Contract Dispute over Football Team Name: Boresville vs Ozzy, Exercises of Construction

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Contracts I

Final Exam

Essays

Spring 2006

Exam Grading Key for Pro$ McDonald Issue I1 I2 (^) == Correct issue statementIncomplete issue statement I3 = Incorrect issue statement Rule R1 R2 == Correct statement of governing legal principlesIncomplete statement of same R3 = Incorrect statement of same Analysis A1A2 == Correct factual analysisIncomplete factual analysis A3 = Incorrect factual analysis Conclusion CC2 1 == Correct conclusionIncomplete conclusion C3 = Incorrect conclusion Other Notations Dquestion. = Did not follow directions or instructions provided on front of exam or as part of

GOR == Good point or analysis. Need better IRAC organization and analysis (e.g., fully complete each issue before

moving on to the next issue; do not "front load"appropriate to each IRAC of a specific issue). rules-discuss them only where ST == Start analysis by Need to budget time between answers more effectively. identifying overarching issue and governing rule.

Y = "Yes!" (as in "righto!").

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....... - ..... ......^9 ......^ Contracts-I1.. - - (McDonald).. ... -SpO6-Fin.^ PROFESSOR Mc^ Don.^... Boresville an she ven went so far as to demand assruances in the K that the name of the town would not be changed. The plaing meaning rule operates when the parties have set there final^ 0' agreement down in a clear and complete document and bars^ L L - par01 evidence. The first question is was there a competely integrated document? here, loolung at both the intrinsic ande extrinsic evidence it seems as if we have a clear and complete document becuase the agreement contained a merger clause, it was a standard form K and the parties after the K was signed, treated it as a final expression of their agreement. The second question is, is the term at issue vague or ambigous on its face? here, the terms is that 0 will name the team and include Boresville. This seems urnambigious and seems to have a plain meaning that Borsville must be in the name somewhere.. So, since there is a plaing meaning of the term, we must consider whether the evidence being brought contains a latent ambiguity in the plaing meaning of the term? The majority approch for this term is the modified 4 comers approach where the court considers the intrinsic and extrinsic evidence, except for evidence of prior negotations. here, the intrinisic evidence from the K language shows a plain meaning of the term that the name Boresville must .Iv( be included in the name of the term. However, looking at the entire purpose of the K, it seems

that since C's main purpose was to attract attention, tourism and business to the town, it seems that the K language would also suggest that the name Boresville should be promiently displayed in order to effectuate these goals. Additionally, another provision in the K, where it says that & Boresville will not change its name, suggests that naming the team after boresville was going to occurLooking at the extrinsic evidence, C is going to use trade custom of the strong tradition that NFL's terms are named after the cities they are located in. Trade usage evidence may only be used if it is such of regularity in a trade or locale that one party is justified in believing that the

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other party should have been aware or held to this information. IF the person is member of that trade they are held to the trade customs per se. Here, 0 is not a member of the trade of the NFL becuase he was new owner of the team. However, the facts show that 0 was aware of the tradition of naming the team after the cities, so the trade usage would be controlling. Thus, considering the majority approach, the evidence of the recitals of the K and the trade usage creates a latent ambiguity in the K that the name Boresville should be prominents displayed and

6 should be the principal name of the team and thus the Prior negotiation evidence between the party would go to the jury. Thus, the jury would be able to consider the fact that they talked about naming the team actual after boresville and that 0 even demanded assurance in the K that they wouldnt change the towns name. Beyond the plain meaning, commercial practice evidence such as trade usage can be consider in interpreating the K if there can be a reaosnable consistent meaning with the trade usage and the K terms. here, I have already concluded the 0 will be held to the NFL custom of naming the team after the city in which it is located, and thus we need to see if this custom can be G (^) reasonably interpretated consistently with the express term in the K requiring Boresville to be in the name of the teach. There is a reasonably consistent interpretation, that the team should be named after Borseville and Boresville should be the prominent part of the name of the team. Thus, the Trade usage evidence will be conisder in deciding on interpreting this express term. After weighing the K langauage, the prior negotiation evidence and the trade custom, the court must decide under restatmeent 201 whether the parties shared a meaning of the term at the time of the K. here it seems that the parties did share a meaning, that the team will be named after Boresville, but now 0 is changing her tune. This is shown by the PN evidence that they -. .. .-... ~ -. .. .. -- ..

(Question 1 continued) ..- .--- .-- ....................... Contracts-I1..... .- (McDonald).....................-SpO6-Fin.PROFESSOR .- .- .............. Mc^ Don^.. .-- deprived of here expectation interests. here, 0 could not open the stadium up by the first game which would be a huge deprivate of here expectations because she wanted to open the stadium up for the new season. As a corally to this, we consider whether she can be compensated for this eprivation. Here money damages would be hard to ascertain because her rent on the new stadium was based on ticket sales, and price she paid at the new stadium was a flat fee. However, lshe did obtain subp by going and renting out the new stadium. Third, we look at the forfeiture

that woudl result to C, which here would be large unless they could find a new team to rent the stadium. Fourth, how likely is that they will come in a fix it, this would be unlikely because they tried their best to get it out on time. Fifth, they acted in good faith. However, I think that because of the significant effect on her expectation to have the new staidum ready, C was in material breach and thus had not substanitally performed. If C materially breached, the 0 must give him reasonably opportunity to cure unless there was a clear rupidation. Here i think C clearly could not fix the rbeach becuse he could not perform by s' 911. IF there is no SPYthen 0 was justified in witholding performance and obtainind performance by going to Megacity and thus she would not be in breach of the agreement. If there was SPYthen she would not be justified in doing that and would have to keep bhe team in Boresvile. 3 Here, C may claim an ased on the contractor's failure to build it on time. Was there a superveing event making agreed upon performanc impractical? yes, the K quite and thus they couldnt get it open on 91 l? Did C bear the risk of this? it is possible that C did bear the risk of this consider it was was construction K but there is no K langauge for this. IF C did not bear the risk, we have to consider did he cause the supervening event and

(Question 1 continued) ....^ ID:^. Contracts-I1^ (McDonald) - SpO6-Fin.^ PROFESSOR^ Mc^ Don.^.. impracticabiliy> here, the facts say that the contractor walked off. if it was their fault, i.e cuz they1 7 breached, that the contractor walked off then they wouldnt have an impracticability defense. If it 1 ' wasnt, then they probably would and then their breach would be excused and 0 would be in breach because she moved the team to a 2/ nother city. Additionally, included in this 's C's ut; to use best efforts because we have a percentage

situation and a situation of heavy dependency because there is no minimum rent. So they^ 6'

be in breach of duty of best efforts to get stadium built by Sept 1. Y

remedies for both issues... Specific performance may only be ordered if money damages would be inadequate, the court considers the ascertainability of the money damages, the ability to collect those damages and the

0 ' A b i l i t y,'--'-, of sub p. H$, I think that in regard to the name of the team, C would be entitled to the

injunction because $ damages would be difficult to ascertain and it would be hard to get substittute performance. No discretionary factors really apply here unless the court considers the PP in gettY'oresville to have the name of an NFL team. In regard to the games at the stadium, if C was in breach,:then she would not be able to SP. If o was in breach then C probably still wounldnt get SP, but possible expectation damages based on the tickets sales at MEgacity and 10% value of those. ?' Part B-

should be allowed to name the new stadium. Here we have par

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if money damages would be inadequate, damages, the ability to collect those would not be adequate because it would difficult to ascertain the amount of damages this caused.

The court looks to discretionary factors, including certainity of terms, difficulty of supervsing K

and equity1PP concerns even if money damages are inadeqaute. Here the terms are certain, pay 10k a year to be able to name the stadium. However, this may be difficult for court to supervise. They can easily order the name change but G o r c e 25 years of^14 - pa&ight be difficult.

however, I think cuz they could easily change the name that the court would be likely to grant SP.

s'

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Contracts-I1 - (McDonald) - - -p.-.....---...p--- SpO6-Fin.PROFESSOR Mc (^) .- Don.. .----

A:

The general issue is whether Ozzy breached the contract by not naming the team "boresville

something" and by refusing to play the first home season in the stadium. 2/

Common law principles would govern thls transaction because the contract does not predominately involve the sale of goods. 2,

The lease was not to begin until September 1st and the City is bringing his claim before that date. The first issue then becomes whether or not the city can bring the claims before the time for Ozzie's performance was due. The city would be able to sue under the contract before the time for performance if Ozzie had anticipatory breached the contract. An anticipatory breach occurs when the other party either expressly or impliedly repudiates the contract. An express repudiation is a clear and unequivocal statement that the other party intends to materially breach the contract.

An implied repudiation is when the party does an affirmative act which would render the party

unable to perform the contract. Ozzie did several affirmative acts: he launched a marketing campaign for his new team naming the team "the megacity Mites of Boresville" and also signed a contract to play the team's 2006 season home games in the stadium of Megacity University. These acts would render Ozzie unable to perform the contract when the performance became due on September 1st. Thus, this wopld be an implied repudiation and the City would be able to sue for breach at that time. c I/AV

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the intent of the parties. Here, the contract specifies that the city has to not change its name because Ozzy will have "invested in advertising and promoting h s Boresville team, including 6 uniforms, equipment and merchandise containing boresville team logo or mascot." In order to have a "boresville team logo or mascot" The focus of the name would have to be on the city of Boresville. If the team could be named, "the megacity Mites of Boresville" the team logo or mascot would more than likely be a "Mite" or "Megacity" and the Boresville will simply be the location of that team.

The city will bring forward trade usage to indicate that there was a strong NFL tradition of naming teams after the cities in which they are located. Trade usage is when a particular practice that is so widely used within a trade that it justifies a presumption that it would be used with respect to the contract at issue. If both parties are members of the trade they are per se expected to know of the particular trade usage. If not, then the party attempting to use the trade usage must show that the other party either knew or should have known of the trade usage. Here, both Ozzy nd the City were aware of the particular trade usage, so it will be able to be used. This is more e to support the CItyl;s interpretation that the team would be named after Boresville.

The City will also try to bring forward prior negotiation evidence to show that "ozzy replied that he was happy to name his team after Boresville" and that he was going to invest in team

materials that featured it. And to further indicate that they were "thrilled that there was going to

be an NFL team named after their city." Whenever a party attempts to offer prior negotiation evidence it implicates the plain meaning rule. The plain meaning rule requires that there be a

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(Question 1 continued) Contracts-I1 - (McDonald) - Sp06-Fin.PROFESSOR Mc Don... w a l integrated w r i t i n a h i s is a lease agreement and so would be a formal writing of the parties' agreed terms. Further, the parties acted as if it was a final expression of their writing.^ ^ A?/ Thus, the writing is finally intergrated for purposes of this analysis. Second, the plain meanink^ I^ I ' rule asks whether the words were vague or ambiguous on their face. If so, then the plain meaning rule will allow the evidence to go to the jury. Here, the phrase "the name of Ozzy's football team will include Boresville in it." Does appear to be falrly^ z- vague. It is not clear whether Ozzie's use of the Boresville would meet the requirements. Thus, the plain meaning rule should not bar the prior negotiation evidence. However, if the court does find that the term is 4 ague or ambiguous, the court will look at the words of the contract and extrinsic evidence surrounding the contract (excluding prior negotiatoin) to see if a latent ambiguity is created. Here, the trade usage information and the words of the contract especially the preamble do create an ambiguity as to what the parties intended and the evidence would go to the jury. The prior negotiation evidence suggests that the city found it important that the City Boresville be featured prominently in the team name. Further, that Ozzy planned to name his team after Boresville and NOT Megacity.

Based on the preceeding evidence, it seems that the City's defination of the team should be the one applied by the court. Ozzie either knew or should have known of the meaning prescribed by the city and as such, his meaning will not be used. Ozzie will therefore be found in breach of the contract. c^1

Would the city be able to prevail on their claim that the court order Ozzy to play his remaining 14 home games in the new stadium? To decide this issue the court must first determine whether

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season if the conditoin is not excused. If the contract was excused Ozzy could simply have played a game or two at the stadium at a fee of 100,000 per game. It seems that the non- occurence of the condition should be excused because it is a construction contract and the forefeiture would be too extreme for the loss that Ozzy would suffer. 7

If Ozzy is found to be in breach for not naming the team will the City be able to prevail the court to issue an injunction? A court will issue an injunction if monetary damages would be inadequate to protect the expectation interests of the party. The court looks at three factors to determien that issue 1)The difficulty in ascertaining monetary damages 2)The difficulty in procuring a suitable substitute 3)The liklihood that damages would not be able to be collected. here, the damages of Ozzy not naming the team after him would be very difficult to measure. Especially because it involves the cities' repudiatoin in the community and the prestige of the city and the perception as a tourist attraction. Monetary damages cannot adequately encompass the potential loss that the City would find. Due to the strength of that factor monetary damages are inadequate. however, the court does have some discretionary powers that it can use to not give specific performance. Those involve the certainity of the terms, the difficulty in enforcing the contract, public policy concerns, and personal service contracts. Here, the terms would be fairly certain, the contract would not be difficult to enforce because the court could just tell Ozzy to change the name, the City came into court will "clean hands" and this would not involve a personal service contract because the Ozzy was planning to use the stadium in Boresville, it just deals with the name he will call the team. Thus, specific performance should be given.

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If Ozzy is found to be in breach for not performing his home season games in the Boresville stadium will the court issue an injunction? This involves the same factors of specific performance as stated above. This situation is different however. Monetary damages are fairly 6 easy to ascertain. Ticket sales are the only form of revenu that the parties will recieve in connection with the football games played. The court can just award the damages lost in the games that Ozzy fails to perform in the stadium. Further, this would 0 /?t 3 w e c a u s e it would involve Ozzy being forced to use the stadium. Thus, the court should not award specific performance, but rather damages for the money that they lost for the games Ozzy will_not play in the stadium.& I

The general issue here is whether or not Ozzy will be able to enter into evidence the agreement that Ozzy would be able to name the new stadium.^ 5' m e n the parties have expressed their e agreement in writing, the parol evidence rule limits the ability of a party to enter a prior or contemporanous oral or written agreement. If the writing evidence will bar any other terms or agreements from reaching the jury. If the writing is only a partial intergration the court will only bar those terms that are contradictory to the express terms of the agreement.

Was the lease agreement a final intergrated writing? First, it must be a finalized writing. To determine this the court will look at both intrinsic and extrinsic evidence. Here, this is a standard .-- .-. ..--.-. .. ... - ..-.--- -.... - -- - -...-.--..--- - ... - -...

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the jury as long as it does not contradict the express terms of the agreement. Here, the express terms are that the name include "boresville" in the name. The agreement that Ozzy will be able to^
A 7 \ (^) i Ai; - - name t h d a m $ dies not contradict that because he could easily name the team something with (^) I Boresville in it. w Thus,Ozzy will be able to succeed on his claim that he will get t /G If Ozzy were to succeed on his counterclaim would the court issue an injunction? A court will issue an injunction if monetary damages would be inadequate to protect the expectation interests of the party. The court looks at three factors to determine that issue 1)The difficulty in ascertaining monetary damages 2)The difficulty in procuring a suitable substitute 3)The / z liklihood that damages would not be able to be collected. Ozzy wanted the po (^) /-. product branding consistency between the team and the sta - Fium's name. That ability seems to* have commercial value due to the parties' agreement. It might be difficult to ascertain monetary damages of the harm if Ozzy is not able to have that type of consistency. The court will issue the injunction.