Question

NO COLLABORATION PERMITTED ON THIS ASSIGNMENT. PLEASE TYPE AND DOUBLE SPACE AND STAPLE. MUST BE HANDED IN BY YOU AT THE BEGINNING OF CLASS ON THE DUE DATE. NO LATE PAPERS ACCEPTED.

Jack leased and operated a barbecue restaurant in Newark, New Jersey (called “Jack’s”). The premises included a bar and dance hall. Bob, a friend of Jack, decided to buy the building from Jack’s landlord Owen. In addition to buying Owen’s building, Bob wanted to purchase Jack’s business, including whatever tangible assets, inventory or “good will” might be involved because Bob planned to open his own restaurant on the premises and call it “Bob’s”. Bob approached Jack and offered to buy the business for $175,000 in exchange for Jack vacating the premises by December 31, 2017. Separately, Bob also told Jack that he would pay him $800 per week to be the manager of Bob’s. Jack accepted Bob’s offer to buy the business and also (separately) agreed to be the manager of Bob’s. After closing on the building (completing the purchase), in December 2017, Jack immediately vacated the premises and was out of the building by the agreed upon December 31^st date. Bob began renovations and also began paying Jack the weekly salary of $800 for his services as manager. Bob opened the new restaurant on March 1, 2018. At that time, Jack asked for the $175,000 purchase price for the business. Bob refused to pay him and Bob fired Jack from his manager position. Jack commenced a legal action to collect the $175,000 purchase price. Bob argued that because he and Jack had not agreed to an interest rate or a due date, there was no contract. Jack argued that the amount was interest free and due on demand. If Bob makes a motion for summary judgment, asking the court to decide in his favor as a matter of law that there was no enforceable contract, will he win his motion? Explain.

Answer 1

Remember that consideration may be a disadvantage to one party. From that idea, the law has developed the concept of promissory reliance - that a contract may be formed if one party reasonably relies on the other's promise. That means that he does more than get his heart set on it. He has to do something he wouldn't have done, or fail to do something he would have done, but for the promise. If that reliance causes some loss, he may have an enforceable contract.

"Suppose that rich Uncle Murray loves your kids. On previous occasions he has asked you to buy them expensive presents and has reimbursed you for them. This past summer, Uncle Murray told you he would like you to build a swimming pool for the kids, and send him the bill. You did so, but moody Uncle Murray changed his mind. Now he refuses to pay for the pool, and claims you can't enforce a promise to make a gift. The pool, however, is no longer considered a gift. You acted to your detriment in reasonable reliance on his promise, by taking on the duty to pay for a swimming pool you would not normally have built. Uncle Murray has to pay if you prove that he induced you to build the pool, especially if this understanding was consistent with many previous gifts."

So, in above situation if, JACK can prove the existence of terms of contract, he can sue BOB i.e. if the said purchase of $1,75,000 of Jack's restaurant by Bob is in written terms , BOB can't win the motion saying the contract isn't enforceable.