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analyze the cases in the Questions and Problems.
Case A: Chapter 15 (8 and 9) and Chapter 16 (7) in Dynamic Business Law
Case B: Chapter 15 (6 and 7) and Chapter 16 (9) in Dynamic Business Law
For each assigned case, write an analysis of the issue based on the following criteria:
Identify the parties involved in the case dispute (who is the plaintiff and who is the defendant).
Identify the facts associated with the case and fact patterns.
Develop the appropriate legal issue(s) in question (i.e., the specific legal issue between the two parties). Provide a judgment on who should win the case – be clear.
Support your decision with an appropriate rule of law.
Be prepared to defend your decision and to objectively evaluate the other points of view
X
Q chapters
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١٢:٣ م الثلاثاء ٤ أكتوبر
380
Part 2 Contracts
detailed his job search and again requested that
Bemis start paying his monthly salary under the
covenant not to compete. Bemis responded by
allowing Bannister out of the covenant not to com-
pete, with the exception that he could not work for
Mondi because of a separate agreement Bemis had
with Mondi. Bannister responded by letter, stating
that the Bemis correspondence was the first notice
of his release to pursue employment with any com-
petitor other than Mondi and that he considered
the release a partial release because of the Mondi
exception. Bemis then confirmed in a letter that
Bannister could accept “employment with any com-
pany other than [Mondi]” and reiterated its position
that there were no damages due under the covenant
not to compete “based on the fact that Mr. Bannis-
ter has been released to seek employment with any
company other than [Mondi].”
Bannister accepted a position with Bancroft
Bag, Inc., a Bemis competitor. He brought a claim
against Bemis for its failure to pay his monthly
salary for the nine-month period during which he
was out of work under the covenant not to com-
pete. The district court found in Bannister’s favor.
Bemis appealed. How did the appellate court rule,
and why? [Bannister v. Bemis Co., Inc., 556 F.3d
882 (2009).]
8. Paul Stewart and Ellen Chalk bought a wireless
LAN PC card, manufactured by Sony, to connect
wirelessly to the Internet through service provided
by T-Mobile. Stewart and Chalk also signed a one-
year service agreement with T-Mobile. The service
agreement mandated arbitration and prohibited
class action lawsuits. For approximately three
weeks after the purchase of the card, Stewart and
Chalk were able to insert it into their IBM ThinkPad
laptop and connect to the Internet without any
difficulty. They then did not attempt to use the card
again for a few months, at which time they were
unable to insert the card into their ThinkPad. They
contacted T-Mobile technical support several times
and received refurbished cards on three separate
occasions. None of the refurbished cards fit into the
ThinkPad. After Stewart and Chalk were unable to
insert the third card, staff from T-Mobile technical
support informed them that they would have to
pursue the issue at the T-Mobile store where they
purchased the original card. At the store, a Sony
representative attempted to insert the card, but he
failed as well. He then promised to contact them
9.
about how to solve the problem. They never heard
back from him, despite multiple e-mail inquiries.
Ultimately, Stewart and Chalk filed a class
action lawsuit against T-Mobile and Sony. The
complaint alleged that Sony and T-Mobile knew
or should have known that the card “was not com
patible and/or did not fit into the IBM ThinkPad
laptop” computers and that Sony and T-Mobile
allowed customers to purchase cards and enter
into long-term service contracts from which con-
sumers would receive no benefit without a com-
patible card. Sony and T-Mobile filed a motion to
compel arbitration. Stewart and Chalk opposed
the motion, contending that the arbitration clause
was unconscionable and therefore unenforce-
able. The district court ruled in favor of Sony and
T-Mobile. Stewart and Chalk appealed. Is the arbi-
tration agreement unconscionable? If you were
an attorney for Stewart and Chalk, would you
argue that the arbitration clause was procedurally
unconscionable, substantively unconscionable, or
both? Why? [Chalk v. T-Mobile, USA, Inc., 560
F.3d 1087 (2009).]
Seigneur joined NFI, a health and fitness facil-
ity, to lose weight and become fit. She was in
poor physical condition and had back problems
that she discussed with NFI before signing a con-
tract with the facility. The contract she ultimately
signed contained a clause that said NFI was not
responsible for injuries sustained during exercise.
Seigneur claimed that she tore a muscle in her
shoulder while doing a series of tests to evaluate
her physical condition. The tear required surgery to
be repaired, and her surgeon stated that he believed
the injury was caused by her using an upper torso
weight machine during her fitness evaluation. She
sued NFI for negligence. NFI filed a motion for
summary judgment on the basis of the exculpatory
clause. The trial court granted NFI’s motion, and
Seigneur appealed. Do you believe the appellate
court upheld the motion for summary judgment?
Why or why not? [Seigneur v. National Fitness
Institute, Inc., 752 A.2d 631 (Ct. App. Md. 2000).]
10. On July 16, 1997, Chicago Steel entered into a
contract with ADT in which ADT agreed to design,
sell, install, and/or maintain a fire alarm system
and provide fire alarm monitoring and report-
ing services for Chicago Steel’s plant at 6630 W.
Wrightwood Avenue in Chicago. Under the terms
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388:١٢ م الثلاثاء ٤ أكتوبر
Qchapter15
by constation because of Cafe Cayma
eral ability to terminate or modify the agreement.
How should the court rule? Explain your reasoning.
[Holloman v. Circuit City Stores, 162 Md. App. 332
(Md. Ct. App. 2005).]
Ct of Appeals, 2006).]
Not Found
8. On February 1, 2004, Zhang entered into a contract
to buy former realtor Frank Sorichetti’s Las Vegas
home for $532,500. The contract listed a March
Chapter 15 Consideration
357
closing date and a few household furnishings as part
of the sale. On February 3, Sorichetti told Zhang
that he was terminating the sale “to stay in the
house a little longer” and that Nevada law allows
the rescission of real property purchase agreements
within three days of contracting. Sorichetti stated
that he would sell the home, however, if Zhang paid
more money. Zhang agreed. Another contract was
drafted, reciting a new sales price, $578,000. This
contract added to the included household furnish-
ings drapes that were not listed in the February 1
agreement, and it set an April, rather than March,
closing date. The primary issue before the court
was whether a real property purchase agreement is
enforceable when it is executed by the buyer only
because the seller would not perform under an ear-
lier purchase agreement for a lesser price. Should
the court enforce the second contract? Why or
why not? [Zhang v. The Eighth Judicial District
Court of the State of Nevada, 103 P.3d 20 (Sup. Ct.
Nev. 2004).]
9. This appeal arises out of the trial court’s division
of property in a divorce case. Vincent Simmons
appeals from the trial court’s order awarding to
his wife, Dorothy Simmons, a one-half interest
in land that he had inherited from his parents.
Vincent contends that the land is nonmarital prop-
erty and, consequently, should have remained his
separate property. Vincent and Dorothy Simmons
were married in 1976. Vincent’s mother executed
a trust in order to convey the land in Florida to her
children, Vincent and his sister, upon her death.
Louise Simmons died on April 1, 1999, but the land
remained in trust for several years after her death.
After Louise died, Dorothy became concerned that
she would not receive an interest in the Florida
land if Vincent died before the trust was distrib-
uted, so she hired an attorney in Monticello, David
Chambers, to prepare a document to protect her
interest. In the document, Vincent states, in part, “It
is my intention, through this affidavit, to convey to
my said wife marital interest in said real property.
If I should die prior to the above-stated Trust being
dissolved, then my said wife shall receive my share
of said real property as her own property.” In 2003,
Dorothy filed for divorce. Vincent argued that there
was a total absence of consideration to support a
contract in this case. Dorothy argued that her ongo-
ing marriage to Vincent constituted adequate con
sideration to support the contract. Who is correct?
Why? [Vincent Simmons v. Dorothy Simmons, 98
Ark. App. 12 (Ark. Ct. App. 2007).]
10. Five employees of American Electric Power (AEP)
Service Corp. invented a new product. “In consid
eration of the sum of One Dollar (1.00), and of
other good and valuable consideration paid to the
undersigned Assignor,” each employee signed an
agreement giving AEP exclusive patent rights to the
invention. Some of the employees sued, alleging
that there was no contract because AEP never paid
the one dollar. How do you think the court ruled?
Explain your reasoning. [Bennett et al. v. American
Electric Power Service Corporation, 2001 Ohio
App. LEXIS 4357 (Ohio Ct. App. 2001).]
365
Looking for more review material?
The Online Learning Center at www.mhhe.com/kubasek2e contains this chapter’s “Assignment on the
Internet” and also a list of URLs for more information, entitled “On the Internet.” Find both of them in
the Student Center portion of the OLC, along with quizzes and other helpful materials.١٢:٣ م الثلاثاء 6 أكتوبر
XQ chapter15
a work permit and begin employment. As a result of this
employment, the teenager is able to earn an income and
make purchases. By maintaining the current age at which
teenagers are seen as having the legal capacity to enter into
a contract, society is, in effect, limiting the teenager’s abil.
ity to make transactions he or she would otherwise be able
to make. This limitation not only restricts teenagers’ free-
doms but also reduces commerce in this country. Society
should lower the age requirement to 16.
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ety could prevent this undue burden from being placed
on parents by keeping the age at which youths have the
capacity to enter into contracts equal to, or greater than,
the age of majority. Parents should have the ability to
decide whether or not they wish to sign a contract on their
child’s behalf if it is potentially they who will ultimately
be held responsible.
380
>
Questions & Problems
1. How does the concept of the age of majority differ
in Great Britain from that in the United States?
2. Explain the obligations of a minor who chooses to
disaffirm a contract.
3. Go back to the discussion of contracts that cannot
be disaffirmed by minors, and explain the policy
reasons that support each of the exceptions. Can
you make an argument for any additional kinds
of contracts that should not be subject to disaffir-
mance by minors?
4. If all you know about a man is that his neighbors
think he is crazy, you do not know whether the con-
tract he entered into was valid, voidable, or void.
Why not?
5. What factors determine whether a covenant not to
compete is legal or illegal?
6. What is the relationship between contracts in
restraint of trade and unconscionable contracts?
7. Roger Bannister was the director of technical and
product development for Bemis. Bannister entered
into a covenant not to compete with Bemis, which
prohibited Bannister from working for a Bemis
competitor for 18 months after the termination of his
employment. The covenant not to compete included
a provision which stated that Bemis was to pay
Bannister his monthly salary if he was unable to find
work due solely to the covenant not to compete, pro-
viding that he provide the relevant paperwork.
Bemis terminated Bannister’s employment.
Bannister’s counsel sent a letter to Bemis requesting
payment of his monthly salary under the covenant
not to compete because he was unemployed due
solely to the covenant not to compete. In this let-
ter, Bannister included a letter he had received from
Mondi, which informed him that Mondi would
hire him if not for the covenant not to compete.
Bannister sent a job contacts log to Bemis that
387
Part 2 Contracts
detailed his job search and again requested that
Bemis start paying his monthly salary under the
covenant not to compete. Bemis responded by
allowing Bannister out of the covenant not to com-
pete, with the exception that he could not work for
Mondi because of a separate agreement Bemis had
with Mondi. Bannister responded by letter, stating
that the Bemis correspondence was the first notice
of his release to pursue employment with any com-
petitor other than Mondi and that he considered
the release a partial release because of the Mondi
exception. Bemis then confirmed-inles
about how to solve the problem. They never heard
back from him, despite multiple e-mail inquiries.
Ultimately, Stewart and Chalk filed a class
action lawsuit against T-Mobile and Sony. The
complaint alleged that Sony and T-Mobile knew
or should have known that the card “was not com-
patible and/or did not fit into the IBM ThinkPad
laptop computers and that Sony and T-Mobile
allowed customers to purchase cards and enter
into long-term service contracts from which con-
sumers would receive no benefit without a com-
patible-Sony and T-Mobile filed a motion toQchapter15
part of a contract.
We have enough exceptions to the rule requiring con.
sideration to make enforcement fair. If a promise was
made and there was expectation of economic benefit, some
courts will permit enforcement under the moral-obligation
exception.
If we suddenly did not require consideration to create
binding contracts, the courts would fill with civil cases of
people trying to enforce all kind of promises.
Not Found
years,” why should Barbara be denied the money because
it was based on acts she did in the past? The right thing.
ethically and morally, is to enforce this promise whether or
not Barbara acted with expectation of payment. Under cur-
rent law, some states can use the moral-obligation excep-
tion to reward those who expect something when they
do good and punish those who do the right thing with no
expectation of reward.
١٢:٠ ص الثلاثاء ٤ أكتوبر
Questions & Problems
1. List the four types of consideration described in 7. Martin was employed as a retail associate by UPS
the text.
2. What is required to prove promissory estoppel
when consideration is missing?
3. Can $1 be adequate consideration? Why or why not?
4. List and describe the three exceptions to the
preexisting duty rule.
5. List the three elements of accord and satisfaction.
6. When Holloman applied for a job at Circuit City, she
signed a “Dispute Resolution Agreement” (DRA)
that stated: “This agreement requires you and Cir-
cuit City to arbitrate certain legal disputes related to
your application for employment with Circuit City.”
The job application then added, “Circuit City will
consider your application only if this agreement is
signed.” Finally, the DRA contained this statement:
“I understand that my employment, compensation
and terms and conditions of employment can be
altered or terminated, with or without cause, and
with or without notice, at any time, at the option
of either Circuit City or myself.” Holloman was
hired but later quit and sued Circuit City, claiming
she had been discriminated against and construc-
tively discharged. Holloman argued that the arbi-
tration agreement was illusory and not supported
by consideration because of Circuit City’s unilat-
eral ability to terminate or modify the agreement.
How should the court rule? Explain your reasoning.
[Holloman v. Circuit City Stores, 162 Md. App. 332
(Md. Ct. App. 2005).]
for over two years. He had no written employ-
ment agreement. On December 5, 2004, Martin’s
boss called him at his home and told him that he
was terminating Martin’s employment. The par-
ties disagreed, however, as to the content of the
rest of the conversation. Martin testified that his
boss had said that Martin was fired because the
other employees felt intimidated by him and that
Martin would be given a severance package of
two weeks’ pay if he would not litigate. Martin’s
mother corroborated this version of the conversa-
tion. In contrast, Martin’s boss stated that he told
Martin that he was fired because of his continued
personal use of company computers and because
of the multiple downloads on company comput-
ers. The boss claims he indicated that he would
give Martin his last week’s pay and his November
bonus and that he would consider giving him two
weeks of severance pay in a few weeks. Martin
never received severance pay from the company.
The company now argues that the offer of sever-
ance pay was not supported by consideration and
that Martin was not prejudiced by his boss’s rescis-
sion of his offer to pay severance. How should
the court decide? Why? [Richard A. Martin v. Ost
Mark, Inc., 2006 Ohio App. LEXIS 3938 (Ohio
Ct. of Appeals, 2006).]
8. On February 1, 2004, Zhang entered into a contract
to buy former realtor Frank Sorichetti’s Las Vegas
home for $532,500. The contract listed a March
364
Chapter 15 Consideration
357
