Bus_415_Week_4_Team_Paper

Foodmart, Inc. BUS/415: Business Law June 4, 2012 Foodmart, Inc. In this paper, Team C analysis several scenarios related to contract law as it applies to contracts with minors, e-commerce, promissory stopple, and contract formation. The scenarios will structure the foundation for considering legal remedies that apply to different circumstances. Scenario #1: Contract Formation Foodmart entered into a bilateral written agreement with Masterpiece Construction to perform a renovation. Masterpiece had a six-month time limit to complete the renovation. Masterpiece could not meet this deadline because it took more contracts with other clients, so it decided to sub-contract the renovation to Build Them to Fall (BTF). Masterpiece did a unilateral novation where it replaced itself with BTF as the party obligated to perform the renovation. The problem here is that Masterpiece did not have the right to do so. A novation requires knowledge and consent to transfer the obligation, and Foodmart did not consent to such transfer (Cheeseman, 2010). The actions of Masterpiece constituted a breach in its contractual obligations. The defense that Masterpiece will use is commercial impracticability. Commercial impracticability is a defense that may excuse a duty under a contract if that duty becomes impracticable to perform due to forces neither party could contemplate or control. However, this defense does not apply because there was not an unforeseen event preventing the performance of the contract. Masterpiece accepted additional projects knowing it did not have enough people and resources to deliver on the obligation it had already entered into with Foodmart. Foodmart was not consulted and did not approve the substitution of BTF. Since this is not an assignment of the contractual rights, Masterpiece is fully responsible. Specific Performance would apply if the project was unique and only Masterpiece could complete it. The courts can require Masterpiece to finish the renovation for Foodmart under the equitable remedy of specific performance. Scenario #2: Contracts with Minors The outcome of this scenario depends on Jeremy’s age at the time he returns the car. The information given is that at the beginning of summer (June), Jeremy is 17. At the end of summer (August), Jeremy is 17. Six months later (around February), Jeremy may have had his birthday. This is a voidable contract if Jeremy is still a minor. If Jeremy is of the age of majority, the outcome will depend on his state laws. “A minor can only avoid a contract during his minority status and only for a reasonable time after he reaches the age of maturity” (USLegal, 2010, para. 2). This depends on state laws because Jeremy was still in school and the court system might recognize him as a minor until he graduates. If Jeremy is still a minor, he can avoid this contract for a few reasons. Jeremy returned the car to Smooth Used Cars. Because Jeremy did not lie about his age and Smooth Used Cars did not ask, he did not misrepresent his age. Jeremy did not have a parent or another adult co-sign. This means that his parents are not liable for this contract. Smooth Used Cars should return Jeremy’s down payment in addition to his monthly payments. If Jeremy has reached the age of majority, or 18, there is a possibility that he already ratified the contract. “Ratification consists of any words or conduct of the minor which shows an intent to be bound by the contract” (USLegal, 2010, para. 5). Making payments can suggest the ratification of a contract. “However, many Courts refuse to recognize payment as ratification unless further evidence is given of an intent to ratify a contract or an understanding by a minor that payment might constitute a ratification” (USLegal, 2010, para. 5). Depending on Jeremy’s age and actions, he may not be able to get out of the contract. The court would have to make this decision. Scenario #3: Promissory Estoppel and Breach of Contract In this scenario Harry is filling a law suit against Brian McDonald for breach of contract as a response to Brian selling his large and rare collection of toy trains to another party. Harry has a very strong case and should receive damages from Brian. Brian will claim that there was no written contract between Harry and himself, but there was a verbal agreement between the two men and Harry has suffered financially from Brian breaking that agreement. This case does not involve a legal written contract but it does involve an implied-in-fact-contract, which is defined as an agreement between two parties. In this type of verbal contract Brian offered to sell Harry the collection in two years because Brian knew that Harry would take proper care of the collection. Harry accepted the offer and began to build a 2,000 square foot room for the collection, and borrow money from a family member to give Brian for the collection. With an accepted offer Harry informed Brian of all of the considerations, a legal value committed to the promise of the agreement, and Brian acknowledged these considerations made by Harry with a positive reaction but still sold the collection to another person without informing Harry before the room was built. To terminate the offer properly after it was made Brian would have to either revoke the offer before Harry accepted it, or Harry would have to reject the offer initially, or Harry would have had a counter offer for Brian. None of these actions occurred as Harry accepted Brian’s offer immediately and began to invest time and money into building the room that would care for the collection according the wishes of Brian’s offer. Harry agreed to the offer and made a consideration by building the room and informing Brian of his commitment to their promise, while Brian never properly voided the original offer or informed Harry that collection was sold to another party. Harry will receive damages from Brian, because of an equitable doctrine called quasi-contract; this doctrine was made for courts to rule and award damages to plaintiffs in cases that involve no legal contracts like implied-in-fact-contract. Brian broke his agreement with Harry and this has caused financial and emotional distress as a result, which is why Brian will have to pay for those damages to Harry. Scenario #4: Contractual Issues of E-Commerce In the case of Todd ordering chocolates sauce online there are multiple discrepancies. The online contract terms state that advertised prices do not apply to internet orders, and limits supply to only come from the store within a 10-mile radius of the customer. Assuming Todd accepted the terms and conditions and the value of the purchase is less than $500. The terms are black and white regarding the price and the delivery option, but are the genuineness’ of assent clear. Todd seems to believe he is getting the clearance price and the food mart associate does not believe he should search the other stores within the 10 mile radius for Todd’s purchase for inventory that they have. Because of these mutual mistakes of the facts the law permits rescission of the contract. The food mart associate proved he did not know the true nature of the terms and conditions when he sighted it as a reason to not search the other stores. Neither the store nor Todd truly wins. Todd will not get the chocolate sauce at the sale price, but if he can prove that he suffered economic injury due to the mistake and misrepresentation he will recoup the loss of the money. Foodmart will pay monetary restitution of the loss of profit Todd would have made making the cakes with the chocolate sauce. References Henry R Cheeseman, (2010). The Legal Environment of Business and Online Commerce: Business Ethics, E-Commerce, Regulatory, and International Issues, Sixth Edition, Prentice Hall. Mayo, H. B. (2012). Basic Finance: An Introduction to Financial Institutions, Investments, and Management (10th ed.). Retrieved from The University of Phoenix eBook Collection database.