Sales and Lease Contracts
Guy Holcomb owns and operates Oasis Goodtime Emporium, an adult entertainment establishment. Holcomb
wanted to create an adult Internet system for Oasis that would offer customers adult-theme videos and “live” chat room
programs using performers at the club. On May 10, Holcomb signed a work order authorizing Thomas Consulting
Group (TCG) “to deliver a working prototype of a customer chat system, demonstrating the integration of live video
and chatting in a Web browser.” In exchange for creating the prototype, Holcomb agreed to pay TCG $64,697. On
May 20, Holcomb signed an additional work order in the amount of $12,943 for TCG to install a customized firewall
system. The work orders stated that Holcomb would make monthly installment payments to TCG, and both parties
expected the work would be finished by September.
Due to unforeseen problems largely attributable to system configuration and software incompatibility, the project
required more time than anticipated. By the end of the summer, the Web site was still not ready, and Holcomb had
fallen behind in his payments to TCG. TCG threatened to cease work and file a suit for breach of contract unless the
bill was paid. Rather than make further payments, Holcomb wanted to abandon the Web site project. Using the infor–
mation presented in the chapter, answer the following questions.
1. Would a court be likely to decide that the transaction between Holcomb and TCG was covered by the Uniform
Commercial Code (UCC)? Why or why not?Commercial Code (UCC)? Why or why not?
2. Would a court be likely to consider Holcomb a merchant under the UCC? Why or why not?
3. Did the parties have a valid contract under the UCC? Were any terms left open in the contract? If so, which terms?
How would a court deal with open terms?
4. Suppose that Holcomb and TCG meet in October in an attempt to resolve their problems. At that time, the parties
reach an oral agreement that TCG will continue to work without demanding full payment of the past due amounts
and Holcomb will pay TCG $5,000 per week. Assuming the contract falls under the UCC, is the oral agreement
enforceable? Why or why not?
