Question

You are an assistant to the attorney for FUN company. To complete this assignment you must write a two-to-three page report discussing the legal issues and likely outcome of the case below:

SAD Co. vs. FUN Company: Several weeks ago, SAD Co. CEO met with FUN’s CEO for lunch to discuss potential business ventures between both companies. After a few shots of whiskey, SAD’s CEO tells FUN’s CEO that SAD is interested in purchasing a commercial building that FUN owns in a central area in West Palm Beach. SAD is interested in this building because of the specific location in which it is located. SAD believes that owning a building in that specific location will increase their business significantly. SAD’s CEO offers FUN’s CEO to purchase that specific building for $5 million. FUN’s CEO responds that FUN estimates that the building is worth $9 million and that they are willing to sell the building for that price give that they have no use for it. SAD’s CEO takes out a $1.00 bill gives it to FUN’s CEO and says “this is my payment so that you give me time to talk to my board and see if we are willing to pay $9 million.” FUN’s CEO laughs and puts the $1.00 bill in his pocket. Both CEO’s shake hands and say goodbye and leave. The next day SAD’s CEO calls an emergency meeting to discuss the $9 million purchase price and the board agrees to the purchase of the building for $9 million. Immediately after the meeting, SAD’s CEO calls FUN’s CEO on the phone and tells him that SAD agrees to purchase the building for $9 million. FUN’s CEO tells SAD’s CEO that FUN has decided not to sell the building because after their meeting yesterday they realized how much potential the building actually had. SAD is now demanding that FUN honor its word and sell them the building for$9 million.

Answer 1

In the above case the outcome is that legally FUN CEO is not liable to sell his property to SAD CEO. Because of the following reason:

Absence of proper channel.:

It refer to the informal meeting of both is not the part of the deal for their company as they are consuming alcohol and dealing under such circumstances it is not accountable to any of the above company. And they are dealing communicating directly each other hence their is not use of proper channel for communication which downgrades the validity their deal.

Legal evidences;

On this point of ground SAD CEO gives only $1 bill to FUN CEO for the deal and no other paper work done to fullfil the legal objective to make the deal complete.

Use of Alcohol:

It has the negative impact on the deal as alcohol is not allowed according to the corporate governance. Use of alcohol promote the uneven mind state which is clearly justified by the doctors. So if dealing takes place under such condition and one of the party step back from the done deal than the case fill favorable to the person who step back from deal. As their is no legal evidences of the deal and above all they were indulge in alcoholic activties at the time of deal, which itself states that deal take place at the uneven state of mind so it will not be valid.

In the above case FUN CEO has the favourable as the deal take place when both are intoxicated and even not through proper channel. Hence according to the corporate goverance if FUN CEO want to step back legally he can.

But from the ethics perspective FUN CEO should done the deal