Written Publishing Agreement - Contracts - Exam, Exams of Contract Law

Download Written Publishing Agreement - Contracts - Exam and more Exams Contract Law in PDF only on Docsity! EXAM NO. __ CONTRACTS Professor John Orcutt Fall Semester 2009 FINAL EXAMINATION -IN CLASS INSTRUCTIONS: 1. This is a closed-book examination. You may not bring any materials to the examination with the excilPtion of ESL students who are allowed to bring and use a Home Language/English dictionary. Calculators, however, are permitted - although I do not believe they will be necessary. 2. This examination is worth 510 points (or 85% of your final grade). The examination consists of 8 essay questions with the following point distributions: • Question 1 = 100 points • Question 4 = 100 points • Question 7 = 30 points • Question 2 = 20 points • Question 5 = 80 points • Question 8 = 30 points • Question 3 = 60 points • Question 6 = 90 points • Question 7 = 711, minutes • Question 8 = 711, minutes • Question 4 = 25 minutes • Question 5 =20 minutes • Question 6 = 22.5 minutes I have written this examination as a 127y,-minute examination (2 hours and 711, minutes). It is your responsibility to apportionyour time appropriately amongst the questions. If you base your time on the possible points per question, the time apportionment should be roughly as follows: • Question·1 = 25 minutes • Question 2 = 5 minutes • Question 3 = 15 minutes To provide some cushion in your taking of the exam and to allow you to take time to be more thoughtful - but not necessarily more long-winded, I am giving you an extra 2211, minutes, so you will in fact have 2 hours and 30 minutes (150 minutes) for the exam. 3. The grading of examinations is anonymous. So, you must write your examination number on the examination and your blue book. YOU MAY NOT WRITE YOUR NAME ON ANYTHING - YOU MAY ONLY USE YOUR EXAM NUMBER. 4. Please write your answers in a blue book. Remember to write your examination number on your blue book. The only answers that will be graded are the answers written into a blue book. While you are free to use scratch paper, answers written on scratch paper, oranything else other than a blue book, will not be read and will not,be counted for any credit. Please write only on the front side of the.pages in the blue book. Please remember that organization, persuasiveness, neatness and legibility all'count in determining your grade on the essay answers. To improve the organization of an answer, you may wish to quickly outline/he answer on a separate sheet of paper pribr to writing your full answer in the blue book. 5. I have tried my best to write and proofread the exam so that there are no distracting typos or other errors - but, I may not have been totally successful. If you believe there is a typo or other error that makes it difficult to answer a particular question, provide your best answer and write out the error in your blue book and any assumption you used to answer the question. Be sure to indicate the number of the question involved. 6. For those of you who are taking this exam on a laptop computer, the above rules are modified to permit usage of a laptop and are supplemented by the laptop exam rules that are prOVided to you by the Registrar. ' Good luck on the examination! DO NOT TURN TO PAGE 2 UNTIL THE PROCTOR TELLS YOU TO BEGIN Page 1 of? EXAM NO. BACKGROUND INFORMATION FOR QUESTIONS 1 AND 2: Neil Patrick Harris ("NPH") recently wrote an action-adventure novel (the "Novel") that centered on two American citizens who were mistaken for terrorists and sent to the Guantanamo Bay. detention camp. The book follows the exploits of the two characters as they escape from Guantanamo Bay and then go into hiding in a number of southern states. In September 2009, NPH entered into a written publishing agreement (the "Publishing Agreement") with Fox Press ("Fox") to pUblish the Novel. The Publishing Agreement provided, in. relevant part: ,- • NPH granted to Fox an exclusive license to pUblish and distribute the Novel; / .., • Fox promised to print a minimum of 20,000 hard bound copies of the Novel and 80,000 paperback copies of the Novel; • Fox promised to begin distribution of the Novel on February 1, 2010, and to use marketing and promotional practices- including organizing a book tour - that are con.sistent with industry practice for potential best-selling novels; and . • Fox promised to pay NPH a royalty of 10% of net sales. NPH provided Fox with a complete manllscript of the Novel, and Fox loved it..Fox expected the Novel to be a best-seller. Fox has found that author participation in the marketing and promotional efforts is crucial to successful book sales. As a result, Fox required NPH to make the following additional commitment in the Publishing Agreement: Clause 3: In connection with the release of the Novel, NPH shall make himself available to perform reasonable marketing and promotional efforts in 'the United States to help support sales of the Novel. Fox will work with NPH to establish a reasonable marketing and promotional schedule. Once that schedule is mutually established between Fox and NPH, NPH will be obligated to make each oftheagre~d upon appearances. NPH's participation in the marketing and promotibnal efforts is of the utmost importance to Fox and Fox's promise to publish the Novel.· Fox would not.have entered into the Publishing Agreement were it not for NPH,'s commitment under this Clause 3. As part of the established marketing and promotional schedule, Fox arranged for NPH to appear at a major conference for book retailers on December 5, 2009. The purpose of NPH's appearance was to create some pre-pUblication "buzz" forthe book. On December 4th , NPH found out that a very high-profile neo-Nazi author would also be presenting at the conference. NPH was uncomfortable presenting at the same conference as,a neo-Nazi, so he called Fox and explained that he would not be presenting at the conference. Fox insisted that NPH present,at which point NPH simply hung up the phone. NPH did.not presentat, or even attend, the December 5th conference. .' Fox was apparently very upset over NPH's "no show" and sent him the following letter: "December 7,2009 Dear Mr. Harris: Your failure to show up for the December 5th book retailers conference is completely unacceptable. We do not t()leratesuch unprofessional behavior from our authors and are Page 20f7 EXAM NO. __ This whole matter has gotten out of hand. We appreciated the high quality of your work while at Acme and we would like your parting with Acme to be completely amicable. In that spirit, Acme agrees to pay you $10,000 if you promise not to file a lawsuit against Acme under the Bonus Agreement and otherwise release all claims that you might have, now or in the future, that arise out of your former employment with Acme. We think this is a very fair resolution to our matter. You have until 5:00 pm on December 4th to respond. Very truly yours, Perry Mason Managing Partner Acme Law Firm" 1212: Elle was not happy with Acme's letter and called Perry. Elle and Perry had the following conversation: Elle: I am shocked by your letter. I do not find your offer to be 'amicable' at all. I think it is an insult. Perry: I am sorry that you feel that way. Elle: Could you increase the payment to $15,OOO? Perry: No. 1213: After a good night's sleep, Elle decided that she had better things to do than sue Acme, so she called Perry again: Elle: I accept your offer for $10,000 and I'll release all claims. Perry: I am sorry, but there is nothing to accept. Acme pulled its offer after your phone call yesterday. We have dropped our offer to $5,000. Please analyze whether Elle entered into an enforceable settlement agreement with Acme based on her phone call of December 3'd. In conducting your analysis, please address whether each of the basic elements of a contract are present. Page 5 of 7 EXAM NO. QUESTION NO.5 (80 points possible - 20 minutes suggested): Heidi's Construction Co. ("HCC") contracted to construct a new home for Spencer for $300,000. HCC constructed the house pursuant to the specifications in the contract, with one major exception - HCC misplaced the wall between the living room and the kitchen by roughly one foot. The living room was supposed to be 20' x 18' and the kitchen was supposed to be 16' x 16'. Due to the misplaced wall, the living room ended up being 20' by 17' and the kitchen ended up being 17' x 16'. The house is completely. built and Spencer is currently living in the house. Spencer previously paid the entire contract price of $300,000 to HCC, but was very unhappy about the misplaced wall. As a result, Spencer sued HCC for breach of contract. During the trial, .the court made the following findings of fact • The wall specifications were promises, and HCC breached its promise to build the living room and kitchen pursuant to the wall specifications. • While HCC breached the contract, HCC did substantially perform under the contract. • The misplaced wall was due to HCC's negligence - it was not intentional. • The cost of tearing down the wall and rebuilding it would be approximately $50,000. • The misplaced wall does not change the fair market value of the house at all. Please do the following: (a) Analyze what Spencer is likely to recover under an expectancy theory from HCC's breach of contract. (b) Would your analysis be impacted if you were to find out that Spencer does not intend to tear down the misplaced wall and rebuild it in its proper spot? Please explain. QUESTION NO.6 (90 points possible - 22.5 minutes suggested): Mr. Tweek was the owner of a gourmet coffee shop named Tweek Bros. in downtown Utopia. Last year, Mr. Tweek sold the coffee shop to Harbucks pursuant to a merger agreement (the "Merger Agreement") dated September 2009. Harbucks operates a national chain of coffee shops and its shops are located in each of the 50 states and in most significant cities. The Merger Agreement included the following non-compete clause: "Mr. Tweek agrees not to own or operate a coffee shop business in Utopia, or in any other city in which Harbucks has a coffee shop franchise, for a period of three (3) years from the date of this agreement." Mr. Tweek ignored the non-compete clause and opened up a new gourmet coffee shop in downtown Utopia - only a few blocks from his prior coffee shop - in November 2009. Harbucks wants to sue Mr. Tweekto enforce the non-compete clause and has hired you to analyze the issue. Please analyze the enforceability of the non-compete clause. Page 6 of? EXAM NO. QUESTION NO.7 (30 pOints possible - 7% minutes suggested): Jefferson Page is an actor. He recently entered into a contract with Paramount Studios to play the role of Gabby Hayes in an upcoming "Hopalong Cassidy" movie. The contract provided that Paramount would pay Page $500,000 for the role. The contract included the following clause: Clause 7:. In the event that Paramount does not use Page in the Hopalong Cassidy movie, Paramount's sole obligation to Page will be to pay Page the $500,000 of compensation provided for herein. What is the purpose of this Clause 7? What likely motivated Paramount to include Clause 7 in its contract with Page? QUESTION NO.8 (30 points possible - 7% minutes suggested): Acme Inc. ("Acme") is a company that employs hundreds of employees. Acme provides an employment manual to each of its "at will" employees. The employment manual covers matters such as expected rules of employee behavior, dress code, promotion policies and vacation policies. In addition, the employment manual inCludes a "progressive termination policy" proVision, which explains that Acme follows a progressive approach to disciplining and, if necessary, terminating its employees. Acme's employment manual contains the following statement (the "Disclaimer"), in all capital letters, on page 1: . "YOUR EMPLOYMENT IS STRICTLY AT WILL. THIS MANUAL SHALL NOT BE DEEMED TO MODIFY YOUR STATUS AS AN AT WILL EMPLOYEE. SUCH STATUS MAY ONLY BE ALTERED BY A SPECIFIC, WRITTEN AGREEMENT SIGNED BY ACME'S PRESIDENT." From a contract law standpoint, please explain the most likely reason for Acme including the Disclai.mer in its employment manual. .. .. * .. .. END OF EXAM CONGRATULATIONS ON FINISHING YOUR FIRST LAW SCHOOL FINAL EXAM! Have. a wonderful break. Page 7 of7