Bmgt380 summer 2014 final exam2
CASE ONE – Worth 25 Points
Instructions: Please read the Case One Background Facts carefully then answer the corresponding multiple choice, short answer and essay questions below.
Case One – Background Facts:
Charlie Jones, a fireman for Boulder County, Colorado, saw an ad for the vacation of his dreams in the local, “Boulder County Gazette.” The ad read, “Seven days at the wonderful luxury Windell resort, ‘Cabo Mar,’ $1200 per person, all inclusive.” The ad featured a picture of the front of the hotel with a person receiving a massage by the pool superimposed over the hotel façade. The ad went on to say how the hotel was located on the beach at Cabo San Lucas, Mexico and in a wonderful tropical setting. The ad also listed the name of a local travel agency, Jennifer’s Tours, for booking purposes. In miniscule print at the bottom of the ad, blending with the pattern of the iron railing, the ad went on to make a short disclaimer to the effect that the amenities featured were not necessarily those provided. Jones knew Jennifer Hooley, the owner of the agency. Anxious for some time off in a warm climate, Jones decided to Google the hotel name to verify that it was indeed a Windell hotel as he knew Windell to be a reputable company. From Google, Jones was able to confirm that the, ‘Cabo Mar,’ was owned by Windell; he also noticed that the same picture appeared on this website as he had first seen in the newspaper. The site also showed pictures of what seemed to be spacious, well-appointed rooms with queen sized beds. Excited by what he saw, Jones called Jennifer’s Tours and booked the special he saw in the newspaper ad.
Upon arrival, Jones found that, while the hotel’s exterior looked like the pictures he saw, the hotel was located mostly in the town of “Cabo” with only a very small portion of the hotel facing beachfront. His room was smaller than on the website and had only a twin bed. Jones was told that if he wanted a bigger room he would have to pay an upgrade fee of $500 for the seven days. He paid the $500 because as a typical fireman, he was a tall, big man and needed more space to sleep. As the trip went on, Jones became increasingly uncomfortable with the, “not included,” fees that were mounting up, but when he went to check out on the seventh day he found that he was being charged for seven lunches. Furious with how the company had treated him, Jones stormed across the lobby to the manager’s office, but before he could get there, he slipped and fell on the wet marble floor having been just washed by the maintenance staff. The staff had placed a “wet” sign on the floor, but it was hidden from plain view behind a large leather chair.
Jones was taken to the nearest hospital where it was determined that surgery was necessary to place a pin in his broken ankle. Anxious to return home and leery of the Mexican hospital, Jones flew out of Mexico immediately after the surgery. He required two plane seats and an ambulance to meet him at the various airports. His health insurance would not cover his hospital stay in Mexico as it was outside the U.S. When back in Boulder, Jones was not able to work for twelve weeks and required another surgery to remove the pin as well as several weeks of therapy. In addition, Jones received his credit card bill with a thousand dollars, “additional charges,” that had been added during his stay at the, ‘Cabo Mar.’
Jones comes to you to consult about his options in this whole affair. He wants to sue for $575,000 to recover on the medical expenses; the cost of the trip (which, with the additional charges amounts to $2200); his lost wages; and pain and suffering resulting from the injury.
In your research of the situation, you discover the following additional information:
1. Jennifer’s Tours is a sole proprietorship owned by Jennifer Hooley. At age 18, Jennifer took over the business from her mother, also named Jennifer Hooley. Just prior to reaching the age of 18, Jennifer had booked Jones’ tour. Jennifer Tours has an exclusive sales contract with Windell Travel, Inc. Jennifer Tours placed the ad in the Boulder Gazette. Similar ads were placed by Jennifer Tours in various newspapers around Colorado as well as on Jennifer’s Tours’ company web site.
2. Both Windell Hotels, Inc. and Windell Travel, Inc. are corporations registered and headquartered in Delaware. Windell Travel has no offices and no hotels in Colorado. It does have an exclusive agency contract with Jennifer Tours. Windell Hotels, Inc. owns and operates the Cabo Mar Hotel.
Case One – Multiple Choice: 2 points each (10pts. Total)
Instructions: Select the best answer and give a two-to-three sentence explanation as to why you believe it is the correct choice.
1. Jones wants to sue Jennifer Tours, Windell Hotels, Inc, and Windell Travel, Inc together in Federal court for his injuries as a result of the fall. Can he do so?
a) Yes, because Federal Court has jurisdiction over citizens of different states.
b) No, because Federal Court does not have jurisdiction in cases that do not involve federal laws.
c) Yes, because the Federal Court has jurisdiction over citizens of different states and the suit involves monies greater than $75,000.
d) No, because the Federal Court has no jurisdiction over an accident that occurred in Mexico.
2. It would be easier for Jones to bring suit in Colorado State court, but he wonders if the court can get the Windell Hotel and Travel companies to come to Colorado. Can the court bring the defendants to Colorado?
a) No, because the subject of the suit took place in a foreign country.
b) No, because the corporations do not have sufficient contact with the state to allow the court to use the long arm statute.
c) Yes, because the Plaintiff is a citizen of Colorado and it is his suit.
d) Yes, because the corporations have sufficient minimum contact with the state to justify the court’s use of the long arm statute.
3. Windell Travel and Windell Hotel’s both claim that they did not have a contract with Jennifer because she was a minor at the time of her dealings with Jones and that they are therefore not responsible to Jones. The contract was void. Jones can refute this argument because:
a) the fact that Jennifer was only days away from becoming an adult negates her minor status.
b) being a minor doesn’t affect her agency relationship with Windell.
c) the privilege to renounce the contract lies with the minor.
d) both b and c
4. Jones wants to sue Jennifer’s mother personally because she has all the family money. Jennifer Hooley, the mother, says that she isn’t responsible because she doesn’t own the company anymore. Will Jennifer Hooley, the mother, win?
a) Yes, because Jennifer Travels is a sole proprietorship and if she doesn’t own it anymore. She isn’t personally responsible for its liabilities.
b) No, because she owned the business at the time of the contract with Jones.
c) No, because Jones knew her as the owner.
d) both b and c
5. Jones wants to get his money back for the trip including the additional charges for those items not included in his “all inclusive” vacation. Under what contract theory or theories will Jones prevail in his suit?
a) The advertisement and website created an express warranty that the trip would include all expenses, three meals a day, and a room with a queen bed.
b) Jones entered into the contract based on a mistake of material fact which the hotel knew to be untrue.
c) Under the UCC written disclaimers must be conspicuously displayed to be valid.
d) All of the above
Case One – SHORT ANSWER: 5 points
Instructions: In six to eight sentences, please answer the following question:
Which contract law will the court most likely apply in making a decision in Jones’ attempt to recoup his trip costs; common law or the UCC and how will it affect the remedies he can obtain? Explain
Case One – ESSAY: Worth 10 points
Instructions: Frame a complete definition of the legal question asked and explain how the law applies to the facts. Suggested length is two to three paragraphs.
Jones brings suit against all the defendants, Windell Travel, Windell Hotel and Jennifer Travels for Negligence. Explain the theory, the elements and how it would apply to Jones’ case. Will Jones be successful against all the defendants? Explain. Be sure to include any and all defenses if any that may lie in your discussion.
CASE TWO – Worth 25 Points
Instructions: Please read the Case Two Background Facts carefully then answer the corresponding multiple choice, short answer and essay questions below.
Case Two – Background Facts:
Joan and Don own “Hot Diggety Dogs,” (HDD) a vending cart business, which sells gourmet hot dogs on the Streets of Richmond, Virginia. The partners operate four hotdog carts scattered at various points in the downtown area close to the office and retail shops. They have a vendor’s license from the City to operate their business. HDD is very successful. Their best selling gourmet dog, “The French Doogle,” is so popular that it was the subject of a Food Network, “Show Down” with Iron Chef, Bobby Flay. The, “French Doogle,” won the competition. Joan and Don are understandably, very proud of their products.
Currently, the partnership has no formal agreement that outlines profit distribution, managerial responsibilities, and liabilities of the parties. Joan and Don want to expand the business. The have agreed to expand the cart business to include four new carts in the city and a kiosk in the mall. They also decide to franchise the cart business around the state. Joan has agreed to the expansion only if they bring in a new partner, with money, for the express purpose of getting the franchise contracts. Jack, one of Joan’s friends, has agreed to become a partner for the time it takes to set up the franchise business. Jack offers to contribute $50,000 to the partnership with the understanding that he will double his money by the end of the 1st twelve months of continuous operation of the four new carts in the city, the kiosk in the mall, and no less than 10 additional franchises around the state. No written agreement was made between the partners.
Every year The Women’s League sponsors an old fashioned Fourth of July Festival. It begins on the second of July and culminates with the fireworks display on July 4th. The proceeds of the festival are given to the local children’s hospital. The three day festival is a big money maker for HDD because of all the activity in the downtown area leading up to the festival and because of the large number of people who come to the festival. It comprises almost 25% of their annual income. Historically, HDD has had their usual four carts around the city during the festival. This income goes to HDD.
HDD also sponsors one cart during the festival which is located in the festival area, itself. The proceeds from this cart go the festival sponsors. This year, the sponsors anticipate an increased attendance of 15%. Joan and Don are excited about this, and hope that they can use the additional funds to help fund their business expansion.
One month before the Festival, Joan and Don received a mailed notice from the City of Richmond informing them that, due to a new City Ordinance brought about because of excessive traffic flow, licensed street vendors would no longer be able to set up in the immediate downtown area of Richmond. The city passed the ordinance at the last city council meeting without prior notice of any kind. The ordinance was written to go into effect on the 1st of July. Vendors could only sell their wares in a concentric circle some 15 blocks from the main street of Richmond. Not only would all the street vendors be more or less together, but the proposed area has very little foot traffic and customers. Failure to abide by the law would result in the loss of a vendor’s license for ten days and a five thousand dollar fine.
The HDD partners were angry and devastated. If this law were allowed to stand, they could no longer do business in the downtown area, they could not participate in the Festival, and their expansion plans would go up in smoke. Worse yet, in anticipation of the Festival, Joan and David ordered and made payment on thirty thousand hot dogs, thirty thousand buns of various types, and condiments from Salvo Food Distributors, their usual supplier. After much discussion, Joan and Don decide that they were going to set up for the festival as usual and take the chance of getting a fine and suspension. Joan and Don make this decision because they think it will be cheaper to pay the fine and lose the ability to do business for ten days than to do business on the city’s terms. The serious financial pressure from having already prepaid Salvo for the hot dogs, condiments, buns, etc. has added real urgency to their decision to pursue business as usual.
From their point of view, it means that HDD can live to fight another day. Joan and Don agreed to this course of action without asking Jack who was not around.
July first arrives, and HDD set up for the Festival. Business at the Festival was going great. The money was pouring in and all the carts are really busy. People having seen the Show Down show were anxious to try the French Doodle. One customer was so excited that he raced to the cart, tripped over a nearby box of hotdogs which caused him to fall into the steaming water, seriously burning his arm and that of the young women manning the cart. Both sue HDD. The suits total $60,000. Moreover, in the midst of the accident, the police arrive. HDD receives a summons and ticket for violation of the new city ordinance. HDD was given a ticket on each remaining day of the festival.
As if this were not enough, three thousand of the buns delivered by Salvo Food on the second of July contained mold. This was not discovered until the final day of the festival. Once discovered HDD was forced to close two of their carts completely before the end of the festival. Joan and Don estimate they lost four thousand five hundred dollars of business.
In addition, while Joan and Don where busy with the festival happenings. Jack, signed three new HDD franchise contracts, and took deposits totaling fifty thousand dollars. Upon his arrival back in Richmond he finds out the problems with the festival and wants out of the partnership. He feels his partners did not include him in their decision-making and that he should not have to pay for their mistakes. He does inform them of the franchise agreements. However, he also informs them that he is leaving with the fifty thousand dollars he collected from the companies, because it is the same amount he put in to the business.
Joan and Don look to you for advice. They have come with the following list of questions for you to answer:
CASE TWO – MULTIPLE CHOICE: 2pts each (10pts. Total)
Instructions: Select the correct answer and give a two-to-three sentence explanation as to why you believe it is correct.
1. If the law suits are successful against HDD will Jack have to pay too?
a. No, because he didn’t get to vote on the decision to participate in the festival.
b. No, because no one knew that he had become a partner.
c. Yes, only to the extent of his fifty thousand dollar contribution.
d. Yes, because an incoming partner is personally liable for debts and obligations incurred by the partnership after becoming a partner.
2. Does the fact that there is no written partnership agreement for HDD mean that no partnership exists?
a. No, a partnership may be oral or written.
b. No, a partnership can be implied by the actions of the party toward others.
c. Yes, because no one on the outside can tell if they are partners or not.
d. Both a and b
3. If the law suits are successful, and if HDD does not have enough money to pay for what has been ordered, do the partners have to personally pay the difference?
a. No, because the partnership is considered a person in the eyes of the law and the partners are not personally liable for what the partnership does.
b. Yes, partners are both jointly and severally liable for torts against third parties.
c. Yes, they will each be equally liable for torts against third parties.
d. Yes, because partners are jointly liable for debts of the partnership.
4. Joan and Don feel that they should not be responsible for the customer’s damages, because they told all HDD employees never to leave the hotdog boxes lying around the cart. Will this fact get them off the hook?
a. No, because as an agent of HDD the employee’s actions are deemed their actions.
b. No, because the act was committed within the scope of employment.
c. Yes, because the employee was acting outside the scope of employment by not adhering to the rules.
d. Both a and b
5. Joan and Don do not want to continue with the Franchise business with Jack gone. Is it possible for them to get out of the contracts by claiming they did not know Jack was making them?
a. Yes, because they can show how busy they were at the Festival.
b. Yes, because they can show that they did not authorize Jack to make the contracts.
c. No, because partners are agents of each other and the partnership.
d. No, because contracts entered into on behalf of the partnership are binding on the partnership.
CASE TWO – SHORT ANSWER: 5 points
Instructions: In six to eight sentences explain your answers to the following questions.
6. Joan and Don are also concerned about their contract with Salvo Foods. They would like to know if they can get reimbursed for the forty-five hundred dollars of business they lost and the money they paid Salvo for the buns and delivery. Under the UCC explain two of the best warranty theories that would help HDD to recover there losses.
CASE TWO – Essay: 10 points
Instructions: Frame a complete definition of the legal question asked and explain how the law applies to the facts. Suggested length is two to three paragraphs.
7. Joan and Don still have a very major concern left to ask you about. They can not continue doing business without a repeal of the city ordinance which has caused them to receive several citations from the city of Richmond. They want to fight the City and go to court with the citations. They feel that the ordinance is in violation of the constitutional right to do business and they were not even given a chance to protest the law. Do you agree? Define the constitutional law theory that would help Joan and Don to defeat the law and its application to their business. Make sure that you are complete in your analysis by incorporating any tests or defenses that may apply.
CASE THREE – Worth 50 Points Total
(25 points Part One/25 points Part Two)
Instructions: Note- Case Three contains two parts with its own corresponding questions and separate point values. Please read the Case Three Background Facts carefully then answer the corresponding multiple choice, short answer and essay questions below.
CASE THREE- BACKGOUND FACTS:
Darren Troll, CEO of Cash Cow Incorporated (CCI) brought CCI’s two Vice Presidents, John Quick and Dirk Driven, into his office to unveil his new plan for a CCI amusement park, called FUN-A-MANIA-USA (FAMUSA). It was to be located outside WashingtonD.C. and its design was to be based on the design of D.C., itself. He had pitched his idea to the Board of Directors, but it was not approved. However, Troll was confident that the project would be a cash cow. He felt sure that once the Board saw the project succeed, they would approve the 3.7 million dollar expenditure.
In Troll’s mind, the key was to get the project up and running before the next Board meeting some 11 months down the road. He assigns each VP tasks and tells them that this is their number one priority. John Quick, known for his fast work, is first up. He is assigned the task of finding the money to support the project from CCI’s budget and to set up accounts for a new separate corporation named Fun-A-Mania-USA, Inc. Quick is also expected to set up the corporation. Troll tells Quick that he has until the next day, Friday, to get the money and accounts in place. Troll emphasizes to Quick and Driven that everything has to be in the name of the new company because he doesn’t want the Board to get wind of things until they are all in place. “Think of it as a surprise gift for them,” he said. Troll then turned to Quick and said, “Your job is to find the site, buy the land, and construct the amusement park. You have 10 months to get the job done.” Both men roll their eyes as they leave the office. The deadline is impossible.
Back in his office, John Quick gets to work. John decides that his first priority is to find the funding for the project. After careful review of the CCI budget, John decided that there are two ways he can raise the money for the project quickly. The first way is to sell the 2.8 million dollar corporate apartment in San Francisco. Overlooking the Golden Gate Bridge, this apartment should be very easily sold, even in today’s market. In fact, he thinks he knows the perfect person, Jack Yono. Yono had called Quick only the last week and asked if Yono knew a place in SF for sale, as Yono was being transferred from Japan to the Bay area by his company. Quick feels certain that Yono can afford the apartment and knows that Yono can save real estate broker-fees if the sale is direct to Yono. He picks up the phone and called Yono who was more than delighted to get the apartment for 2.8 million. He would wire him half of the money as a deposit this afternoon, and pay the rest when he got the contract of sale and Deed. It would be a cash transaction. John told him the documents would come via e-mail this afternoon after the deposit wire had been received. He could close the deal by tomorrow. Everyone was pleased when they hung up the phones. Quick called the bank and arranged to set up a new account in the FAMUSA name.
The second part of John’s plan was to fire two upper management people, Joe Jolly and Jill Jackal. Joe was the Director of Sales and Dirk Driven’s gopher. The sales figures were down this year and this would be a perfect excuse to let him go. CCI could save $450,000 dollars by letting him go and promoting his immediate underling with a salary bonus of only $100,000. John wanted to make sure first that CCI wouldn’t have any problems with his employment contract. He pulled Joe’s file and found that he was correct in surmising that he had signed one of the old contracts. He was bound to a six year covenant not to compete even if he was fired. Furthermore, all disputes with the contract were to be handled through arbitration at Jolly’s expense unless Jolly won. John was sure that wouldn’t happen because CCI would get to pick the person. John decided if he let him go with two weeks notice and severance pay that would be enough to prevent any problems. What John forgot to check, because it wasn’t in the new contracts, was the clause on dismissal of the employee. It provided that when the employee was dismissed without thirty days notice and severance pay, any disputes would revert to the Court system for resolution.
Jill Jackal, though, was another matter. She had negotiated her own contract and was sharp and talented. Her, “Cow Time,” cartoon is a real hit. It brings millions to the company each month. Dealing with her would prove a headache for sure. Quick needed her $500,000 salary. Fortunately, for him, Jill entered his office at the moment and informed him that she was resigning her position as Creative Director. She was giving her two weeks notice. She also said that she wanted the $100,000 per month “Cow Time” royalty checks that Troll had promised her last month. The royalty checks were to begin that same month and continue as long as, “Cow Time,” was used by CCI. Quick wanted to laugh. Troll was always making promises like that to people, but he never paid. He said nothing. At least he no longer had to fire her.
John had one last thing to do before he could go home for the day. He had to get the corporation for FAMUSA formed. Normally, he would have gotten legal to handle this, but they had gone home for the evening. He would just take one of the corporate books from the shelf and scan the documents into the computer. He would edit the existing name and put Fun-A-Mania-USA in its place. He names Troll, Driven and himself the shareholders and Board of Directors with the thought that this could be changed later to CII when the Board approves the park plan. He had accomplished the job Troll gave him in one day.
The Board of Directors, now very much aware of FAMUSA plan, and not too happy, come to you for advice. They want your legal opinion on the following questions.
CASE THREE – MULTIPLE CHOICE (Part 1): 2 pts each (10 pts Total)
Instructions: select the best answer and give a two-to-three sentence explanation as to why you believe it is correct.
1. Can Troll justify his action to start the amusement park project by asserting the best business judgment rule?
a. Yes, because Troll had diligently researched the project and in good faith felt it to be in the best interest of the company.
b. Yes, because he exercised his judgment in believing that other CEO’s like him would also make the same judgment that he did.
c. No, because he failed to use care and diligence in executing his plan.
d. No, because he failed to use care, and failed to do so in a manner that a prudent person would believe to be in the best interest of the company.
2. Will the company be able to rescind John’s sale of the condo to Yono?
a. Yes, because John acted outside the scope of his employment by selling the condo to a friend.
b. Yes, because Yono knew the condo was titled in the name of CCI not FAMUSA and that the proceeds of the sale were to go FAMUSA account.
c. No, because Yono had no reason to believe that the FAMUSA account was not owned by CCI.
d. No, because as Vice President, of CCI John had the implied, apparent authority to act as agent of CCI and bind CCI to the sales contract. Where the money went was irrelevant.
3. Joe Jolly has brought a suit in the state court against CCI to have the employment contract held void because he claims the contract was against public policy. The board wants to know if they can force him into arbitration as is stated in his contract.
a. Yes, because the terms of the contract call for arbitration to settle disputes.
b. Yes, because the courts will not hear contract cases when a contract calls for arbitration.
c. No, because the Federal Arbitration Act will permit court suits in cases where equity or legal grounds exist to revoke them.
d. No, because the terms of the contract, itself, allow him to bring the suit in the Court system as John did not give him thirty days notice.
4. Assuming that Jolly gets to keep the suit in the Court System, under what legal theory is he most likely to win his case.
a. It is an adhesion contract, which, by definition, is a contract whose terms he was unable to negotiate.
b. It is an unconscionable contract because CCI used their dominant position to impose an unfair, “covenant not to compete,” clause and Jolly had no other job alternative at the time.
c. It is against public policy because the covenant not to compete is so long it approaches slavery.
d. It is an adhesion contract, but its terms are so unfair that the court could use its equity power to make it fair.
5. Jill Jackal has also filed suit against CCI as she has not yet received her promised royalty checks. Will Jill win?
a. No, because the oral agreement between Troll and Jackal cannot be heard by the court as it is not an exception to the parole evidence
b. No, because even if the Court heard the evidence, the oral agreement is not supported by any consideration.
c. Yes, because the cartoon was her creation and CCI should have to pay her for her ideas.
d. Yes, because her employment contract was amended by Troll when he verbally agreed to pay the royalty premium.
CASE THREE – SHORT ANSWER (Part 1): 5 points
Instructions: In six to eight sentences explain your answers to the following questions:
Can the Board sue Troll and John for negligence?
If so, why?
If not, why not?
CASE THREE – ESSAY (Part 1) : 10 points
Instructions: Frame a complete definition of the legal question asked and explain how the law applies to the facts. Suggested length is two to three paragraphs.
(1) Is FAMUSA a viable corporate entity in the eyes of the law? Explain. Be sure to include in your answer a discussion of the nature of a corporation.
CASE THREE – BACKGROUND FACTS – Part Two:
Upon leaving Troll’s office, Driven does not bother to go to his office. He knows that to get his job done within 10 months, it would be necessary to get the site picked and the land purchased within the next two days. He leaves the office almost immediately. Dirk also knows that to keep the price down on the land purchase, it is necessary to keep the deals “casual” and away from legal. That meant the rural areas where people let cash speak.
Dirk knew exactly where he wanted to go, Front Royal, Virginia; a perfect spot. Front Royal has a lot of empty land a two to three hour ride from many major cities in the Washington, D.C. corridor. It also has the Manassas Battlefield and Luray Caverns very close by to bring in the tourist trade. With the help of a local realtor, Dirk locates two major farms in the vicinity that would be good sites. One farm belongs to the Jacobs and the other to the Dilly’s. One couple, Jordan and Janet Jacob, was anxious to sell off the 640 acres that the family left them so that they could move into the city where they were employed. An offer already exists from a local developer, Danny Dee, for a thousand dollars an acre. This offer is seen to be low but is receiving their consideration as the economy is so bad. Dee told them that they had to let him know by the end of the week because he could lose his loan with the bank soon without any land to develop.
Driven comes to them, the same day as his meeting with Troll, and two days before their answer is due to Dee. Dirk, explained to the Jacobs that he was a Vice President of CCI and gave them a business card. CCI, he explained, is going to start a new company, FAMUSA, and wishes to buy the land for that business. Dirk goes on to say that FAMUSA would pay them $3,000 dollars an acre and closing would be in sixty days. He gives them a check for $25,000 dollars as earnest money, drawn on a CCI account, because as far as he knows the FAMUSA account is not yet opened by Quick. The Jacobs think this is great. They agree to the deal and in Dirk’s presence call Dee to turn down his offer.
A week later, Driven, after much consideration, decides that he is not interested in buying the Jacobs land after all. He thinks that it will cost too much money to develop. That day he makes a proposal to the Dilly’s and buys 640 acres from them for $2,500 per acre. The Dilly’s said that they wanted to reserve the mineral rights to the property and asked him to write on the check in the memo slot “sale of land does not include mineral rights.” As he knows the sale isn’t in writing, Driven agrees to this. Remembering the phone call and the Jacobs’ delight he thinks he will just forget the Jacobs’ offer and let the earnest check go as payment for their time. After all, nothing is in writing. Besides he thinks, it is the easiest $25,000 dollars they will ever make.
Immediately after closing on the Dilly’s land, Dirk began construction on Fun-A-Mania-USA amusement park. Within months it became apparent to Driven that things were not going to get done within the ten month deadline. He has trouble with the county inspectors; the suppliers are not getting paid; and Quick is requiring several bids on everything to save money. Furthermore, The Jacobs’ write the Board of Directors demanding to be paid for the contract they lost. The Board of CCI, now aware of the project, tells Dirk that they could continue with the project but he could not exceed the 3.7 million dollar budget.
Dirk is just about at that point and stressed out beyond belief. He writes a check for $750,000 on the FAMUSA account and sneaks away to his secret cabin in New Mexico. The check is labeled as severance pay. Upon learning of Dirk’s departure, the Board halts the project. The suppliers and contractors are furious at being treated so badly and decide to picket the project. The picketing draws the attention of the media. One contractor, Jim Jacob, Jordon’s brother, decides to blog a long diatribe against CCI. Among many other things, he calls the Company a fraud. This blog was picked up by the media.
The Board of Directors is now very much aware of the whole fiasco and comes to you for advice. They want your legal opinion on the following questions:
CASE THREE – MULTIPLE CHOICE (Part 2): 3 pts. Each (9 pts Total)
Instructions: Select the best answer from the choices given and give a two-to-three sentence explanation as to why you believe it is correct.
1. The board wants to know if they should try to negotiate an agreement with the Jacobs rather than be forced to pay for specific performance of Dirk’s Deal. You suggest the best answer is:
a. Yes, because courts like to use specific performance in land cases and they would get 1.92 million minus the $25,000 earnest money if they won.
b. Yes, because it is assured that under the doctrine of promissory estoppel they would be entitled to the money they would have gotten from the developer.
c. No, because specific performance is an equitable remedy and will not be applied in this case because there is a legal remedy available.
d. No, specific performance is only granted when the solution to the case involves something unique. The Jacobs want money not land.
2. CCI wants to avoid the Jacobs claim by disclaiming Dirk as an agent for CCI. Can this succeed?
a. Yes, they will succeed because Dirk clearly stated that he was buying the land for the new company, FAMUSA and therefore Dirk was FAMUSA’s agent.
b. Yes, they will succeed because CCI did nothing to create the appearance that Dirk was their agent.
c. No, they will not succeed because Dirk represented himself as a VP of CCI and issued a check on the CCI account creating an implied agency.
d. No, they will not succeed because FAMUSA was a project created for CCI’s benefit.
3. The Board members are furious with Dirk and want to press charges against him criminally for stealing the $750,000 from the FAMUSA account. If they file charges, do you think the prosecuting attorney will win the case?
a. No, because Dirk did not intend to steal the money as indicated by the notation on the check. It would create doubt in a jury’s mind.
b. No, because as a director of the company, he is authorized to sign and issue payroll checks, therefore the act was not a criminal one. It would create doubt in a jury’s mind.
c. Yes, because his doing all this in a secretive way would imply that he knew the money did not belong to him. This would be enough evidence to show general intent to steal beyond a shadow of a doubt.
d. Yes, because the secretive circumstance surrounding the issuance of the check, as well as the fact that no payroll checks of any kind were issued (either in the name of CCI or FAMUSA) will be enough evidence to prove a criminal act and intent to steal beyond a shadow of a doubt.
CASE THREE – SHORT ANSWER (Part 2): 6 points
Instructions: In six to eight sentences explain your answers to the following question.
1. The Board said that the Dilly’s had approached them to claim the mineral rights to the property according to their deal with Driven. The Board wants to know if THE Dilly’s can access the land to exercise these rights. Can they?
CASE THREE – ESSAY (Part 2): 10 points
The CCI Board wants Jacob to stop the blog and get damages. What legal theory or theories can they use to bring suit against Jim Jacob? Include in your discussion the remedies that would be best suit the case as well. Does Jacob have any defense? Explain.
END OF EXAM