Reference no: EM132228432

Sam Thomas owns and operates Scandals, an adult entertainment establishment. Sam wants to create an online adult portal for Scandals that would offer customers adult themed video and live chat room programs using the performers at the club. On April 15, Sam signed a work order authorizing Maxim Internet Solutions (MIS) "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, Sam agreed to pay MIS $75,987. On May 25, Sam signed an additional work order in the amount of $10,589 for MIS to install a customized firewall system. The work orders stated that Sam would make monthly installment payments to MIS, and both parties expected the work to be completed 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 Sam had fallen behind in the payments to MIS. MIS was threatening to cease work and file suit for breach of contract unless the bill was paid. Rather than make further payments, Sam wanted to abandon the Web site project.

1. Would a court be likely to decide that the transaction between Sam and MIS was covered by the Uniform Commercial Code (UCC)? Why or why not?

2. Would a court be likely to consider Sam a merchant under the UCC? Why or why not?

3. Did the parties have a valid contract under the UCC? Explain.

4. Suppose that Sam and MIS meet in October in an attempt to resolve their problems. At the time, the parties reach an oral agreement that MIS will continue to work without demanding full payment of the past-due amounts and Sam will pay MIS $2,500.00 per week. Assuming the contract falls under the UCC, is the oral agreement enforceable? Why or why not?