Answer two of the following three questions (6, 7, 8). Be very clear. Each question is worth 15 points. For each of the following examples determine whether, on efficiency grounds, the contract should be performed or breached. If you recommend the former, explain in one or two sentences why. If you recommend the latter, identify the contract doctrine that would excuse promise breaking. Use the front and back of this sheet. Indicate which question you are answering.
- Sarah is 12 and an avid collector of baseball cards, agrees to sell a Derek Jeter rookie card to a dealer for $500, when in the fact the market value of the card is at least $1,000. Sarah's parents attempt to block the sale of the card.
- The Economics department at Columbia University agreed to hire Dana Xiao to teach introductory macroeconomics courses. In his application Dana indicated that he would have his Ph.D. completed by the time the school year started, a requirement for the teaching position. Upon his arrival on campus, the Economics department learns Dana has not yet received his Ph.D. due to data problems that prevented him from completing his dissertation, and declares the contract void.
- Smith offers to sell Jones a pleasure boat they have used together on many occasions. After taking delivery of the boat, Jones discovers that the motor is unreliable and fails to start from time to time. Arguing that he was unaware of the problem when the sale took place, Jones demands damages. Smith responds that he assumed Jones was aware of the problem given their previous trips together and that, therefore, no damages are warranted.