Scenario:

Chuck House was the Facilities Director at the headquarters of Hospital Corporation of America (HCA) for 25 years before taking early retirement in 2012.  As the Director, Chuck had experience with a variety of functions, including mechanical, electrical, HVAC, carpentry and more.  After retiring, Chuck moved to Florida and purchased a condo on the beach.  A year later, Chuck was bored, so he decided to start a facilities maintenance business with his friend, Ben Holmes.  Even after the economy turned around, Chuck found that individuals and businesses repaired things instead of replacing them, so his services were always in demand.  Ben suggested they form a partnership and call it House & Holmes Facilities Management. As House & Holmes began operating, they experienced several different scenarios: 

Stop Payment on a Check:

Although corporate clients paid by check or electronic transfers, Chuck preferred that individuals pay with cash.  A new residential customer paid for some electrical work with a check for $225, made payable to House & Holmes.  Chuck took the check to the bank the next afternoon and was informed that the customer's bank issued a stop payment on the check. 

Window Problems:

House & Holmes received a large contract from a condo association to replace all of the windows in the building.  Chuck ordered 75 windows from a wholesale dealer.  The dealer came out to measure for the windows.  Since the windows were specially ordered, Chuck paid for the entire shipment when placing the order.  The windows arrived three weeks later; however, two windows were shattered and three windows were missing.  As they were installing the windows, two windows did not fit.

Kitchen Package:

Chuck enjoyed getting deals on materials.  A kitchen supply company offered to sell House & Holmes all of their custom floor model kitchens in its Tampa showroom.  The parties agreed on a price of $15,000 for the six models, each complete with custom wood cabinets, hardware, islands, lighting and appliances.  Since House & Holmes receives a significant amount of kitchen remodeling jobs, Chuck thought this was a great deal.  Chuck and the seller entered into an oral contract whereby Chuck would pay the seller $ 1,500 as a down payment and the remainder when the goods were delivered.  In anticipation of receipt of the kitchens, Chuck lined up two complete kitchen remodeling jobs.  Chuck was able to offer the customers a great deal because of the deal he received from the kitchen supply company.  When time came for delivery of the custom floor model kitchens, the seller said that it already sold the appliances to another company.

Hot Water:

Chuck and Ben installed three new hot water heaters manufactured by Bradford White for three residents in one of the condominium complexes where they had contracts for maintenance services.  Extensive warnings were provided on the water heater itself and in the manual Chuck provided to the residents at the time of installation.  The warning on the water heater read "CAUTION: Hot water increases the risk of scalding injury."  The heater itself contained a picture of hot water coming from a faucet with the words "DANGER" printed above it.  In addition, the water heater had a statement on it:

Warning!  Water temperature over 130°F can cause severe burns instantly or death from scalds.  Children, disabled, and elderly are at highest risk of being scalded.  Feel water temperature before bathing or showering.  Temperature limiting valves are available, see manual.

Chuck set the temperature on each tank at 120°F.  The next day, 90 year old Margaret slipped and fell when trying to get out of the tub because the water was too hot.  Margaret received second degree burns and broke her hip when she fell. 

Sara started to fill the tub to give her grandson, Gabe, a bath.  When the phone rang, Sara left Gabe alone in the bathtub with the water running.  Gabe was scalded by the water from the tap.

Margaret and Sara filed a lawsuit against Chuck, Ben, House & Holmes and Bradford White, alleging defects in the design of the water heater and Chuck and Ben's failure to warn them about the heater's dangers.

Assignment:

Question 1: Based on the different situations described in the scenario, create a 5 to 8-page Microsoft Word document that includes the answers to the following:

Question 2: Identify the types of business organizations Chuck and Ben might consider for operating House & Holmes.  Explain the advantages and disadvantages of each type.  Select one type of business for House & Holmes and provide support for your choice.

Question 3: What are Chuck's options related to the stop payment on the customer's check?

Question 4: What are Chuck's options related to the damaged, missing and incorrect-sized windows?

Question 5: What rights does Chuck have related to the oral contract for the kitchen floor model packages?  Is the seller in breach of contract?  Discuss why or why not.

Question 6: Can Margaret or Sara prevail in a product liability lawsuit against Chuck, Ben, House & Holmes or Bradford White?  Explain why or why not for each party.

Question 7: Identify any ethical concerns House & Holmes encountered related to the topics covered.

Question 8: Conclude your paper by providing suggestions for House & Holmes to help prevent future occurrences of these types of legal and ethical problems.

Support your answers with appropriate research, reasoning, cases, laws, and other relevant examples.