MGT 403 Second Assignment Contracts

MGT 403 Second Assignment Contracts

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MGT 403 Second Assignment Contracts

MGT 403 – Fall 2020                                                                                  Prof. Salzman

Second Assignment – Contracts – Part I

 

This assignment is due at 12:30 pm on Wednesday, November 4, 2020. You must submit your assignment via SafeAssign on UB Learns on or before the date and time that it is due. This assignment is worth ten and one-half percent (10.5%) of your course grade (or 42 points out of 400). Ten and one-half (10.5) points will be deducted from the grade on this assignment for each day or portion thereof that it is handed in late. As a result, any assignment received after 12:30 pm on Sunday, November 8, 2020, will receive no credit. Your assignment will be treated as submitted at the date and time that UBLearns indicates to me that it was submitted.

Absent receiving prior permission from the Instructor (Prof. Salzman), you must complete this written assignment in the group of two (2) or three (3) students with which you completed Written Assignment 1 in the course. Completing this Written Assignment on your own and not as part of your group is not an option. Each written assignment should be solely the written work of the members of the group submitting it as their group’s work. Submitting someone else’s work as one’s own (or allowing others to submit your work as their own) is plagiarism, and will result in no credit on the assignment and may also result in other consequences consistent with University policies regarding academic integrity (see the course syllabus and University policies for further information).

 

This assignment requires you to answer a number of questions regarding a hypothetical fact situation (with some variations as described in the Questions below) using the knowledge you have gained (and are gaining) about contract law. For purposes of the assignment, assume that the common law of contracts (as described in class and in the course textbook) applies, and that the Uniform Commercial Code (UCC) does not apply.   You do not need to consult any outside sources (i.e., other than the course textbook and your class notes) to complete the assignment.

Your answers should be written in sentences. Your answers do not need to restate the facts or the questions asked – just fully answer the questions asked, and give the legal reasons (i.e., the why or why not or brief explanation) for your answers. Do not just rely on or restate the facts for explaining the reasoning or rationale for your answers. To receive full credit, you need to refer to and analyze the question in light of the common law of contracts. Where applicable in your answer, you should use the terms, phrases and concepts used to describe contracts and contract law in the textbook and in class. If you are uncertain of the legal conclusion to any of the issues raised, your answer should describe the applicable considerations (including the applicable contract law principles) and indicate what additional facts, if any, would help you (or a court) reach a conclusion on the issue in light of those principles.

The assignment must be typed, double spaced, in a 12 point font, and use approximately 1 inch margins. Your answers should approximately be between 4 and 8 pages (not counting a cover page if you choose to use one) in length.

MGT 403 Second Assignment Contracts

You should refrain from using “etc.” and any abbreviation not used below unless you have clearly defined it in your answers.   Proofread your answers – I do take off for excessive typographical and/or grammatical errors, as well as for failing to follow these Instructions.

 

Number your answers to correspond with the numbers of the Questions below.

 

Please be sure to include your names on your assignment and to timely submit your assignment via SafeAssign on UB Learns. Only one member of the group should upload it to SafeAssign.

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FACT SITUATION:

MGT 403 Second Assignment Contracts

The Blue Spruce (“The Spruce”) and SP Restaurant Corporation (“SPR”)

The Blue Spruce (also known as “The Spruce”) is a popular restaurant located in Bluefield, Virginia. The Spruce is owned by SP Restaurant Corporation (“SPR”). Ms. Indigo Skye is the sole shareholder and President of SPR. Ms. Skye also manages The Spruce restaurant. Unfortunately, The Spruce was closed in late March of 2020 due to the coronavirus and has not reopened. Ms. Skye would like to reopen The Spruce in a way that is safe and within Virginia’s guidelines (which we will assume for purposes of this assignment are similar to New York’s).  To reopen The Spruce, Ms. Skye realized that the restaurant must be enlarged to add distance between tables. In addition, she wants to hire a cleaning service to deep clean the restaurant thoroughly every night.

Sapphire Construction Company Inc. (“Sapphire”)

Ms. Skye met with several construction contractors to discuss their proposals for building an addition onto The Spruce’s restaurant building.

One of the contractors that Ms. Skye met with is Sapphire Construction Company Inc. (“Sapphire”). Ms. Skye had a few meetings with Mr. Perry Winkle, the President of Sapphire over a 2-week period during October of 2020. The meetings included inspecting the restaurant building, reviewing an architect’s design for a 60 feet by 40 feet addition to the building, and discussing finishes for the inside of the addition, including the need for tile flooring and 10 booths. During their meetings, Ms. Skye told Mr. Winkle that The Spruce addition needs to be completed by January 31, 2021. On Monday, October 19, 2020, Ms.

MGT 403 Second Assignment Contracts

Construction Addition Proposal October 15, 2020 SP Restaurant Corporation 123 Cobalt Avenue Bluefield, Virginia 24605 Attention: Ms. Indigo Skye, President   Sapphire Construction Company Inc. (Sapphire) hereby agrees to build an addition onto the existing building of The Blue Spruce restaurant. The work shall be completed in accordance with the architect’s design reviewed with Ms. Skye during October, 2020, as follows: 1.    Interior size of addition – 2,400 square feet (60 feet by 40 feet) 2.    Location – The Blue Spruce restaurant, 123 Cobalt Avenue, Bluefield, Virginia 3.    Construction includes full finishing of the interior and exterior of the addition, including tile flooring, lighting, and 10 installed dining booths. 4.    Completion – the addition is to be completed by January 31, 2021. 5.    Total price for the work = $800,000, payable as follows: a.    $200,000 payable upon customer’s acceptance of this proposal, and b.    2 payments of $300,000 each, one payable upon completion of 50% of the work and the other payable upon completion of the addition. If you agree to the terms above, sign this form below and mail it (together with your check for the amount noted at item 5.a. above payable to Sapphire Construction Company Inc.) to Mr. Perry Winkle, President, Sapphire Construction Company Inc., 25 Slate Street, Bluefield, Virginia 24605. Sapphire Construction Company Inc. By s/Perry Winkle, President Perry Winkle, President Customer’s Signature: SP Restaurant Corporation   By____________________________________ Print Name: Print Title:

Skye received the following in the mail from Mr. Winkle at Sapphire:

MGT 403 Second Assignment Contracts

On behalf of SPR, Ms. Skye signs the Construction Addition Proposal form and mails it to Mr. Winkle at Sapphire on Friday, October 23, 2020. She encloses an SPR check for $200,000 in the envelope with the signed form.

 

On Monday, October 26, 2020, before receiving the signed form and check from Ms. Skye, Mr. Winkle calls her and tells her the following:

 

“I’m sorry to tell you this Ms. Skye, but I’m afraid we’re overbooked for the next several months. I did not realize when I spoke with you and sent you Sapphire’s proposal that one of my colleagues had already booked the company on several other jobs through the middle of next year. I am sorry that Sapphire won’t be able to build The Spruce’s addition after all. I hope that we can work with you sometime in the future.”

 

Ms. Skye responds by telling Mr. Winkle, “that is not good. I am afraid you are just going to have to rearrange your jobs because I have already signed and sent you your proposal form. We have a deal. I expect Sapphire to start The Spruce addition soon and finish by the end of January or you will have a lawsuit on your hands.”

 

Mr. Winkle receives the signed form and $200,000 check in the mail at Sapphire on Wednesday, October 28, 2020. The envelope in which they are enclosed is postmarked October 23, 2020.

 

Mr. Royal Navy doing business as Navy Cleaning

On Monday, October 19, 2020, Ms. Skye meets with Mr. Royal Navy who is known as the best restaurant cleaner in Bluefield. Mr. Navy is a sole proprietor who does business under the name Navy Cleaning, which is not incorporated. During the meeting, Ms. Skye tells Mr. Navy that The Spruce will need to be thoroughly and deeply cleaned each night once it reopens on February 1, 2021. At the end of the meeting, Mr. Navy says the following to Ms. Skye: “Indigo, I am willing to add The Spruce to the list of restaurants that I and my employees clean each evening beginning on February 1, 2021. However, I would like to do so for a 3-month trial period. We always start with a 3-month trial. If you are happy with Navy Cleaning’s work and I am happy having Navy Cleaning cleaning The Spruce, we can discuss extending our arrangement near the end of the 3 months. So, here is my offer: Navy Cleaning will thoroughly and deeply clean The Blue Spruce every night beginning on February 1, 2021 through April 30, 2021. Our fee for doing the work is $3,500 per week payable each Friday during the 3-month period.” Ms. Skye responded by saying the following: “That is a bit more expensive than I expected, but I would like to think about it. Can you give me until next Monday [i.e., October 26th] to let you know?” Mr. Navy replied as follows: “Okay, I can give you until next Monday to let me know. However, as you might expect, my businesses’ services are in great demand given the coronavirus situation, so I’m afraid I can’t give you more than one week to decide.”

Ms. Skye meets with a couple other restaurant cleaning businesses but decides that Mr. Royal Navy and Navy Cleaning have the best reputation. On Thursday, October 22nd, Ms. Skye plans to call Mr. Navy the next day to accept his proposal.

IMPORTANT NOTES:

1. A number of the Questions below ask whether or not the parties have a “valid contract”. Other than with respect to your response to the first Question (where you should be briefly introducing all of the requirements for a valid contract), your answers to these Questions should not re-list and describe all of the requirements of a valid and enforceable contract. Instead, your answers should focus on the key requirement (or requirements) for a valid contract with respect to which the facts of the Question raise an issue. In other words this assignment involves (and will include being graded on) both spotting the contract law issues that are raised by the facts and addressing them in your answers. For example, other than with respect to your answer to the first Question, including in your answer a discussion of the requirement that the subject matter of the contract must be legal (e., the legality requirement) would detract from your answer if that issue is clearly not raised by the facts set forth in this assignment and the particular Question.
2. Where applicable your answer to each question below should clearly indicate any additional factual information (not described in the Fact Situation above or in that question) that you are assuming in arriving at your answer to the question.
3. You can assume (and do not need to state in your answers that you are assuming) that Ms. Skye has actual authority to do everything she does (and to say everything she says) on behalf of SP Restaurant Corporation and The Spruce and that Mr. Winkle has actual authority to do everything he does (and to say everything he says) on behalf of Sapphire Construction Company Inc. In other words, your answers should focus on the contract law issues raised by the Fact Situation and Questions, and not on any agency law issues. In addition, Mr. Royal Navy is acting for himself because “Navy Cleaning” is not a separate entity, it is just the name under which Mr. Navy is doing business as a sole proprietor.

QUESTIONS:

1. Based on the facts set forth in the Fact Situation above, do SPR and Sapphire have a valid contract? Why or why not? If they do have a valid contract, what are its terms? (6 Points) [NOTE – See IMPORTANT NOTE a. above with respect to this question]
2. Assume only for purposes of this question that when she signed the Construction Addition Proposal form and mailed it to Mr. Winkle on October 23rd, Ms. Skye made one change to the form, substituting “12” for “10” installed dining booths in item 3. Also assume for purposes of this question only that Mr. Winkle does not call Ms. Skye on October 26th, and that Mr. Winkle receives the signed Construction Addition Proposal form and $200,000 check in the mail on Wednesday, October 28, 2020. Do SPR and Sapphire have a valid contract? Why or why not? If they do have a valid contract, what are its terms? (3 Points)
3. Assume only for purposes of this question that Ms. Skye signed Sapphire’s Construction Addition Proposal form and mailed it, together with a check for $200,000, to Mr. Winkle at Sapphire on Friday, October 23, 2020. Also assume only for purposes of this question that Mr. Winkle does not call Ms. Skye on October 26th, and that Mr. Winkle received the signed form and check (in an envelope postmarked October 23, 2020 in the mail at Sapphire on Wednesday, October 28, 2020. Also assume only for purposes of this question that on Friday, October 30, 2020, Ms. Skye received a “Corrected Construction Addition Proposal” in the mail from Mr. Winkle at Sapphire. The Corrected Construction Addition Proposal is identical to the original one, except that it shows a price of $900,000 (instead of $800,0000), with $300,000 (instead of $200,000) to be paid up front and the balance still to be paid in 2 installments of $300,000 each.       Mr. Winkle had enclosed a note with the Corrected Construction Addition Proposal which states as follows: “Dear Ms. Skye: Please disregard Sapphire’s initial proposal. I had forgotten to include a recent price increase in our original proposal. Therefore, we have to increase our price by $100,000. Sincerely, s/Mr. Perry Winkle, President of Sapphire Construction Company Inc.” The envelope in which the Corrected Construction Addition Proposal and note were enclosed is postmarked October 26, 2020.       Do SPR and Sapphire have a valid contract? Why or why not? If they do have a valid contract, what are its terms? (3 Points)
4. Assume only for purposes of this question that when she signed the Construction Addition Proposal form and mailed it to Mr. Winkle on October 23rd, Ms. Skye made one change to the form, substituting “12” for “10” installed dining booths in item 3.       Also assume only for purposes of this question that Mr. Winkle does not call Ms. Skye on October 26th, and that Mr. Winkle receives the signed Construction Addition Proposal form and $200,000 check in the mail on Wednesday, October 28, 2020.       Also assume only for purposes of this question that on Friday, October 30, 2020, Ms. Skye received a “Corrected Construction Addition Proposal” in the mail from Mr. Winkle at Sapphire. The Corrected Construction Addition Proposal is identical to the original one, except that it shows a price of $900,000 (instead of $800,0000), with $300,000 (instead of $200,000) to be paid up front and the balance still to be paid in 2 installments of $300,000 each.       Mr. Winkle had enclosed a note with the Corrected Construction Addition Proposal which states as follows: “Dear Ms. Skye: Please disregard Sapphire’s initial proposal. I had forgotten to include a recent price increase in our original proposal. Therefore, we have to increase our price by $100,000. Sincerely, s/Mr. Perry Winkle, President of Sapphire Construction Company Inc.” The envelope in which the Corrected Construction Addition Proposal and note were enclosed is postmarked October 26, 2020.       Do SPR and Sapphire have a valid contract? Why or why not? If they do have a valid contract, what are its terms? (3 Points)
5. Assume only for purposes of this question that during the evening on Thursday, October 22nd, Mr. Navy calls Ms. Skye and tells her the following: “Hi Indigo, it’s Royal Navy calling. I am afraid that I’m not going to be able to have Navy Cleaning commit to a 3-month trial period that begins in February for cleaning The Spruce. Two of my key employees just notified me that they are both going on leave starting in mid-January. One is having surgery and the other is having a baby. Without them, I am just not in a position to have Navy Cleaning start working for a new customer in February. It’s possible that we might be able to start cleaning at The Spruce in April, but I would have to check on how long they will each be on leave first. I am so sorry about this. I was really looking forward to cleaning at The Spruce. It is one of my favorite Bluefield restaurants.”       Ms. Skye replied, “actually Royal, this will work out perfectly for me. My family and I have decided to spend the Winter in Florida and not to reopen The Spruce until April. So, I accept your offer to start the 3-month trial period on April 1, 2021.       I look forward to seeing you then.”       Do SPR and Mr. Navy have a valid contract? Why or why not? If they do have a valid contract, what are its terms? (3.5 Points)
6. Assume only for purposes of all parts of this question that on Friday, October 23, 2020, Ms. Skye calls Mr. Navy and tells him that SPR accepts his offer regarding the 3-month trial period for cleaning The Spruce. MGT 403 Second Assignment Contracts

1. Do SPR and Mr. Navy have (i) a bilateral contract or a unilateral contract, and (ii) an express contract or an implied contract? Briefly explain the reasons for each of your choices. (3 Points)
2. Do SPR and Mr. Navy have a valid, void, or voidable contract if Mr. Navy is declared by a judge to be mentally incompetent on Monday, October 26, 2020? Why? (Explain your answer) (2 Points)
3. Do SPR and Mr. Navy have a valid, void, or voidable contract if Mr. Navy was declared by a judge to be mentally incompetent on Wednesday, October 21, 2020?   Why? (Explain your answer) (2 Points)
4. Do SPR and Mr. Navy have a valid, void, or voidable contract if Mr. Navy was declared by a judge to be mentally incompetent on Friday, October 9, 2020? Why? (Explain your answer) (2 Points)
5. Assume only for purposes of this part e. of Question 6 that Mr. Royal Navy was born on February 24, 2005. As of October 23, 2020, do SPR and Mr. Navy have a valid, void, or voidable contract? Why? (Explain your answer) (2 Points)
6. Assume only for purposes of this part f. of Question 6 that Navy Cleaning begins cleaning The Spruce every night beginning on February 1, 2021. On March 4, 2021, Mr. Navy calls Ms. Skye and tells her that his workers are demanding raises, or they will quit working for him. Mr. Navy tells Ms. Skye that he is going to have to charge SPR an additional $500 per week to cover his increased labor costs. Ms. Skye agrees that SPR will pay the additional $500 per week beginning with the March 12th payment. On March 12th, SPR pays Mr. Navy $4,000, but the following week SPR pays him $3,500. Ms. Skye tells Mr. Navy that SPR cannot afford the additional $500 per week and will only pay $3,500 per week for the remainder of the 3-month trial period. If Mr. Navy sues SPR for breach of contract for not paying the additional $500 per week after March 12th, should the court order SPR to pay him the additional $500 per week?   Why or why not? Your answer should include any relevant exception(s) to your answer that could apply to this situation. (3.5 Points)

1. Assume only for purposes of all parts of this question that Ms. Skye signed Sapphire’s Construction Addition Proposal form and mailed it, together with a check for $200,000, to Mr. Winkle at Sapphire on Friday, October 23, 2020. Also assume only for purposes of all parts of this question that Mr. Winkle does not call Ms. Skye on October 26th, and that Mr. Winkle received the signed form and check (in an envelope postmarked October 23, 2020) in the mail at Sapphire on Wednesday, October 28, 2020. As of October 29, 2020:

1. Do SPR and Sapphire have a bilateral contract or a unilateral contract? (Briefly explain the reason for your choice). (2 Points)
2. Do SPR and Sapphire have an executed contract or an executory contract? (Briefly explain the reason for your choice). (2 Points)
3. Assume only for purposes of this part c. of Question 7 that Sapphire begins working on the addition at The Spruce on November 15, 2020. Ms. Skye is extremely impressed with how neat and tidy Sapphire’s workers keep the construction site; they clean up any construction debris (both inside and outside) at the end of each workday. One of Sapphire’s workers tells Ms. Skye that Sapphire requires them to do this and prides itself on having its workers clean up the site every day on all projects. Ms. Skye thanks Sapphire’s workers for doing this and tells them that if they continue to clean up the construction debris at the end of each day, she will give each of them a $500 bonus at the end of the project. Sapphire finishes construction of the addition at The Spruce on January 29, 2021. Just before they leave for good on that day, Sapphire’s workers approach Ms. Skye and remind her about her promise to pay each of them $500. Ms. Skye says “I know you have all nicely cleaned up the site at the end of every day, but I’ve changed my mind and am not going to be paying you $500 each. I’m sorry, but this has been an expensive endeavor and I should never have said that.” Sapphire’s workers sue SPR and Ms. Skye for $500 each. Should the court order SPR or Ms. Skye to pay each worker $500?   Why or why not? Your answer should include any relevant exception(s) to the general rule that could apply to this situation. (3 Points) [NOTE – this question is not about which one may have to pay (SPR or Ms. Skye), but rather about whether the court should order either of these defendants to pay $500 to each of Sapphire’s workers.]

Following Instructions and lack of typos/grammar errors – 2 Points

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