On a weekday, Tamara Cohen, a real estate broker, showed a townhouse owned by ray and Harriet Mayer to Jessica Seinfeld, the wife of Comedian Jerry Seinfeld. On the weekend, when Cohen was unavailable because her religious beliefs prevented her from working, revisited the townhouse on their own and agreed to buy it. The contract stated that the "buyers will pay buyer's real estate baker's fees."
a) Is Cohen entitled to payment even though she was not available to show the townhouse to the Seinfelds on the weekend? Explain.
b) What obligation do parties involved in business deals owe to each other with respect to their religious beliefs? How might the situation in this case have been avoided?
CASE ACTIVITY: 19-4: As you think about this case, please consider the substantial differences between a breach of contract and a penalty clause
19-4 liquidated Damages and Penalties.
Planned Pethood Plus, Inc., is a veterinarian-owned clinic. It borrowed $389.000 from keybank at an interest rate of 9.3 percent per year for ten years. The loan had a "prepayment penalty" clause that clearly stated that if the loan was repaid early, a specific formula would be used to assess a lumpsum payment to extinguish the obligation. The sooner the loan was paid off, the higher the repayment penalty. After a year, the veterinarians decided to pay off the loan. Keybank invoked a prepayment penalty of $40,525.92, which was equal to 10.7 percent of the balance due. The veterinarians sued, contending that the prepayment required was unenforceablebecause it was a penalty. The bank countered that the amount was not a penalty but liquidated damages and that the sum was reasonable. The trail court agreed with the bank, and the veterinarians appealed. Was the loan's prepayment charge reasonable, and should it have been enforced? Why or why not?
CASE ACTIVITY 20-3: This case involves the very difficult issue of a mix of goods and services. The analysis would apply to many contracts. Bill
20-3. Spotlight on Goods and Services-The Statute of Frauds.
FallsviewGlatt Kosher Caterers ran a business that provided travel packages, including food, entertainment, and lectures on religious subjects, to customers during the Passover holiday at the New York resort. Willie Rosenfeld verbally agreed to pay Fallsview $24,050 for the Passover package for himself and his family. Rosenfeld did not appear at the resort and never paid the amount owed. Fallsview sued Rosenfeld for breach of contract. Rosenfeld claimed that the contract was unenforceable because it was not in writing and violated the UCC's statute of frauds. Is the contract valid? Explain.