Question 1. Jan went to Sam's to have her hair colored dark brown as she had done many times, although this was Jan's first time as a client at Sam's. Tom, a student trainee at Sam's, colored her hair. Jan's hair turned green and fell out within 24 hours. Jan had never had any problems with hair color previously.

Jan sued Sam's for negligence. Who wins and why?

Question 2 - Racer contracted in writing to drive Owner’s one-of-a-kind, specially designed championship race car in the Miami 500 Race on July 15 for a fee of $2500. On July 1, the race car was destroyed in an accidental fire in a storage warehouse where the race car was being stored prior to the race. Owner owns no other race cars, so Owner considered the contract discharged. Racer claimed that she is still entitled to the $2500 fee because she and Owner had a valid enforceable contract.

Compare and contrast the rights and obligations of Racer and Owner under the contract as of July 1.

Question 3 - Mark plans to open a barbeque restaurant. He can either open the business as a sole proprietorship or obtain a franchise for “Smokin’ Hot Bar-B-Q”.

Compare and contrast the advantages and disadvantages of opening the business as a sole proprietorship and a franchise.

Question 4 - Dan, Fran and Stan want to establish a bike sales and rental shop. Dan and Fran will be actively involved in managing the business operations, and Stan is investing most of the money. The 3 want to use a form of business organization that will give limited liability to each of them.

Discuss what would be the best type of business organization to limit their liability, and why?

Question 5 – Fran, Joe, and Mike formed a general partnership to operate a flower shop called Fresher Flowers. One of Fran’s jobs is to make deliveries using the partnership truck. In one such delivery, Fran negligently ran a stop sign, striking a car driven by Peggy, causing damage to the car and injury to Peggy.

Analyze and describe (1) the personal liability of Fran, Joe, and Mike, (2) the liability of the partnership, Fresher Flowers.