Case Studies on Contracts Questions

Business Ethics

Mr. Winkel had made an employment contract with FHC (Family Health Care). A modified verbal contract was entered into that included Winkel’s salary increase and also a profit-sharing bonus. Family Health Care delivered on a salary increase; however, FHC failed to implement profit sharing. Assuming that oral modifications of contracts that are written with no actual implementation was prohibited by the Montana law; then, unless there was some payment of profit-sharing bonus, or there was a memorandum that existed from Loren and that proved an agreement on profit-sharing, Dennis would not have enforced the agreement that was modified, since he may not have gratified the burden of production, crucial to proving the existence of the contract.

In terms of ethical considerations on the actions of Loren, ethical judgments may be subjective. Consequently, the issue may be irrelevant since it has no tangible effect on the dispute’s legal outcome. After analyzing the case, the only issue may be that, the contract may be either enforceable or not (Winkel v. Family Health Care, 1983).

In my view, Winkel ought to have received the profit-sharing bonus. According to Dictionary.com, unethical means the unwillingness to stick to appropriate rules of conduct (Dictionary.com, 2014). Dr. Vranich’s decision not to honor the agreement on profit-sharing was unethical. This case shows that the parties agreed willingly and Dr. Vranich paid Winkel the salary increase. There may be a consideration of what is offered and articulated through words, and this may be apparent in the act of payment to the other involved party (U. S. Department of Labor Wage and Hour Division, 2011, pp. 1-13). The jury consented and awarded the profit-sharing bonus to Winkel. The best solution ought to have been a proper renegotiation of the contract after Dr. Quan’s departure; for the reason that, this might have eliminated perplexity regarding profit-sharing and payment.

10.7. Acceptance

Mr. Andrus offered Durick Insurance to insure his apartment building for 24,000 dollars. The offer made by Andrus was rejected by Durick Insurance, and the Insurance company made a counter-offer that contained an absent affirmative notification acceptance that was automatic. Andrus never replied to the counter-offer and for this reason, the failure to make premium payments as requested by Durick Insurance was notice of the counter-offer rejection; thus, Andrus won (J.C. Durick Insurance v. Andrus, 1980). Andrus made an offer verbally to Durick Insurance that he never wanted the policy; in effect, Andrus rejected the offer that was provided. Andrus’s lack of response to the counter-offer never constituted acceptance that he had previously rejected; hence, there was no binding contract among the two parties.

In my view, the best solution ought to have been for Durick Insurance to provide Andrus with the coverage that he was seeking and since no such policy existed in that company, this gave Andrus the opportunity to seek the policy with another insurance provider. In fact, Durick insurance tried to force Andrus into purchasing a new policy with the knowledge that he was never going to accept their offer.

11.4. Pre-existing Duty

Mr. Gough was under a pre-existing duty for the construction of Kinney shoe store’s trusses. Chuckrow, who was the general contractor, was never obliged to pay for the re-erection of the trusses regardless of the person responsible for the fault, stipulated that they fell, according to the initial agreement. Gough’s pre-existing responsibility cannot alter the offer by Chuckrow to pay or work as consideration. As a result, the contract was not altered, and Chuckrow may only be obligated for the initial price of the contract; hence, the recovery of funds by Gouph cannot happen (Robert Chuckrow Construction Company v. Gough, 1968)

The main issue in this case is pre-existing duty; Kinney Shoe Store cannot be accountable for any extra cost under the contract; for the reason that, the feat of adding the trusses was binding under the contract and any addition of more trusses due to unforeseen conditions cannot constitute to compelling reasons for a new-fangled promise. Moreover, an offer by a party of a performance that may be already obligatory under a binding contract may be a deficient consideration for the contract’s alteration. Nevertheless, at times, a party to an existing contract may run into considerable unforeseen intricacies while performing duties that are contractual and the contract can be altered to take into account these difficulties.

Founded on the unexpected difficulties, it may be a fair supposition that Chuckrow may recover the extra costs; the contract’s alteration was made in good-faith, willingly entered into, and obtained devoid of threat or coercion to never complete the mandated construction under the contract. The alteration may be equitable and fair to all involved parties and not anticipated at the instance of the original contract.

In my view, the best solution for this case ought to have been for all parties involved in this case to share the extra cost of the new-fangled trusses. Once more, this issue was unforeseen, and neither party anticipated it. It may not be reasonable that only one party incurs the cost in totality.

13.1. Unilateral Mistake

In this case, Mrs. Chaney’s estate sold her Maryland home for 300,000 dollars to Drs. Steele and Faust founded on the estimated 15,650 square footage. Nonetheless, before the deed transfer, an error in the square footage was realized. The definite square footage was 22,047, and the estate requested Drs. Steele and Faust to pay extra money for the Maryland home derived from the newly revealed property error.

A contract can be rescinded for an error or mistake (Cheeseman, 2010, p. 208). Where the error or mistake is mutual or common, the parties may consent to withdraw, or the court may restructure the contract to convene to the initial parties’ expectations. Given that the mistake is unilateral, the party requesting rescission ought not to bear the jeopardy of the error. Moreover, the other party ought not to have reasonable or actually, had prior knowledge of the error, or the mistake by the rescinding parties.

The issue is whether the estate can rescind the contract. According to Farlex Inc rescind in legal terms means to declare a contract canceled, not binding or devoid of legal force (Farlex, Inc., 2014). The estate affirmed the property’s square footage, and the purchaser accepted the assertion by the estate. This may perhaps be a mutual mistake; nevertheless, real property can be observed; thus, there was no intended con or deception. On the other hand, the estate ought to have without doubt, noticed that the property that it was offering was bigger than asserted; thus, the estate made a unilateral mistake regarding property’s size and consequently the price. As a result, the purchaser can enforce the contract by lack of follow-through and specific performance by the estate (Steele v. Goettee, 1988).

In my view, the best solution ought to have been for the estate to communicate the definite square footage of the home and settle on the dimensions of the property. The documents by the court stated that the estate communicated their wish to put up the home for sale for more than18 dollars per square foot. For Drs. Steele and Faust, to enter into the binding contract anchored on what they knew, was deceitful and fraudulent.

References

Cheeseman, H. (2010). Business Law: Legal Environment, Online Commerce, Business Ethics,

and International Issues. (7^th Ed.). Pearson Learning Solutions.

Dictionary.com. (2014). “Unethical.” Dictionary.com. Retrieved on Jan 6, 2015, from;

http://dictionary.reference.com/browse/unethical

Farlex, Inc. (2014). “Rescind.”  legal-dictionary.thefreedictionary.com. Retrieved on Jan 6,

2015, from; http://legal-dictionary.thefreedictionary.com/rescind

J.C. Durick Insurance v. Andrus, 139 Vt. 150, 424 A. 2d 249 (Supreme Court of Vermont,

1980). Retrieved on Jan 6, 2015

Robert Chuckrow Construction Company v. Gough, 117 Ga. App. 140, 159 S.E. 2d 469 (Court

of Appeals Georgia, 1968). Retrieved on Jan 6, 2015

Steele v. Goettee, 313 Md. 11, 542 A. 2d 847. (Court of Appeals Maryland, 1988). Retrieved on

Jan 6, 2015, from; http://leagle.com/decision/1988324313Md11_1322.xml/STEELE%20v.%20GOETTEE

1. S. Department of Labor Wage and Hour Division. (2011). “Regulations Part 785: Hours

Worked.” United States Department of Labor.

Winkel v. Family Health Care, P.C., 205., Mont. 40, 668 P.2d 208. (Supreme Court of Montana,

1983).

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