Question

Instructions

The Bluth Company (“TBC”) owns and operates a frozen banana stand on the boardwalk in Newport Beach, California (http://bit.ly/1M4esOi), from which it sells frozen bananas to the general public. TBC buys its bananas from a banana farmer in Honduras named Jorge Miguel, who can be considered a banana merchant. George Michael, the TBC employee who manages the banana stand, sends an email to Jorge Miguel stating “I offer to buy 1,000 bananas to sell at my frozen banana stand.” There are two types of bananas that Jorge grows – the high starch and the low starch. The high starch bananas must be used when freezing them otherwise they will taste terrible. In all other aspects, there is no discernable difference between the two types of bananas.

Jorge does not reply to George Michael’s email, but instead ships him 1,000 low-starch bananas. Assume bananas are a commodity and their market price is readily available. Because TBC received the wrong type of bananas, it lost out on profits in the amount of $3,000. Also, because it couldn’t meet customer demand, the banana stand lost out on a future contract to cater an event which would have resulted in profits of $10,000.

Please answer the following questions:

Did George Michael and Jorge Miguel form a contract under common law contract rules? What about under the UCC Article 2? Explain.

Did Jorge Miguel breach any warranties with the bananas he shipped to George Michael? (Hint: analyze all three types of warranties and determine whether it was breached)

In a lawsuit for breach of contract, what types of damages could TBC recover, and how much would those damages be?

Answer 1