Category : Articles
Foodmart, Inc. Paper
Contracts are essential factor when engaging in any business transaction. They give businesses and individuals the official right to sell and purchase products, as well as transfer property when needed (Cheeseman, 2010). Team A will try to elaborate four scenarios that all have something to do with business sales, rendering services, and electronic contracts. Also, the team will summarize the legal aspects involved in the scenarios, identify the implications and consequences of the contracts used in each scenario.
Masterpiece Construction signed a contract with Foodmart, offering to reconstruct or renovate Foodmart stores. Unfortunately, Masterpiece Construction was not able to meet the expected renovations to be done, because of the many additions to the contracts they have that can no longer be covered in their schedule. With that, masterpiece construction decided to have a subcontract for the job, and passed the remaining tasks to the Build Them to Fall Construction, without any permission from Foodmart. Apaprently, it was the masterpiece Construction that was really responsible for all the renovations, as clearly stated in the contract, and not any construction company. For Team A, the Masterpiece Construction just committed a breach of contract. This happens when a company creates a subcontract with another company, which is exactly what happened in this case. To make matters worse, Foodmart only received inferior performance from the new company, which can then be considered as material breach of contract. Another violation committed in this case is the implied warranty and other conditions that both companies agreed to. Basically, the case will be forwarded to the court, but the obvious consequence would be for the Masterpiece Construction to finish what they have already started. But in case the Masterpiece Construction refuses to do so, Foodmart is already free to choose any construction company they want to finish the renovations, and they may charge Masterpiece Construction some fine that will be used to finance the second contractor. This case will lonely be considered as a minor breach of contract by the court. The court may also demand monetary awards just to pay for the damages that the non-breaching company had because of the subcontracted job.
Looking at this case, there are still many legal defenses involved. To name some, There are lack of capacity, lack of consideration, unconscious ability, Statute of Frauds, duress, illegality, mistake of facts, and change in circumstances (Cheeseman, 2010). On the other hand, the breaching company may also use the defense of commercial impracticability. Another option for them is to prove that indeed an unanticipated event occurred that caused them to delay the renovation. It is totally unacceptable for the court if the Masterpiece Construction uses the increasing new contracts for the breaching. Contingency reasons would only include natural disasters and other significant, inevitable events that could truly impede a company??™s operation. With all these said, Masterpiece Construction will apparently lose the case.
The second scenario is about a sales contract that 17-year old Jeremy Atwater signed with Smooth Sales Used Cars. From the description of the scenario alone, we can already see the discrepancy ??“ no minor is allowed to engage in any contract. This can be blamed to the salesman??™s irresponsibility, for allowing such thing to happen. He could have asked for any credentials from the buyer to confirm his age and validity to purchase a car independently. When purchasing a car, the buyer would also be required to have a driver??™s license as part of the car dealership, so there would really be no excuse for missing such important requirement. If indeed the salesman failed to do all of this, then he is definitely in trouble. One solution that can be done regarding this scenario is to submit promissory estoppels to cover up for the failure to have a valid contract between Jeremy and the Smooth Sales Used Cars. Moreover, to save himself, the salesman may also attest that he was merely relying on the promises of Jeremy, but such statements from the buyer should also be reliable. It should be noted though that it can be hard for the dealer to prove the detrimental reliance simply because there are not enough detriments. The salesman can simply resell the car, and all the payment made by the minor buyer can be considered insignificant ??“ so the detriment to the car dealership is not really that grave. The salesman may also attempt to give a more reasonable and enticing explanation, like saying that there were originally two interested buyers of the car but it was Jeremy who offered a higher offer, and promised to pay the agreed price. Losing the value of the car and the payment itself may not be a very strong argument. Lastly, it should be proven in the dealership that indeed the reliance was rational.
On Jeremy??™s end, he can also save himself by claiming that it was solely the salesman??™s responsibility to ask for all the customers??™ ID. It was wrong for the salesman to immediately assume that all the customers are 18 years old or above. In defense, the dealership can also file fraud case against Jeremy because of the deception that he allowed to happen. Now, the salesman should be able to claim that Jeremy insisted that he is already in legal age, because if this is not proven, then there is really no fraud that happened. It whatever sides we look at this scenario, Jeremy have the greater chance of winning the case if it is filed in the court. He may even decide to void the agreement, because of his age.
In Scenario 3, we deal with the case of two friends. Brian Mcdonald promised his friend Harry that he will sell his trains after his retirement. But this was more than just a friendly contract; Brian sold it with a sales contract. With that, Harry started preparing a garage space in his home in anticipation for the trains that he is about to have. However, Brian suddenly sold it to his neighbor, James. Harry filed a complaint against Brian, for contract breaching and promissory estoppels. Based on the textbook, break of contract happens when one of agreeing party does fulfill what is agreed in the contract (Cheeseman, 2010). This is also likely to happen if the parties really signed a contract, but in Brian and Harry??™s case, they did not. For that reason, Harry cannot demand for compensatory fines from Brian. So, Harry may only opt to file promissory estoppels even with the absence of enforceable contract. It is already valid as one person was certain to have relied on the promise of another (US Legal, 2010). The group believes that Brian was aware of all the efforts of harry due to the promise they made, and is even more aware about his friends??™ debt as preparation for the trains. So it was totally irresponsible for him not to abide by what they already agreed.
Another way looking at it is that an agreement was made between two friends, and they were confident enough that to sort of legal document is needed anymore. The textbook moreover elaborates that a contract may contain an agreement, any lawful object, considerations, and contractual capacity. As our group understands it, all requirements are present in this scenario. Unfortunately for Harry, it was stated in the Statute of Frauds that any contract that is not fulfilled within a year should already be put into writing, something that both parties in this scenario failed to do. So, despite the unethical act of Brian, he can still avoid any complaint and the contract itself.
The last and fourth scenario for this paper has something to do with e-commerce contracts. Foodmart recently implemented a new online ordering system and customers were required to agree to a certain contract before engaging to this new program. It was emphasized in the terms and conditions that any prices advertised, especially in other medium (not internet) are not applicable to the prices of the online products, and that shipping is only limited to 10-mile radius only. Moreover, the company also emphasized that all purchases are limited to what is available in the inventory. A customer named Todd, visited the website with the hopes of engaging in online shopping, as well. Basically, the contract would also apply to him. Todd showed his agreement to the terms and conditions that Foodmart presented. The case that Todd filed against Foodmart came from his experience of trying to purchase a chocolate bar that was advertised to be on sale. It is clear on the contract that if a buyer wants to avail of bargain prices, they need to go directly to the nearest Foodmart outlet, instead of purchasing it online since the prices are not applicable. Obviously, Todd would lose this case. Another factor is his location that will not be covered by the 10-mile radius limit of Foodmart. The company has been very clear and specific on their terms and conditions for online purchase (Henry, 2010).
Both traditional and e-commerce contracts are approved are legally approved to ensure protection of both the retailer and consumers??™ rights. Moreover, Cheesman emphasized the importance of contracts lack of enforceable contract can be a cause of a company??™s breakdown, thus it should really be considered as a law of the parties involved. Relying on moral duties and promises is truly not recommendable especially in business dealings. What Foodmart did is commendable because they really had all the requirements of an enforceable contract.
Cheeseman, H. R. (2010). The legal environment of business and online commerce:
business ethics, e-commerce, regulatory, and international issues (6th ed.). Upper
Saddle River, NJ: Pearson Education, Inc.
Henry, C.H. (2010). The legal environment of business. Retrieved September 23, 2010,
from: University of Phoenix eBook collection database.
US Legal. (2010). Promissory Estoppel Law & Legal Definition. Retrieved September
23, 2010, from http://definitions.uslegal.com/p/promissory-estoppel