Business Law - Final Exam - Essay Answers
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Transcript of Business Law - Final Exam - Essay Answers
Fordham Id: A09323211 Business Law I Part Two -‐ Essays Question 1.a: Specific Performance Question 1.b: In this contract breach scenario, Good Faith is the injured party that is seeking specific performance from the defaulting party Kreative. The contract called for Kreative to install Duravit sinks. However, Koehler sinks were installed instead. If this were a case involving a contract for the sale of real property, the courts would have granted specific performance out of Kreative. However, since this contract called for a service to be performed by Kreative for Good Faith, a court of equity will not rule in favor of Good Faith for a specific performance remedy. Question 1.c: If Good Faith were to seek monetary damages as remedies, compensatory damages could be awarded to place the injured party (Good Faith) in a position as good as the one it would have occupied had the other party (Kreative) performed under contract. Monetary damages can be awarded only for losses that are foreseeable, established with reasonable certainty, and unavoidable. The amount is computed as follows: Compensatory Damages = Loss of Value + Incidental Damages + Consequential Damages – Loss/Cost Avoided by Injured Party The Loss of Value = Value of Promised Performance – Value of Actual Performance. For this scenario, the Loss of Value is $75,000 because this is the total amount lost in market value of the building. Incidental damages are damages that arise directly out of the breach. In this case, the incidental damages are the costs to replace the sinks in all of the condo units ($125,000). Consequential damages include lost profits and injury to person or property resulting from defective performance. From the details of this case, it can be inferred that there were no consequential damages to Good Faith ($0). Costs avoided include any loss that the injured party (Good Faith) has avoided by not having to perform. From the details of this case, it can be inferred that there were no costs avoided by Good Faith ($0). Based on the above information,
Compensatory Damages Good Faith could receive = $75,000 + $125,000 = $200,000 However, since there is already a liquidated damages clause in the contract, Good Faith would receive $100,000. Question 2.d A tort occurs when a duty owed by one person to another is breached and proximately causes injury or damage to the owner of a legally protected interest. The law provides protection against intentional harm to the person. Destiny is personably liable for the following torts against Sam: • Assault: Sam could argue that she felt imminent bodily harm as Destiny marched
towards her. • Battery: Sam could argue that while forcibly being escorted to the office there
was offensive contact by Destiny • False Imprisonment: By being detained in an office for 5 hours, Sam could argue
that there was intentional confinement against her will. • Defamation: Sam could argue that when Destiny falsely accused her of writing
the letter in front of everyone in the cafeteria, it diminished her reputation and the respect to which she was held.
Destiny, being the general partner, acts as the agent Good Faith. However, based on the facts provided, Good Faith did not authorize Destiny to forcibly detain Sam and was not negligent or reckless in failing to prevent the above torts (i.e., b/c it knew that Destiny was prone to violence). Good Faith is not liable for any of the torts. If Good Faith were found liable for any of the torts, the limited partners would be liable only up to the value of the assets that they put into the company. The General Partner would be liable for any short-‐fall in damages owed. Question 2.e Krazy is an employee agent of the principal Kreative. This relationship is a consensual agency relationship in which the agent acts as a representative or on behalf of the principal with power to affect the legal rights and duties of the principal. An employee is an agent whose principal controls or has the right to control the manner and means of the agent’s performance of work. In addition, Sam is an employee agent of the principal Good Faith. The fake letter was written by Krazy in order to imply that Sam had actual authority to change the terms of the contract for Good Faith. In this contract between Kreative and Good Faith, Krazy was acting as an agent with actual authority to install the sinks on behalf of the disclosed principal Kreative. Krazy was negligent and did commit fraud when he wrote the fake letter from Sam. However, it was not foreseeable that this would cause the harms by Destiny against
Sam. Therefore, neither Krazy nor Kreative would be found liable for the harm caused. If for some reason, Krazy was deemed personally liable, Kreative would not need to indemnify Krazy because he did not act within the scope of his actual authority. Question 3.f Good Faith is a limited partnership in which Destiny is the general partner who manages the company and Hope and Faith are limited partners. As a general partner, Destiny has unlimited liability for the partnership’s debts while limited partners have limited liability for the partnership’s debts. Each of the partners owes the following duties to one another: Duty of loyalty, duty of obedience, duty of care, duty to inform, and duty to account to the partnership. In this scenario, it can be implied that Faith is also a general partner since her name is part of the legal name of the entity. It can also be implied by Hope’s conduct in making management decisions, that she too is a general partner. As a result of this, all 3 partners are equally liable for the $500,000 debt owed to Benevolent Bank.