Question

Walter and Jesse own a business together. The business delivers food based on special recipes developed by Walter. Gus owns a business in the same city, Loot Lake, which sells pizza. One day, Gus approaches Walter and Jesse with a business opportunity. He proposes to sell all the pizza in the south side of the city while Walter and Jesse can sell in the north side of the city. He also agrees that Walter and Jesse can still sell food on the south side of the city as long as the food is not pizza or anything substantially similar. Walter thinks this is a great idea, but Jesse is not so sure. However, despite his reservations, Jesse doesn’t say anything. The two businesses agree to go with the plan proposed by Gus for a period of two years, but they do not put this agreement in writing. They also agree in a short written note, that they will consult with each other anytime either business wants to change its prices. The plan goes well for six months, but soon Walter decides that his pizza recipe is far superior to the one Gus uses, and Walter thinks that if he sells on the south side, he can put Gus out of business and become the main provider of pizza in the city. He talks to Jesse and they decide to go ahead and start immediately selling pizzas on the south side of the city despite their agreement with Gus. Please discuss and analyze all relevant legal issues raised by this hypothetical scenario.

Answer 1

answer-

In this case we find legal issues like Was there a valid contract between Two businesses or not? Was agreement between both businesses required to be in writing in order to be enforceable or not? we learned that some contracts to be enforceable needs to be in writing. One of them is if a contract can not be completed within one year then it is required to be in writing.( under statute of fraud)

The two businesses agree to go with the plan proposed by Gus for a period of two years, but they do not put this agreement in writing. under statue of fraud, the agreement was not valid and enforceable.

Legal issue related to liability of Jesse under the agreement between Gus and Walter because Jesse was not sure to form agreement with Gus but as partner will both be liable for any breach or not.

There is also legal issues related to was price fixation policy between both business was legal or not? as we learned that unfair competition or pricing strategies which leads to exploitation of customers can be illegal because if both are only pizza business in the city and both agree to charge high prices on pizza then it would be unfair for customers.