Question

10–4. Business Case Problem with Sample Answer— White-Collar Crime. Matthew Simpson and others created and operated a series of corporate entities to defraud telecommunications companies, creditors, credit reporting agencies, and others. Through these entities, Simpson and his confederates used routing codes and spoofing services to make long-distance calls appear to be local. They stole other firms’ network capacity and diverted payments to themselves. They leased goods and services without paying for them. To hide their association with their corporate entities and with each other, they used false identities, addresses, and credit histories, and issued false bills, invoices, financial statements, and credit references. Did these acts constitute mail and wire fraud? Discuss.

11–1. Doing Business Internationally. Macrotech, Inc., develops an innovative computer chip and obtains a patent on it. The firm markets the chip under the trademarked brand name “Flash.” Macrotech wants to sell the chip to Nitron, Ltd., in Pacifica, a foreign country. Macrotech is concerned, however, that after an initial purchase, Nitron will duplicate the chip, pirate it, and sell the pirated version to computer manufacturers in Pacifica. To avoid this possibility, Macrotech could establish its own manufacturing facility in Pacifica, but it does not want to do this. How can Macrotech, without establishing a manufacturing facility in Pacifica, protect Flash from being pirated by Nitron?

12–1. Unilateral Contract. Rocky Mountain Races, Inc., sponsors the “Pioneer Trail Ultramarathon,” with an advertised first prize of $10,000. The rules require the competitors to run one hundred miles from the floor of Blackwater Canyon to the top of Pinnacle Mountain. The rules also provide that Rocky reserves the right to change the terms of the race at any time. Monica enters the race and is declared the winner. Rocky offers her a prize of $1,000 instead of $10,000. Did Rocky and Monica have a contract? Explain.

12–5. Agreements That Lack Consideration. ArkansasMissouri Forest Products, LLC (Ark-Mo), sells supplies to make wood pallets. Blue Chip Manufacturing (BCM) makes pallets. Mark Garnett, an owner of Ark-Mo, and Stuart Lerner, an owner of BCM, went into business together. Garnett and Lerner agreed that Ark-Mo would have a 30-percent ownership interest in their future projects. When Lerner formed Blue Chip Recycling, LLC (BCR), to manage a pallet repair facility in California, however, he allocated only a 5-percent interest to Ark-Mo. Garnett objected. In a “Telephone Deal,” Lerner then promised Garnett that Ark-Mo would receive a 30-percent interest in their future projects in the Midwest, and Garnett agreed to forgo an ownership interest in BCR. But when Blue Chip III, LLC (BC III), was formed to operate a repair facility in the Midwest, Lerner told Garnett that he “was not getting anything.” Ark-Mo filed a suit in a Missouri state court against Lerner, alleging breach of contract. Was there consideration to support the Telephone Deal? Explain.

Answer 1

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12-5:

In the givin case, defendant SL promised the plaintiff MG a 30% interest in their future projects int eh Midwest in a telephonic deal. Howeverm when BC III was formed, SL refused to give anything to MG. MG, owner of Ark-Mo, Sued BCM’s owner, SL alleging breach of contract.Using the precedent in the case of Walker v. Rogers,  – Consideration “may consist of some right, interest, profit, or benefit accruing to one party, or some forbearance, loss or responsibility given, suffered, or undertaken by the other party.”.In the given case, defendant SL promised to give30% to MG in exchange of him foregoing an ownership interest in BCR. This covers the “some right, interest or profit” aspect of the precedent mentioned above.

12-1

In this case problem the courts have historically treated contests as unilateral contacts. Unilateral contracts is in which that a contact that results when an offer can be accepted only by the offeree’s performance. For instance, a person who is offering the prizes is examples of unilateral contracts. Although, a person complies with the rules of the contest such by submitting is a unilateral contract is formed, binding the organization by offering prizes to a contract and to perform as promised in the offer. Courts that have a historically treated contest as unilateral contracts, typically cannot be modified by the offeror after the offeree has begun to perform as well. This principle though may not always apply to the contest terms or even advertisements too.

11-1

This scenario deals with issues of doing business internationally. The following points are facts of the case:

• Macrotech Inc developed an innovative chip that’s called “Flash” and obtained a patent for the same.
• Macrotech Inc is considering exporting the chip to Nitro in the Pacifica.
• Macrotech feared that the chip would be: pirated and sold to other manufactures after the intial shipment was made to Nitron.
• Macrotech Inc has the option of setting up their computer manufacturing facility in Pacificia but he does not want to do so.

The IPR related to the computer chip can only be protected in case there is a very strong legal system in Pacifica. If this is so, then Macrotech cold sign a licensing agreement with Nitron to manufacture computer in Pacifica using the Flash chip. However, if the legal systems are not strong, no amount of protective legal system can prevent the pirating of technology.

10-4

Mail and wire fraud is any fraudulent activity to intentionally deprive one party of property or honest services via mail or wire communication.The given case clearly is a mail and wire fraud as Matthew makes illegal use of other firms’ network capacity (which comes under wire fraud) for personal gain or profits.Such an activity was carried out without the other parties being aware of it.