of the aircraft. The plane crashed killing both Mr. and Mrs. Pass. Approximately four
and a half months prior to the flight in which he was killed, Mr. Pass had taken his
airplane to Shelby Aviation, an aircraft service company, for inspection and service. In
servicing the aircraft, Shelby Aviation replaced both rear wing attach point brackets on
the plane. Three and one half years after the crash, Max E. Pass, Sr., father of Mr. Pass
and administrator of his estate, and Shirley Williams, mother of Mrs. Pass and
administratrix of her estate, filed suit against Shelby Aviation. The lawsuit alleged that
the rear wing attach point brackets sold and installed by Shelby Aviation were defective
because they lacked the bolts necessary to secure them properly to the airplane. The
plaintiffs asserted claims against the defendant for breach of express and implied
warranties under Article 2 of the Uniform Commercial Code (“UCC”), which governs
the sale of goods. Shelby Aviation contended that the transaction with Mr. Pass had been
primarily for the sale of services, rather than of goods, and that consequently Article 2
of the UCC did not cover the transaction. Does the UCC apply to this transaction?
Explain.
Answer: Uniform Commercial Code. No, plaintiffs’ warranty claim dismissed. The problem
in “mixed” transactions such as this one is to determine whether Article 2 governs the
contract. The test for inclusion or exclusion in the U.C.C. is not whether the contracts are
ANSWERS TO “TAKING SIDES” PROBLEMS
Richardson hired J. C. Flood Company, a plumbing contractor, to correct a stoppage in
the sewer line of her house. The plumbing company’s “snake” device, used to clear the
line leading to the main sewer, became caught in the underground line. To release it, the
company excavated a portion of the sewer line in Richardson’s backyard. In the process,
the company discovered numerous leaks in a rusty, defective water pipe that ran parallel
with the sewer line. To meet public regulations, the water pipe, of a type no longer
approved for such service, had to be replaced either then or later, when the yard would
have to be excavated again. The plumbing company proceeded to repair the water pipe.
Though Richardson inspected the company’s work daily and did not express any
objection to the extra work involved in replacing the water pipe, she refused to pay any
part of the total bill after the company completed the entire operation. J. C. Flood
Company then sued Richardson for the costs of labor and material it had furnished.
(a) What arguments would support J. C. Flood’s claim for the costs of labor and
material it had furnished?
(b) What arguments would support Richardson’s refusal to pay the bill?
(c) For what, if anything, should Richardson be liable? Explain.
ANSWER:
(a) J.C. Flood could argue that (i) Richardson had agreed expressly to the replacement of
the water pipe; (ii) Richardson had agreed impliedly to the replacement of the water
pipe; (iii) the work was necessary, completed and satisfactorily performed; and (iv)
the bill was reasonable in its amount.
