Scenario 1 – Contracts
Greg, a consumer in Tennessee, sent a purchase order to Campbell Manufacturing, a U.S. company, for a 4000 PSI gas pressure washer valued at $1275. Greg needed a new pressure washer for his part time business of washing houses. The order did not specify how disputes between the parties would be settled. Campbell returned a definite, unconditional acceptance that contained one additional term which stated that disputes must be submitted to arbitration. Greg received the acceptance; however, he never agreed or objected to the additional term.
Campbell orally contracted to sell 15 pressure washers to London Painting Company a large commercial painting company in France.
Explain the status of the contract between Greg and Campbell.
If a contract was formed, did the additional term in the acceptance become part of the contract?
Is the contract between Campbell and London legally enforceable? (Additional research outside of the textbook may be necessary).
Scenario 2 – Management of Corporations
Parker and Phillips incorporated P & P Resorts Inc., a closely held Texas corporation. Parker was president and Phillips served as vice president and director for operations. Parker owned 40% of the stock, while Phillips owned 60%. Both men met with CTA, a group of travel agents from California to discuss special deals for booking groups into the resorts. After the first meeting, all contracts with CTA were made by Phillips, who learned that there was a good chance that CTA would award the contract to P&P Resorts. Phillips incorporated Travel Brokers and was its sole owner. Phillips used P& P Resort’s time to work on proposals for Travel Brokers and managed to keep negotiations with CTA a secret from Parker. When Parker discovered Phillip’s actions, he filed suit against him for wrongfully taking a corporate opportunity from P &P Resorts. Phillips claimed that he did not take a corporate opportunity because Travel Brokers did not have the financial ability to undertake the contract with CTA.
Provide the arguments for Parker and Phillips.
Determine which party should win and provide support for your selection.
Explain any ethical principles applicable to this case.
Scenario 3 – Product Liability
Allan was not a licensed plumber, but often installed hot water heaters as part of his job as a handyman. Allan installed a new hot water heater manufactured by Bradford Inc. for Karla, a single mother with two children. Warnings were provided in large bold letters on a metal plate on the water heater. Similar warnings were provided in the manual Allan provided to Karla at the time of installation. The warning on the water heater read “CAUTION: HOT WATER CAN SCALD.” The heater itself contained a picture of hot water coming from a faucet with the words “DANGER” printed above it. In addition, the following statement was printed on the water heater.
Warning! Water temperature over 120°F can cause severe burns. Children, elderly persons, and the disabled are at higher risk of being scalded. Test water temperature before bathing or showering. Temperature limiting valves are available, see manual.
Allan set the temperature to 105°F. The next day, 3-year-old Simon was being bathed by his 12-year-old sister, Linda. When Linda received a text on her cell phone, she left Simon alone in the bathtub with the water running. Simon was scalded by the water from the tap. Simon’s mother brought suit against Allan and Bradford Inc. alleging defects in the design of the water heater and Allan’s failure to warn her about the heater’s dangers.
Provide arguments that Allan, Bradford and Linda will introduce in court.
Determine which party should win and support your answer.
