BUS1038 Solution to Scenarios Worksheet

BUS1038 Solution to Scenarios Worksheet

Instructions/Descriptions

BUS1038 Solution to Scenarios Worksheet

Select two of the scenarios listed below and explain the best solution for each. Include comments related to any ethical issues that arise. You should locate at least one scholarly source from the SUO Library or one case that has been decided or is currently pending to support your answer.

Scenario 1 – Third Party Rights

Bobby was attending college two hundred miles from his home for the fall semester. Bobby’s wealthy aunt, Brenda, decides to give Bobby a car for Christmas. In November, Brenda makes a contract with Walker Ford to purchase a new car for $21,800 to be delivered to Bobby just before the Christmas holidays, in mid- December. The title to the car is to be in Bobby’s name. Brenda pays the full purchase price, calls Bobby and tells him about the gift, and takes off for a three-month vacation in Mexico.

Is Bobby an intended third party beneficiary of the contract between Brenda and Walker Ford?

Suppose that Walker Ford never delivers the car to Bobby. Does Bobby have the right to sue Walker Ford for breaching its contract with Brenda? Explain.

Scenario 2 – Statute of Frauds

Kathy agreed to purchase specially made cartons for one-of a kind wood sculptures from Pierce Packaging. Pierce faxed an invoice to Kathy reflecting a purchase price of $35,000, with a 20 percent down payment and the “balance due before shipment.” Kathy paid the down payment. Pierce finished the cartons and wrote Kathy a letter telling her to “pay the balance due or you will lose the down payment.” By then, Kathy had lost her customers for the cartons, could not pay the balance due, and asked for the return of her down payment.

Did these parties have an enforceable contract under the Statute of Frauds? Explain.

Scenario 3 – Breach and Remedies

Candace Dixon agreed to sell Alana Mendes a house in Alabama for $205,000. The sale was supposed to close by November 30, when the parties were to exchange the deed for the price. The contract included a provision that “if Seller is unable to convey good, clear, insurable, and marketable title, Buyer shall have the option to:

accept such title as Seller is able to convey without reduction of the Purchase Price, or

cancel this Agreement and receive a return of all Deposits.”

An examination of the public records revealed that the house did not have marketable title. Mendes offered Dixon additional time to resolve the problem, and the closing did not occur as scheduled. Dixon decided “the deal is over” and offered to return the deposit. Mendes refused and, in mid-December, decided to exercise her option to accept the house without marketable title. She notified Dixon, who did not respond. She then filed a lawsuit against Dixon in a state court.

Discuss whether Dixon breached the contract and decide in whose favor the court should rule.

Assume that Dixon breached the contract and determine what the appropriate remedy is in this situation.

Scenario 4 – Third Parties

Ronny enters into a contract with Sean to paint Sean’s house. Ronny paints Sean’s house an extremely hideous orange and blue even though Sean specified tan. Sean and his neighbor Chris are both fans of the Florida Seminoles and are furious to see the house painted in Florida Gator colors . Sean and Chris threaten to sue Ronny.

Evaluate the arguments each party will make, determine the outcome and support your answer with appropriate sources.

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