Business Law 431
The Law of Commercial Transactions
Unit 2 Assignment
Please read each question carefully and draft your answers, making sure to address
each part of each question. Upload your answers to the Unit 2 Assignment dropbox
on Westernonline.
1 Search online to find examples of the following:
a. Find a website with Terms of Use that include a mandatory arbitration
clause. Copy and paste the clause in your answer and indicate from what
found it). Describe how at least one portion of the clause surprised you or
indicate what portion you found to be the most important. Explain why. 5
points
b. Answer the following questions concerning the Apple.com Terms of Use,
found here:
services/terms/site.html:
i. If you have a dispute with Apple regarding any matter relating to
your use of its website (and you are not a consumer based in any
European Union country), where do you consent to personal
jurisdiction and what law do you agree to use to govern your
dispute with Apple? Copy and paste that portion of the agreement
that governs these issues.
ii. What do Apple’s Terms of Use say about a user attempting to sue
Apple for consequential damages (or lost profits) as a result of a
problem with its site or software? Copy and paste that portion of
the agreement that governs these issues. 5 points
2 Go to the artificial intelligence site hosting ChatGPT (openai.com). Create an
account to use ChatGPT if you do not have one. Once there, you should see a
search box near the bottom of the screen. In the search box, instruct it to draft
a contract between RJ Hunt, seller, and DJ March, buyer, for the sale of a
house at 123 Jackson St., Macomb, IL 61455, legally described as Lot 1 in
Block 17 of Miller’s Addition to the City of Macomb, IL for the purchase
price of $300,000. There will be earnest money of $3000 paid on the date the
contract is signed and the closing will be on December 31, 2023. Also, include
a financing contingency clause for the buyer, where the buyer must be
approved for a mortgage loan of 80% of the purchase price by December 1,
2023.
a. Compare the agreement drafted by ChatGPT to the Illinois Real Estate
Purchase Agreement provided with this assignment. Answer the
following questions:
i. List at least two significant differences between the two contracts
(the one drafted by AI and the one provided with the assignment)?
ii. What stands out to you the most after reading each document? 4
points
b. According to the Illinois Real Estate Purchase Agreement (the human-
prepared contract), what happens if a dispute arises between the buyer and
seller (assuming the dispute is not one of the exceptions listed)?
i. What happens if a dispute arises under the AI generated contract?
ii. Is there a significant difference and what would the difference
mean to the parties involved? Explain. 3 points
c. Illinois, like many states, requires sellers of residential real estate to make
certain disclosures about the condition of the property to the buyer.
i. How do the two contracts treat the disclosures differently?
ii. One disclosure requirement is in the form of the Illinois
Residential Real Property Disclosure Report, a copy of which may
be found here:
ENTIAL%20REAL%20PROPERTY%20DISCLOSURE%20REP
ORT%20-%20IRELA%20-
%20fillable%20New%202022%20FINAL.pdf List three things a
seller of residential real property in Illinois is required to disclose
on the form? (you may have to zoom in to read them)
iii. Page 2 of the form contains the language of the Illinois statute
requiring this disclosure. Look at Section 55 on page 2 – what
happens if the seller violates the Act by failing to make the
required disclosures? Knowing this, what is the risk of using the
AI generated contract? 3 points
3 Billy-Ray-Joe-Bob (BRJB) is an excellent hunter. He is constantly hunting
whatever is in season in Missouri. Von is a lawyer from the big city and has
trouble hunting down a turkey sandwich in a deli. Von’s law firm put him in
charge of organizing a retreat to rural Missouri, where several of the partners
like to hunt deer. Von took a trip to Missouri to scout out the possibilities and
ran into Billy-Ray-Joe-Bob at Bud’s Place, the local tavern-bait shop-used car
lot-laundry mat. The two talked about the firm hiring Billy-Ray-Joe-Bob as a
guide for the hunting trip. They laughed at the thought since it would be a
funny pairing of Billy-Ray-Joe-Bob and a bunch of city lawyers. Von says,
“yeah, and we could pay you $400 per hour for you to guide us, ha, ha, ha.”
Billy-Ray-Joe-Bob then says, “I bet you wouldn’t.” Von responds by saying,
“oh yes we will, here…” and Von writes on a bar napkin, “the Sullivan Law
Firm will pay Billy-Ray-Joe-Bob $400 per hour, 8 hours per day, to be a
hunting guide for the firm retreat from November 25-30.” Von laughs and
says, “see, here you go,” and handed Billy-Ray-Joe-Bob the signed napkin.
Billy-Ray-Joe-Bob says, “Great, you’re on!”
Based on the conversation with Von, Billy-Ray-Joe-Bob contacts his
cousin, Jim-Bob who owns prime hunting land in the area. Without asking
Von, Billy-Ray-Joe-Bob forms an agreement with Jim-Bob to use his land to
hunt when the lawyers arrive. In addition, Jim-Bob agrees to give Billy-Ray-
Joe-Bob a commission on the rent the firm will pay Jim-Bob to hunt on his
land. Billy-Ray-Joe-Bob’s commission will be 10% of the total rent, or
$3,000. Additionally, Billy-Ray-Joe-Bob was asked to be a hunting guide for
another group during the same week for $1,500. He turned them down,
saying, “sorry, I can’t do it, I have a group of lawyers coming from the big
city that week.”
In October, the law firm canceled its retreat. Von did not call Billy-Ray-Joe-Bob
and no one from the big city showed up to hunt on November 25th. In December,
Von received a summons and complaint from Billy-Ray-Joe-Bob’s lawyer, Billy-Jack
(licensed taxidermist/attorney at law). The suit alleges a breach of contract by the
Sullivan Law Firm and seeks damages.
a. Assume the Sullivan Law Firm did form and breach a contract with Billy-Ray-
Joe-Bob, how much and what type of damages will they have to pay? In your
answer explain the different types of damages and why certain types of damages
would either apply or not apply.
b. If the court determines there is no enforceable contract between the Sullivan Law
Firm and Billy-Ray-Joe-Bob, is there any other remedy that Billy-Ray-Joe-Bob
could seek? If so, what and for how much?
c. Again, assume the Sullivan Law Firm formed and breached a contract with Billy-
Ray-Joe-Bob. Can Jim-Bob sue the Sullivan Law Firm as a third party
beneficiary to BRJB’s contract? In your answer discuss the classifications of
third party beneficiaries and determine which classification would include Jim-
Bob.
10 points (Hint: Chapter on Remedies).
