Contracts Questions Thread

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OperaSoprano
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Re: Contracts Questions Thread

Postby OperaSoprano » Thu Dec 03, 2009 1:41 pm

To the OP: you have my eternal gratitude for creating this thread.

So, mine:

Can courts apply divisibility to Ks involving both goods and services, and analyze only the goods portion under the UCC? Unclear from my notes.

Under the UCC, can the seller ever be the offeror? I swear that we had a case like that involving shrinkwrap terms.

If some obscure material alteration is buried in boilerplate language, but the UCC does not govern, is the party who accepts this counter offer by performance bound to follow the new terms under the last shot rule?

Also, am I going to fail all my exams and die a miserable death?

HAMBONE
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Re: Contracts Questions Thread

Postby HAMBONE » Thu Dec 03, 2009 1:55 pm

Goal wrote:
HAMBONE wrote:
I think that's limited to an express option where even nominal consideration has been paid for the exclusive window for negotiation. In a standard option K or reliance based K (contractors usually) counteroffers destroy the option. maybe I am misremembering this. I will know for sure once I spend today with the UCC


That is an interesting point and it had me flying straight to Wexis to double check. I couldn't find any supporting section though. Could you expand on your reasoning? I'm honestly curious to learn more because I believe my prof made it clear to us that only lapse of time is the sure way to terminate an option K.

By the way, are you implying that the UCC governs this fact pattern?


No, I know that this fact pattern doesn't deal with UCC. I was just talking generally.

Here's what I have from my class notes on option K

1) Express option
- buyer pays cash and seller promises not to revoke
- counteroffer/ rejection without express waiver does not destroy the option
2) Unilateral K option
- Acceptance by performance only (part-performance makes offer irrevocable)
- Doesn't deal with what counter-offer does to the option after part performance
3) Reliance based option (usually only applicable to general contractors, sub contractors)
- Offer which contemplates the reliance
- reliance renders offer irrevocable
- passage of time, rejection, counteroffer destroys the option
- usually under R2d §87 (2)

I guess in this fact pattern this analysis is not really necessary

HipSquare
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Re: Contracts Questions Thread

Postby HipSquare » Thu Dec 03, 2009 3:08 pm

OperaSoprano wrote:To the OP: you have my eternal gratitude for creating this thread.
Under the UCC, can the seller ever be the offeror? I swear that we had a case like that involving shrinkwrap terms.
Also, am I going to fail all my exams and die a miserable death?


Yes, the seller can be an offeror. (Brower v. Gateway) Contracts professor explained it like this: Shrinkwrap should be additional terms (governed by 2-207) but the courts just fix that by making the seller the offeror. I'm pretty sure this only applies with shrinkwrap where you're given a certain number of days to return whatever you bought. The "acceptance" is keeping whatever you buy longer than the time you have to return it.

No you're not going to fail all your exams, the bad thing about the curve is that it's hard to get a good grade and the nice thing is that it is also hard to get a bad grade. Pretty much no one "fails" unless you consider anything less than top 10% failing (in which case the vast majority of law students everywhere fail). Relax and you'll do just fine.

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vanwinkle
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Re: Contracts Questions Thread

Postby vanwinkle » Thu Dec 03, 2009 3:11 pm

OperaSoprano wrote:To the OP: you have my eternal gratitude for creating this thread.

So, mine:

Can courts apply divisibility to Ks involving both goods and services, and analyze only the goods portion under the UCC? Unclear from my notes.


Are you talking about buying something that is both a good and a service, or are you talking about a contract that involves buying two different things (a good, and a distinctly different service)?

If it's something that's both a good and a service, the courts will look at whether the good or the service is the more important part. For instance, if you buy a custom portrait, that's something that's both a good (the painting you get) and a service (the hiring of a talented artist to perform the act of painting). If the "goods" part is the more valuable part, then they'll treat it as going under the UCC; if it's the "services" part that's more valuable, then they won't.

Like, if you contract with a company that will paint a portrait of your law school, and then deliver you 1,000 copies of that portrait for you to sell to alumni, you're obviously more concerned about getting the goods to resell and the "service" is just part of making those goods. This will likely be found to be governed by the UCC.

But if you contract with a guy described as "a modern-day Leonardo da Vinci" to paint a giant portrait of you to hang in your home, they're going to say that the thing you're really paying for is his very unique service, and the goods aren't substantial enough to warrant this being governed by the UCC.

The other thing I was asking if you meant was, if you're buying a good and a service separately. Like, if you say "I'll buy 500 widgets from you for $1,000, and also pay you $20 to mow my lawn," then it's possible for the court to find that divisible. The good and the service are clearly separate items with separate payments for each, and it's easy to take the good and the amount owed on it and apply the UCC to just that as a distinct agreement from the service agreement.

OperaSoprano wrote:Under the UCC, can the seller ever be the offeror? I swear that we had a case like that involving shrinkwrap terms.

If some obscure material alteration is buried in boilerplate language, but the UCC does not govern, is the party who accepts this counter offer by performance bound to follow the new terms under the last shot rule?


This is correct. Here's an example:

Buyer: I see you sell widgets for $1,000. I'll give you $1,000 right now for a widget.

Seller: Okay, I'll sell you a widget for $1,000, expressly conditional on you signing this form with all of our terms on it.

Buyer: Okay. *signs form*

If this wasn't governed by the UCC, the "mirror-image" rule would apply. The seller's adding new terms changes this from an acceptance to a counter-offer, making the seller the offeror. The buyer accepts that counter-offer by agreeing to the new terms and signing the form.

Under UCC 2-207, under most circumstances the seller's "last shot" is taken to be an acceptance instead of a counter-offer and then figures out if the new terms have to be added, but there are a couple conditions where it's not. One of those is if the seller expressly conditions his acceptance on the new terms. Under those conditions (like the example above), 2-207 still treats this as a counter-offer.

It doesn't even need to be that obvious. The "expressly conditional on accepting these terms" doesn't have to be stated, the seller can just say "I'll sell you the widget if you sign this form" and then the express condition can be in the language of the form.

OperaSoprano wrote:Also, am I going to fail all my exams and die a miserable death?


You'll be fine! It's graded on a curve. You're a first-semester 1L, you're not expected to know as much as a real lawyer does at this point, just as much as your classmates who are just as confused about some things. You'll pass.

agumon
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Re: Contracts Questions Thread

Postby agumon » Thu Dec 03, 2009 8:27 pm

Is there a fool-proof way of calculating Expectation damages? Going by the Restatement confuses me, I always get the final amount wrong.

HAMBONE
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Re: Contracts Questions Thread

Postby HAMBONE » Thu Dec 03, 2009 10:01 pm

agumon wrote:Is there a fool-proof way of calculating Expectation damages? Going by the Restatement confuses me, I always get the final amount wrong.


seller's and buyer's remedies UCC 2-703-716 fun stuff

HipSquare
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Re: Contracts Questions Thread

Postby HipSquare » Thu Dec 03, 2009 10:35 pm

agumon wrote:Is there a fool-proof way of calculating Expectation damages? Going by the Restatement confuses me, I always get the final amount wrong.


Expenditures+Expected Profits-Mitigation=Expectation Damages. Does that miss anything important?

SlipperyPete
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Re: Contracts Questions Thread

Postby SlipperyPete » Thu Dec 03, 2009 10:42 pm

.
Last edited by SlipperyPete on Fri Feb 14, 2014 3:45 pm, edited 1 time in total.

solidsnake
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Re: Contracts Questions Thread

Postby solidsnake » Fri Dec 04, 2009 4:19 pm

OperaSoprano wrote:To the OP: you have my eternal gratitude for creating this thread.

So, mine:

Can courts apply divisibility to Ks involving both goods and services, and analyze only the goods portion under the UCC? Unclear from my notes.

Under the UCC, can the seller ever be the offeror? I swear that we had a case like that involving shrinkwrap terms.

If some obscure material alteration is buried in boilerplate language, but the UCC does not govern, is the party who accepts this counter offer by performance bound to follow the new terms under the last shot rule?

Also, am I going to fail all my exams and die a miserable death?



Majority approach is "predominant purpose" test, i.e., what was the pl's primary purpose for entering the contract? If goods, then UCC is applied to entire contract; if services, then CL applies to entire K, even the goods portion. Minority approach, OTOH, is "gravamen of the action" test, i.e., which part of the transaction gave rise to the complaint? Whichever it was, the relevant governing law applies regardless of what the predominant purpose of entering into the K was.

yes, the seller can be offeror. Applies in shrinkwrap ProCD v. Zeidenberg cases, where buyer-offeree has reasonable time to return, and also in breach of warranty cases which require a contract, so courts will hold that buyer-offerees accepted the proffered goods the minute they placed the item into their shopping carts (with the option of returning back on the shelf, since it is an unambiguous unilateral K), so as to protect them if the good explodes, causing tortious harm, while in the checkout line, or at any time before payment is tendered.

Third question: depends on unconscionability analysis, i.e., procedurally and substantive unconscionability. Lots of room for argument here, very fact-specific; so need fact-pattern for any meaningful analysis.

Fourth question: Hopefully, but that applies to all extremist fiscally-liberals. ;)

bam. next.

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napolnic
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Re: Contracts Questions Thread

Postby napolnic » Fri Dec 04, 2009 7:25 pm

HAMBONE wrote:
Goal wrote:
napolnic wrote:Also note that he had canceled the option contract by informing her that he has put the house on the market.


You can't terminate an option contract. (§ 37).


I think he meant offer and not the option K. The option K can only be destroyed by the promisee by a counteroffer, outright rejection or bid shopping (in reliance options)

This. I misspoke because there is no option contract. An option contract requires a separate consideration for its formation (or other means such as start of performance). You can't just say that you'll leave it open. At that point it's a gratuitous promise that can be rescinded unilaterally.

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vanwinkle
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Re: Contracts Questions Thread

Postby vanwinkle » Fri Dec 04, 2009 8:24 pm

napolnic wrote:This. I misspoke because there is no option contract. An option contract requires a separate consideration for its formation (or other means such as start of performance). You can't just say that you'll leave it open. At that point it's a gratuitous promise that can be rescinded unilaterally.


If you look at it as a unilateral contract meant to be accepted by performance (and he did say to accept by delivering the money, instead of promising to pay), then beginning performance creates an irrevocable option allowing the performer to finish the performance. The question in that case is whether going through the motions of gathering up the money constitutes "part performance" in the eyes of a court.

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mikeytwoshoes
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Re: Contracts Questions Thread

Postby mikeytwoshoes » Fri Dec 04, 2009 8:39 pm

OperaSoprano wrote:To the OP: you have my eternal gratitude for creating this thread.

So, mine:

Can courts apply divisibility to Ks involving both goods and services, and analyze only the goods portion under the UCC? Unclear from my notes.

Under the UCC, can the seller ever be the offeror? I swear that we had a case like that involving shrinkwrap terms.

If some obscure material alteration is buried in boilerplate language, but the UCC does not govern, is the party who accepts this counter offer by performance bound to follow the new terms under the last shot rule?

Also, am I going to fail all my exams and die a miserable death?

How could you die a miserable death after attending Fordham Law? :o

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m311
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Re: Contracts Questions Thread

Postby m311 » Sat Dec 05, 2009 10:12 am

vanwinkle wrote:
m311 wrote:If all else fails she has a promissory estoppel claim. When she said she was getting the money together, he didn't stop her. He knew she was acting under the assumption she could buy for 300k and knew she was probably incurring costs.


I don't think a court would buy this. If they're resorting to promissory estoppel it means they already accepted his statement of putting the house up for sale as a revocation (otherwise they'd still be trying to enforce a breach of express contract). If they're accepting that statement as a revocation... what else could he have said to stop her besides telling her he was revoking?
I realized that after I wrote it but was already out the door. I was thinking maybe good faith and fair dealing (he knew she was incurring costs, and didn't let her know when he sold whatever it was he was selling) but that's only applicable to specific contract provisions- can't be an independent cause of action. So good catch.

Babcock
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Re: Contracts Questions Thread

Postby Babcock » Sun Dec 06, 2009 9:27 pm

Here's a nice, dense hypo for someone to pick apart....


On July 1, 1990, at his grandmother's seventy-fifth birthday party,
Paul Plugger announced that he would be attending Glass City Dental
School in the fall of 1991. Grandmother was so delighted with this news
that she said to Paul, "Paul, I want to give you $10,000. If you get A's in
all your first-year courses, I'll give you $10,000. I'm so happy you're going
to be a dentist and I'd be so proud of you if you got all A's. Of course, I
won't be able to do this unless I get Grandpa's pension from the railroad."
Paul smiled and kissed Grandmother.
On August 1, 1990, Paul wrote the following note to Grandmother:
"Dear Grandmother, I accept your offer to pay me $10,000 if I get all A's in
my first-year courses. Of course, the offer does not include my Gingivitis
course since it is a very difficult course, one in which no one gets an A.
Also, I've never been very good at rote memorization and I know it would
be impossible for me to get above a C in that course. Love, Paul."
Grandmother received Paul's note on August 3.
On August 15, 1990, Paul received a letter from Grandmother which
said: "My dearest Paul, It was so good to have seen you at my birthday
party. Enclosed is a photo of you and me at the party. Good luck in dental
school. Your family is depending on you to make us all proud. Love,
Grandmother."
Paul entered dental school on September 1, 1991. Although
Grandmother died on October 1, 1991, Paul's family did not tell Paul for
fear that he would be unable to concentrate because of his grief. During
the Fall 1991 semester, Paul worked hard and gave up his social life and
doing most of the things he enjoyed, (m', going to movies, bars, etc.).
Paul completed his first semester exams on December 20, 1991.
Paul learned of Grandmother's death on December 21. On January 15,
1992, Paul received his grades - all A's except a B in Gingivitis.
Grandmother's executor refused to pay Paul the $10,000 he claims
from the estate, explaining that, among other things, Grandmother never
applied for Grandfather's pension. However, on December 10, 1992, the
executor sent Paul a letter that said in part: "Paul, Take this $1,000 and
don't ask for any more." Attached to the letter was a $1,000 check made
out to Paul. Also clearly written on the check was "Payment in Full --
Dental School Claim."
Paul has called you for advice. Advise him. Discuss all legal
arguments you will raise, even though your discussion of one or more issues
might render your discussion of others unnecessary. Of course, you also
must answer any arguments which you anticipate will be raised by
Grandmother's executor.

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JPeavy44
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Re: Contracts Questions Thread

Postby JPeavy44 » Sun Dec 06, 2009 11:26 pm

I have a question about bilateral v. unilateral K's

Bilateral K's form at the moment of promise
Unilateral K's form upon performance

In unilateral K's no one is bound until performance in complete. So the offeror could revoke the offer up until completion. Where does partial performance come in? With partial performance a benefit must be conferred to the offeror and once partial performance is determined, there cannot be a revocation. Don't these contradict each other?

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vanwinkle
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Re: Contracts Questions Thread

Postby vanwinkle » Sun Dec 06, 2009 11:28 pm

JPeavy44 wrote:I have a question about bilateral v. unilateral K's

Bilateral K's form at the moment of promise
Unilateral K's form upon performance

In unilateral K's no one is bound until performance in complete. So the offeror could revoke the offer up until completion. Where does partial performance come in? With partial performance a benefit must be conferred to the offeror and once partial performance is determined, there cannot be a revocation. Don't these contradict each other?


Actually that's not correct, in a unilateral K the offeror becomes bound to honor the terms of the offer once partial performance begins. Partial performance creates an irrevocable option for the offeree to complete the performance and receive the agreed-upon compensation. The offeree is not required to finish, but they have the option to once performance has begun. If they walk away nothing happens, but if they finish the offeror must honor the terms of the bargain.

See Restatement § 45. The question is what constitutes part performance; preparations to begin performance probably don't if they're not either expressly mentioned in the discussions or clearly implied in them. Ever-Tite is a good example of the latter, where "performance" was found to have begun by hiring workers, loading a truck, and driving to the house, even though they hadn't begun work on the house yet. The court found that those actions were necessarily a part of performance and so Ever-Tite had begun performance before the contract was rescinded.

pandacot
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Re: Contracts Questions Thread

Postby pandacot » Mon Dec 07, 2009 12:11 am

Vanwinkle - you seem to have a good grasp on K's. So, did you study 87(1)? We only briefly covered it in my class (like two sentences), but can 87(1) basically turn any unilateral or bilateral offer into an option K as long as 1)the offer is a writing that is signed by the offeror and 2) the writing states a consideration for keeping the offer open?

HAMBONE
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Re: Contracts Questions Thread

Postby HAMBONE » Mon Dec 07, 2009 12:30 am

pandacot wrote:Vanwinkle - you seem to have a good grasp on K's. So, did you study 87(1)? We only briefly covered it in my class (like two sentences), but can 87(1) basically turn any unilateral or bilateral offer into an option K as long as 1)the offer is a writing that is signed by the offeror and 2) the writing states a consideration for keeping the offer open?


yes. That's the creation of an option k which can only be destroyed by an explicit waiver. under UCC, I think its covered by 2-205

HAMBONE
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Re: Contracts Questions Thread

Postby HAMBONE » Mon Dec 07, 2009 12:39 am

does 87(2) apply to preparation for performance? (creating a reliance option because the offeree relied on the offeror's promise to keep the offer open)

also how do you determine when to award restitution vs. reliance/expectation damages?

HAMBONE
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Re: Contracts Questions Thread

Postby HAMBONE » Mon Dec 07, 2009 1:21 am

betasteve wrote:
HAMBONE wrote:does 87(2) apply to preparation for performance? (creating a reliance option because the offeree relied on the offeror's promise to keep the offer open)

also how do you determine when to award restitution vs. reliance/expectation damages?

Yes.

restitution is generally getting back what you've conferred when it is unjust enrichment. reliance/expectation is usually getting from the other what their actions cost you...


I get the difference b/w the two but I am confused about the process of applying them. when and why would court grant restitution instead of reliance? is it strictly a matter of getting the highest value back to the non breaching party, or is there some other reason for choosing between the two?

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Mulliganstew
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Re: Contracts Questions Thread

Postby Mulliganstew » Mon Dec 07, 2009 1:37 am

HAMBONE wrote:
betasteve wrote:
HAMBONE wrote:does 87(2) apply to preparation for performance? (creating a reliance option because the offeree relied on the offeror's promise to keep the offer open)

also how do you determine when to award restitution vs. reliance/expectation damages?

Yes.

restitution is generally getting back what you've conferred when it is unjust enrichment. reliance/expectation is usually getting from the other what their actions cost you...


I get the difference b/w the two but I am confused about the process of applying them. when and why would court grant restitution instead of reliance? is it strictly a matter of getting the highest value back to the non breaching party, or is there some other reason for choosing between the two?


If you ask me, remedies are the single hardest thing about contracts. From what I understand, unless there's no enforceable contract (In which case you use restitution), you pretty much only use restitution when there's a losing contract. Someone feel free to correct me. (Without being a dick.)

HAMBONE
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Re: Contracts Questions Thread

Postby HAMBONE » Mon Dec 07, 2009 1:42 am

Mulliganstew wrote:
HAMBONE wrote:
betasteve wrote:
HAMBONE wrote:does 87(2) apply to preparation for performance? (creating a reliance option because the offeree relied on the offeror's promise to keep the offer open)

also how do you determine when to award restitution vs. reliance/expectation damages?

Yes.

restitution is generally getting back what you've conferred when it is unjust enrichment. reliance/expectation is usually getting from the other what their actions cost you...


I get the difference b/w the two but I am confused about the process of applying them. when and why would court grant restitution instead of reliance? is it strictly a matter of getting the highest value back to the non breaching party, or is there some other reason for choosing between the two?


If you ask me, remedies are the single hardest thing about contracts. From what I understand, unless there's no enforceable contract (In which case you use restitution), you pretty much only use restitution when there's a losing contract. Someone feel free to correct me. (Without being a dick.)


especially if you have to get into the seller's and buyer's remedies in the UCC. ugh...
but what you said about restitution actually sort of seems to make sense. Is there a source or case that expands on it?

HAMBONE
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Re: Contracts Questions Thread

Postby HAMBONE » Mon Dec 07, 2009 1:55 am

betasteve wrote:
HAMBONE wrote:especially if you have to get into the seller's and buyer's remedies in the UCC. ugh...
but what you said about restitution actually sort of seems to make sense. Is there a source or case that expands on it?

Callano v. Oakwood, Pyeatte v. Pyeatte (what my above restitution hypo is based on)


we never did those cases. We only did 1 case on restitution and that was a really straightforward application of benefit conferred.

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vanwinkle
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Re: Contracts Questions Thread

Postby vanwinkle » Mon Dec 07, 2009 9:15 am

pandacot wrote:Vanwinkle - you seem to have a good grasp on K's. So, did you study 87(1)? We only briefly covered it in my class (like two sentences), but can 87(1) basically turn any unilateral or bilateral offer into an option K as long as 1)the offer is a writing that is signed by the offeror and 2) the writing states a consideration for keeping the offer open?


Someone else answered this correctly already, but yes. The consideration for keeping the offer open turns the offer into an irrevocable option contract. How long it's irrevocable will depend on how the option was bargained for (i.e. agreeing to keep an offer open for 6 months in exchange for $500).

Keep in mind that courts can treat the option contract like any other contract and void for any of the reasons you'd void any other contract. (For example, an option contract to keep an offer open for 60 years for $5 might be ruled unconscionable, or lacking adequate consideration, or thrown out for Statute of Frauds; if one party accepted those option terms with a gun to his head it'd be duress; and so on and so forth.) Basically treat the option as a separate contract that's about the original, written contract. It makes the original written contract irrevocable during that time period, but if you can find a way to revoke the option...

pandacot
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Re: Contracts Questions Thread

Postby pandacot » Mon Dec 07, 2009 9:30 am

Thanks for the 87(1) clarification Hambone and vanwinkle




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