Contracts 3

Assignment 3

Brenda owns “Brenda’s Widgets, Inc.” (“BWI”), a corporation located at 123 Main Street, Podunk, Iowa. Her company manufactures and distributes widgets. Jim owns a hardware store at 456 First Street, Secondville, Michigan, that sells widgets. He wants to buy 10,000 widgets from BWI. After Jim consults with Brenda, the parties agree to a price of $5 per widget.

These are the provisions that Jim wanted in the contract:

1) Jim will pay 10% of the purchase price initially and he will pay the remainder after the goods are received.

2) Jim must have all 20,000 widgets in stock before the summer starts, so the goods must ship prior to June 1.

3) The widgets should be shipped to his place of business. Jim will pay the cost of the shipment.

4) If there is a dispute under the contract, it will be submitted to arbitration.

5) Michigan law, and not Iowa law, applies to all disputes under the contract.

The final contract, drafted by Brenda’s lawyer, has the following provisions:

1.Jim must pay 50% of the purchase price upon execution of the contract, and the remainder upon receipt of the goods.

2.Brenda acknowledges Jim’s need to receive all the widgets before the summer starts, but since this is Brenda’s busy season, shipment after June 15 shall not constitute a breach.

3.Jim will pay the cost of shipping to his place of business.

4.Any dispute under the contract shall be submitted to arbitration.

5.The laws of Iowa shall govern this contract and any disputes hereunder.

Jim was in a big hurry when he met with Brenda to sign the contract. He checked the names, address and confirmed the widgets would be shipped to his store. He signed the contract without reading further.

Widgets turned out to be the hottest item that spring, and Brenda could hardly keep up production to fill her orders. She finally shipped Jim’s order on June 27, and he did not receive the widgets until July 5. By then, most of his customers had purchased their widgets from other retailers, causing Jim to suffer significant losses. Jim sues Brenda for breach of contract in federal court for the District of Michigan.

What are the strengths and weaknesses of Jim’s case? What defenses can Brenda raise? An IRAC style essay is NOT required, but a thorough discussion of the issues is necessary.

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