This three-hour examination is in two equal parts. Part I (90 minutes) consists of short-answer questions which you should answer on the examination paper itself; Part II (90 minutes) includes two essay questions which you should answer in one or more blue books.

Your answers to Part I will be collected at the end of 90 minutes. If you finish Part I before this time has elapsed you may go on to Part II.

You should answer both parts. When computing your final grade I will count each part fifty percent (50%) of the grade.

This is an open book examination. During the examination you may consult any written materials except materials checked out of the reserve section of the law library.

Assume that the 1978 official text of the Uniform Commercial Code is in force in all relevant jurisdictions unless otherwise expressly indicated. Where the Code sets out alternate provisions (e.g., UCC 2-318), assume that the second alternative has been adopted.

Part II of this examination consists of two questions. Your answer to each question will be given equal weight when computing the final grade. Part II counts for fifty percent (50%) of the final grade.

Read each question carefully. Organize your answer before you begin to write and emphasize those points you think are most significant. If you find an ambiguity or if you need more facts, make reasonable assumptions and state these clearly in your answer.

In January, Farmer writes to Agricultural Services Inc. ordering 100 gallons of the herbicide, TWA-727. Farmer's letter to ASI specifically orders TWA-727 and states that Farmer will use the herbicide on his spring corn to protect against all weeds. ASI responds to Farmer's letter with an acknowledgment form that states in conspicuous type: "Because of the difficulties of determining what causes herbicides not to be effective, all herbicides supplied by ASI are sold without warranties, express or implied." At no time did Farmer comment on this language in ASI's form. ASI subsequently sent the 100 gallons to Farmer and Farmer applied the herbicide to his spring corn crop following the printed instructions on the barrels in which the herbicide was delivered. Despite the herbicide, weeds grew in the corn fields and made it very difficult to harvest the crop.

Farmer now seeks to recover from ASI for breach of warranty. Advise ASI on whether it should contest Farmer's threatened legal action.

On July 20, Seller and Buyer agreed on the purchase and sale of 300,000 barrel staves at $450 per thousand with delivery on December 31. On August 15, Seller wrote to Buyer saying that Seller would not perform its contract obligations. Buyer did not make a substitute purchase until December 31, when it bought 300,000 staves for $560 per thousand. In the interim, Buyer urged Seller on numerous occasions to perform, but Seller showed no willingness to change its decision. Buyer now wishes to bring legal action to recover damages and consults you about what damages might be recovered.

When preparing your answer for Buyer you have discovered the following information.

1. There is an established market for barrel staves and both Seller and Buyer regularly purchase and sell on the market.
2. On July 20, the market price for barrel staves is $445 per thousand for immediate delivery or $450 per thousand for delivery on December 31.
3. During the month of August, the market price for barrel staves is $470 per thousand for immediate delivery and $475 per thousand for delivery on December 31.
4. On December 31, the market price for barrel staves is $550 per thousand for immediate delivery.

Advise Buyer.