Pine Trees, Inc. Student Coaching Notes

Recovery of Lost Profits Is the Lost Profits Limitation Clause Part of the Contract? May an Established Business Recover Lost Profits Based on Projection of Future Income? 13

Is the Lost Profits Limitation Clause Part of the Contract? Is there an Acceptance? - Definite - Timely - Not Conditional on Offeror’s Assent Rejection & Counter Offer Are the Additional/Different Terms Part of Contract? Both Parties Merchants At Least One Party is Not a Merchant Yes, unless - Material Alteration - Offer Limit Acceptance - Offeror Objects No, unless Offeror Expressly Consents

Material Alteration Surprise or Hardship Standard Clauses that deny implied warranties Clauses that require arbitration Clauses that limit remedies 13

Reasonable Certainty Standard May an Established Business Recover Lost Profits Based on Projection of Future Income? Reasonable Certainty Standard Not Speculative in Nature No Absolute Precision is Required May Rely on Statistical Models based on Past Financial Data 13

Question 2a: Getting the Histogram Use Excel to Calculate Profits on Spreadsheet File Pine Case. Divide Profits Range (Highest Minus Lowest) by 6 to Get Bin Size and Round to Nearest 1000’s. Manually Input 6 Upper Values of Bins into Column of Spreadsheet File Pine Case. Follow Directions for Constructing Histograms on Using_Excel_for_Stat PowerPoint.

Questions 2b & 2c: Descriptive Statistics Follow Directions for Descriptive Statistics on Using_Excel_for_Stat PowerPoint. Use a 99% Confidence Level when Using Excel.

Question 2 d: Expected Exposure Expected Exposure = Construction Costs + Total Expected Profits for Six Months Basis for Compensation

Question 4: Hypothesis Test Test Mr. Washington’s Claim that Offer Underestimated Lost Profits (Profit Increased During Last Six Months). Follow Directions for Hypothesis Testing on Using_Excel_for_Stat PowerPoint. Use Two Sample Assuming Equal Variances.