Book - ESSENTIALS of BUSINESS LAW By Jeffrey F. Beatty and Susan S. Samuelson[FIFTH EDITION]

Chapter 11 : CONSIDERATION

ESSAY QUESTIONS

2. CeCe Hylton and Edward Meztista, partners in a small advertising firm, agreed to terminate the business and split assets evenly. Meztista gave Hylton a two-page document showing assets, liabilities, and a bottom line of $35,235.67, with half due to each partner. Hylton questioned the accounting and asked to see the books. Meztista did not permit Hylton to see any records and refused to answer her phone calls.

Instead, he gave her a check in the amount of $17,617.83, on which he wrote "Final payment/payment in full." Hylton cashed the check, but she wrote on it, "Under protest-cashing this check does not constitute my acceptance of this amount as payment in full." Hylton then filed suit, demanding additional monies. Meztista claimed that the parties had made an accord and satisfaction. What is the best argument for each party? Who should win?

3. ETHICS Melnick built a house for Gintzler, but the foundation was defective. Gintzler agreed to accept the foundation if Melnick guaranteed to make future repairs caused by the defects. Melnick agreed but later refused to make any repairs. Melnick argued that his promise to make future repairs was unsupported by consideration. Who will win the suit? Is either party acting unethically? Which one, and why?

4. Sami walks into a restaurant. She is given a menu, which indicates that lobster is $30.Sami orders the lobster. It arrives, and Sami thinks it is very tasty. When the bill arrives, Sami tries to execute a clever ploy she learned about in her business law class. She writes a check to the restaurant for $20 and writes "full settlement" across the top. The waiter accepts the check without looking at it, and the restaurant manager later deposits it in the restaurant's bank account. Is this a liquidated or an unliquidated debt? Is Sami off the hook for the last $10?

5. In the bleachers ...

"You're a prince, George!" Mike exclaimed. "Who else would give me a ticket to the big game?"
"No one, Mike, no one."
"Let me offer my thanks. I'll buy you a beer!"
"Ah," George said. "A large beer would hit the spot right now."
"Small. Let me buy you a small beer."
"Ah, well, good enough."
Mike stood and took his wallet from his pocket. He was distressed to find a very small number of bills inside. "There's bad news, George!" he said.
"What's that?"
"I can't buy you the beer, George."
George considered that for a moment. "I'll tell you what, Mike," he said. "If you march to the concession stand right this minute and get me my beer, I won't punch you in the face."
"It's a deal!" Mike said.
Discuss the consideration issues raised by this exchange.

Chapter 12 : LEGALITY

Essay Questions

2. Brockwell left his boat to be repaired at Lake Gaston Sales. The boat contained electronic equipment and other personal items. Brockwell signed a form stating that Lake Gaston had no responsibility for any loss to any property in or on the boat. Brockwell's electronic equipment was stolen and other personal items were damaged, and he sued. Is the exculpatory clause enforceable?

3. Guyan Machinery, a West Virginia manufacturing corporation, hired Albert Voorhees as a salesman and required him to sign a contract stating that if he left Guyan, he would not work for a competing corporation anywhere within 250 miles of West Virginia for a two-year period. Later, Voorhees left Guyan and began working at Polydeck Corp., another West Virginia manufacturer. The only product Polydeck made was urethane screens, which comprised half of 1 percent of Guyan's business. Is Guyan entitled to enforce its noncompete clause?

4. 810 Associates owned a 42-story skyscraper in midtown Manhattan. The building had a central station fire alarm system, which was monitored by Holmes Protection. A fire broke out and Holmes received the signal. But Holmes's inexperienced dispatcher misunderstood the signal and failed to summon the fire department for about nine minutes, permitting tremendous damage. 810 sued Holmes, which defended based on an exculpatory clause that relieved Holmes of any liability caused in any way. Holmes's dispatcher was negligent. Does it matter
how negligent he was?

5. YOU BE THE JUDGE WRITING PROBLEM Oasis Waterpark, located in Palm Springs, California, sought out Hydrotech Systems, Inc., a New York corporation, to design and construct a surfing pool. Hydrotech replied that it could design the pool and sell all the necessary equipment to Oasis, but it could not build the pool because it was not licensed in California.Oasis insisted that Hydrotech do the construction work because Hydrotech had unique expertise in these pools. Oasis promised to arrange for a licensed California contractor to "work with" Hydrotech on the construction; Oasis also assured Hydrotech that it would pay the full contract price of $850,000, regardless of any licensing issues.

Hydrotech designed and installed the pool as ordered. But Oasis failed to make the final payment of $110,000. Hydrotech sued. Can Hydrotech sue for either breach of contract or fraud (trickery)? Argument for Oasis: The licensing law protects the public from incompetence and dishonesty. The legislature made the section strict: no license, no payment. If the court were to start picking and choosing which unlicensed contractors could win a suit, it would be inviting incompetent workers to endanger the public and then come into court and try their luck. That is precisely the danger the legislature seeks to avoid.

Argument for Hydrotech: This is not the kind of case the legislature was worried about. Hydrotech has never solicited work in California. Hydrotech went out of its way to avoid doing any contracting work, informing Oasis that it was unlicensed in the state. Oasis insisted on bringing Hydrotech into the state to do work. If Oasis has its way, word will go out that any owner can get free work done by hiring an unlicensed builder. Make any promises you want, get the work done to your satisfaction, and then stiff the contractor-you'llneverhavetopay.