1. Assume that the high costs of performing cause the promisor to breach a contract and pay perfect expectation damages to the promisee. Would the promisee have preferred that the promisor perform?

2. Explain the gain in total payoffs from allowing the promisor to breach and pay expectation damages when performing is efficient.

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Jamar FerryLv2

1 May 2019

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1- To invoke implied warranty of merchantability in a sales or lease contract, the:
a. buyer should prove that he or she is a merchant.
b. purchaser must have purchased or leased the good from a merchant.
c. goods purchased or leased should be worth $5,000 or more.
d. seller should have transferred a void title to the buyer.

2- When the buyer in a sales contract is in breach, sellers are allowed to sell the goods to another buyer or dispose of the goods under the Uniform Commercial Code (UCC). Which of the following is true of the liability of the buyer under these circumstances?
a. UCC allows the seller to recover only the incidental damages.
b. UCC allows the seller to recover the difference between the resale price and the contract price, minus the profits the seller makes from the resale.
c. UCC allows the seller to claim the difference between the original contract price and the profits made through resale.
d. UCC allows the seller to recover the difference between the resale price and the contract price, plus incidental damages and minus expenses saved.

Consider the example of the rancher (R) and the farmer (F). As in class, the cattle will cause $100 damage to F's crops, if left unchecked. It would cost R $75 to fence his range, and it would cost F $50 to fence her field. The rancher's business earns him $500 in profits, and the farmer earns $300 in profits. Consider the three following legal rules:

1. R has the right to operate his business

2. F is entitled to compensatory damages from R.

3. F is entitled to an injunction against R.

For each rule, discuss whether efficiency will be achieved when.

a.) transaction costs are high enough to preclude bargaining. Identify the payoffs to each player, and the joint payoffs earned by the players under each rule.

b.) transaction costs are not high enough to preclude bargaining. In this case, specify the threat values for each player, the surplus that can be gained through bargaining, what the bargain will be, and the payoffs gained by each player after the bargain. First, identify the socially efficient outcome, and then indicate whether each legal rule achieves efficiency.

raspberryworm401

Q. You run a small janitorial service in your town. You know that a rival company has the contract to clean the public areas at the local college. You send advertisements to almost every business in town, including the college. Those advertisements focus on your all-natural cleaning products, your commitment to helping your clients recycle, and your reduction in waste. Your advertisement is accurate and widely distributed. You receive a call from the college administration asking you when you can begin your sustainable work at the college. Soon after starting, you are sued by your rival for wrongful interference. Explain whether or not your actions constitute wrongful interference.

Answer feedback: Wrongful interference with a contractual relationship requires a valid, enforceable contract between two parties, the third party with knowledge of that contract, and the intentional inducing of one party to breach that contract. In this situation, there is a valid contract between the college and your rival. You know about that contract. But your actions in advertising are not an intentional inducement to breach the contract. While you do intend to attract new clients, you sent the advertisement out broadly. This is justified or permissible interference. This is known as bona fide competitive behaviour. The college may have breached its contract with your rival, but since you did not specifically target or induce the college to intentionally breach that contract, you should not be liable.