Download Public Option - Contracts - Exam and more Exams Contract Law in PDF only on Docsity! Exam #_________ CONTRACTS LS1 LS2 SYLVESTER FALL 2009 PART TWO When the U.S. Congress passed health care legislation including a “public option” to be administered by the states, the State of California (the “State”) solicited proposals from organizations interested in administering the new program in California. The most impressive proposal was submitted by HealthCo. After several rounds of long meetings and a great deal of detailed discussion, the State and HealthCo signed an agreement in late October 2009 wherein each promised to negotiate with the other “until finalization, not later than December 1, 2009, of an agreement under which HealthCo will administer the new public option health insurance program in California beginning on January 1, 2010.” When HealthCo expressed concern that one month would not be nearly enough time to gear up for a January 1 start, the State agreed and said, “If we are going to do this deal, you had better start getting ready now.” The next week, HealthCo telephoned Dr. Smith, a highly regarded medical systems administrator, to see whether she would be interested in serving as Chief Operating Officer of the new program in California. Dr. Smith said she would think about it. A week later, she wrote HealthCo a letter detailing the terms on which she would accept the job for the five year term that HealthCo had proposed. Upon receiving the letter, HealthCo called immediately and agreed to Dr. Smith’s terms. Dr. Smith quit her job, sold her house in Chicago, and moved with her family to San Francisco. HealthCo then decided that it could win public support by offering free H1N1 vaccinations at clinics throughout California as soon as its contract with the State was finalized and announced. So, during the first week of November 2009, HealthCo sent DrugCo an e-mail message asking for DrugCo’s best price on 250,000 doses of the vaccine. DrugCo replied that it would sell HealthCo 250,000 doses of the vaccine for two million dollars. DrugCo’s reply went on to say, “We can hold this price for you, but not for long; let us know as soon as possible whether you want to buy this vaccine.” The same day, realizing the workers at its vaccination clinics would need rubber gloves, HealthCo perused the trade journals and found an ad offering latex gloves in lots of 1,000 or more at five pair for one dollar. The seller was a company called Latex, and the ad included a telephone number for placing orders. HealthCo called the number and got a recorded message inviting orders. HealthCo left a message providing its phone number, ordering 5,000 pair of gloves, and requesting that Latex “call back to confirm the order ASAP.” Within a few hours, Latex retrieved the message, shipped the gloves, and sent HealthCo a letter acknowledging and detailing the transaction. The next day, before HealthCo had responded to DrugCo, HealthCo read a newspaper report that DrugCo was selling its entire supply of H1N1 vaccine to another buyer. HealthCo immediately contacted DrugCo and ordered 250,000 doses of the vaccine at the two million dollar price specified by DrugCo. Although the newspaper report in fact had been erroneous, Sylvester Contracts I Final Exam, Fall 2009 Page 1 of 2
