ESSAY EXAM QUESTIONS AND ANSWERS

Specific Performance Against Wilderness Society: If we can establish, by one of the above theories, that there is a valid contract between Pinsky and Dole, we might be able to get the court to order specific performance, in the form of a decree ordering Wilderness Society to convey the land to Pinsky (and a collateral decree ordering Dole to return the money raised to purchase the land for donation to the Society). In support of this request for specific performance, we can point out that the Wilderness Society people are not bona fide purchasers, but in fact had knowledge of the offer to Pinsky. But as a practical matter, I don’t think we’re likely to find a judge who would be willing to turn this land over to a developer like Pinsky, rather than keeping it in its natural state. Specific performance is a remedy very much left to the trial court’s discretion, and I wouldn’t get our hopes up about it. I think the best we can hope for is a breach of contract verdict against Dole, with damages of the $2.5 million profit that Pinsky could have made by selling the land to the Wilderness people. If we can come up with some very specific figures showing how profitable Pinsky World would have been, maybe we can get some damages for these lost profits as well, but I’m afraid they will be held to be too speculative unless Pinsky has previously operated a similar business.

QUESTION 2

The General Construction Co. of Memphis, Tennessee decided to build for itself a new headquarters building of an original and striking design. It secured much publicity in journals read by architects and builders by printing artists’ sketches of the building, located at a dramatic site at a bend in the Mississippi river. In the publicity was included the announcement of a self-imposed deadline for completion, a deadline that was very short by usual standards of the construction industry for a building of that size.

The Frank Corporation is a steel fabricator that buys steel ingots and transforms them into structural steel. On September 1, 2006, the General Construction Co. and the Frank Corporation executed a written contract under which Frank undertook to fabricate and deliver the structural steel called for by General’s specifications, which were made part of the contract. The contract provided a delivery schedule with five lots to be delivered as follows:

Lot I March 6, 2007

Lot II March 27, 2007

Lot III April 10, 2007

Lot IV April 24, 2007

Lot V May 1, 2007

The contract also provided that although the tonnage and value of the lots would differ somewhat, the total contract price of $10 million would be divided into five installments of $2 million each, and that General would pay Frank $1.75 million “within five days after the timely and satisfactory delivery of each lot. The $250,000 withheld from each payment will be paid by General Co. after complete performance, satisfactory to the General Co., of all Frank Co.’s obligations.” The contract also stated: “Because of the importance to the General Co. of completing its own building by the published completion date, time is declared to be of the very essence of this contract and for each day’s delay in delivery of any lot General may retain $5,000 as damages.”

Lot I was delivered on March 12 (6 days late) and on March 14 General mailed a check for $1.75 million to Frank. Lot II was delivered April 6 (10 days late). On April 9 General’s President telephoned Frank’s President to express her concern about the timeliness of future deliveries.

“I know your reputation is on the line, but supplies of steel are getting short. My usual suppliers have failed me and I expect there will be some longer delays. But aren’t you worried about the recent river floods?”

General’s President replied:

“Don’t you worry about us. You go ahead and deliver or I’m going to saw you off.”

By the date of this conversation, April 9, the steel contained in Lot I had been all attached to the foundations of the structure and a few beams from Lot II had been attached (the rest was lying on the ground at the site) when, on the morning of April 11, the levee protecting the area burst and the flood waters of the Mississippi, which were then reaching their greatest height in 100 years, covered the building site to a depth of 15 feet. The Army Corps of Engineers estimates that the water will not subside at the site before the middle of June. Past experience makes it clear that lying under water for two months will make the steel at the site unusable unless cleaned of muck and rust and covered with a special rust inhibitor. The cost of this operation will be at least $1.2 million.

On April 12, Frank faxed General:

“Have not yet obtained steel for Lot III. Best promise from any supplier is delivery to us on May 25. We can complete fabrication of Lot III and deliver it to you by June 15. After that I will do my best to obtain supplies.”

General faxed in reply:

“You have been late with every delivery. We cannot accept any promises from you. We cancel.”

After canvassing all steel fabricators with substantial supplies of steel, General now finds that the best delivery terms are offered by States Steel Corp., which will charge $7.5 million for the balance of the steel due under the Frank contract. States Steel Corp. will promise to begin deliveries July 1 and complete them by August 1. The architects’ journals have published pictures of the original model of the General headquarters building and beside it some steel beams projecting from the river, with such captions as

“Old Man River Rolls Over General And Just Keeps Rolling Along.”

The President of General expresses to you her dismay over the effects of these events on General’s reputation, and her uncertainty as to whether to complete the submerged structure. She wants to know General’s rights against and liabilities to Frank if the building is completed by contracting with the States Steel Corp. for the steel required. What would you advise? Why?

She also asks whether General’s rights or liabilities would be altered if the whole building project is abandoned? What is your answer? Why?