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Chapter 9

BMGT 380 Chapter Notes - Chapter 9: Public Auction, Forego, Demurrer


Department
Business and Management
Course Code
BMGT 380
Professor
William Mc Clenahan
Chapter
9

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Chapter 9 Cases & Questions 01:42
I. Lambert vs. Barron
A. Facts
A.1. Lambert (experienced in resolving construction disputes) sued Barron
(Lambert’s former friend; business was experiencing financial strain because 5
of his projects had difficulties) for the breach of a contract
A.1.a. Two parties talked on the phone, Lambert became
concerned about his friend’s well-being and flew from New Orleans to
Farmerville to meet with Barron
A.1.b. Prior to the flight, Barron’s employee faxed documentation
regarding Barron’s problematic construction disputes for Lambert to
review
A.2. Lambert contended that before boarding the plane he and Barron contracted for
Lambert to provide consulting services for Barron
A.2.a. Lambert usually charged clients $3,100 per month with the
minimum term being one year along with 10% of any amount
recouped by his clients
A.3. Lambert billed Barron for the $34,100 balance owed on the alleged oral contract
A.3.a. Barron wrote Lambert saying he did not think that he owed
him any money other than the $3,100 invoice that was paid following
the invoice that was sent to Barron
A.4. Lambert sued Barron for breach of contract
B. History
B.1. The trial court dismissed Lambert’s case. Lambert appealed
C. Issues
C.1. Was a contract formed for consulting services? If so, was there a breach of said
contract?
D. Holdings
D.1. There was no clear agreement given by Barron on November 11, 1998, as
Lambert boarded the plane to return to New Orleans
D.2. The trial court could determine that no tactic acceptance of Lambert’s offer for
services was made by Barron
D.3. The trial court held that the parties’ relationship was that of a “friend helping a
friend” such that Lambert could not have reasonably believed that a contract
had been formed
E. Reasoning
E.1. Lambert’s proof of supposed contract rests on his receipt of certain
documentation of Barron’s troubled construction projects and invoices for
consulting fees sent to Barron.
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E.1.a.Bulk of documentation was forwarded to Lambert days before his
flight
E.1.b.Lambert’s review of documents would have taken place before his
flight without any contract binding his friend
E.1.c. Lambert was provided documentation without any indication that
his friend’s review of the projects would require compensation
E.2. After Lambert expressed his desire for a consulting contract, further
documentation was faxed to him without any request for specific services
E.2.a.Barron’s attorney never contacted Lambert
E.2.b.Lambert never responded in writing to Barron regarding any
substance concerning the status of the construction project disputes
during that time
E.3. Barron never used the principal subject matter of Lambert’s expertise,
arbitration, to resolve disputed construction project issues during the year
following the alleged oral contract
F. Result
F.1. The trial court’s determination that no contract was formed between the parties
was affirmed
F.1.a.The case was affirmed in favor of Barron;
II. Audio Visual Artistry vs. Tanzer
A. Facts
A.1. AVA (a residential entertainment and communications specializing in custom
design products) had a contract with Stephen Tanzer (homeowner) to sell and
install a smart-home system in Tanzer’s large home which was still under
construction at this time
A.1.a. The contract reflected an understanding that Tanzer’s needs
and desires for the audio system would likely evolve as the
construction of his home progressed, that AVA would accommodate
such needs and desires, and that the contract price would be increased
if AVA took on additional work in accordance with Tanzer’s new
requirements
A.2. The parties became involved in a dispute over what was to be don’t, the
amounts of adjustments to the contract price, and the quality of AVA’s work
A.2.a. Tanzer fired AVA and retained another firm to complete
the work
A.3. AVA sued Tanzer for breach of contract; sought payment for portions of the
contract price that Tanzer had not paid
A.4. Tanzer counterclaimed against AVA; AVA breached its obligations under the
contract
A.5. In his appeal, Tanzer argues that the thrust of the contract is for services and not
for the sale of goods (common law breach of contract would rule of UCC)
B. History
B.1. The trial court rules in favor of AVA; the court entered judgment in AVA’s
favor in the amount of $36,580.
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B.2. Tanzer appealed to the Tennessee Court of Appeals; argued, among other
things, that the trial court erred in applying the UCC instead of the common law
C. Issues
C.1. Should UCC provisions or common law contract principles be applied to this
case on terms of available warranties and the measure of damages?
D. Holdings
D.1. The court concludes that the four Pass factors favor the trial court’s conclusions
that the instant contract was predominantly for the sale of goods
E. Reasoning
E.1. To determining whether such “mixed” or “hybrid” contracts are governed by
Article 2, a court must examine that whole transaction and look to the essence
or main objective of the parties’ agreement or the primary or overall purpose of
the transaction
Usually determined by considering whether the contract, reasonably stated, is for goods with
labor incidentally involved or for services with goods incidentally involved.
E.2. Pass vs. Shelby Aviation: the predominant purpose test for cases involving a
mixed transaction of goods and services; the court looks to 4 factors:
E.2.a.The language of the contract
E.2.b.The nature of the business of the supplier of goods and services
E.2.c. The reason the parties entered the contract
E.2.d.The amounts paid for the rendition of the services and goods,
respectively
E.3. From the plain language of the contract titled “Systems Sale and Installation
Contract” it is clear that this is a hybrid contract
E.3.a.Tanzer is referred to as the “purchaser” which connotes a sale of
goods contract, the contract mentions “equipment” which is “peculiar
to the sale of goods”
E.4. The Law of Product Warranties: contracts for the installation of products that
were identifiable goods before installation and that when installed constitute
only a small portion of a total building, are covered by UCC Article 2; the
installation of the following are all sale of goods:
E.4.a.Carpet, electrical equipment, trees, shrubs, and sod, steel lockers,
overhead doors, water heaters, a furnace, an air conditioning system,
or interior window panels
E.5. Highland Rim Constructors vs. Atlantic Software Corp.: the court held that a
contract involving the sale of a computer system to a construction company was
a sale of goods contract; the contract was a hybrid contract involving both the
sale of goods and a service:
E.5.a.The sale was predominately for the sale of an integrated computer
system with the obligation to provide training in the use of the system
being incidental to the purchase of the system itself: the transaction is
one involving the sale of goods
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