Author Question: Contract Modification. Ritz-Craft Corp contracted with the Stanford Management Group (SMG) to ... (Read 50 times)

cherise1989 · **on:** Jun 24, 2018

Contract Modification. Ritz-Craft Corp contracted with the Stanford Management Group (SMG) to manufacture and install prefabricated multi-family housing units for SMG. Ritz-Craft was also to set the units on the foundations constructed by SMG, as well as provide some connective work for electricity, plumbing, and so on. The original contract price for forty-nine units was 1,613,500, but a subsequent modification to the contract due to unforeseen circumstances raised the price by 45,000. SMG refused to pay the additional 45,000, arguing that the modification was not enforceable because it had not been accompanied by consideration. Ritz-Craft sued for breach of contract. If no consideration was given, is the agreement to modify the original contract binding? Does the manufacture and installation of modular homes involve goods or services? Discuss fully how the court should rule on each of these issues.

Question 2

In Yim v. J's Fashion Accessories, Inc, where J's Fashion sued Yim for failing to pay for goods he bought under the name Ho Tae and Yim denied liability on the grounds that he had been acting as an agent for Hosung Enterprise, Inc which also did business under the name Ho Tae, the courts held that:
a. Yim was not liable because he was an agent of Hosung Enterprise, Inc.
b. Yim was not liable, even though he was an agent of Hosung Enterprise, Inc. c. Yim was liable because he disclosed Hosung Enterprise, Inc. as the principal d. Yim was not liable because he had apparent authority
e. none of the other choices are correct

aham8f · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

Contract modification
An agreement modifying a contract for the sale of goods within the UCC, needs no con-sideration to be binding. Thus, if a sale qualifies as a sale of goods, the modification is binding without consideration. The court held that a contract to supply pre-manufactured housing units to a buyer is a contract for the sale of goods and is governed by the Uniform Commercial Code. The court explained that goods are defined as all things (including specially manufactured goods) that are movable at the time of identification. The modular units installed by Ritz-Craft were manufactured off-site at plaintiff's factory. Since they were manufactured to the buyer's specifications, the time of identification was at the first step in production, at which time the modular homes were movable. Thus, at the moment of their identification to the contract, the units were movable goods'. The court concluded that the fact that this transaction has ingredients of both a sale and a service, does not change its character as a contract for the sale of goods. Although the contract here does contain an element of service, i.e. performance of certain finish work' by Ritz-Craft, the sale function predominates, and the contract is thus one for the sale of goods within the UCC.

Answer to Question 2

e