law101 : legal enfiroment business (activity)

Choose one of the following cases, then analyze the cases in the Questions and Problems.

Case A: Chapter 35 (6 and 7), Chapter 36 (9 and 10) in Dynamic Business Law

Case B: Chapter 35 (4 and 5), Chapter 36 (7 and 8) 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.

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1. What is the distinction between a general partner-
ship and a limited partnership?
2. Explain why a cooperative could not claim to be a
syndicate.
3. Suppose you were asked to review and assess a
franchise agreement. What responsibilities would
you expect to find included in that agreement?
4. Joe Orosco, an employee of Sun-Maid Growers,
Inc., lost his arm in an industrial accident with a
raisin elevator in 1991. Sun-Maid was one of four
members of a marketing cooperative called the
Sun-Diamond Corporation. According to the coop-
erative agreement, Sun-Diamond was authorized
to provide certain management services to Sun-
Maid. Orosco sued Sun-Maid and Sun-Diamond,
arguing that both corporations were liable because
they were involved in a joint venture to design,”
manufacture, construct, repair, maintain, install,
and test the processing line on which Orosco lost
his arm. Were the two corporations involved in a
joint venture? What additional facts would you
want to know before forming your answer? If
they were involved in a joint venture, should Sun-
Diamond be held liable for Orosco’s injuries? Why
or why not? [Orosco v. Sun-Diamond Corp., 51
Cal. App. 4th 1659 (1997).]
5. “YOU AND I” was a thoroughbred racehorse
owned by a syndicate composed of 40 equal own-
ership shares. The syndicate agreement stated that
if an acceptable offer was made to purchase the
horse from the syndicate, each syndicate member
had a “first right to purchase” under which he could
sell his interest in the horse or buy the interests
of the other syndicate members who had elected
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Ch.35
Chapter 35 Forms of Business Organization
791
to sell their interests in the horse. The syndicate
agreement, however, required that if a syndicate
member planned to exercise his first right to pur-
chase, he had to notify the syndicate manager of his
intent within 10 days of his receiving notification of (7.
the acceptable offer. In September 2003, Brereton
Jones, a syndicate member and the syndicate man-
ager, received an offer from Blooming Hills Farms
to buy YOU AND I for $500,000. Jones sent a
memo to all the syndicate members notifying them
that Blooming Hills Farms had made the offer, that
he believed the offer to be fair, and that he planned
to sell his interest. Jones received word from 39
of the 40 syndicate members that they planned to
sell their interests in YOU AND I. The following
day, Never Tell Farm, a syndicate member, notified
Jones that it planned to exercise its first right to pur-
chase. Jones and Never Tell proceeded to negoti-
ate over whether Never Tell would exercise its first
right to purchase, and the 10-day window elapsed.
When the negotiations fell through, Never Tell
notified Jones of its intent to exercise its first right
to purchase. Jones told Never Tell that it had not
timely asserted its right and thus the horse had been
sold to Blooming Hills Farms. Never Tell sued
Jones, claiming that under the syndicate agreement
it should have had the right to purchase the other
syndicate members’ interests in YOU AND I. With
whom do you think the court sided in this case?
Why? [Never Tell Farm, LLC v. Airdrie Stud, Inc.,
123 Fed. Appx. 194 (2005).]
As a sole proprietor, should Dominguez be held
personally liable for Antenas Enterprises’ actions?
[Garden City Boxing Club, Inc. v. Luis Dominguez,
2006 U.S. Dist. LEXIS 38184 (2006).]
Chic Miller operated a General Motors (GM)
franchise car dealership. His written franchise
agreement with GM stipulated that Miller had to
maintain a floor-plan financing agreement with a
lender to enable him to buy new cars from GM.
Initially, Miller maintained a line of credit with a
GM affiliate (GMAC), but he terminated the agree-
ment because he felt that GMAC charged him
an exorbitant interest rate. Miller was able to find
another line of credit from Chase Manhattan Bank,
but Chase withdrew its financing agreement with
Miller after one year. Miller attempted to resume
the agreement with GMAC, but GMAC refused.
Miller alleged ipse dixit (an assertion without evi-
dence) that GMAC discouraged other lenders from
providing a line of credit to Miller. GM then noti-
fied Miller that it was terminating its franchise
relationship with him because he failed to satisfy
the financing stipulation of the written franchise
agreement. Two months after receiving this notice
from GM, Miller attempted to sell his franchise to
Kenneth Crowley, the owner of another car deal-
ership. GM rejected this sale, alleging that Miller
no longer had a franchise to sell because GM had
terminated the franchise agreement two months
earlier. Miller sued GM for failing to help his fran-
chise obtain floor-plan financing and for rejecting
the sale of his franchise to Crowley How do you
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792
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Jones, Cramming that under the synencate agreement
it should have had the right to purchase the other
syndicate members’ interests in YOU AND I. With
whom do you think the court sided in this case?
Why? [Never Tell Farm, LLC v. Airdrie Stud, Inc.,
123 Fed. Appx. 194 (2005).]
6. The Garden City Boxing Club held exclusive sat-
ellite licensing rights for a live broadcast of a
boxing match between Oscar De La Hoya and
Fernando Vargas. Luis Dominguez owned Antenas
Enterprises, the installer of a satellite account at
Mundelein Burrito restaurant. However, Antenas
listed Mundelein Burrito as a residence instead of a
commercial location. A commercial establishment
could show the boxing match only if it was contrac-
tually authorized by GCB to do so and if it paid the
appropriate fee of $20 times the maximum fire code
occupancy of the establishment. Mundelein Burrito
showed the event to its patrons. However, because
Mundelein Burrito was classified as a residence, it
did not pay the proper fee for a commercial estab-
lishment. The Garden City Boxing Club filed suit
against Dominguez, the sole proprietor of Antenas,
to collect the lost fees from the boxing match.
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Kenneth Crowley, the owner or another car deal-
ership. GM rejected this sale, alleging that Miller
no longer had a franchise to sell because GM had
terminated the franchise agreement two months
earlier. Miller sued GM for failing to help his fran-
chise obtain floor-plan financing and for rejecting
the sale of his franchise to Crowley. How do you
think the court ruled in this case? What require-
ments must GM meet to lawfully terminate a fran-
chise? Did GM meet those requirements? [Chic
Miller’s Chevrolet, Inc. v. GMC, 352 F. Supp. 2d
251 (2005).]
8. Margaret Miller operated an H&R Block tax prep-
aration franchise for 15 years. She hired William
Hehlen as an income tax return preparer for five
years, from 1997 to 2001. Each year, Miller and
Hehlen signed an employment agreement drawn up
by H&R Block. The 2001 agreement was between
Hehlen and “Margaret Miller, doing business as
H&R Block,” and included stipulations prohibit-
ing Hehlen from reproducing confidential business
information and from soliciting clients away from
Miller’s business. Hehlen maintained on his home
computer a spreadsheet of customer names that he
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Ch.35
Part 7 Business Organizations
obtained from Miller. In April 2001, H&R Block
terminated its franchise agreement with Miller,
and Miller subsequently operated her business as
a sole proprietorship under the name “MJM &
Associates.” Hehlen’s employment with Miller
ended after the 2001 tax season. In December
2001, Miller sent advertising postcards to clients
referring to Hehlen as one of her associates. When
Hehlen, who went to work for another H&R Block
office, learned of the postcards, he began telephon-
ing the customers whose names he had obtained
from Miller. Miller learned of the calls in February
2002 and filed a cease-and-desist action against
Hehlen, arguing that Hehlen was violating his
employment contract with Miller. Hehlen argued
that his employment contract was with Miller’s
H&R Block franchise, which ceased to exist after
April 2001. Do you think Hehlen’s employment
contract was signed with Miller’s franchise or with
Miller’s sole proprietorship? If you think Hehlen’s
contract was with Miller’s franchise, should Miller
have the right to enforce the contract provisions
after H&R Block terminated her franchise agree-
ment? Why or why not? [Miller v. Hehlen, 104 P.3d
193 (2005).]
manager. The bank account for the diner was still
to remain in Eddie Bynum’s name and Tammy’s
parents did not change any business tax informa-
tion. In the course of her employment, Tammy
was injured when she slipped off a ladder and fell
onto both knees. The diner’s insurer, Cypress, paid
Tammy temporary total disability benefits. How-
ever, five months later Cypress notified Tammy
that it intended to controvert her claim on the basis
of alleged newly discovered evidence that she was
not an employee of the diner but was a co-owner
under the agreement she had made with her mother
and stepfather. What are the essential elements of a
partnership? Was Tammy Duncan a partner in the
diner? Why or why not? [Cypress Insurance Com-
pany v. Duncan, 281 Ga. App. 469 (2006).]
10. Harvey Pierce was a work-release inmate from the
local county jail who worked at an Arby’s fran-
chise restaurant owned by Dennis Rasmussen, Inc.
(DRI). One day in June 1999, Pierce walked off
the job without permission and crossed the street
to wait for his former girlfriend, Robin Kerl, and
her fiancé, David Jones, in the parking lot of the
Walmart store where both Kerl and Jones worked.
When Kerl and lones exited the store, Pierce shot
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