Question

Blochead, the world's largest, and extremely profitable, manufacturer of military aircraft, employs test pilots to fly its planes in various experimental stages. To compensate them for their rare skills and the extremely hazardous nature of their work - a considerable number of pilots are seriously injured or killed every year - the company pays each pilot an annual salary of $1 million.

Rob Serra, one of Blochead’s top pilots, test-flew its experimental X-Z, which was on course to becoming the biggest seller in military aviation history. On a test flight, the cockpit burst into flames. Although Rob could have saved himself by activating the ejection seat, the plane might have crashed into a heavily populated area. Rob recalled that Blochead’s policy, incorporated into his employment contract, required him to use his best efforts to avoid collateral damage that might result in costly tort liability to Blochead. Rob therefore stayed the course, battling the flames while landing the plane back at Blochead’s airbase. Because the fire destroyed the landing wheels, however, Rob crashed and he was blinded and paralyzed for life. He will never be able to do physical work again.

While undergoing treatment at a regional burn center, Rob was visited by Blochead’s president, who assured Rob that Blochead would provide for Rob and his family financially. A few days later the president wrote Rob a letter stating:

"You've been our star pilot for more than 20 years. Because you've shown loyalty far beyond the call of duty, we'll never forget what you've done for us. Enclosed is a check for $30,000. You'll receive a check like this every month so long as the company remains profitable."

Blochead regularly sent the checks to Rob for five years. During this time, Rob was occasionally wheeled into Blochead’s headquarters, where, with the president's encouragement, he passed on his lore and grit to other pilots. Recognizing the potential cash value of his growing celebrity status, Rob began writing his autobiography, intending his book as a piece of enthusiastic advocacy for Blochead and the military aircraft industry. However, Rob’s publisher convinced him that he had in fact been a dupe and had been taken advantage of by Blochead. In 2016, Rob’s book was published and it included some unsavory information about the company (all of which was true). Unbeknownst to Rob, his publisher, in order to hype the book, announced on the back cover that it was founding a peace institute named after Rob.

When Blochead’s president heard about Rob’s book, she immediately told Rob that he was a traitor whose allegations in the book about Blochead might cause Blochead serious financial harm. Blochead stopped payments on the $30,000 checks. Rob sued Blochead for breach of contract. Who is likely to prevail and why? Explain your answer.

Answer 1

Contract with Blochead

• A contract was formed when Blochead offered Rob a compensation of $30,000 per month as long as Blochead remained profitable being the condition for performance of the contract and acceptance granted by Rob when he accepted and encashed the first check.
• A legally binding contract was formed with legal obligations for performance and action for breach.
• It is generally an agreement between two or more parties to perform an act, through entering into an agreement which is legally enforceable.
• There are certain major factors which need to be fulfilled for a contract to be considered valid and legally enforceable.
• In the above case a contract has been entered into as all required elements of a valid contract exist within the agreement.
• It depends greatly upon intent for the concerned actions along with eligibility to be a valid contract which is the acceptance of an offer, competence of the concerned parties to have the legal capacity to enter into the contract and be of sound mind, a consideration be paid, and the contract be for a lawful subject matter.
• Intent may be of two types implicit intent and explicit intent. Explicit intent is clearly proved by the actions and words of the concerned person where is implicit intent can be determined from what is implied by such actions. As an offer was made for a compensation and accepted, with both parties being eligible to enter into a contract the contract is legally enforceable and can invite applicable action in the form of damages or equitable remedies for breach.

CONTRACT EXPLANATION

Rob is likely to prevail as the subsequent actions of Rob cannot invalidate an existing valid contract which is independent of such actions, no terms and conditions being specified at the time of contract for the contract to be considered legally terminated upon such actions.

The only condition for the contract undertaken by Blochead for payment of $30,000 per month to Rob is the company remaining profitable and is the only condition that can be considered for non-performance of obligations under the contract. Therefore, this would be breach of contract on part of Blochead with Rob eligible for compensation.

In this case Rob will prevail as he has spilled the ugly truth about the Blochead and Blochead is responsible for the breach of contract since they have stopped paying checks to Rob.

Blochead has promised and given assurance to Rob that they will pay $30000 every month till company remains profitable and until not Company did not go into losses by was going to endure financial harm which not made them go into loss making situation so Blochead is liable here for breach of contract.