united-states contract-law california breach-of-contract bar-admission
How to answer this California bar-exam question?
<h2>The July 2022 Bar Exam of California includes the following as <em>the fact pattern</em> of Question 1</h2>
<blockquote>
<p>&quot;Bath Stuff (Bath), a retailer located in Betaville, sent Neat Scents (Scents), an importer located in Sunville, a signed offer to purchase 1,000 individually wrapped candles at a price of $10,000, free on board (“FOB”) Betaville. Scents promptly sent Bath a signed acknowledgment accepting the offer, which also included the following language: “Some shipping boxes have external water damage. Contents of shipping boxes guaranteed to have no damage.” Bath did not respond to the acknowledgment. No other express warranties or disclaimers were stated in the offer or acknowledgment.</p>
<p>Scents timely shipped the order to Bath’s warehouse using TruckCo, a third-party common carrier, at a freight cost of $400. One-quarter of the shipping boxes showed signs of water damage. Each shipping box contained candles that were individually wrapped for retail sale. All candles and individual wrapping were undamaged. When the shipment arrived, Bath’s employees noticed the water damage on some shipping boxes. They immediately rejected the shipment without opening any boxes, promptly notified Scents of the rejection, and refused to pay any amount.</p>
<p>Scents paid TruckCo $500 to ship the candles back to Sunville and notified Bath that Scents intended to resell the candles. Scents promptly solicited bids from all of its customers and received the best offer, which it accepted, from Redemption Candles (Redemption) of $9,000, FOB Sunville.</p>
<p>Bath promptly entered into a valid written contract with Hot Candles (Hot), an importer in Hatville, to purchase 1,000 replacement candles for $12,000, FOB Hatville. TruckCo was engaged to transport the candles from Hatville to Betaville. In transit, TruckCo’s truck was struck by lightning in a storm and all of the candles melted. TruckCo’s shipping contract disavows liability from acts of God, including lightning. Bath refused to pay for the candles and Hot refused to send replacement candles.</p>
<p>Bath sued Scents for breach of contract and Scents countersued Bath. Bath sued Hot for breach of contract and Hot countersued Bath.&quot;</p>
</blockquote>
<h2>Questions</h2>
<p>As summarized by the title question, it has <strong>two main questions divided each into two sub-questions</strong> as follows:</p>
<blockquote>
<ol>
<li><p>Did Bath and Scents have a binding contract and, if so, did either party breach the contract? If there was a breach of contract, what damages are likely to be recovered, if any? Discuss.</p>
</li>
<li><p>Has Bath or Hot breached their contract? If so, what damages are likely to be recovered, if any? Discuss.</p>
</li>
</ol>
</blockquote>
<hr />
<p><strong>Official Instructions</strong></p>
<sup>
<blockquote>
<p>[The] question is designed to be answered in one (1) hour.</p>
<p>Your answer should demonstrate your ability to analyze the facts in the question, to tell the difference between material facts and immaterial facts, and to discern the points of law and fact upon which the situation turns. Your answer should show that you know and understand the pertinent principles and theories of law, their qualifications and limitations, and their relationships to each other.</p>
<p>Your answer should evidence your ability to apply the law to the given facts and to reason in a logical manner from the premises you adopt to a sound conclusion. Do not merely show that you remember legal principles. Instead, try to demonstrate your proficiency in using and applying them to the facts.</p>
<p>If your answer contains only a statement of your conclusions, you will receive little or no credit. State fully the reasons that support your conclusions, and discuss all points thoroughly.
Your answer should be complete, but you should not volunteer information or discuss legal doctrines that are not pertinent to the resolution of the issues raised by the call of the question.
Unless a question expressly asks you to use California law, you should answer according to legal theories and principles of general application. </sup></p>
</blockquote>
<p><strong>See further:</strong>
<a href="https://www.calbar.ca.gov/Portals/0/documents/admissions/Examinations/July2022CBX_Questions.pdf" rel="nofollow noreferrer">July 2022 Exam Sheets</a></p>

<p>In a Bar exam hypothetical you are expected to discuss the merits of each party's cases.  There are potentially many breaches here, you need to discuss them all.</p>

<blockquote>
<p>What breach of contract, if any, is in this bar-exam hypothetical?</p>
</blockquote>
<p>At the outset, there is a minor --yet distracting-- flaw in the hypothetical scenario. It takes some time to discern where the disclaimer about water damage was included: The syntax suggests that the disclaimer was made in the offer (because &quot;<em>which also included the following language</em>&quot; immediately follows &quot;<em>the offer,</em>&quot;), but semantically it can be only in the seller's acknowledgment (only the seller was in a position to know beforehand that some shipping boxes have extern water damage).</p>
<blockquote>
<p>Did Bath and Scents have a binding contract and, if so, did either party breach the contract? If there was a breach of contract, what damages are likely to be recovered, if any?</p>
</blockquote>
<p>Bath and Scents rescinded their contract. Rescission preempts any claim of breach of contract, since rescission means that the parties are --for the most part-- restored to their prior position as if no contract had been entered.</p>
<p>Enforceability of the contract is not precluded by Bath's lack of response to Scent's acknowledgment. That is because Scent's disclaimer did not amount to a counteroffer. Regardless of the external water damage in the shipping boxes, Scent provided exactly what Bath requested: 1,000 individually wrapped candles that were in good condition (i.e., undamaged).</p>
<p>Were it not for rescission, only Scent would have a viable claim of breach of contract. Scent being the [only] party that performed the contract, it was entitled to payment from Bath. Bath's assessment of solely the shipping boxes does not entitle it to void the contract.</p>
<p>Scent's disclaimer also reinforces his position as to the implied covenant of good faith and fair dealing. The disclaimer was intended to assure Bath about satisfactory delivery and not to be misled (i.e., falsely alarmed) by non-existent damage.</p>
<blockquote>
<p>Has Bath or Hot breached their contract? If so, what damages are likely to be recovered, if any?</p>
</blockquote>
<p>Bath is in breach of contract.</p>
<p>Hot performed the contract by dispatching the candles. The clause about &quot;FOB Hatville&quot; transferred to Bath the risk of any losses that might occur transportation. The losses actually occurred during transportation. Hot is entitled to recover from Bath the $12,000, the amount the parties agreed upon.</p>
<p>Note: The FOB clauses instantiate what the <a href="http://www.oneclubofjusticides.com/p/restatement-second-contracts.html" rel="nofollow noreferrer">Restatement (Second) of Contracts</a> at § 154 calls [a party's] <em>bearing the risk of mistake</em>.</p>
