New Jersey Institute of Technology RRG and Cooks Contractual Situation Analysis

Carina Cooks has been employed by Realfood Restaurant Group (RRG) for around 3 years. Cooks was first hired as a line cook. After seeing Cooks’ potential, Cooks was quickly promoted to Sous Chef. At the time of the promotion, Cooks signed a document that stated:

AGREEMENT NOT TO COMPETE: In consideration of continued employment at RRG, I agree that, in the event of termination, I will not engage in any business as an owner, employee, or stockholder with any company that competes, directly, or indirectly with RRG, for ten years.

Last year, Cooks was asked to head a special project to design the menu for a new RRG concept restaurant – the Fast But Fancy Fried Food Emporium. The restaurant was to sell deep-fried food in a fine dining atmosphere with fine dining pricing. For her role, Cooks was promised a bonus of 3% of the restaurant’s profits over the first year of operation in addition to her salary as the Head Chef of the restaurant. Cooks was skeptical of such a restaurant’s marketability, but went ahead on menu and recipe development consistent with what RRG requested.

In consumer testing, though, the restaurant, and Cooks’ menu, fell flat. Cooks was fired from RRG. Based on the feedback it received from the consumer testing, RRG changed the concept and eventually opened a restaurant called You Won’t Believe It’s Not Fried – a moderately priced down-home healthy version of Cooks’ original menu, which included faux fried, healthy foods. The new concept was widely popular with the health conscious fitness set and turned a profit after just a few months of operation.

When she was fired, Cooks could not find immediate employment, so on her own, she opened up a home business, which, coincidentally, also catered to the health conscious adult. Cooks prepared healthy meals at home, and sold them at major gym locations where they were an instant hit with evening gym-goers who didn’t want to cook or eat out.

Upon learning of Cooks’ entrepreneurial undertakings, RRG filed a complaint seeking to restraint Cooks from the marketing and sales of her successful home meals. In its complaint, RRG sited the Agreement Not to Compete between it and Cooks. This prompted Cooks to check out the menu at You Won’t Believe It’s Not Fried. Cooks was struck between the similarities between what Cooks proposed to RRG and what is offered at the new restaurant.

Cooks seeks your advice, and asks you the following two questions:

Is Cooks bound to the non-compete agreement that she signed with RRG? Is this non-compete agreement a contract?

Is Cooks entitled to make a breach of contract claim against RRG for what Cooks believes is the use of her ideas?

This assignment requires you to complete a comprehensive review of a contracting situation, and apply the knowledge gained in Units 4, 5, 6 and 7 to resolve the issues in the scenario. This means, to answer each question, you will have to determine whether a valid contract exists by applying your knowledge and understanding of the concepts in Units 4 and 5. If you find that a contract exists, you will have to determine if there are defenses to the enforcement of the contract by applying your knowledge and understanding of Unit 6. Finally, if there is a contract, you will have to determine whether that contract has been performed, discharged, and whether the aggrieved party (whether Cooks or RRG) is entitled to damages, all concepts that will require you to apply your knowledge and understanding of Unit 7.

Part
Weakness
Principle
1 No Independent Review
Perform Regular Independent review
2 Function Segreation
Job roles not clearly defined
3 Misuse of Cheques
Lack of security
4 No Formal process
Record Keeping
5 Improper Documentation
Inadequete Records
Suggested Change
Owners should do the review
Accounts manager should take responsibility for them along with store manager
Proper lockers
Bills and invoices should have seperate folders
Number cheques
Date
3/1
3/14
3/15
3/20
Particulars
Petty cash a/c
To cash
(Petty cash fund established)
Office expenses a/c
To petty cash
(Office expenses paid from petty cash)
Petty cash a/c
To cash a/c
(Petty cash replenished when balance in petty cash is $2)
Petty cash a/c
To cash a/c
(Fund of petty cash increased to $175)
Debit ($)
100
95
98
75
Credit ($)
100
95
98
75
Part A
Particulars
Petty Cash fund
Treasury Bills
Deposit in transit
Cash in bank (2,500 + 4,800)
Total Cash and Cash equivalent
Amount
60
10,000
260
7,300
17,620
Part B
Postdated check
Account Recieveable
Balance Sheet
Postage
Office Supplies
Balance Sheet
IOU
Account Recieveable
Balance Sheet
Part A
Cash balance per bank
Add: Deposits in transit
Less: Outstanding checks
Check Number
3470
3474
3478
3481
3484
3486
Adjusted cash balance per bank
Cash balance per books
Add : Direct credit of Electronic transfer
Less: Check Printing Charges
Understatement of amount for check 3485
Overstatement of ReceiptOn 12-20
Adjusted cash balance per book
Part B
Date
31 Dec 2022
To record corrections in check issued amount , deposit amount and printing charges debited by the bank
Date
31 Dec 2022
To record direct credit in the bank by Electronic transfer
$19,239.10
1,690.40
20929.5
Check Amount
$720.10
1,050.00
612.3
807.4
798
889.5
4,886.30
16,043.20
$13,985.20
2,242.00
16,227.20
$85.00
90
9
184
$16,043.20
Account Titles and
Debit
Explanation Credit
Accounts receivable
$9
Accounts payable
90
Bank Charges
85
Cash
by the bank
Account Titles and
Debit
Explanation Credit
Cash
$2,242
Accounts receivable
2,242
184