Question

Law

Stein and his son owned a television appliance store. However there were having severe financial difficulties and decided to borrow money in order to increase their working capital for the company. Stein, having difficulty borrowing money from conventional lenders due to his poor Dunn & Bradstreet rating and his poor personal credit rating. He was introduced by a friend to a company which provided loans to companies in need of capital. Stein signed on behalf of the corporation and the interest rate for the loan was 26% annually. In addition he signed for a personal loan of 17% . A few months later despite this influx of capital, Stein realized that the business was failing. He was forced to sell to a national appliance chain, GP Pritchard. Pritchard’s attorney prepared a sale of contract which included a provision prohibiting Stein from operating an appliance store within 10 miles of the current store location and for a time period of ten years. Stein Reluctantly signed the agreement due to his financial inabilities. Pritchard opened a new appliance store and made its employees sign an employment agreement which prohibited its employees from working for Pritchard’s competitors for no less that 10 years after they left Prichard’s employ. Stein in the meantime opened a new business, a health spa. Members signed contracts which relieved Stein from any liability for negligence for any reason whatsoever. Jim, a new member, slipped near the spa pool re which contained piddles of water. In the meantime, Pritchard’s business was booming. However, Pritchard’s attorney suggested that Pritchard could further increase its business by providing installment sales agreements for its customers. The terms of the installment contract included a provision such that if the customer defaulted in the payment of any installment, the company could repossess any appliances bought, at any time from Pritcahrd. Pritchard’s business expanded. In addition to appliances the business now sold household goods, clothing and food.One day Theodore Cleaver, a 15 yr old, entered the store. He appeared old than his age but no one questioned. He bought a flat screen TV, sneakers and groceries such as milk and eggs. A day later he appeared at the store to return all of the items and he demanded his money back. Theodore’s grandmother June had been declared an incapacitated person by the NYS courts. Theodore, who lived with his grandmother ( who was the court appointed guardian for his grandmother) wanted to have cable TV installed in their home. His mother refused. One afternoon, he called the cable company and had his grandmother sign a contract to install cable TV. His mother came home and was furious. She called the cable company to remove the cable system. The company refused. Stein’s son is having financial problems and goes to a local bank. The bank wants a guaranty from Stein for his son’s debts. Stein calls the banker by phone and advises the banker that he will “make good” on the loan if his son defaults. The banker has the son fill out the forms and he sends a form to Stein to sign. Stein leaves for Europe and advises the banker that he will sign when he returns from Europe. The son is given the loan. Stein returns from Europe but never signs the guaranty. The son defaults on the loan. Stein’s son meets the girl of his dreams. He agrees to marry the girl. The girl’s father agrees to give him a new Jaguar auto if he does marry the girl. He marries the girl and the father in law refuse to give him the car and states that he was merely joking when he stated that. Stein’s son hires a lawyer to sue his father in law. he also asks the lawyer to prepare divorce papers for his new bride. Pritcahrd decides to buy the land next to its current store. Pritchard’s executives enter into a contract after about 6 months of negotiation. The written contract has a clause which declares that the written contract is the final and complete understanding between the parties. During the oral negotiations, Pritcahrd was told by the seller that the seller would remove a shed in the rear. However, the written contract did not state this fact and the seller refused to remove the shed. Pritchard commenced a new advertising campaign. It hired a famous jingle writer composer and singer Harry Banilow to create and record a theme song for some TV commercials. After signing the contract Banilow, leaves for Asia on a concert tour. He calls his friend Bob who is a studio musician to compose and record the music for his contract with Pritchard. Bob agrees . Pritchard is furious. Please help me identify the issues and which courts will they be brought into and why?

Answer 1

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The case has conflicting a line of business, conflict of inters, torts of negligence and too many business lines. When there are varied interests, legal aspects of contracting, violating business contracts and negligence follows.

The first issue is based on a non-competing clause. Stein was forced to sell to a national appliance chain, GP Pritchard. Pritchard's attorney prepared a sale of contract which included a provision prohibiting Stein from operating an appliance store within 10 miles of the current store location and for a time period of ten years. Stein Reluctantly signed the agreement due to his financial inabilities. Pritchard opened a new appliance store and made its employees sign an employment agreement which prohibited its employees from working for Pritchard's competitors for no less than 10 years after they left Prichard's employ. Pritchard made sure that Stein could neither open an appliance business nor could he get people to work for him. This put down all chances of Stein’s business. If Stein tried to open a business on similar lines, he would be sued for violating the rules of the agreement and would have to end up paying heavily .the non-competing clause has put Stein out of business.

The second issues is the tort of negligence: Stein in the meantime opened a new business, a health spa. Members signed contracts which relieved Stein from any liability for negligence for any reason whatsoever. Jim, a new member, slipped near the spa pool which contained puddles of water. In this case a tort of negligence can be brought against Stein n for not keeping the health spa in a manner that would prevent accidents. If Jim can prove that the spa authorities were negligent a case of immediate negligence can be brought about by Jim on Stein.

The third issue is if a contract with a minor is valid: In the meantime, Pritchard's business was booming. However, Pritchard's attorney suggested that Pritchard could further increase its business by providing installment sales agreements for its customers. The terms of the installment contract included a provision such that if the customer defaulted in the payment of any installment, the company could repossess any appliances bought, at any time from Pritchard. Pritchard's business expanded. In addition to appliances the business now sold household goods, clothing and food .One day Theodore Cleaver, a 15 yr. old, entered the store. He appeared old than his age but no one questioned. He bought a flat screen TV, sneakers and groceries such as milk and eggs. A day later he appeared at the store to return all of the items and he demanded his money back. The legal issue is the terms and conditions given during the sale. A contract with a minor is null and void ab initio. If Theodore is able to prove that he is a minor then the store would have to return the money to Theodore and take back the goods sold. Theodore cleaver can get his money back.

The fourth issue is the legal guardian for an incapacitated person: Theodore's grandmother June had been declared an incapacitated person by the NYS courts. Theodore, who lived with his grandmother (who was the court appointed guardian for his grandmother) wanted to have cable TV installed in their home. His mother refused. One afternoon, he called the cable company and had his grandmother sign a contract to install cable TV. His mother came home and was furious. She called the cable company to remove the cable system. The company refused. The cable company has got a signed contract from the Grandmother which is a valid agreement even though she has been declared incapacitated.

The fifth issue is orally accepted terms are not legally enforceable: Stein's son is having financial problems and goes to a local bank. The bank wants a guaranty from Stein for his son's debts. Stein calls the banker by phone and advises the banker that he will "make good" on the loan if his son defaults. The banker has the son fill out the forms and he sends a form to Stein to sign. Stein leaves for Europe and advises the banker that he will sign when he returns from Europe. The son is given the loan. Stein returns from Europe but never signs the guaranty. The son defaults on the loan. Any agreement given orally is not legally enforceable or accepted as being a legal promise. Since the banker got the promise from Stein orally and through the telephone, this does not bind stein and the banker hence if the student default the loan, stein cannot be held responsible or the bank cannot enforce and legal action against stein.

The sixth issue deals with enforceable agreements must be in writing and to create a legal purpose Stein's son meets the girl of his dreams. He agrees to marry the girl. The girl's father agrees to give him a new Jaguar auto if he does marry the girl. He marries the girl and the father in law refuse to give him the car and states that he was merely joking when he stated that. Stein's son hires a lawyer to sue his father in law. He also asks the lawyer to prepare divorce papers for his new bride. This is not an enforceable contract as the promise to give the jaguar was not in writing. The lawyer has no legal basis to sue the father of the bride. The lawyer can be hired to prepare divorce papers but the reason for divorce cannot be cited as being as legally right.

The seventh issue all terms in the contract must be honored: Pritchard decides to buy the land next to its current store. Pritchard's executives enter into a contract after about 6 months of negotiation. The written contract has a clause which declares that the written contract is the final and complete understanding between the parties. During the oral negotiations, Pritchard was told by the seller that the seller would remove a shed in the rear. However, the written contract did not state this fact and the seller refused to remove the shed Any contract to be enforceable the agreement with all conditions has to be in writing. Since the seller informed Pritchard orally that he would clear the shed but refused to do so is not binding on the terms of the contract as it was not included .the seller need not remove the shed.

The eighth issue is violation in performance of contract: Pritchard commenced a new advertising campaign. It hired famous jingle writer composer and singer Harry Banilow to create and record a theme song for some TV commercials. After signing the contract Banilow, leaves for Asia on a concert tour. He calls his friend Bob who is a studio musician to compose and record the music for his contract with Pritchard. Bob agrees. Pritchard is furious The contract which is signed is for Banilow to compose and sing for Pritchard. Since Banilow did not keep up to his part of the contract, Pritchard can sue Banilow for nonperformance of the contract. Conclusion: The contract act clearly states that a contract can be enforceable only when it is writing and there is clear agreement between both the parties. A contract with a minor is null and void and terms of the contract have to be clearly understood.