Business law essay questions

1. Jewell-Rung was a Canadian corporation that imported and sold men’s clothing wholesale. Haddad was a New York corporation that manufactured and sold men’s clothing under the “Lakeland” label. The companies agreed that Haddad would sell 2,325 Lakeland garments to Jewell-Rung for $250,000. Jewell-Rung began to take orders for the garments from its Canadian customers. Jewell-Rung had orders for about 372 garments when it learned that Haddad planned to allow another company, Olympic, the exclusive Canadian right to manufacture and sell Lakeland garments. Jewell-Rung sued Haddad for its lost profits. Haddad moved for summary judgment, claiming that Jewell-Rung could not recover lost profits because it had not covered. Is Haddad right? If so, why might Jewell-Rung not have covered?


2. Lewis River Golf, Inc., grew and sold sod. It bought seed from defendant, O. M. Scott & Sons, under an express warranty. But the sod grown from the Scott seeds developed weeds, a breach of Scott’s warranty. Several of Lewis River’s customers sued, unhappy with the weeds in their grass. Lewis River lost most of its customers, cut back its production from 275 acres to 45 acres, and destroyed all remaining sod grown from Scott’s seeds. Eventually, Lewis River sold its business at a large loss. A jury awarded Lewis River $1,026,800, largely for lost profits and loss of goodwill. Scott appealed, claiming that a plaintiff may not recover for lost profits and goodwill. Comment.



3. The AM/PM Franchise association was a group of 150 owners of ARCO MiniMarket franchises in Pennsylvania and New York. Each owner had an agreement to operate a gas station and mini-market, obtaining all gasoline, food, and other products from ARCO. The association sued, claiming that ARCO had experimented with its formula for unleaded gasoline, using oxinol, and that the poor-quality gas had caused serious engine problems and a steep drop in customers. The association demanded (1) lost profits for gasoline sales, (2) lost profits for food and other items, and (3) loss of goodwill. The trial court dismissed the case, ruling that the plaintiff’s claims were too speculative, and the association appealed. Please rule.

5. YOU BE THE JUDGE WRITING PROBLEM Clark Oil agreed to sell Amerada Hess several hundred thousand barrels of oil at $24 each by January 31, with the sulfur content not to exceed 1 percent. On January 26, Clark tendered oil from various ships. Most of the oil met specifications, but a small amount contained excess sulfur. Hess rejected all of the oil. Clark recirculated the oil, meaning that it blended the highsulfur oil with the rest, and it notified Amerada that it could deliver 100 percent of the oil, as specified, by January 31. Hess did not respond. On January 30, Clark offered to replacetheoilwithanentirelynewshipment,duetoarriveFebruary1.Hessrejectedthe offer. On February 6, Clark retendered the original oil, all of which met contract terms, and Hess rejected it. Clark sold the oil elsewhere for $17.75 per barrel and filed suit. Is Clark entitled to damages? Argument for Clark: A seller is entitled to cure any defects. Clark did so in good faith and offered all of the oil by the contract deadline. Clark went evenfurther,offeringanentirelynewshipmentofoil.Hessactedinbadfaith,seekingto obtain cheaper oil. Clark is entitled to the difference between the contract price and its resaleprice.ArgumentforHess:Hesswasentitledtoconforminggoods,andClarkfailed todeliver. Underthe perfecttender rule, thatisthe end ofthe discussion. Hesshadthe right to reject non-conforming goods, and it promptly did so. Hess chose not to deal further with Clark because it had lost confidence in Clark’s ability to perform.

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