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Sierra Nevada Trees, Inc.Student Coaching Notes

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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?

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Is the Lost Profits Limitation Clause Part of the Contract?Is there an Acceptance?

- Definite- Timely- Not Conditional on Offeror’s Assent

Are the Additional/Different Terms Part of Contract?

Rejection & Counter Offer

Both Parties Merchants At Least One Party is Not a Merchant

No, unless Offeror Expressly ConsentsYes, unless- Material Alteration- Offer Limit Acceptance- Offeror Objects

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Material Alteration

Surprise or Hardship Standard Clauses that deny implied warranties

Clauses that require arbitration

Clauses that limit remedies

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May an Established Business Recover Lost Profits Based on Projection of Future Income?

Reasonable Certainty StandardNot Speculative in NatureNo Absolute Precision is RequiredMay Rely on Statistical Models based

on Past Financial Data

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Question 2a:Getting the Histogram

Use Excel to Calculate Profits on Spreadsheet File Sierra 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 Sierra Case.

Follow Directions for Constructing Histograms on Using_Excel_for_Stat PowerPoint.

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Questions 2b & 2c:Descriptive Statistics

Follow Directions for Descriptive Statistics on Using_Excel_for_Stat PowerPoint.

Use a 99% Confidence Level when Using Excel.

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Question 2 d:Expected Exposure

Expected Exposure = Construction Costs + Total Expected Profits for Six Months

Basis for Compensation

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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.

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