Solution for a problem in the contraction - Essay Example

College Contraction Problem Davenport development deals with commercial rental properties, which suggest the company has to maximize its profits while minimizing the costs involved. As such, any property that the company deals with has to be a profitable venture with the best rates of return possible and the least costs incurred in development of the property. In the case above, getting a loan from the city council ensures that Davenport does not have to finance the development program. Moreover, the requirement that the companies keeps the building in its original use for another ten years and receive reimbursement of the mortgage is a good incentive, which davenport has to pursue.

All the same, the contract with the city managers was exclusively related to loans and the terms agreed had no mention of leases. As such, Wasserman’s lease deal was very attractive and promised Davenport huge profits. Therefore, leasing the property to Wasserman, who could then sublease to the tenants did not violate the terms of agreement; the immediate usage of the property would continue as agreed. Thus, Davenport would be right in leasing the property to Wasserman while at the same time respecting the loan terms not to change the usage or ownership of the property within the stipulated period.

All the same, Davenport faces some unethical dilemma. Any contractual deal has to be in good faith and to the best interests of the two parties involved (Hellman 2011). As such, any change or implied change in terms of agreement breaches this good will and partially changes the terms of the investment in question. In the case above, though the agreement with the city managers did not address the issue of leases, leasing the property to Wasserman with the promise of the latter buying the property afterwards amounted to forfeiting the ownership of the property to the second owner, while at the same time pretending that the terms of the agreement were still intact, to benefit unethically from the mortgage waiver.

Therefore, in the above deal, though Davenport was legally correct, there were some ethical issues involved in the deal with Wassermann. Work CitedHelman, Christopher. Chesapeake Energy: Whats Up With These Lawsuits? Forbes. Jan 11, 2011. http://www.forbes.com/sites/christopherhelman/2011/01/21/chesapeake-energy-whats-up-with-these-lawsuits/ March 19, 2014.