CONTRACTS ANALYSIS CASE STUDY
Marshall Petersen and his wife, Gloria, began visiting the
Sunday school class you teach in Huntsville, Alabama, about six months ago.
Marshall is not a Christian, but with the encouragement of his wife, who is a
believer, he says he is beginning to explore the faith.
After his first visit to the class, you spent some time
talking with Marshall and you discovered that he owns a small, local health
food products business, and that he is interested in growing the business by
adding some new product lines. You informed him of the high antioxidant
qualities of the Muscadine grapes your family’s produce company sells, and you
asked him if he might be interested in promoting either the grapes themselves
or the various products developed using their seeds. Marshall was interested,
and a few days later you supplied him with some samples. The samples turned out
to be a very popular item with his regular customers, so he placed a modest
phone order with your company. Over time, Marshall placed regular, increasing
phone orders, and he began investing heavily in advertising for the Muscadine
products at his store. Your company has faithfully delivered everything
requested, promptly, and at consistent prices. You typically sent an invoice
with each delivery, requiring payment within 30 days, and though Marshall has
frequently been late making payment, he has generally paid each invoice within
45 to 60 days. You have elected not to charge him any interest or penalties,
though your invoices state that you reserve the right to do so.
On one occasion when your son, a part-time deliveryman for
your company, delivered some product to Marshall’s store, Marshall handed your
son a requirements contract and asked him to sign it on behalf of your company.
The contract includes a guaranteed price schedule consistent with what he had
been paying. Marshall told him that it was “just a formality” to guarantee a
continuing business relationship. Your son signed the contract and gave it back
to Marshall. Neither Marshall nor your son mentioned the contract to you. Your
son was 17 years old at the time, but turned 18 last month.
After a columnist for The Huffington Post wrote an article
praising the antioxidant qualities of Muscadines, the demand for Muscadines
skyrocketed nationwide. Your company became inundated with orders, far in
excess of your ability to meet the demand. A company in Texas offered to pay
you twice the going rate for your products, but the company also required you
to sign an output contract as a part of the deal.
Though this contract would represent a substantial financial
windfall for your company, you felt bad about potentially leaving Marshall out
to dry. You called Marshall, advised him of the offer you had received, and you
suggested to him the names of other reputable potential suppliers in the area
to try and soften the blow.
To your surprise, Marshall became very angry and told you
that he expected you to continue to supply him with all the product he needs,
when he needs it, and at the prices he had always paid, per the requirements
contract between your businesses and in accordance with an implied duty of good
faith and fair dealing that had evolved based on your ongoing business
relationship. When you asked what requirements contract he was talking about,
he faxed you a copy of the contract that had been signed by your son.
CONTRACTS ANALYSIS INSTRUCTIONS
Review the Contracts Analysis Case Study prior to answering
the questions listed below.
Assignment:
Write a legal analysis of at least 1,000 words that answers
the following questions from both a legal and a spiritual perspective:
1. What
should you do about continuing to do business with Marshall?
2. If you
elect to stop doing business with Marshall, what legal causes of action might
he bring against your company, what damages or remedies might he seek, and what
legal defenses might your company have?
3. If you
stop doing business with Marshall, what are the potential impacts on Marshall’s
continued exploration of his faith? What biblical options are available for
resolving your disputes with Marshall?
Your analysis must be supported by at least 3 legal or
scholarly sources, cited in proper APA format. The assignment must also be
formatted in current APA format, but you do not need to include an abstract.
In connection with this assignment, you may want to research
the following legal concepts and incorporate what you find in your analysis if
you consider them relevant:
• Covenants
of good faith and fair dealing;
o See,
e.g., Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396 (1997).
• Minor’s
capacity to contract;
• Fraud in
the execution of a contract;
• An
employee’s capacity to bind a company by contract;
• Section
2-306 of the Uniform Commercial Code;
• Implied
contracts;
• Promissory
Estoppel;
• Custom
and practice between merchants;
• Biblical
dispute resolution; and
• Any other
legal concepts you believe may be relevant.
Submit this assignment via SafeAssign by 11:59 p.m. (ET) on
Sunday of Module/Week 3.
