Scenario 1

2/2 points (graded)

1. A massive world war has broken out. Fighting is raging everywhere, especially on the high seas of
the North Atlantic Ocean. But Thomas—a farmer in Iowa—grows wheat, which is desperately
needed in the cities of Europe. Because Thomas also desperately needs to sell his crop, he contracts
with HLS Shipping to transport a load of wheat by ship from Baltimore to Southampton, England.

HLS insists on an extremely high rate for the passage, due to the wartime conditions, and so Thomas
insists on a special clause in the contract that says, “Parties agree that shipper’s obligation to deliver
the wheat shall be absolute, however, and that no act of man or God shall release it of that
obligation.”

Halfway through the voyage, the ship is torpedoed, and the grain is lost. HLS is willing to reimburse
the shipping cost to Thomas but not the value of the lost wheat. HLS refuses to pay any other
damages, arguing that delivery became impracticable once the ship was lost. Thomas says that HLS
promised to deliver the wheat to England and that it did not, so he wants the cost of the voyage and
the wheat across the Atlantic back as damages. Who should win that disagreement? (Select 1)

A. Thomas — shipping the wheat is not impracticable at all; it could be recovered with
submarines and HLS could simply put it on another ship.

B. HLS — in a time of war, a court would probably try to help a shipper who suffered a loss like
HLS did, so the court would probably not hold HLS to its deal with Thomas.

C. Thomas — the parties thought about the possibility of a wartime incident like the one that
occurred, and they accounted for it in making their deal.

D. HLS — this is a case of commercial impracticability: after the ship was gone, it would be
unreasonable to expect that HLS would take whatever steps necessary to get the wheat transported,
or to pay damages for failing to do so.

correct

Explanation

The parties here have specifically considered the possibility of the wartime conditions causing HLS to
be unable to deliver the wheat and have included an explicit term in the contract that HLS shall be
liable for the wheat no matter what. Accordingly, HLS cannot argue the parties had not considered
this happening and that it should thus be released from its contractual obligation.

1. Hint (1 of 1): Think about the specifics of the bargain that the parties made. What exactly
was their agreement?

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Scenario 2

2/2 points (graded)

2. Parcel carriers do a major business in shipping goods across the country overnight via aircraft, as
you know if you shop online. In addition to the new clothes that you purchase, though, these carriers
ship critical parts and machinery that industrial companies often need sent to them quickly by
suppliers thousands of miles away. Freeman Motors is such a company, and Ames Widgets is such a
supplier.

On September 10, 2001, Freeman’s machine broke, and it urgently needed a part from Ames. So,
Freeman and Ames contracted for Ames to have the needed part shipped overnight on FedPSU, a
well-known air carrier, to arrive at Freeman’s factory on the next afternoon. That next morning,
however, the 9/11 tragedies struck, and the federal government grounded all flights nationwide.

That meant that the air carrier could not take off, and, as a consequence, that Ames couldn’t deliver
as promised. Freeman—losing money by the minute—was furious (and fairly unreasonable and
uncompassionate too, apparently). Eventually, Freeman sued Ames for failing to deliver as promised,
and claimed great sums of damages. Who should prevail in that suit—will a court hold Ames to its
promise to have the part delivered at the specified time? (Select 1)

A. Yes — the court probably will. While there was certainly a tragedy, a deal is a deal. Ames
promised to deliver, and it did not. That is all contract law looks to see, so Ames is liable to Freeman.

B. No, not likely — This is a clear case of impracticability/frustration. Neither party anticipated
that the airways would be completely closed on the day when the part needed to be sent. It would
be unreasonable to hold Ames to its bargain given the circumstances.

C. Yes — the court probably will. If Ames were worried about this sort of problem, it should
have accounted for it in the contract. It is not the court’s job to bail it out of poor contract drafting.

D. No, not likely — Courts never uphold promises in a time of national security emergency, so a
court would likely release Ames from its obligations to deliver on time.

correct

Explanation
Although Ames promised that the part would be delivered to Freeman by the next day, this
agreement depended on an assumption by both parties that the airways would be open the next
day, allowing the delivery to take place. In contrast to the scenario in question 1, the parties did not
explicitly contract around the unforeseen occurrence, and thus a court would not likely think it was
reasonable to hold Ames to the bargain.

1. Hint (1 of 1): What assumptions, if any, did the parties make when they made their
agreement? Were any of those assumed facts changed after the agreement was made?

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Scenario 3

2/2 points (graded)

3. After some discussion with the Dean of the school, David agrees to teach a class on copyright law
at Acme Law School the following spring. David is not an expert in copyright law, though his
scholarship in other areas is world-renowned. But he promises the Dean that he will teach himself
copyright law during the fall, so that he would be ready to teach the Acme students come
springtime. Knowing of his lack of knowledge in the area, though, David agrees to teach for very little
money, instead gaining value from the opportunity to teach at Acme and to learn new things.

Unfortunately, though, David’s preparations did not go as he planned. A week before his class at
Acme Law School was to start, he had not reviewed even the slightest bit of copyright law. He did
not want to be embarrassed by trying to teach unprepared, so he tried to think up a scheme to get
himself out of his contract without being in breach and incurring liability to Acme for failing to keep
his end of the bargain.

So, he secures himself a different job, one that pays thousands and thousands and thousands of
dollars more than the Acme job would. On the first day of class, David is not at Acme to teach, but is
instead working this new job at a law firm in New York City. The Dean of Acme Law School, furious,
sues David for breaching his contract.

David, though, argues that keeping his contract with Acme would be commercially impracticable. "It
pays next to nothing, and I have a family to care for," David argues. It would not only be
impracticable for me to keep my end of the bargain, it would be unjust, as my family would be left to
struggle just to satisfy this agreement I made with the Dean.
What result in this suit? Does the Dean of Acme Law School have a valid case for breach of the
teaching contract? (Select 1)

A. Yes, the Dean wins. David’s impracticability defense is a valid one, but no court would apply it
to a contract of this sort, since that is reserved for contracts that do not involve services like teaching
but instead involve more commercial applications like shipping and manufacturing.

B. No, David wins. This is a contract for personal services, so the court cannot hold David liable
for breach of contract in failing to keep his end of the bargain.

C. Yes, the Dean wins. David is at fault for creating this so-called situation of impracticability,
and a court would not likely even consider this to be a case of impracticability. Although a court may
not order a person to do work he does not want to do, it does not shield him from paying damages
for his breach of contract.

D. No, David wins. This is certainly impracticability: no court is going to force David to pay
damages when he took another opportunity that is much better financially not only for him but for
his family as well.

correct

Explanation

To apply the doctrine of impracticability, both parties were depending on circumstances that they
believed to be present, but that actually were not. Here, this is not true--not only are the
circumstances as the parties believed them to be, but nothing has occurred to create unforeseen
circumstances. Further, David’s circumstances here are not some independent act of God; rather,
they are David’s doing, so a court would not be willing to release David from his obligations.
Although a court would not be able to order David to teach, it would be able to enjoin him from
working anywhere else, and would also be able to require David to pay damages for his breach.

1. Hint (1 of 1): On the day that the contract is to be performed (that is, the first day of class),
have any critical facts changed in a way that the parties did not anticipate when they made
their agreement? Even if things have changed some, what caused those changes? Would a
court let someone out of an obligation based on such changes?