- Elements of a Contract
Read the Case Campbell Soup Co. v. Wentz in the text. Answer the following questions:
1. What were the terms of the contract between Campbell and the Wentzes?
2. Did the Wentzes perform under the contract?
3. Did the court find specific performance to be an adequate legal remedy in this case?
4. Why did the court refuse to help Campbell in enforcing its legal contract?
5. How could Campbell change its contract in the future so as to avoid the unconsionability problem?
Be at least 200 words
- The Uniform Commercial Code (UCC)
Read the Ace Heating and Cooling scenario in your text and answer the following questions:
a. Under UCC 2-302, who has the best chance of getting out of the contract due to unconsionability?
b. The symbol for justice features a woman wearing a blindfold illustrating that the law should be applied the same way regardless of who the parties are. Does the UCC rule seem to contradict this? Which approach do you think is more ethical?
c. Note that both Glamour and Shady Rest are businesses, and courts rarely find that contracts between two businesses are unconscionable. The rationale is that a business is a sophisticated entity, familiar with transactions and able to protect itself. Do you think Glamour and Shady Rest are in a comparable position in regard to this contract? Why or why not?
- Be at least 200 words
Reading for Discussion 1
Case Study: CampbellSoupCo. v. Wentz
Facts: Per a written contract betweenCampbellSoup Company (a New Jersey company) and the Wentzes (carrot farmers in Pennsylvania),the Wentzes would deliver toCampbell all the Chantenay red cored carrots to be grown on the Wentz farm during the 1947 season. Thecontract price for the carrots was $30 per ton. The contract betweenCampbellSoup and all sellers of carrots was drafted byCampbell and ithad a provision that prohibited farmers/sellers from selling their carrots to anyone else, except those carrots that were rejected byCampbell.The contract also had a liquidated damages provision of $50 per ton if the seller breached, but it had no similar provision in the eventCampbell breached. The contract not only allowedCampbell to reject nonconforming carrots, but gaveCampbell the right to determine whocould buy the carrots it had rejected. The Wentzes harvested 100 tons of carrots, but because the market price at the time of harvesting was$90 per ton for these rare carrots, the Wentzes refused to deliver them toCampbell and sold 62 tons of their carrots to a farmer who soldsome of those carrots toCampbell.Campbell sued the Wentzes, asking for the court’s order to stop further sale of the contracted carrots toothers and to compel specific performance of the contract. The trial court ruled for the Wentzes andCampbell appealed.
Issues: Is specific performance an appropriate legal remedy in thiscase or is the contract unconscionable?
Discussion: In January 1948, it was virtually impossible to obtain Chantenay carrots in the open market.Campbell used Chantenay carrots(which are easier to process forsoup making than other carrots) in large quantities and furnishes the seeds to farmers with whom itcontracts.Campbell contracted for carrots long ahead, and farmers entered into the contract willingly. If the facts of thiscase were thissimple, specific performance should have been granted.
However, the problem is with the contract itself, which was one-sided. According to the appellate court, the most direct example ofunconscionability was the provision that, under certain circumstances,Campbell may reject carrots, but farmers cannot sell them anywherewithoutCampbell’s permission. Though the contract was legal, it was wrong forCampbell to ask for the court’s help in enforcing thisunconscionable bargain (one that “shocks the conscience of the court”). The court said that the sum of the contract’s provisions “drives toohard a bargain for a court of conscience to assist.”
Holding: The judgment of the trial court in favor of the farmers is affirmed.
Questions for Discussion
- What were the terms of the contract betweenCampbell and the Wentzes?
- Did the Wentzes perform under the contract?
- Did the court find specific performance to be an adequate legal remedy in thiscase?
- Why did the court refuse to helpCampbell in enforcing its legal contract?
- How couldCampbell change its contract in the future so as to avoid the unconscionability problem?
Reading for Discussion 2
AceHeating andCooling sells air conditioners. One unit, the Freezy, has a fair market value of $300. During a heat wave,Ace sells threeFreezys for $1,000 to the following:
- Breanna, single mom with poor credit, who can’t afford to pay cash for an AC unit. Breanna signs a contract to pay $1,000 on acredit plan, with an additional $500 in interest and financing fees.
- Barry Bigshot, investment banker, who knows the price is way too high but who is far too important to waste his time driving aroundtown trying to get a better deal.
- Glamour Café, a fancy restaurant with an upscale clientele, whose AC went out in the middle of the lunch rush. The manager isdesperate to get the place cooled down before people like Barry Bigshot come in for the evening happy hour.
- Shady Rest Nursing Home, a business with a narrow profit margin. The manager isn’t happy about the price, but old people are veryvulnerable to heat, and she’s afraid that her patients’ health could be compromised by any delay in getting AC.
Questions for Discussion
- Under UCC 2-302, who has the best chance of getting out of the contract due to unconscionability?
- The symbol for justice features a woman wearing a blindfold, to illustrate that the law should be applied the same way regardless ofwho the parties are. Does the UCC rule seem to contradict this? Which approach do you think is more ethical?
- Note that both Glamour and Shady Rest are businesses, and courts rarely find that contracts between two businesses areunconscionable. The rationale is that a business is a sophisticated entity, familiar with transactions and able to protect themselves. Doyou think Glamour and Shady Rest are in a comparable position with regard to this contract?
- Section 2-302 leaves a goodly amount of discretion to the courts in deciding whether a contract term is grossly unfair and whether theparties had such disproportionate ability to bargain that the contract should be found unconscionable. Do you think this is a goodapproach? Would it be better if the law were more specific?