A-30 Appendix A Alternate Case Problems—Chapter 9Ap.docx

A-30 Appendix A: Alternate Case Problems—Chapter 9
Appendix A: Alternate Case Problems—Chapter 9 A-31
Alternate Case Problems
Chapter 9
Contract Formation
9–1. Types of Contracts. Professor Dixon was an adjunct
professor at Tulsa Community College (TCC) in Tulsa,
Oklahoma. Each semester, near the beginning of the term, the
parties executed a written contract that always included the
following provision: “It is agreed that this agreement may be
cancelled by the Administration or the instructor at anytime
before the first class session.” In the spring semester of Dixon’s
seventh year, he filed a complaint with TCC alleging that one of
his students, Meredith Bhuiyan, had engaged in disruptive
classroom conduct. He gave her an “incomplete” grade and
asked TCC to require her to apologize as a condition of
receiving a final grade. TCC later claimed, and Dixon denied,
that he was told to assign Bhuiyan a grade if he wanted to teach
in the fall. Toward the end of the semester, Dixon was told
which classes he would teach in the fall, but the parties did not
sign a written contract. The Friday before classes began, TCC
terminated him. Dixon filed a suit in an Oklahoma state court
against TCC and others, alleging breach of contract. Did the
parties have a contract? If so, did TCC breach it? Explain.
[Dixon v. Bhuiyan, 10 P.3d 888 (Okla. 2000)]
9–2. Definiteness of Terms. Southwick Homes, Ltd., develops
and markets residential subdivisions. William McLinden and
Ronald Coco are the primary owners of Southwick Homes. Coco
is also the president of Mutual Development Co. Whiteco
Industries, Inc., wanted to develop lots and sell homes in
Schulien Woods, a subdivision in Crown Point, Indiana. In

September 1996, Whiteco sent McLinden a letter enlisting
Southwick Homes to be the project manager for the developing
and marketing of the finished lots (lots where roads had been
built and on which utility installation and connections to water
and sewer lines were complete); the letter set out the roles and
expectations of each of the parties, including the terms of
payment. In October 1997, Whiteco sent Coco a letter naming
Mutual Development the developer and general contractor for
the houses to be built on the finished lots. A few months later,
Coco told McLinden that he would not share the profits from
the construction of the houses. McLinden and others filed a suit
in an Indiana state court against Coco and others, claiming, in
part, a breach of fiduciary duty. The defendants responded that
the letter to McLinden lacked such essential terms as to render
it unenforceable. What terms must an agreement include to be
an enforceable contract? Did the McLinden letter include these
terms? In whose favor should the court rule? Explain.
[McLinden v. Coco, 765 N.E.2d 606 (Ind.App. 2002)]
9-3. Intention. Before an employee convention, Nationwide
Mutual Insurance Co. created a committee, whose members
included Mary Peterson, to select a theme. The committee
announced a contest for theme suggestions: “Here's what you
could win: His and Hers Mercedes. An all expense paid trip
for two around the world. Additional prize to be announced.
(All prizes subject to availability.)” David Mears submitted the
theme “At the Top and Still Climbing.” At a dinner of
Nationwide employees, Peterson told Mears that he had won
two Mercedes. Mears and others who heard this believed that
he had won the cars. Nationwide never gave him the cars,
however, and he filed a suit in a federal district court, alleging
breach of contract. At the trial, Peterson claimed that she spoke
with a facetious tone and, in reality, had no intention of
awarding the cars. Is Mears entitled to the cars? Why or why
not? [Mears v. Nationwide Mutual Insurance Co., 91 F.3d 1118
(8th Cir. 1996)]
9–4. Consideration. In 1995, Helikon Furniture Co. appointed

Gaede as its independent sales agent for the sale of its products
in parts of Texas. The parties signed a one-year contract that
specified, among other things, the commissions that Gaede
would receive. Over a year later, although the parties had not
signed a new contract, Gaede was still representing Helikon
when it was acquired by a third party. Helikon’s new
management allowed Gaede to continue to perform for the same
commissions and sent him a letter stating that it would make no
changes in its sales representatives “for at least the next year.”
Three months later, in December 1997, the new managers sent
Gaede a letter proposing new terms for a contract. Gaede
continued to sell Helikon products until May 1997 when he
received a letter effectively reducing the amount of his
commissions. Gaede filed a suit in a Texas state court against
Helikon, alleging breach of contract. Helikon argued in part that
there was no contract because there was no consideration. In
whose favor should the court rule, and why? [Gaede v. SK
Investments, Inc., 38 S.W.3d 753 (Tex.App.—Houston [14
Dist.] 2001)]
9–5. Unconscionability. Frank Rodziewicz was driving a Volvo
tractor-trailer on Interstate 90 in Lake County, Indiana, when he
struck a concrete barrier. His tractor-trailer became stuck on the
barrier, and the Indiana State Police contacted Waffco Heavy
Duty Towing, Inc., to assist in the recovery of the truck. Before
beginning work, Waffco told Rodziewicz that it would cost
$275 to tow the truck. There was no discussion of labor or any
other costs. Rodziewicz told Waffco to take the truck to a local
Volvo dealership. Within a few minutes, Waffco pulled the
truck off the barrier and towed it to Waffco’s nearby towing
yard. Rodziewicz was soon notified that, in addition to the $275
towing fee, he would have to pay $4,070 in labor costs and that
Waffco would not release the truck until payment was made.
Rodziewicz paid the total amount. Disputing the labor charge,
however, he filed a suit in an Indiana state court against
Waffco, alleging in part breach of contract. Was the towing
contract unconscionable? Would it make a difference if the

parties had discussed the labor charge before the tow? Explain.
[Rodziewicz v. Waffco Heavy Duty Towing, Inc., 763 N.E.2d
491 (Ind.App. 2002)]
9–6. Covenant Not to Compete. Gary Forsee was an executive
officer with responsibility for the U.S. operations of BellSouth
Corp., a company providing global telecommunications
services. Under a covenant not to compete, Forsee agreed that
for a period of eighteen months after termination from
employment, he would not “provide services * * * in
competition with [BellSouth] * * * to any person or entity
which provides products or services identical or similar to
products and services provided by [BellSouth] * * * within the
territory.” Territory was defined to include the geographic area
in which Forsee provided services to BellSouth. The services
included “management, strategic planning, business planning,
administration, or other participation in or providing advice
with respect to the communications services business.” Forsee
announced his intent to resign and accept a position as chief
executive officer of Sprint Corp., a competitor of BellSouth.
BellSouth filed a suit in a Georgia state court against Forsee,
claiming in part that his acceptance of employment with Sprint
would violate the covenant not to compete. Is the covenant
legal? Should it be enforced? Why or why not? [Bellsouth Corp.
v. Forsee, 595 S.E.2d 99 (Ga.App. 2004)]
9-7. Fraudulent Misrepresentation. Division West Chinchilla
Ranch made numerous TV advertisements that induced listeners
to go into the business of raising chinchillas. The
advertisements stated that, for a payment of $2,150 or more,
Division would send one male and six female chinchillas and—
for an additional sum—cages, feed, and supplies. Division’s
representations were that “chinchilla ranching can be done in
the basement, [and] spare rooms, . . . with minor modifications”
and that chinchillas were “odorless and practically noiseless”
and “a profitable pastime that can explode into a FIVE FIGURE
INCOME.” All statements would lead one to believe that no

special skill was needed in the raising of chinchillas. Based on
these representations, Adolph Fischer and others (the plaintiffs)
purchased chinchillas from Division. None of the plaintiffs was
a sophisticated businessperson or highly educated. It soon
became apparent that greater skill than that advertised was
required to raise chinchillas and that certain statements made by
Division’s sales representatives as to the value of the pelts were
untrue. None of the plaintiffs had financial success with their
growing (ranching) of chinchillas over a three-year period. The
plaintiffs sought to rescind the contracts to get their money
back, claiming fraud on the part of Division. Discuss whether
Division’s statements constitute fraud. [Fischer v. Division
West Chinchilla Ranch, 310 F.Supp. 424 (D.Minn. 1970)]
9-8. Statute of Frauds. Carol Mann and Gerald Harris worked
for Helmsley-Spear, Inc. (HSI), as account managers for various
HSI properties. In 1983, each received a bonus of $50,000 for
their work in converting an HSI apartment complex, known as
Windsor Park, into a cooperative housing unit. The conversion
had taken several years to complete. After they had finished the
Windsor Park conversion, they were asked to work on another
cooperative conversion of two HSI apartment buildings known
as Park West Village. Mann and Harris were orally promised
compensation, over and above their base salaries, on the basis
of a formula similar to the one that had been orally agreed upon
with regard to the Windsor Park conversion. In 1987, after they
had completed the conversion of Park West Village, they were
fired, and HSI refused to pay them the additional compensation.
Among other things, HSI contended that their oral agreement
concerning the extra compensation was unenforceable under the
Statute of Frauds. How should the court rule on this issue, and
why? [Mann v. Helmsley-Spear, Inc., 177 A.D.2d 147, 581
N.Y.S.2d 16 (1992)]
9–9. Third Party Beneficiary. Acciai Speciali Terni USA, Inc.
(AST), hired a carrier to ship steel sheets and coils from Italy to
the United States on the M/V Berane. The ship’s receipt for the
goods included a forum-selection clause, which stated that any

dispute would be “decided in the country where the carrier has
his principal place of business.” The receipt also contained a
“Himalaya” clause, which extended “every right, exemption
from liability, defense and immunity” that the carrier enjoyed to
those acting on the carrier’s behalf. Transcom Terminals, Ltd.,
was the U.S. stevedore—that is, Transcom off-loaded the vessel
and stored the cargo for eventual delivery to AST. Finding the
cargo damaged, AST filed a suit in a federal district court
against Transcom and others, charging in part negligence in the
off-loading. Transcom filed a motion to dismiss on the basis of
the forum-selection clause. Transcom argued that it was an in
tended third party beneficiary of this provision through the
Himalaya clause. Is Transcom correct? What should the court
rule? Explain. [Acciai Speciali Terni USA, Inc. v. M/V Berane,
181 F.Supp.2d 458 (D.Md. 2002)]
9-10. A Question of Ethics
Jacobsen attended Columbia University from 1951 to 1954.
During his years at Columbia, Jacobsen was a difficult student
and critical of his professors. He shifted his academic interests
a number of times—from physics to social work to creative
writing and other areas. In his last year, he attended classes
only as he chose, and he rejected the university’s regimen
requiring examinations and term papers. Ultimately, he failed to
graduate because of poor scholastic standing. When Columbia
sued Jacobsen for $1,000 in tuition still owed by him, Jacobsen
countered with the allegation that the university had failed to im
part the “wisdom” promised—by its motto, its brochures, the in
scriptions over its buildings, in its presidential addresses, and
so on. Because Columbia had promised something it could not
deliver, it was guilty of misrepresentation and deceit and should
return to Jacobsen all the tuition he had paid—$7,016. [Trustees
of Columbia University v. Jacobsen, 53 N.J.Super. 574, 148
A.2d 63 (1959)]
1. Do you agree with Jacobsen that Columbia, by implicitly

promising to impart wisdom, was guilty of misrepresentation?
Can “wisdom” be imparted?
2. What exactly is the nature of a university’s contractual duty
to its students?
3. Review the list of equitable maxims in Chapter 1. Which
maxim is most appropriate to Jacobsen’s behavior in this case?
A-28

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