Fundamental of Legal Environment of Business - Case Study Example

Fundamental of Legal Environment of Business Issue: Fraud, Materiality The issue involved a fraud case in which an Old lady, Doris Reed bought a house and the seller, Robert King and his agents failed to notify her that multiple murders had occurred at the house. However, reed did not know of the murder and bought the house at a price of $76,000 while the house was worth $65,000 due to its bad history. When reed learnt of the murders from the neighbors who had been warned by King not to tell her of the incidence, he sued King as well as and the agent for failure to disclose of the murders which she considered as fraud and wanted rescission and damages. Initially, the court dismissed the case on bases that Reed failed to prove that there was concealment of material facts. However, Reed appealed (Roberts and Mann, 2011). Rule When selling property, the seller must accomplish the duty of disclosing all flaws of the property which could be in form of physical blemishes as well as legal deficiencies of faults. Analysis For reeds case to be considered as fraud she must prove that there was cover up of facts or opinions that might affect the value of the property which was done knowingly with an intention of inducing her to acquire the property. She must also prove that that she acted in reliance of the information provided by property owner and that the action caused her damages. Conclusion Reeds case is viable and she is entitled to a just ruling since kings acted materialistically by failing to disclose facts that might have affected the market price of the property which is equivalent to fraud. Issue: Legal Sufficiency Harold Pearsall filed the case against his friend Joe Alexander. Pearson claimed that Alexander breached an agreement refusing to share $20,000. Pearsall and Alexander had been friends and had developed a habit of getting together twice a week at Takoma Metro station. They would purchase a package of orange juice, two cups, vodka and two lottery tickets, proceed to Alexander’s home where they would drink the drinks and scratch the lottery tickets. Whenever the lottery tickets yielded considerable amount of money they would buy another set of lottery tickets. However, on December 16 1982, Alexander had no money thus Pearsall purchased the tickets but still agreed to share the rewards with Alexander when he asked him and Alexander consented to this. However, the lottery tickets yielded no rewards. The same evening, Alexander had managed to get some cash and he bought two lottery tickets. Each of the two scratched a ticket, Pearsall’s was worthless while Alexander’s yielded $20,000 which he refused to share with Pearsall. Pearson sued Alexander for agreement breach but the court dismissed Pearsall’s case arguing that “enforcement of contracts arising from gaming a transaction is bared by the Statute of Anne” (Roberts and Mann, 2011). Rules For a deal or promise to be considered legally sufficient, it required to be of legal detriment to the person who the promise and beneficial to promisor. The promise must have been made without prior legal obligation. Analysis The behaviour of Alexander and Pearsall demonstrates that there existed an agreement between the two, which is comparable to course of conduct under Uniform Commercial code. Alexander clearly consented verbally to be part of the deal even though he did not contribute to purchasing of the first set of tickets. The fact that Alexander allowed Pearsall to scratch one of the cards in the set he purchased proves that Alexander had entered into a mutual agreement to share the rewards. Additionally the deal can be considered to consist of detriment to both Pearson and Alexander. Pearsall undertaking to share the returns is clearly spelt in his question “Are you in on it?” which prompted a detriment in Alexander. When Alexander consented to Pearsall’s agreement, he prompted a detriment in Pearsall (Roberts and Mann, 2011). Conclusion There existed a mutual agreement between Alexander and Pearsall to share incomes from the $20,000 ticket bought by Alexander and a fair judgement should be given in favour of Pearsall, the appellant. Issue: Preexisting Obligation The issue was on the person entitled to receive $1,500 reward by First State Bank of Eubank, a member of Kentucky Bankers Association for the arrest and conviction of the robbers who robbed $30,000 from First State Bank of Eubank in Kentucky. Several individual were claiming the reward thus Kentucky State Bankers Association requested the circuit court to determine the person who deserved the reward. Among the claimants were State Policemen Garret Godby, Johnny Simms, and Tilford Reppert who arrested the robbers. Other claimants were the Banks employees Murrell Denney, Joyce Buis, Rebecca McCollumn, and Jewell Snyder who described the culprits thus helped the police arrest the robbers. Other claimants who did not file a claim for the reward with Kentucky Bankers Association were Corbin Reynolds, Julia Reynolds, Alvie Reynolds, and Gene Reynolds. The court established that Tilford Rippert as the only eligible claimant (Roberts and Mann, 2011). Rules The law does not consider performance or undertaking to carry out a pre-existing legal obligation to be a legal detriment or benefit to the person. Analysis Claimants Murrell, Joyce, and Jewell did not qualify for the award since they were employees of First State Bank of Eubank ant it was part of their responsibility to safeguard bank resources. The claimants from state police, Godby, and Johnny were also performing their duty of apprehending criminals .Claimants Corbin, Julia Reynolds and Gene were not qualified since they did not file a claim for the reward. The court declared Tilford Rippert as the only eligible claimant since he was a deputy sheriff in Rockcastle who helped in arrests at Pulaski county which was outside his jurisdiction thus he had no legal obligation to help in the arrest (Roberts and Mann, 2011). Conclusion The court ruling is justifiable since all the possible candidates were performing their legal obligations and the Reynolds’ did not make any legal claim for the reward. Issue: Exculpatory Clauses The case involves a complaint filed by Tammey Anderson against “Curves for Woman” health club owned by McOskar Enterprises, Inc. in Monticello. Anderson joined the fitness club in 2003 after signing an agreement and release of liability document, which exempted Curves from any form of liability or injuries incurred by Anderson while participating in the club events or using the club’s equipment. While on her workouts under a trainer from curves, Anderson stared experiencing headache, reported it to the trainer who argued that it was likely caused by preceding disuse of some muscles. Later on Anderson developed neck, arm, and shoulder pains, notified but she completed his session. The pain persisted, she searched for medical attention, underwent therapy and cervical discectomy. She later sued Curves for negligence but the court agreed to Curves’ request for summary judgement since Anderson had relieved Curves from liability for negligence (Roberts and Mann, 2011). Rules Exculpatory clauses relieving a person or an institution from liability for damage caused intentionally or due to recklessness are considered unenforceable and violation to public, especially if the services involved are considered a public necessity. However, exculpatory clauses that exempt individuals from liability for damages or harm due to negligence require a conspicuously and clearly written contract. Analysis Anderson willingly signed the agreement form protecting Curves from liability for harm caused by their own negligence. Additionally, she did not bargain for alteration of the conditions and the service she was seeking was obtainable elsewhere. The Curves release does not expressly exculpate the club from obligation for any intentional, deliberate, or malevolent act. As much as Anderson opposes that the Curves contract as being ambiguous, the curves release did not breach public policy and the service Anderson was seeking are not considered a public necessity. Conclusion The court’s ruling was justifiable since the appellant willingly signed an agreement to release the respondent from negligence Minors: Ratification The issue is about appellant Bryant, a basketball player who signed a contract in 1996 through an agent called Tellem with The Score Board Inc. (Debtor) while he was seventeen. Initially, Debtor came up with the agreement, which licensed him to create products bearing Bryant’s image. Bryant was supposed to make two appearances on behalf of Debtor, sign 15,000-32,000 autographs at $2 per autograph after 7,500. Bryant was entitled to $10,000 compensation, of which $5,000 was to be paid within ten days after receiving the executed agreement and $5,000 bonus in case he gave back the agreement in six weeks. Bryan rejected this agreement, prepared another one changing the minimum number of autographs from 7,500 to 500, which he signed and gave Debtor to sign and file. When he turned 18, Bryant he received $10,000 payment and he started performing his obligations but he later stopped his duties and his agent assumed that the contract no longer existed. In1998, Debtor pays Bryant $1,130 instead of $10,130 he was entitled to. Later Debtor started selling his assets including Bryant who refused to be considered Debtors asset since he had signed the contract while a minor. The court ruled that since Debtor admitted Bryant’s counter offer and their conduct demonstrated that contract existed thus Bryant was Debtors asset. Rules A minor can consent an agreement after attaining the age of majority, which can be either through writing or through his or her conduct. However, a minor has no authority to indorse an agreement while still a minor. A ratification cannot be grounded on words or behavior demonstrated by a minor but it must happen after the person attains votive ability by attaining majority age. Analysis Contracts signed in the course of minority are voidable after a certain time after the minor attains majority age. Bryant ratified the contract since he agreed to perform his duties and the fact that he and his agent did not deny the existence of the contract entitles Debtor to consider Bryant as part of his assets Conclusion The court ruling that Bryant had a contract with is justified and valid. Issue: Intoxicated Persons/Incompetent Persons The issue involved the appellant, First State Bank of Sinai who filed a case against Melvin Hyaland and wanted him to assume to pay a notes payment worth $9,800 paid to his son. Previously, Melvin had accepted to pay $900 interest on the money. Melvin had signed the promissory note for his Randy while he was drunk. However, his son failed to pay the money and Melvin refused to accept the obligation. The court found that Melvin truly signed the note under alcohol influence and thus did not understand its content, which was confirmed by his family and hospital reports, which proved that Melvin had prolonged difficulties with alcohol. The court thus ruled the promissory note as null (Roberts and Mann, 2011). Rules Votive responsibilities incurred by drunken persons may be considered void and are thus rescinded by the formerly incapacitated party. Analysis In this case Melvin should have disaffirmed the agreement promptly upon the salvage from the drunkenness or and upon acknowledgement of the contract, in case he had forgotten it. The fact that he paid the loan interests confirms that he agreed to the contract. Conclusion Melvin action of paying the interest resulting from the money bound him to the contract. He had the option of exercising his rescission right. The court ruling is thus not justifiable. Issue: One-Year Provision The issue is on a verbal agreement that the plaintiff, Mary Iacono and the defendant Carolyn Lyons. The plaintiff and defendant were friends for long. In 1996, Carolyn invited Mary to Las Vegas and she agreed. In 1997 went for gambling and agreed to spit gambling winnings equally. They played at a dollar slot machine and the defendant won $1, 908, 064, which was to be paid in 20 years and refused to share the winnings with the plaintiff. The Mary sued Carolyn for breach of contract. Carolyn requested for summary judgement arguing that oral contract was unenforceable under the law of frauds and the court ruled in Carolyn’s favour (Roberts and Mann, 2011). Analysis The one year provision by the law of frauds only applies to in cases when there is written document for agreements that cannot be implemented in one year’s time. Basing the above case on the statute of frauds was thus inappropriate since the winning payments were not made in one year and there was no written or electronic documentation (Roberts and Mann, 2011). Rules A writing to make them enforceable by the law of frauds must support contracts longer than one year. The statute of frauds necessitates all agreements that cannot be entirely performed in one year to be put in writing or electronic method. Conclusion The defendant did not deserve a summary judgment on bases of confirmatory defense under the statute of frauds. Issue: Intended Beneficiary The issue is about complainant, Mary Stine who lend $100,000 to her daughter Mary Ellen Stewart and her Son in-law William Stewart to buy a home in 1984. The Stewarts implemented the agreement to pay the loan as well as interest arising in a promissory note. The Stewarts divorced in 1992 having paid $50, 000 of the loan leaving the other $50,000 and accumulated interests. However, the Stewarts’ signed an Agreement that allowed William to lease the house. However in case he decide to sell it he was to pay the $50,000 and any extra proceeds were to be paid 50% to Nancy Karen Stewart and 50$ to William Dean Stewart. In case the proceeds were not enough, the Stewarts were to equally pay the remaining loan. However, Stine did not sign the agreement when Stewart sold the house at $126,009, but refused to pay the remaining loan (Roberts and Mann, 2011). Rules Proposed donee beneficiary can enforce the agreement in contradiction of the promisor. An anticipated creditor beneficiary can impose the agreement in contrast to the promisor and the promise or both. Except if decided between the promisor and promisee, a legatee of a promise is a beneficiary only if the party decides so. Analysis Stine sued him and the court awarded her $28,410 for damages. Stewart appealed and the high court revoked the judgement arguing that the agreement did not show that Stewarts planned to give Stine a gift and she was not a third-party donee beneficially of the pact. Stine could recover the contract between the Stewarts only if they planned to benefit to her or if the Stewarts made the agreement Stine’s benefit or if Stewart showed she was a ‘‘donee’’ or ‘‘creditor’’ beneficiary of the agreement. Conclusion Certain aspects of the agreement show that the Stewarts’ intended to pay Stine’s money. The agreement recognizes existence of legal responsibility payable to Stine and thus it is an enforceable obligation. Therefore, Stewart breached the contract by refusing to pay Stine the money as the agreement requires. Reference Mann, R., & Roberts, B. (2011). Smith and Robersons Businass Law, 15 Edition. New York: Cengage Learning. Read More