HI Bar - Hawaii Bar Contracts and Sales Questions and Answers — Questions and Answers
Question 1: A contractor in Honolulu enters into a written agreement with a homeowner to build a new patio for $15,000. The written contract is a complete and final expression of their agreement. Before signing, the homeowner mentioned he wanted a specific type of expensive 'koa' wood, and the contractor verbally agreed. The final written contract, however, specifies 'pressure-treated pine'. When the contractor uses pine, the homeowner sues for breach, seeking to introduce evidence of the prior oral agreement. Under Hawaii law, which doctrine will likely prevent the homeowner from introducing this evidence?
- The doctrine of promissory estoppel.
- The Statute of Frauds.
- The parol evidence rule. (Correct answer)
- The doctrine of substantial performance.
Correct answer: The parol evidence rule.
The parol evidence rule in Hawaii prevents the admission of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary the contractual terms of a written contract when the written contract is intended to be a complete and final expression of the parties' agreement. Since the contract was a complete and final expression, the prior oral agreement about 'koa' wood is inadmissible to contradict the written term specifying 'pine'.
Question 2: A Maui-based farmer orally agrees to sell 1,000 pounds of sweet potatoes to a restaurant in Lahaina for $800. The farmer delivers the potatoes, and the restaurant accepts them. However, the restaurant later refuses to pay, arguing the contract is unenforceable. Under Hawaii's Uniform Commercial Code (UCC), is the contract enforceable?
- No, because all contracts for the sale of goods must be in writing to be enforceable.
- Yes, because the goods have been received and accepted, this action serves as an exception to the Statute of Frauds. (Correct answer)
- No, because the contract price is over $500, it must be in writing according to the Statute of Frauds.
- Yes, because contracts between merchants do not need to be in writing.
Correct answer: Yes, because the goods have been received and accepted, this action serves as an exception to the Statute of Frauds.
Under Hawaii's UCC, specifically §490:2-201, a contract for the sale of goods for $500 or more is generally not enforceable unless there is a writing. However, an exception exists under §490:2-201(3)(c) if the goods have been received and accepted. Since the restaurant accepted the delivery of the sweet potatoes, the oral contract becomes enforceable despite the price being over $500.
Question 3: A software company on Kauai enters into a contract to provide custom software and ongoing technical support for a local hotel chain. The total contract price is $100,000, with the software valued at $80,000 and the support services at $20,000. A dispute arises over the warranty provisions. Which body of law will a Hawaii court most likely apply to this 'mixed' contract?
- The Uniform Commercial Code (UCC) because the contract involves the sale of goods.
- Common law because the contract includes services.
- The Uniform Commercial Code (UCC) because the predominant purpose of the contract is the sale of goods. (Correct answer)
- Both the UCC and common law will be applied proportionally to the different parts of the contract.
Correct answer: The Uniform Commercial Code (UCC) because the predominant purpose of the contract is the sale of goods.
For mixed contracts involving both goods and services, Hawaii courts, like most jurisdictions, apply the 'predominant purpose' test to determine whether the UCC or common law governs. The court will look at factors like the language of the contract, the nature of the business, and the relative value of the goods versus the services. Here, since the value of the software (a good) is $80,000, which is substantially more than the $20,000 for services, the predominant purpose is the sale of goods, making the UCC the governing law.
Question 4: A homeowner in Hilo hires a contractor to renovate their kitchen. The contract specifies that the contractor will install 'Brand X' granite countertops. The contractor, unable to source Brand X, installs 'Brand Y' granite countertops, which are of identical quality, color, and market value. The homeowner, however, is unhappy and declares a material breach. Which of the following is the most likely outcome in a Hawaii court?
- The contractor will be found to be in material breach and the homeowner can cancel the contract and sue for total damages.
- The contractor's performance will likely be considered substantial performance, and the homeowner will only be entitled to damages for the minor deviation, if any. (Correct answer)
- The homeowner is entitled to specific performance, forcing the contractor to remove Brand Y and install Brand X.
- The contract is voidable by the homeowner due to the contractor's unilateral deviation from the terms.
Correct answer: The contractor's performance will likely be considered substantial performance, and the homeowner will only be entitled to damages for the minor deviation, if any.
The doctrine of substantial performance applies when a party has performed the essential purpose of the contract, even if there is a minor deviation. A breach is only material if it defeats the purpose of the contract. Here, installing an identical quality and value countertop would likely be seen as substantial performance, not a material breach. The homeowner's remedy would be limited to any actual damages suffered from the deviation (which may be zero if the countertops are truly equivalent), not cancellation of the entire contract.
Question 5: Which of the following agreements is required to be in writing to be enforceable under Hawaii's Statute of Frauds, as codified in Hawaii Revised Statutes § 656-1?
- An agreement to lease a car for a term of six months.
- An agreement to cater a wedding that will take place in 18 months. (Correct answer)
- An agreement for the sale of a custom-made surfboard for $450.
- An agreement to pay the debt of another person, made to the debtor.
Correct answer: An agreement to cater a wedding that will take place in 18 months.
Hawaii's Statute of Frauds, HRS § 656-1, requires certain types of contracts to be in writing. This includes any agreement that is not to be performed within one year from its making. An agreement to cater a wedding in 18 months cannot be completed within one year, and therefore must be in writing to be enforceable. Leases of goods (like a car) are governed by UCC Article 2A, and short-term leases do not typically require a writing. Contracts for the sale of goods under $500 are not covered by the UCC's statute of frauds. A promise to pay the debt of another (a suretyship promise) must be in writing, but this promise must be made to the creditor, not the debtor.
Question 6: A buyer in Kona rightfully rejects a shipment of non-conforming papayas from a seller. The buyer had already made a partial payment of $1,000. Under Article 2 of Hawaii's UCC, what remedy is available to the buyer regarding the papayas in their possession?
- The buyer must destroy the papayas to prevent their sale on the open market.
- The buyer must return the papayas at their own expense and then sue for damages.
- The buyer may resell the papayas and apply the proceeds to the damages owed by the seller. (Correct answer)
- The buyer obtains full title to the papayas and can keep them without further payment.
Correct answer: The buyer may resell the papayas and apply the proceeds to the damages owed by the seller.
According to Hawaii's UCC §490:2-711(3), on a rightful rejection, a buyer has a security interest in goods in their possession or control for any payments made on their price. To enforce this interest, the buyer may resell the goods in a commercially reasonable manner, similar to how an aggrieved seller would. The buyer can then account for the proceeds from the sale when calculating damages. This is a form of self-help to recover the partial payment.
