Question 1 | Question 2 | Question 3 | Question 4
Question 5 | Question 6 | Question 7 | Question 8

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QUESTION 1

Stan Student attended the Thomas Bayard Academy ("Academy"), a private high school in the State of Delaware, and was a member of Academy's ice hockey team. While playing in a game against Academy's arch-rival during the first semester of the school year, Stan collided with another player and fell back striking his head hard on the ice. After assessing Stan's injuries, Carl Coach, who was also a faculty member at Academy, sent Stan back into the game even though Stan was complaining about a headache.

After the game, Stan collapsed and was taken to the hospital, where he died. A medical examination revealed that Stan had a severe concussion when he was sent back into the game. It was also determined that if he had been given proper medical treatment promptly he almost certainly would have survived. Academy's separate investigation revealed that Stan had not been wearing regulation headgear, issued by the school, but instead had been wearing a helmet that his older brother had purchased five years earlier and which might have been defective.

Assume that you are the lawyer for the Academy and you have been asked to assess its exposure with respect to any potential claims against it.

Frank, Stan's father, was upset with Academy's handling of the matter. He initiated a letter-writing campaign targeted at the parents of other Academy students. His letter, which was e-mailed to the parents of all 900 students at Academy, accurately described the facts surrounding Stan's death and urged the parents to cancel their tuition agreements and withdraw their children from the Academy. Frank also published his letter in a full-page ad in the local Delaware newspaper.

Shortly after Frank sent his letter, five (5) students were removed from the school by their parents, resulting in the loss of about $50,000 in tuition revenue which Academy expected from the second semester of the school year and another $100,000 for the following year. In addition, only 60 percent of the Academy's offers of admission for the following year, as compared with 80 percent the year before, were accepted. As a result of the decline in enrollment, Academy projects the loss of another $200,000 in revenue for the coming school year.

Shortly after Stan died, Rhonda Reporter, a reporter for the local newspaper, began snooping around Coach's house looking for a story. She went through his trash can at night when it was left on the street and found love notes written by Coach to the female headmaster of the Academy, Terry Trump. After further investigation, she discovered that Coach had been having an extra-marital affair with Trump for several years and published this information in an article in the newspaper. Shortly after this revelation was published, Academy's Board voted to terminate Coach's employment.

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QUESTION 2

ABC Beverage, Inc. ("ABC") is a Delaware corporation which manufactures and bottles "Gusto," a popular sports energy drink. ABC has 10,000,000 shares of common stock outstanding. ABC stock trades on the New York Stock Exchange. For the first six months of 2007, ABC stock has traded consistently in the range of $79 to $81 per share. ABC's Certificate of Incorporation includes a provision adopted pursuant to 8 Del. C. §102(b)(7) which extends protection to all ABC directors against liability to the maximum extent possible under Delaware law.

ABC has a five member Board of Directors. Andrew Ames is a director, Chairman of the Board and Chief Executive Office of ABC. Ames' compensation for 2007, as approved by the Compensation Committee of the ABC Board, was $1 million in cash. Brad Brady is a director and was Chief Financial Officer of ABC from 1995 until he retired in 2003. Brady also has been a close personal friend of Andrew Ames since childhood. None of the other three ABC directors, Colin Combs, Dana Downs or Edmond Edwards, has any business or personal relationship with ABC or Andrew Ames except their positions as outside ABC directors. Combs, Downs and Edwards also comprise the Compensation Committee of the ABC Board.

For the past several years, ABC has targeted Aqua, Inc. ("Aqua") as a potential strategic merger partner. Aqua is the leading bottler and supplier of purified water, under the brand name "Hydro," in the United States. ABC management believes a merger of ABC and Aqua could achieve significant synergies in the area of product distribution. Like ABC, Aqua is a publicly-traded Delaware corporation. Aqua has 10,000,000 shares of common stock outstanding. Aqua's stock is traded on the New York Stock Exchange. From time to time over the past several years, ABC management has held discussions with Aqua management regarding the prospect of a merger. Aqua's Chairman and CEO, Henry Ames, owns 3,000,000 Aqua shares. Henry Ames is the brother of ABC's Andrew Ames. The discussions between ABC and Aqua regarding a possible strategic merger all have ended without any agreement, due to Henry Ames' repeated refusal to consider a merger.

At a family gathering on May 1, 2007, Henry Ames informed his brother, Andrew, that he had finally decided to consider a merger of Aqua and ABC if mutually acceptable terms could be negotiated. Henry further informed Andrew that Aqua would be inclined to pay a premium over the market trading price for ABC stock, either in the form of cash or Aqua stock, for all of the outstanding ABC shares. Henry instructed Andrew to inform the ABC Board and to propose terms for a merger.

On May 10, 2007, the ABC Compensation Committee held its regularly scheduled annual meeting to consider and approve the 2008 compensation packages for ABC executives. The usual procedure at ABC was for Andrew Ames, as CEO, to propose compensation terms for the executives to the Compensation Committee approximately one week prior to the annual meeting of the Compensation Committee. In keeping with this practice, on May 5, 2007 Andrew submitted to the Compensation Committee proposed 2008 compensation for all of the ABC executives. For all executives except himself, Andrew proposed cash compensation representing a 3% increase over 2007 compensation. For himself, Andrew proposed $500,000 in cash compensation plus 10,000 shares of ABC common stock. Andrew proposed that the stock would be granted to him on May 10, 2007. He further proposed that in the event of a change of control of, or a merger involving, ABC on or before December 31, 2008, he would receive an additional 40,000 shares of stock. Andrew informed the Compensation Committee that he was proposing a combination of stock and cash for his own compensation package in order to align his interest with the long-term interest of the stockholders in maximizing share value. Andrew did not inform the Compensation Committee regarding his discussions with Henry Ames.

The Compensation Committee approved the 2008 compensation packages as proposed by Andrew, including the 50,000 share stock grant to Andrew. Later the same day, ABC issued a press release, which was filed with the SEC on Form 8K, to inform the public regarding the terms of the 2008 compensation packages approved by the Compensation Committee and the grant of 10,000 ABC shares to Andrew with the provision for an additional 40,000 shares on a change of control or merger of ABC.

The ABC full Board held its regularly scheduled board meeting on May 15, 2007. Andrew informed the other directors that he believed it was time to make another approach to Aqua to discuss a possible strategic merger. Andrew did not disclose to the other directors his contacts or discussions with Henry on May 1. The Board authorized Andrew to contact Henry Ames to initiate discussions.

On May 16, 2007, Andrew informed Henry that the ABC Board was preparing proposed merger terms. Andrew and Henry agreed to recuse themselves from further negotiations in view of their sibling relationship. On May 17, 2007, Andrew convened a telephonic meeting of all ABC directors. Andrew informed the ABC directors that Henry had decided to consider a merger of ABC and Aqua and Aqua was inclined to pay a premium for ABC in the form of cash or stock. Andrew further informed the directors that Henry requested ABC to propose merger terms and that he and Henry had agreed to recuse themselves from further negotiations.

The ABC Board formed a Special Committee consisting of Combs, Downs and Edwards to develop merger terms and to negotiate with Aqua. The ABC Special Committee engaged an independent financial advisor, BankGroup Advisors, and independent legal counsel, Law Firm LLC. On May 31, 2007, after extensive due diligence, BankGroup presented to the ABC Special Committee its estimate of the value of ABC in the range of $100 - $110 per share based on the discounted cash flow and comparable companies methodologies. BankGroup also informed the Special Committee that in estimating ABC's value, BankGroup had not considered, and had not been requested to consider, whether any company other than Aqua would be interested in a purchase of or merger with ABC. After considering the BankGroup presentation, the Special Committee determined to propose a merger in which Aqua would acquire the outstanding stock of ABC under either one of two alternative scenarios: (1) Aqua would acquire the stock of ABC for $105 per ABC share in cash, or (2) Aqua would acquire the stock of ABC in exchange for $105 worth of Aqua common stock for each ABC share.

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QUESTION 3

Art and Ann Adams resided in northern New Jersey for many years. When Art retired at the end of 2005, they decided to move to Delaware because it had no sales tax and low property taxes. In January 2006 they contacted a Delaware realtor, Betty Brogan, and asked her to help them find a home.

Betty quickly located a prospective home for Art and Ann. The owner of the home was Chelsea Cheeseman, who had decided to sell her home herself rather than listing it with a realtor. She did, however, meet with her attorney, Donald Dewey, prior to completing the statutorily required sellers' disclosure document. During that meeting in Donald's office, Chelsea revealed to Donald that she had previously noticed some settling problems with the home and had engaged a structural engineering firm to inspect the house and to complete a report. The report revealed that the home had serious foundation problems.

Chelsea also told Donald that she had to sell the home in order to pay off some significant gambling debts. Chelsea said that she planned to destroy the structural engineering report and not to disclose the structural problems on the required seller's disclosure form. Chelsea asked Donald if she could be held liable for any problems after the sale if there was no evidence that she was aware of the structural problems. Donald advised Chelsea that if there was no evidence that she (Chelsea) was aware of the problems, it would be unlikely that she would be held liable. Chelsea then completed and signed the seller's disclosure form without disclosing the structural/foundation problems.

The next weekend, Art and Ann went with Betty to see Chelsea's house. They immediately fell in love with it and after reviewing the disclosure form they made a full price offer for the house. Chelsea accepted the offer and signed the sales contract, again without disclosing the foundation problems.

A couple of months later, Art and Ann were excitedly preparing to move into their new home. Settlement was set for April 1, 2006. Art and Ann followed the moving truck through busy traffic. While proceeding through an intersection in Middletown, Delaware, the Adamses' vehicle was struck on the passenger side door by a large van driven by Elsa Edwards.

As Art and Ann sat stunned in their vehicle, Elsa approached the open driver's window and asked Art if he needed medical assistance. Elsa also said, "I'd be happy to pay for your medical bills." Art replied "That's all right, we have insurance."

At the same time, Fred Fuller, the passenger in the van, approached the passenger window where Ann was sitting and said, "Oh, don't worry about insurance. Elsa works for my company, Fuller Air Conditioning and Heating, and our insurance will cover everything."

A police officer responded to the accident and took statements from Art and Elsa. Art told the police officer that his light was green. Elsa told the police officer that her light was yellow as she entered the intersection.

Art and Ann, who both sustained minor injuries, were able to proceed in their own vehicle to a nearby hospital. While they were waiting in the emergency room, Art told Ann that, even though he told the police officer that his light was green, it might have been changing from red to green as he entered the intersection.

After being treated for their injuries, Art and Ann went to Donald's law office, where the settlement took place. Soon after they moved into their home, Art and Ann noticed evidence of structural and foundation problems, including cracks that had been filled in and painted. Art and Ann hired their own engineer, whose report revealed serious structural and foundation problems.

Art and Ann retained the law firm of Giles & Giles to file suit in the Court of Chancery against Chelsea for breach of contract and fraud, seeking rescission of the contract. They also asked Giles & Giles to file a separate tort suit in the Superior Court against Fuller Air Conditioning and Heating for the personal injuries they received in the accident.

First, assume you are a Vice Chancellor hearing the Chancery case. Explain how you would rule on each of the listed evidentiary objections, and give reasons for your ruling.

1. Art and Ann's lawyer, Gerry Giles, seeks to call Donald to testify about his conversations with Chelsea regarding the structural and foundation problems. Chelsea's lawyer, Helen Harper, objects on the grounds of privilege. How would you rule and why?
2. While rummaging through the drawers of their new home, Art and Ann found a copy of the structural report previously obtained by Chelsea with a handwritten note at the top in pencil stating, "This is bad - sure can't let a buyer see." Gerry wants to call Iggy Irwin, Chelsea's former gardener, who now works for Art and Ann, to testify that the handwriting is Chelsea's. Helen objects to Iggy's testimony on the basis that he is not qualified to give an opinion regarding the handwriting. How would you rule and why?
3. When Chelsea takes the stand to testify, Gerry seeks to question Chelsea on cross-examination about a 13-year old conviction for felony theft. Helen objects. How would you rule and why?

At the Superior Court personal injury trial, Art and Ann are represented by Gina Giles. Fuller Air Conditioning and Heating is represented by John Jackson. Assume that you are the Superior Court judge assigned to the trial. Explain how you would rule on each of the following objections and why.

1. When Ann is testifying, Gina seeks to question her about Fred's statement that Fuller's insurance will pay for the accident. John objects. How would you rule and why?
2. At a deposition before trial, Ann testified that she saw their traffic light change from red to green as their vehicle entered the intersection. John seeks to elicit this testimony on cross-examination, and Gina objects on the basis of husband-wife privilege. How would you rule and why?
3. When Elsa is on the stand, Gina seeks to question Elsa on cross-examination about her statement that she would be willing to pay for Art's and Ann's medical treatment. John objects to this testimony. How would you rule and why?
4. Assume for purposes of this question that Art testifies at trial. John seeks to elicit testimony from a former business associate of Art's regarding Art's reputation for dishonesty in his business dealings. Gina objects. How would you rule and why?

Gina seeks to present evidence that, shortly before the time of the accident, Elsa had left the scene of another accident in which Elsa had struck and killed a small child riding a tricycle. John objects. How would you rule and why?

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QUESTION 4

Dan Developer owned a six acre parcel of land in Capital City, Delaware. The northern edge of the property bordered Main Street and the other three sides bordered park land owned by the State of Delaware.

In connection with a potential sale, Dan divided the property into two three acre lots known as Frontacre and Backacre as shown on the diagram below. (Assume for purposes of the question that the division of the property is valid as a matter of law and equity.) The only means of access to Backacre is a gravel road which is contained entirely within the borders of Frontacre. (Assume for purposes of this question that the gravel road cannot be dedicated to any governmental authority.)

Bob and Betsy Buyer are brother and sister. While both are generally good citizens, as a result of his disagreement with federal government's handling of the conflict in Vietnam, Bob stopped paying federal taxes in 1969.

In late 1969, Betsy agreed to buy Frontacre, and Bob agreed to buy Backacre. The closings on both of the properties occurred on January 10, 1970 at Dan's office. Present at the closings were Dan, Dan's attorney, Betsy, Bob and Bob's best friend, Sam Student, a second year law student at Delaware State University School of Law. During the closings, in the presence of everyone, Sam pointed out that other than describing the fact that the gravel road existed, the relevant documents were silent with respect to the use and maintenance of the gravel road. Accordingly, Sam suggested that there be some type of written agreement with respect to the use and maintenance of the gravel road. Betsy and Bob both expressed the view that such an agreement was unnecessary, that they would both use the gravel road and that they would take care of it together. Bob specifically stated: "She's my sister. I'll make sure the road is maintained for both of us." Dan also stated: "This is just common sense. Of course, Bob can use the gravel road to get in and out of his property."

Betsy and Bob both obtained mortgages on their properties from First Bank. The First Bank employee assigned to Betsy's loan recorded the mortgage on January 11, 1970. The First Bank employee assigned to Bob's loan was on his way to record Bob's mortgage when he learned that his wife was in labor. The employee went home, took his wife to the hospital and did not record Bob's mortgage.

After the settlements, Bob and Betsy both built houses on their respective lots and used the gravel road to access their properties from Main Street. A couple of years later, Bob decided to pave the gravel road and to make other improvements on Backacre. Bob completed the paving on January 6, 1975.

In order to pay for the paving and other improvements, Bob obtained a second mortgage on Backacre from Second Bank. The Second Bank mortgage was recorded at 10:00 a.m. on January 7, 1975. That same day, employees of First Bank discovered that the First Bank mortgage on Backacre had never been recorded. First Bank recorded its mortgage at 3:00 p.m. on January 7, 1975.

After the paving of the gravel road, Bob continued to maintain the road. He cleared the snow in the winter and repaired the road when it was necessary. Betsy never paid any money or otherwise assisted Bob in connection with the maintenance of the road.

On December 22, 1982, Betsy invited Bob to dinner at her house. Following dinner, Betsy told Bob that in order to show her appreciation to him for his work on the road and for generally being a good brother she would transfer Frontacre to him, effective January 1, 2006. While Bob did not think that Betsy was actually serious about the transfer, Bob thanked her for the gesture but told her that she did not need to do that.

The next day -- unbeknownst to Bob -- Betsy handwrote a deed which stated, in its entirety: "I, Betsy Buyer, hereby grant, effective as of January 1, 2006, to my brother Bob Buyer that certain property known as Frontacre located in Capital City, Delaware and as depicted on the attached survey." Betsy stapled to the deed a survey which Dan Developer had given to her. She also had one of her friends take the handwritten deed to work with her in order to type Betsy's name on it. After Betsy's name was typed on the deed, she put in it a file where she kept other important papers. Eventually, Betsy forgot about the deed.

On February 1, 1989, Betsy sold Frontacre to Ned Neighbor. Bob continued to use and maintain the road as he had when Betsy owned Frontacre. After a couple of years, however, Ned and Bob had a huge fight. As a result, on March 1, 1991, Ned erected an electronic gate at the entrance of the road and did not give Bob the access code.

After selling to Ned, Betsy moved to a deed restricted community. The declaration for the community required that any change to the structure of the house be approved by an architectural review committee. The declaration also provided that the architectural review committee could make decisions in its "sole and absolute discretion." Betsy submitted a request to paint her shutters purple. The declaration is silent with respect to the color of shutters within the community. However, there are no other purple shutters in the neighborhood. The architectural review committee denied Betsy's request without explanation.

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Question 1 | Question 2 | Question 3 | Question 4
Question 5 | Question 6 | Question 7 | Question 8

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QUESTION 5

Mission University ("University") is a private, religious, multi-campus university in Delaware. All full-time University employees have standard written employment contracts which provide for a renewable term of service, a fixed salary, and health-insurance coverage. University recently issued employment guidelines consistent with its religious mission. Under the new guidelines, all newly hired non-Delaware resident employees are required to be residents of the State of Delaware and must refrain from "publicizing" statements that conflict with University's positions on a variety of social issues. University promulgated the guidelines in order to promote its mission and to ensure that its employees would be involved in and be viewed as a part of the Delaware community. Although a private and religious entity, the University receives substantial direct financial subsidies from the State of Delaware.

Specifically, the new guidelines provide that a failure to become a resident of the state within "two months" of hiring will void an employment contract. The guidelines also authorize University's board of trustees to terminate an employment contract due to an employee's failure to become a resident. In addition, publicizing views contrary to University's position on, for example, school prayer or physician-assisted suicide, would subject an employee to a review process, in which a panel of professors (the "Guidelines Panel" or the "Panel") would determine whether the statement might injure University's reputation in the community and, if so, whether and how the employee should be disciplined. The Guidelines Panel is not authorized to terminate an employment agreement under any circumstances.

In January 2007, Mary Free, an unemployed Maryland resident, read an advertisement in a Delaware newspaper for an administrative assistant position at University's Dover, Delaware campus. Mary, an atheist, interviewed for the position on January 31st and was hired on the spot. The next day, Mary and University executed an employment agreement consistent with University's recent employment guidelines.

About twenty-five days into her new job, Mary began looking for a house in Delaware. After finding one she liked, Mary then put her Maryland residence on the market. A buyer expressed interest, and Mary set the settlement date for April 1, 2007. Mary, who had been unemployed for a long time and was short on cash, determined that she would be unable to settle on her new house until after closing the sale on her old house. She therefore set the settlement date for her new house for April 2, 2007, the day after she was to settle on her old house. Knowing that University had granted waivers in the past, Mary advised University that the April 2 relocation date would fall one day outside of the residency guideline. University expressed no objection.

In the meantime, Mary looked for a way to get involved with the surrounding community. Luckily, Mary heard from a friend that the Dover based newspaper was soliciting guest editorials on the topic of physician-assisted suicide. These articles were to be part of a week-long series highlighting the pros and cons of this contentious issue. Identifying herself as a member of a Maryland atheist group, Mary wrote and submitted a guest editorial to the newspaper that extolled physician-assisted suicide and claimed that the practice has its roots in atheist doctrine. The newspaper published the piece the next day in its statewide edition. Shortly thereafter, the piece generated dozens of letters to the editor.

On the last day of February, University's board of trustees convened a meeting of the Guidelines Panel. During the meeting, the members of the Panel expressed outrage over the opinions voiced in Mary's editorial and lamented the fact that the Panel's employee discipline authority, as one member put it, had "no teeth." On April 1, University, through the board of trustees, fired Mary for "failing to establish a Delaware residence." The next day, Mary settled on her new house.

Assume that Mary and the atheist group she belongs to file a wrongful-termination suit against University in the United States District Court for the District of Delaware.

II.

A year later, the State of Delaware contacted University and informed University that its ten-story classroom building, located in downtown Wilmington, was the last privately owned parcel of land in the city's state-financed urban revitalization district. The State explained that it wanted to redevelop University's building as a mixed residential and commercial "destination."

Because of its location fronting on the Christina River, the State saw University's building as the cornerstone of its revitalization project. As part of an incentive package, the State offered to allow University to retain title to the property and to retain use of the top floor, but requested that University vacate the other nine floors.

Assume that University receives 70% percent of its tuition revenues from its Wilmington location and, while it does receive state subsidies, it is otherwise a private entity. Assume further that there is no state statute that specifically authorizes the use of the State's eminent domain power to promote economic development. University comes to you for advice on how to challenge the State's "request" that it vacate nine floors of its building.

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QUESTION 6

Assume that you are an associate in a Delaware law firm, and that a senior partner at the firm has asked you to file a complaint on behalf of Paul Plaintiff, who was in an automobile accident. Paul Plaintiff, who is a Delaware resident, was driving in New Castle County, Delaware and was struck by Dan Driver. Driver is a resident of New Jersey and lives just over the New Jersey/Delaware state line. Driver was operating his car at an excessive rate of speed at the time of the accident. Plaintiff was seriously injured, and has already incurred more than $200,000 in expenses and anticipates extensive future expenses.

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QUESTION 7

Paint Manufacturer ("Manufacturer") manufactures and sells paints to commercial paint operations. On its web site, Manufacturer solicits buyers and allows any prospective buyer to request a quotation for a purchase via the web. The quotation form requires the name and amount in gallons of the paint, and a contact address to which the quotation can be sent. After a request is submitted, Manufacturer sends the price quotation to the prospective buyer at the address provided. The quotation form sets out in bold print that (1) Manufacturer's paints are the product of highly complex mixing processes; (2) the requested color(s) may change with time; and, (3) therefore, the paints should be used as soon as practicable.

On May 23, 2006, Paint Contractor ("Contractor") submitted a quotation request to Manufacturer for 2500 gallons of Paul Newman Blue latex paint. Contractor noted in the quotation request that time was of the essence and asked that all responses be sent by email and/or facsimile to Contractor. Immediately upon receipt, Manufacturer processed the quotation request and returned the quotation to Contractor by facsimile as requested. The quoted price for the 2500 gallons of paint was $100,000. The quotation noted that "[f]ull warranty information appears on the reverse side of this form and on all invoices generated by Manufacturer." The faxed quotation had nothing on the reverse side.

In response to Manufacturer's written quotation, Contractor submitted Purchase Order number 29874 for 2500 gallons of Paul Newman Blue latex paint on May 23, 2006. Contractor specifically directed that the paint be delivered in two equal shipments of 1250 gallons each, four weeks apart, consistent with the timeline for the completion of the project. Per the Contractor's order, the first shipment of paint was delivered on June 7, 2006 to Contractor's subcontractor ("Painter"), who was working for Contractor on a large apartment complex project for which the paint had been purchased. On the back of the $100,000 invoice accompanying the first shipment was printed the following:

Seller's Warranty
(a) Seller warrants that Product manufactured by Seller shall conform to Seller's published specifications covering such products in effect at time of manufacture ("Seller's Warranty"). SELLER MAKES NO OTHER WARRANTIES OR REPRESENTATIONS WITH RESPECT TO PRODUCTS AND HEREBY DISCLAIMS ANY SUCH WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Certification by Seller by separate writing as to compliance with specifications, blue prints, part numbers, quantity, test or otherwise will not create any other warranty by or other obligation of Seller.
(b) Seller's Warranty shall not be construed as a "warranty" for purposes of the Magnuson-Moss Warranty Act. In the event Seller's Warranty should be so construed as a limited warranty for purposes of the Magnuson-Moss Warranty Act, then any implied warranty which might exist by operation of such law shall be limited to thirty (30) days from the date of original consumer purchase and such limited warranty shall run only to the original consumer purchaser.
(c) Buyer shall notify Seller of any Product which does not conform to Seller's Warranty within a reasonable time after delivery of such Products, but in no event later than thirty (30) days following such delivery. Failure to notify Seller of such nonconformance shall constitute a waiver by Buyer of any claims with respect to such nonconforming products.
(d) SELLER'S LIABILITY WITH RESPECT TO PRODUCTS, WHETHER BASED ON CONTRACT, WARRANTY, TORT (INCLUDING, BUT NOT LIMITED TO NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE, AND BUYER'S SOLE AND EXCLUSIVE REMEDY WITH RESPECT THERETO, SHALL BE LIMITED TO, AT SELLER'S SOLE OPTION, THE REPLACEMENT BY SELLER OF ANY NONCONFORMING PRODUCT FOR WHICH CLAIM IS MADE BY BUYER IN ACCORDANCE WITH (c) ABOVE OF THESE TERMS AND CONDITIONS, OR TO THE REFUND OF THE PORTION OF THE PURCHASE PRICE PAID BY THE BUYER ATTRIBUTABLE TO SUCH NONCONFORMING PRODUCT.
(e) If Products are purchased for resale by Buyer, Buyer shall not make any representations or warranties with respect to the Products inconsistent with these Terms and Conditions and shall include in the terms and conditions of such resale disclaimers of warranties and limitations of liability at least as restrictive as contained in these Terms and Conditions.

Due to cash shortfalls on another job, Painter was delayed in starting the apartment project. Concerned about the impact of the project delay, Manufacturer required Contractor to advance the cost of the first shipment of paint. Contractor had the same concern, and it turned to Painter for the advance, which Painter made by sending a $50,000 check to Manufacturer. On the face of the check, Painter endorsed the check with the statement: "This payment constitutes payment in full of all obligations under the contract."

Manufacturer delivered to Painter the second 1250 gallons of paint as scheduled on July 7, 2006. Accompanying the second shipment was a statement directing the recipient to "refer to the invoice accompanying the first shipment for details." Upon receipt of the second shipment, a second $50,000 payment by check was hand delivered to Manufacturer, this time by Contractor.

Painter could not begin the apartment project until July 15, 2006. Upon receipt of the first shipment of paint, Painter's project manager called Contractor's quality assurance manager ("QA Manager"), told him of the delay and asked about the paints, their integrity and color fast qualities. QA Manager relayed through a subordinate that Manufacturer's quality assurance manager had assured him that the paints are great, stand up to all conditions, will not fade, were specifically chosen by Manufacturer for this application, and that Manufacturer stands strongly behind its product line.

Upon applying the first coat of paint to the project on August 1, several of Painter's employees noticed that the paint was not Paul Newman Blue, but was rather Robert Redford Blue, a subtly different blue color that Manufacturer had recently discontinued. However, in light of QA Manager's remarks, and sensitive to the delays that had already occurred and the pressure to complete the project in a timely manner, Painter's project manager instructed the crew to continue painting. He then called Painter's president, Sue President, about the potential problem. Sue President is an expert in paint manufacturing, tinting and mixtures. Sue President couldn't get to the site that day, but came by two days later and confirmed that, in fact, the paint on the walls was Robert Redford Blue and not Paul Newman Blue. In addition, the day following her first visit, Sue President noticed that the paint was not adhering correctly and was beginning to show signs of peeling.

On August 6, Sue President determined to revoke acceptance of the contract and immediately called Contractor's president, who concurred in the decision to revoke the purchase. Learning that neither $50,000 check had yet been presented for payment, on August 7 Contractor's president attempted to put a stop payment order on the Contractor check for $50,000. The stop payment order was not received in time to stop the check from being paid. The Painter's check for $50,000 was paid by the bank on the same day. On August 8, 2006, Sue President emailed a revocation letter to Manufacturer through its web address. A courtesy copy of the revocation letter was sent to Contractor. The remaining paint was not returned to Manufacturer because Painter and Contractor wanted first to see how Manufacturer was going to handle the matter.

On August 16, 2006, Manufacturer forwarded the revocation letter to its litigation counsel, Senior Partner. Senior Partner instructs you to analyze the case and answer the following questions:

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QUESTION 8

Assume that you are a Deputy Attorney General in the Delaware Department of Justice assigned to the "Case Screening Unit." In this position, it is your responsibility to meet with investigating officers to review reports and make charging decisions. After reviewing investigative reports you must prepare a memo detailing, for each defendant, which crimes should be charged. Investigator Bednerik has provided you with the report set out below.

Review this report and prepare a memorandum identifying each individual to be charged, the charges for that individual, and the basis for each charge. If there is more than one degree (i.e. Murder 1st degree, Murder 2nd degree), specify the appropriate degree, and explain why. Do not include lesser included offenses and only include Title 11 and Title 16 crimes. Do not discuss any constitutional issues relating to search and seizure.

Report of Investigator Fran Bednerik
Delaware State Police
Dated: July 22, 2007

On January 10, 2007, while working supplemental security at the Best City store on Kirkwood Highway, Wilmington, Delaware, I observed Colin Martin (28 years old, no prior criminal record) place ten CDs inside the front of his zippered jacket. I immediately took Martin into custody and returned the merchandise, valued at $125, to the store manager. Prior to placing Martin into my car I patted him down and located a closed pocketknife in his right front pocket and a note listing several music CDs in his left front pocket. The note contained the letterhead "C.M. Entertainment."

On January 12, 2007, I responded to a call from the Circuit Buy store located on Route 202 in Wilmington, Delaware. Upon arrival I made contact with Danny Smith, the store manager, and was directed to the security department located at the rear of the store. I observed Macy Adams (27 years old, 1999 conviction for Theft over $50,000) and Broderick Bowden (31 years old, 2002 conviction for Disorderly Conduct) secured to a bench. I reviewed the scene, interviewed witnesses, reviewed store video surveillance and learned the following facts.

Adams and Bowden entered the store together carrying large bags with the Circuit Buy logo. Together they approached the CD and DVD section of the store and proceeded to methodically place CDs and DVDs into their bags. Security Officer Joseph Milan approached the pair, noticed the merchandise in the bags, and requested that they come with him. Adams swung at Milan, striking the right side of his face, kicked him in the groin and fled toward the store exit. She was detained by Security Officer Frank Jamison prior to reaching the door. Bowden acquiesced to the officer's demands. A photograph of a four inch laceration to Milan's right cheek was taken as evidence.

Jamison advised me that he was familiar with Adams and Bowden and had observed them behave suspiciously in the store a week earlier. At that time he issued "Do Not Return" notices to both. These notices advise recipients that they are not permitted on store property for a period of three months. Jamison provided me with copies of the "Do Not Return" notices, signed and acknowledged by Adams and Bowden, dated January 5, 2007.

I took custody of Adams and Bowden and, prior to placing them in my patrol vehicle, documented their possessions and searched their persons. Both possessed large store bags lined with several layers of duct tape. Based on my training and experience, these bags, commonly referred to as "booster bags," are used to thwart commercial security sensors. Adams' bag contained 57 compact discs valued at $570. Bowden's bag contained 102 DVDs valued at $1,530. In Adams' waistband I located a sheathed hunting knife with a nine inch blade. In her back pocket I found a screwdriver, window tamper, and two pairs of latex gloves. In Bowden's front jacket pocket I located a small glass pipe, a razor blade, and a Ziploc bag containing a white powdery substance (later identified by a chemist as .1 grams [one "user dose"] of cocaine). While patting down Bowden, I discovered a loaded .357 Magnum firearm tucked into his waistband. In Bowden's rear pocket I found a folded piece of paper with a list of recently released CDs and DVDs. The note had the letterhead "C.M. Entertainment" and underneath was handwritten "Macy and Bowdy, 1/12."

I returned to the troop, processed Adams and Bowden, and placed them in holding. I reported to Major Crimes and advised Sgt. Williams of the arrests. I also advised him of my January 10, 2007, arrest of Martin. Sgt. Williams advised that his unit was investigating the criminal activity of Colin Martin. He told me that Martin sold heavily discounted CDs and DVDs from a warehouse down by the docks. The next day, Adams, Martin and Bowden were released on bail.

A search warrant was later obtained for Martin's warehouse. A team was assembled, and the warrant was executed at 9:00 a.m. on January 15, 2007, at 2222 Riverview Avenue, Wilmington, Delaware, the offices of "C.M. Entertainment." Prior to executing the warrant, surveillance video and building schematics established the interior of the warehouse to be a large open floor with a small office toward the rear of the structure. At the front of the building, a standard door and an adjacent garage door opened onto Riverview Avenue. In the rear, a smaller door next to the office opened into a parking lot. The team was divided into two groups and simultaneously entered the structure from the front and back.

Officers entering the rear of the building immediately went and secured the office. Martin's drivers license and utility bills in Martin's name were found on a desk. A desktop computer was located and a multi CD/DVD copying machine (designed to create twenty copies of a CD or DVD simultaneously) was located under the desk and was connected to the desktop computer. Two spools of DVDs labeled in permanent marker with names of recently released Sony Films DVDs were located next to the computer. The DVDs were examined and found to contain copies of Sony Films releases. An unlocked gun showcase in the corner of the office held five shotguns and one rifle. A firearm silencer was found on the upper shelf of the case. The computer and firearms were processed for fingerprints and all were positively matched to Martin.

Officers entering the front of the building observed Bowden and Martin unloading CDs and DVDs from the back of an idling cargo van. Adams was running a magnetic security removal tool over the items before placing them in alphabetical order on racks. The officers announced their presence and advised, "You are under arrest. Kneel and place your hands behind your head." Adams and Bowden put their hands up, and were handcuffed. Meanwhile, Martin jumped into the driver's seat of the van and accelerated through the closed garage door, exiting onto Riverview Avenue, a popular shopping and dining area. Officer Jane Dixon, responding to a police broadcast call for assistance, was exiting the Starbrew coffee shop across the street from the warehouse as the van crashed through the door. She was struck and killed instantly. Martin lost control of the van, and it crashed into the Starbrew plate glass window, shattering the window and destroying 5 tables and causing $1,900 damage. The van came to a stop and Martin was taken into custody without further incident. He was wearing a bullet proof vest, and thus sustained only minor injuries in the crash. Officers at the warehouse recovered stolen CDs and DVDs valued at over $5,000.