Negligence and Misrepresentation

Please it due in 5.5hrs Business Law I Final Exam​ Fiorentino/Spring 2012     Business Law I Final Exam Fiorentino/Spring 2012   Directions: Read each question carefully. Base your answers only on the facts given in the fact pattern. If you believe additional information is necessary to answer the question, please let me know.   Case One (11 points total):   ​Charlie Jones, a fireman for Boulder County, Colorado, saw an ad for the vacation of his dreams in the local, “Boulder County Gazette.”  The ad read, “Seven days at the wonderful luxury Windell resort, ‘Cabo Mar,' $1200 per person, all inclusive.”  The ad featured a picture of the front of the hotel with a person receiving a massage by the pool superimposed over the hotel façade.  The ad went on to say how the hotel was located on the beach at Cabo San Lucas, Mexico and in a wonderful tropical setting.  The ad also listed the name of a local travel agency, Jennifer's Tours, for booking purposes. In miniscule print at the bottom of the ad, blending with the pattern of the iron railing, the ad went on to make a short disclaimer to the effect that the amenities featured were not necessarily those provided.  Jones knew Jennifer Hooley, the owner of the agency. Anxious for some time off in a warm climate, Jones decided to Google the hotel name to verify that it was indeed a Windell hotel as he knew Windell to be a reputable company. From Google, Jones was able to confirm that the, ‘Cabo Mar,' was owned by Windell; he also noticed that the same picture appeared on this website as he had first seen in the newspaper. The site also showed pictures of what seemed to be spacious, well-appointed rooms with queen sized beds.  Excited by what he saw, Jones called Jennifer's Tours and booked the special he saw in the newspaper ad.   ​Upon arrival, Jones found that, while the hotel's exterior looked like the pictures he saw, the hotel was located mostly in the town of “Cabo” with only a very small portion of the hotel facing beachfront. His room was smaller than on the website and had only a twin bed.  Jones was told that if he wanted a bigger room he would have to pay an upgrade fee of $500 for the seven days.  He paid the $500 because as a typical fireman, he was a tall, big man and needed more space to sleep.  As the trip went on, Jones became increasingly uncomfortable with the, “not included,” fees that were mounting up, but when he went to check out on the seventh day he found that he was being charged for seven lunches.  Furious with how the company had treated him, Jones stormed across the lobby to the manager's office, but before he could get there, he slipped and fell on the wet marble floor having been just washed by the maintenance staff.  The staff had placed a “wet” sign on the floor, but it was hidden from plain view behind a large leather chair.   ​Jones was taken to the nearest hospital where it was determined that surgery was necessary to place a pin in his broken ankle.  Anxious to return home and leery of the Mexican hospital, Jones flew out of Mexico immediately after the surgery.  He required two plane seats and an ambulance to meet him at the various airports.  His health insurance would not cover his hospital stay in Mexico as it was outside the U.S.  When back in Boulder, Jones was not able to work for twelve weeks and required another surgery to remove the pin as well as several weeks of therapy.  In addition, Jones received his credit card bill with a thousand dollars, “additional charges,” that had been added during his stay at the, ‘Cabo Mar.'   ​Jones comes to you to consult about his options in this whole affair.  He wants to sue for $575,000 to recover on the medical expenses; the cost of the trip (which, with the additional charges amounts to $2200); his lost wages; and pain and suffering resulting from the injury. ​ In your research of the situation, you discover the following additional information:   1. Jennifer's Tours is a sole proprietorship owned by Jennifer Hooley. At age 18, Jennifer took over the business from her mother, also named Jennifer Hooley.  Just prior to reaching the age of 18, Jennifer had booked Jones' tour.  Jennifer Tours has an exclusive sales contract with Windell Travel, Inc.  Jennifer Tours placed the ad in the Boulder Gazette.  Similar ads were placed by Jennifer Tours in various newspapers around Colorado as well as on Jennifer's Tours' company web site.   2. Both Windell Hotels, Inc. and Windell Travel, Inc. are corporations registered and headquartered in Delaware.  Windell Travel has no offices and no hotels in Colorado.  It does have an exclusive agency contract with Jennifer Tours.  Windell Hotels, Inc. owns and operates the Cabo Mar Hotel.     SHORT ANSWER: 2 points   Instructions: In six to eight sentences, please answer the following question:   Which contract law will the court most likely apply in making a decision in Jones' attempt to recoup his trip costs; common law or the UCC and how will it affect the remedies he can obtain?  Explain   ESSAY: 4 points   Instructions: Frame a complete definition of the legal question asked and explain how the law applies to the facts. Suggested length is two to three paragraphs.   Jones brings suit against all the defendants, Windell Travel, Windell Hotel and Jennifer Travels for Negligence. Explain the theory, the elements and how it would apply to Jones' case. Will Jones be successful against all the defendants?  Explain. Be sure to include any and all defenses if any that may lie in your discussion.     Case Two (12 points total):       Joan and Don own “Hot Diggety Dogs,” (HDD) a vending cart business, which sells gourmet hot dogs on the Streets of Richmond, Virginia.  The partners operate four hotdog carts scattered at various points in the downtown area close to the office and retail shops.  They have a vendor's license from the City to operate their business. HDD is very successful.  Their best selling gourmet dog, “The French Doogle,” is so popular that it was the subject of a Food Network, “Show Down” with Iron Chef, Bobby Flay.  The, “French Doogle,” won the competition. Joan and Don are understandably, very proud of their products.       Currently, the partnership has no formal agreement that outlines profit distribution, managerial responsibilities, and liabilities of the parties.  Joan and Don want to expand the business.  The have agreed to expand the cart business to include four new carts in the city and a kiosk in the mall.  They also decide to franchise the cart business around the state.  Joan has agreed to the expansion only if they bring in a new partner, with money, for the express purpose of getting the franchise contracts.  Jack, one of Joan's friends, has agreed to become a partner for the time it takes to set up the franchise business.  Jack offers to contribute $50,000 to the partnership with the understanding that he will double his money by the end of the 1st twelve months of continuous operation of the four new carts in the city, the kiosk in the mall, and no less than 10 additional franchises around the state.  No written agreement was made between the partners.     Every year The Women's League sponsors an old fashioned Fourth of July Festival.  It begins on the second of July and culminates with the fireworks display on July 4th.  The proceeds of the festival are given to the local children's hospital. The three day festival is a big money maker for HDD because of all the activity in the downtown area leading up to the festival and because of the large number of people who come to the festival.  It comprises almost 25% of their annual income.  Historically, HDD has had their usual four carts around the city during the festival.  This income goes to HDD.   HDD also sponsors one cart during the festival which is located in the festival area, itself.  The proceeds from this cart go the festival sponsors. This year, the sponsors anticipate an increased attendance of 15%.  Joan and Don are excited about this, and hope that they can use the additional funds to help fund their business expansion.      One month before the Festival, Joan and Don received a mailed notice from the City of Richmond informing them that, due to a new City Ordinance brought about because of excessive traffic flow, licensed street vendors would no longer be able to set up in the immediate downtown area of Richmond. The city passed the ordinance at the last city council meeting without prior notice of any kind.  The ordinance was written to go into effect on the 1st of July.  Vendors could only sell their wares in a concentric circle some 15 blocks from the main street of Richmond.  Not only would all the street vendors be more or less together, but the proposed area has very little foot traffic and customers.  Failure to abide by the law would result in the loss of a vendor's license for ten days and a five thousand dollar fine.        The HDD partners were angry and devastated. If this law were allowed to stand, they could no longer do business in the downtown area, they could not participate in the Festival, and their expansion plans would go up in smoke.  Worse yet, in anticipation of the Festival, Joan and David ordered and made payment on thirty thousand hot dogs, thirty thousand buns of various types, and condiments from Salvo Food Distributors, their usual supplier.  After much discussion, Joan and Don decide that they were going to set up for the festival as usual and take the chance of getting a fine and suspension.  Joan and Don make this decision because they think it will be cheaper to pay the fine and lose the ability to do business for ten days than to do business on the city's terms.  The serious financial pressure from having already prepaid Salvo for the hot dogs, condiments, buns, etc. has added real urgency to their decision to pursue business as usual.        From their point of view, it means that HDD can live to fight another day. Joan and Don agreed to this course of action without asking Jack who was not around.        July first arrives, and HDD set up for the Festival.  Business at the Festival was going great. The money was pouring in and all the carts are really busy. People having seen the Show Down show were anxious to try the French Doodle.  One customer was so excited that he raced to the cart, tripped over a nearby box of hotdogs which caused him to fall into the steaming water, seriously burning his arm and that of the young women manning the cart.  Both sue HDD.  The suits total $60,000. Moreover, in the midst of the accident, the police arrive.  HDD receives a summons and ticket for violation of the new city ordinance.  HDD was given a ticket on each remaining day of the festival.       As if this were not enough, three thousand of the buns delivered by Salvo Food on the second of July contained mold.  This was not discovered until the final day of the festival. Once discovered HDD was forced to close two of their carts completely before the end of the festival. Joan and Don estimate they lost four thousand five hundred dollars of business.       In addition, while Joan and Don where busy with the festival happenings. Jack, signed three new HDD franchise contracts, and took deposits totaling fifty thousand dollars. Upon his arrival back in Richmond he finds out the problems with the festival and wants out of the partnership. He feels his partners did not include him in their decision-making and that he should not have to pay for their mistakes. He does inform them of the franchise agreements.  However, he also informs them that he is leaving with the fifty thousand dollars he collected from the companies, because it is the same amount he put in to the business.        Joan and Don look to you for advice.  They have come with the following list of questions for you to answer:   Case Three (7 points total).   Darren Troll, CEO of Cash Cow Incorporated (CCI) brought CCI's two Vice Presidents, John Quick and Dirk Driven, into his office to unveil his new plan for a CCI amusement park, called FUN-A-MANIA-USA (FAMUSA).  It was to be located outside Washington D.C. and its design was to be based on the design of D.C., itself. He had pitched his idea to the Board of Directors, but it was not approved. However, Troll was confident that the project would be a cash cow. He felt sure that once the Board saw the project succeed, they would approve the 3.7 million dollar expenditure.   In Troll's mind, the key was to get the project up and running before the next Board meeting some 11 months down the road.  He assigns each VP tasks and tells them that this is their number one priority.  John Quick, known for his fast work, is first up. He is assigned the task of finding the money to support the project from CCI's budget and to set up accounts for a new separate corporation named Fun-A-Mania-USA, Inc.  Quick is also expected to set up the corporation.  Troll tells Quick that he has until the next day, Friday, to get the money and accounts in place.  Troll emphasizes to Quick and Driven that everything has to be in the name of the new company because he doesn't want the Board to get wind of things until they are all in place.  “Think of it as a surprise gift for them,” he said.  Troll then turned to Quick and said, “Your job is to find the site, buy the land, and construct the amusement park. You have 10 months to get the job done.”  Both men roll their eyes as they leave the office. The deadline is impossible.   PART ONE:   Back in his office, John Quick gets to work. John decides that his first priority is to find the funding for the project.  After careful review of the CCI budget, John decided that there are two ways he can raise the money for the project quickly.  The first way is to sell the 2.8 million dollar corporate apartment in San Francisco.  Overlooking the Golden Gate Bridge, this apartment should be very easily sold, even in today's market.  In fact, he thinks he knows the perfect person, Jack Yono.  Yono had called Quick only the last week and asked if Yono knew a place in SF for sale, as Yono was being transferred from Japan to the Bay area by his company.  Quick feels certain that Yono can afford the apartment and knows that Yono can save real estate broker-fees if the sale is direct to Yono. He picks up the phone and called Yono who was more than delighted to get the apartment for 2.8 million. He would wire him half of the money as a deposit this afternoon, and pay the rest when he got the contract of sale and Deed. It would be a cash transaction. John told him the documents would come via e-mail this afternoon after the deposit wire had been received. He could close the deal by tomorrow. Everyone was pleased when they hung up the phones.  Quick called the bank and arranged to set up a new account in the FAMUSA name.   The second part of John's plan was to fire two upper management people, Joe Jolly and Jill Jackal.  Joe was the Director of Sales and Dirk Driven's gopher.  The sales figures were down this year and this would be a perfect excuse to let him go.  CCI could save $450,000 dollars by letting him go and promoting his immediate underling with a salary bonus of only $100,000.  John wanted to make sure first that CCI wouldn't have any problems with his employment contract.  He pulled Joe's file and found that he was correct in surmising that he had signed one of the old contracts. He was bound to a six year covenant not to compete even if he was fired.  Furthermore, all disputes with the contract were to be handled through arbitration at Jolly's expense unless Jolly won. John was sure that wouldn't happen because CCI would get to pick the person. John decided if he let him go with two weeks notice and severance pay that would be enough to prevent any problems. What John forgot to check, because it wasn't in the new contracts, was the clause on dismissal of the employee.  It provided that when the employee was dismissed without thirty days notice and severance pay, any disputes would revert to the Court system for resolution.         Jill Jackal, though, was another matter.  She had negotiated her own contract and was sharp and talented. Her, “Cow Time,” cartoon is a real hit. It brings millions to the company each month. Dealing with her would prove a headache for sure.  Quick needed her $500,000 salary. Fortunately, for him, Jill entered his office at the moment and informed him that she was resigning her position as Creative Director.  She was giving her two weeks notice.  She also said that she wanted the $100,000 per month “Cow Time” royalty checks that Troll had promised her last month.  The royalty checks were to begin that same month and continue as long as, “Cow Time,” was used by CCI.  Quick wanted to laugh. Troll was always making promises like that to people, but he never paid. He said nothing.  At least he no longer had to fire her.        John had one last thing to do before he could go home for the day. He had to get the corporation for FAMUSA formed.  Normally, he would have gotten legal to handle this, but they had gone home for the evening. He would just take one of the corporate books from the shelf and scan the documents into the computer. He would edit the existing name and put Fun-A-Mania-USA in its place.  He names Troll, Driven and himself the shareholders and Board of Directors with the thought that this could be changed later to CII when the Board approves the park plan.  He had accomplished the job Troll gave him in one day.   The Board of Directors, now very much aware of FAMUSA plan, and not too happy, come to you for advice.  They want your legal opinion on the following questions.   SHORT ANSWER: 2 points   Instructions: In six to eight sentences explain your answers to the following questions   Can the Board sue Troll and John for negligence?   If so, why? If not, why not?