Business Law Discussion

Discussion 8 ResponsesOriginal Question
You are fresh out of graduate school, and you take a management job
with Cowtown Casino Management (CCM). CCM builds, manages, and
sells rural casinos throughout America.
CCM has contracted with Big Builder (BB) to build a casino. CC and BB
have done business for years, and the contract is done over the phone,
with an agreement to reduce the contract to writing later. BB builds
casinos quickly, often within a matter of months.
BB later emails you what it calls the written contract for the casino. You
scan the document, and you see some things that concern you.
Among other things, the document states that if gambling becomes
illegal, BB’s duties are deemed satisfied, and will still owe BB a
minimum of half the contract price. The document further states that if
BB is late finishing the casino, BB will owe CC 25% of the agreed-upon
lost profits for every day the casino is late. These terms are different
than prior contract terms between CCM and BB, and you don’t recall
agreeing to change those terms.
You remember enough from this course to know you need to contact
CCM’s attorney. Identify all the issues, and your perceived strengths
and weaknesses of those issues, that you want to discuss with the
attorney. Also, discuss any ethical issues raised in this scenario.
First Post by Student;
Discussion 8 by Yanier
Dear Attorney,
As we can enhance and detail on the parts of a contract determined to
be agreement, consideration, contractual capacity, and
legality. Looking further in the discrepancies I see in this specific
contract with BB I can certainly see that there is a lack of agreement as
many of these issues were never spoken about.
Contracts are often verbally done, but certainly better when in writing
for this same reason. Many times verbal communication can certainly
be misunderstood and misinterpreted. While a verbal contract can be
constituted as long as it meets all four parts of a contract (agreement,
consideration, contractual capacity, and legality) many details can
potentially be left out like the ones I have found in the written portion
BB has sent us, since it lacks agreement this contract would be null and
void.
We can find a remedy through simply bringing up the discrepancies
and abnormalities that we never agreed to in the written portion of the
contract to BB as it could possibly be a mistake or misunderstanding,
have BB re-write the contract to match our agreement.
We cannot assume that this was unethically done until we get to the
bottom of it. Could it be a potential unethical action from BB? Maybe,
but we will get to the bottom of it and find out one way or another,
whether it is through a dispute, or resolution between the two of us.
References
Clarkson, K. W. (2021). Business Law: Text and Cases. In K. W.
Clarkson, Business Law: Text and Cases (pp. 44-45). New York: Cengage
Learning.
White, J. (2020, August 19). kirasystems.com. Retrieved from Why a
Written Contract Is Better Than a Verbal Agreement:
https://kirasystems.com/learn/why-a-written-contract-is-better-than-averbal-agreement/
Second Post by Student;
Discussion 8 – Mie Otake
Here are my talking points with Cowtown Casino Management’s (CCM)
attorney regarding the revised terms and conditions proposed by Big
Builder (BB) surrounding contract discharge and as well as possible
breach of contract:
First, from the details in hand, it is unclear whether BB has broken
ground on this project yet. In the event they have not started, it is my
assumption we should contact them immediately and ask to hold off
for the time being. If they have already started, I’m not sure whether
it’s best to ask they pause or to allow them to continue working while
we work through the details of the contract. Please advise.
Addressing minimum guarantee upon discharge:
Considering the typically short construction assignments like the ones
we have with BB that are typically settled in a few months, the state
gambling laws changing without warning over the contract duration
seems extremely unlikely. However unlikely, it is always possible but,
would likely fall under the “impossibility of performance” doctrine as it
would be an unforeseeable event from the lens of both BB and CCM.
While we understand there are significant up-front costs of starting
construction (planning, procuring materials, hiring, etc.), these elements
should be significantly covered in compensatory damages in the
event the project becomes illegal. One-half the contract as minimum
guarantee seems an unreasonable ask considering consequential
damages such as indirect and foreseeable losses and this puts CCM in
a scenario where we could liable to pay 50% even if construction is only
5% complete. If the contract is discharged by operation of law because
it has been rendered illegal, contract performance becomes objectively
impossible. In this case, this is something both parties must meet
halfway on since it is not punitive damage by CCM. We have a long
working history with BB and consider them a trusted partner but, we
should consider a counter with a decreased percentage. While the real
risk of encountering a problem in this area feels miniscule, CCM will be
in a stronger position without accepting this risk unnecessarily.
Addressing lost profit due to project delay:
As much as I don’t like the first point above, I am more concerned
about this deviation in BB’s standard contract terms. We are in the
business of selling casinos. If we have an existing sale contract pending
with a buyer, we may face severe penalties for delay. Allowing BB to be
responsible for only 25% of “the agreed-upon lost profits” is out of the
question and, in my mind, a deal breaker. Any damages suffered by
CCM as a result of loss of use will be entirely measurable. CCM should
be able recover losses at 100% if delay is due to BB’s breach of contract
and they need to be responsible for that. As currently written, this
contract leaves CCM very vulnerable.
Issues of work without contract:
As now you know, the work may have already begun on this project
and, as we anticipated no changes in the usual terms and conditions of
contracts with BB, the initial contract was made over the phone.
Moving forward, it would be a good idea to have fully executed written
agreements in place with BB prior to beginning work. Of course, we will
have you review all of them to mitigate the risk of oversight in
reviewing those construction agreements. If we ever have any dispute
with BB, we should be protected by parol evidence rule. Please let me
know your thoughts on this.
References:
Clarkson, K. W., & Miller, R. L. (2019). Business Law: Text and Cases
(15th Edition). Cengage Learning
US. https://ccis.vitalsource.com/books/9780357129746
What is Rescission: Everything You Need to Know. (n.d.).
UpCounsel, https://www.upcounsel.com/what-is-rescission
Licensing | Washington State Gambling Commission. (n.d.).
Www.wsgc.wa.gov. Retrieved February 15, 2022,
from https://www.wsgc.wa.gov/licensing
How to Start a Casino. (n.d.). WikiHow..https://www.wikihow.com/Starta-Casino
Discussion 9 Responses
Original Question
You just finished your MBA, and you are now a new vice-president of
Handsome Hair (HH), a chain of discount hair salons. You have
received several complaints from customers about hairstyles they
recently received.
The complaints were launched in May which is HH’s busiest time of the
year. Some customers bitterly complained to their stylists about the
hairstyles that they received, that their stylists walked off the job. Some
stylists refused to work for a few days until customers calmed
down. As a result, other customers complained about not being able
to get their hair done at all. Also, some salons that had stylists walk off
the job were able to meet their appointment obligations with other
stylists.
Report to Penny President, the president of HH, concerning all possible
legal liability HH may face and damages HH might have to pay.
First Post by Student;
Discussion 9 by Yanier
Dear Penny President,
I want to make some recommendations in order to mitigate or reduce some of
the current issues we have been having at the Salon. As of now we certainly
have an issue that we must look into. Many customers have complaints and
some may even sue due to lack of professionalism, customer service, and
service over-all.
While we may face some litigation, this can potentially entail a bit more than
the eye can meet. There could be issues with self-appearance that we may be a t
fault of, for example, if a customer lost days at their job because of the way they
looked which can be linked to our lack of professionalism and service, we may
potentially not be able to win that battle in a legal court.
Recommendations that I can present to you are certainly a good insurance
policy that can protect us from and cover us in cases and issues such as the ones
we are currently facing. Additionally, we can completely change the way we do
business. Many Salons rent their chairs/spaces out to the specialists and
stylists. We can sign contracts with the specialists and stylists in where they
would be responsible for their own lack of professionalism and/or service, this
would take a large burden off our backs in holding each individual
specialists/stylist responsible for their customer service and professional
processes.
Small business insurance can certainly help us cover and protect our business
from issues like the ones we are currently facing, and holding our stylists
accountable for any lack of professionalism or customer service would certainly
bring our business to the next level and further prevent, or at least, reduce issues
like the ones we are currently facing from happening.
References
Clarkson, K. W. (2021). Business Law. Boston: Cengage learning.
Sandra. (2018, December 20). salonspanetwork.org. Retrieved from Would you
do anything to avoid litigation?: https://salonspanetwork.org/would-you-doanything-to-avoid-litigation/
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Second Post by Student;
Discussion 9 – Ken Barnes
Contains unread posts
Kenneth Barnes posted Feb 17, 2022 11:18 PM
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Dear President President,
Since May, we have experienced increased customer complaints about
the hairstyles they received. The customers are complaining to their
hairstylist about the poor performance. We have had so many
complaints directly to the stylists that they have walked off the job and
did not return for several days. Due to the shortage of stylists, other
customers had their appointments canceled.
Ironically, competing salons have also had a rash of unhappy
customers with stylists walking out. However, they were able to meet
their customers’ appointments. While there is the potential for lawsuits
filed by our customers, unless they incurred damages due to the
negligence of our stylists, the customers are not likely to win in court, if
they can even find a judge willing to hear the case (Feldman, 2013). To
my knowledge, none of our customers received physical injuries, which
would very likely force us to pay damages to the customer, including
their court costs. However, these would probably be covered by our
liability insurance. Given the high amount of our deductible, it may be
easier to simply pay the damages out of cash unless we are looking at
a major medical claim.
References
Clarkson, K. W., & Miller, R. L. (2021, 2018). Business Law: Text and
Cases (15th ed.). Australia, Brazil, Mexico, Singapore, United Kingdom,
United States: Cengage Learning.
Feldman, A. (2013, July 25). Suing Your Hairdresser. Retrieved from 3
CBS Philly: https://philadelphia.cbslocal.com/2013/07/25/suing-yourhairdresser-2/