When she asked about the price, Steven replied, ‘Well, considering the status of the artist, I couldn’t take less than $4000 for it. Knowing that an original painting by Arthur Master was worth at least $40,000 Bea immediately paid for the paining. Due to its size, however, Bea asked it be delivered to her home and hung in the living room. Steven agreed and wrote up a dated invoice for “1 Master painting’ to be delivered and installed Beak’s address “sometime next week. ” Steven initialed the invoice and marked it “Paid. ” Steven did not deliver the paining the next week, but instead took it to Beak’s house the week following.
Bea was not at home, so Steven left the paining on Beak’s porch. It rained later that day and the part of the canvas mildewed. Bea went ahead and hung the paining in her home. She then called an art expert to evaluate the painting for the potential resale and get an estimate on fixing the mildew damage. Weeks later the art expert examined the painting, he informed Bea that the mildew could be removed for $1 00, but the paining was not by the renowned artist, Arthur Master. Instead, it was by a local artist, Andrew Master, and was worth approximately $400.
Prepare a memorandum addressing the following matters in detail, and including relevant case law to support your arguments 2. 0 Questions 1 . What are Bea’ potential claims against Steven? What are Stevens potential defenses? Who is likely to prevail in the event this case goes to court? 2. Assume Bea prevails in her lawsuit against Steven. What remedies is Bea likely to receive from the court? 3. 0 Memorandum The first requirement for a valid contract is an agreement, which normally consists of an ‘offer’ and an ‘acceptance’ between two or more parties.
Then in order to form a valid contract there must be an offer, acceptance and consideration. This case addresses a painting so it falls under the Personal Property Securities Act (PAS) because the painting is considered as GOODS. Contract – In order for a contact to be valid a contract must contain: 1) An offer 2) An acceptance 3) Consideration 4) No defenses Here there was an offer – The painting was offered for $4000 by Steven and a valid acceptance by Bea (she paid for it). An offer is a manifestation of an intent to be bound plus the inclusion of any essential terms.
Under the PAS, quantity is the sole essential term. Everything else can be supplied by gap-fillers from the PAS. Acceptance is an intent to be bound. Consideration is a bargain-for- exchange, a benefit to one party or a detriment to the other. In this case Bea paid or the item and Steven sold her the item. It appears that there was a valid offer, acceptance and considering. Statue of Frauds – Under the PAS, a sale of goods for a price of $500 or more must be: 1) in writing 2) signed by the party to be charged Bea could raise a Statute of Frauds (SOFT) defense however it appears that it has been met.
The writing required does not have to be formal contract. A dated invoice was used in this case. This is sufficient as writing for the Statute of Frauds. Steven, who is the party to be charged also, signed the invoice so we have a signature. The SOFT applies in the first place because we have a sale of odds greater then $500(it is for $4000). This defensibly Bea most likely will fail. Deliver – Under the PAS, a buyer has the option to reject the goods if it is not a perfect tender. In this case we are told that instead of rejecting the damaged painting, Bea accepted it by hanging it in her living room.
After acceptance, a buyer may revoke the goods if the goods are substantially impaired and there is a good reason for not rejecting them. Bea could try to revoke the painting but she would need to argue that she had a good reason for not rejecting it. She might argue that she did not believe the damage to be that severe or costly. Or she might argue that because of a unilateral mistake she should be able to revoke the painting. Bea might also argue that the seller breached the contract by delivering the painting late.
It was to be delivered “sometime next week” but instead if was delivered the following week. This argument is weak because the contract did not specify that the time important. The seller under the PAS has a reasonable time to deliver the goods if not specified which Stevens would argue. However Bea could argue that the time was not specified and that Steven breached by not delivering on time. Also the painting might not eave been damaged by rain if it had been delivered on time. Bea should also argue that the method of delivery was improper.
The facts do not state that an independent contractor was used for deliver so the Risk of loss would be on the seller since delivery was specified at Beak’s home. Assuming the seller made the delivery himself as a merchant; risk of loss begins with the seller and passes to the buyer upon the buyer taking physical possession of the goods. Bea did not take the possession until after the painting was damaged. Therefore Bea was a good claim that the seller is liable for the damage to the painting. Leaving it on he porch was poor delivery. Mistake – Both parties may claim that there was a mistaken identity of the artist of the painting.
If it was a mutual mistake, the contract could be cancelled because there was a never a full understanding for both parties. Though Steven would argue that was only unilateral mistake on the part of Bea and as such should bear the cost of that mistake. Bea could counter that Steven being a dealer/seller of painting knew that Bea might think it was a famous artist. If Steven knew of Beak’s mistake on identity of artist, the PAS will not hold her to that mistake and Bea probably can get out of the contract based n her unilateral mistake. Steven as the seller should have known who the artist was.
Misrepresentation – Misrepresentation occurs when one party: 1) makes a statement of material fact to the other party 2) knows the statement was false 3) intends the other party to rely on it 4) the other party realizes on the statement 5) the other party is justified in relying on it; and Stevens comment ‘Well, considering the status of the artist” could be interpreted as a misrepresentation. The Artist is the basis of the bargain where Steven intended her to rely on, which Bea did, that is why she paid so much for it. The only element that might be difficult to prove is that Steven knew the statement was false.
Since he is the seller of painting he probably did know of its falsity when he made it. Remedies – If the court decides that Steven breached the contract, Bea has several remedies available both legal remedies and equitable. Legal remedies Bea can ask for warranty remedies, market damages, incidentals and consequential damages. Cover damages would not likely be available due to the type of goods. Warranty – If Steven has made any express warranties to her, she can claim breach of warranty and recover. Market Damages – The price of he contract minus the market price of the goods would be 4000-400 = $3600.
Incidental Damages – Those incurred by Bea for storing the goods and possibly after an expert looked at the painting. Consequential Damages – If Bea had another contract lined up or a showing of her house centered on the painting she might be able to recover these damages. The facts do not indicate this so most likely consequential damages are not available Equitable Remedies Specific Performance – Is usually available because the painting is unique. Specific Performance is used for unique items and is a method whereby the court ill order the other party to perform. Since she has the painting this remedy is inappropriate.
Recession – Bea can ask the court to cancel the contract because of the unilateral mistake recession puts the parties back in the same position before the contract was formed. In this case Bea would get her money back and Steven would get the painting back. The court will consider the mistake and the likelihood that Stevens knew of it before the contract was formed. Mistake of the price is not something a court will withdraw a contract for but a mistake as to the artist is something the court will consider. Bea specially asked if it was an original Master” and was led to believe it was.