Fashion Designer Contracts by rub12667

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									                                                                           EXAM#____________
                               Part II: Essay Question (40 points total)
                                    Recommended Time: 2 hours

    NOTE: You must answer all three (3) sub-parts to be eligible for full credit. This
 examination is intended to test only material covered in our fall semester Contracts course. Do
                           not discuss matters we have not addressed.

                                            SUB-PART 1

Robert is an out-of-work fashion designer. Elizabeth is the President of Chanel, a high end
fashion company. Robert and Elizabeth run into each other in September 2008 at New York
Fashion Week and have the following conversation:

        E: Robert, it is really great to see you! I have heard great buzz about your work. I want
        you to work for Chanel as head designer. Are you available?
        R: Elizabeth, I would kill for that job. Are you serious?
        E. Deathly serious. I am offering you the job and I will pay you $100,000 per year.
        R: My head is spinning. Can I have a few days to think about it?
        E: Robert, I wouldn’t have graduated from fashion school without all of your help. I
        owe you big. Of course you can have 72 hours to think about it.

The next morning, Robert wakes up and reads in the New York Times that Chanel has hired
someone else to be its new head designer. If Robert sues Chanel, what arguments will be made
by each party and with what likely result? Why? Assume that Elizabeth had complete, actual
authority to act on behalf of Chanel.

                                            SUB-PART 2

On October 1, 2008, pursuant to an oral agreement, Chanel delivered 10 dresses to Boutique, a
high end retail store, in exchange for Boutique’s promise to pay Chanel $100,000. On October
15, 2008, Xena, one of Boutique’s best customers, bought all 10 dresses. Unfortunately, due to
the slow economy, Boutique went bankrupt before it could pay Chanel for the dresses. If Chanel
sues Xena for the cost of the dresses, what arguments will be made by each party and with what
likely result? Why?

                                           [CONTINUED]




                                              Page 1 of 2
Chuang: Contracts I, Final, FA 09
                                                                          EXAM#____________
                                          SUB-PART 3

In fashion, one day you’re in and the next day you’re out. Chanel fires its head designer and its
entire executive team in November 2008. Chanel’s new President, Jane, calls Robert into her
office. Jane’s secretary, Alex, memorializes the conversation on Chanel letterhead:

         Preliminary Agreement: Chanel to hire Robert as head designer of House of Chanel.
         Salary is $100,000 per year and term of employment is 2 years. Robert to start
         immediately. Final contract outlining other detailed terms and conditions being prepared
         and available for signature shortly. Present: Jane, Robert, Alex. Date: December 4,
         2008.

Neither Jane nor Robert signed the memo. Robert started immediately. No formal written
contract was entered into by the parties.

In August 2009, searching for ways to increase revenue and reduce costs, Jane told Robert that
he would now also be responsible for designing Chanel’s bargain line, Cheapo Chanel. Robert
was horrified and told Jane, “That’s not in my job description.” Abruptly, and without warning,
Chanel fired Robert. Answer BOTH questions below.

    1.       If Robert sues Chanel to enforce their agreement, what arguments will be made by
             each party and with what likely result? Why? Assume that Jane had complete, actual
             authority to act on behalf of Chanel.

    2.       Assume, for this part of your answer only, that Robert has sued Chanel for breach of
             their agreement. Assume further that Robert seeks to introduce the testimony of the
             head buyers of several major department stores who all agree that within their
             industry, the term “House of Chanel” does not refer to Chanel’s bargain line “Cheapo
             Chanel.” In Chanel’s public corporate filing with the U.S. Securities and Exchange
             Commission, “Cheapo Chanel” is listed as one of the brands within “House of
             Chanel.” What arguments will be made by each party and with what likely result?
             Why?




                                      END OF EXAM
                                    CONGRATULATIONS!



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Chuang: Contracts I, Final, FA 09

								
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