National University

Legal Aspects of Business I

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LAW 304 - Assignment #3

Answer the following questions. Fully explain each answer. Your answers should be thorough and complete. Fully describe the applicable laws and then apply them to the material facts. Explain your analysis. If you make assumptions of fact, fully explain them. Your responses will be graded upon their correctness and completeness. Complete the following:

Chapter 16, Questions 2 and 5 in the "Questions and Case Problems" section;

Question 2.) Martin made an oral contract with Cresheim Garage to work as its manager for two years. Cresheim wrote Martin a letter stating that the oral contract had been made and setting forth all of its terms. Cresheim later refused to recognize the contract. Martin sued Cresheim for breach of the contract and offered Cresheim's letter in evidence as proof of the contract. Cresheim claimed that the oral contract was not binding because the contract was not in writing and the letter referring to the contract was not a contract but only a letter. Was the contract binding?

Question 5.) Boeing Airplane Co. contracted with Pittsburgh-Des Moines Steel Co. for the latter to construct a super- sonic wind tunnel. R.H. Freitag Manufacturing Co. sold materials to York-Gillespie Co., which subcon- tracted to do part of the work. To persuade Freitag to keep supplying materials on credit, Boeing and the principal contractor both assured Freitag that he would be paid. When Freitag was not paid by the subcontractor, he sued Boeing and the contractor. They defended on the ground that the assurances given Freitag were not written. Decide. What ethical values are involved? [R.H. Freitag Mfg. Co. v. Boeing Airplane Co., 347 P.2d 1074 (Wash.)]

Chapter 18, Questions 5, 13 & 14 in the "Questions and Case Problems" section;

Question 5.)The Tinchers signed a contract to sell land to Creasy. The contract specified that the sales transaction was to be completed in 90 days. At the end of the 90 days, Creasy requested an extension of time. The Tinchers refused to grant an extension and stated that the contract was terminated. Creasy claimed that the 90-day clause was not binding because the con- tract did not state that time was of the essence. Was the contract terminated? [Creasy v. Tincher, 173 S.E.2d 332 (W. Va.)]

question 13.)Union Pacific Railroad's long-term coal-hauling contract with electric utility WEPCO provided that if the railroad is prevented by "an event of Force Majeure" from reloading empty coal cars (after it has delivered coal to WEPCO) with iron ore destined for Geneva, Utah, it can charge the higher rate that the contract makes applicable to shipments that do not involve backhauling. The iron ore that the railroad's freight trains would have picked up in Minnesota was intended for a steel mill in Utah. The steel company was bankrupt in 1999 when the parties signed the contract. In November 2001 the steel mill shut down and closed for good in February 2004. Thereafter, the railroad wrote WEPCO to declare "an event of Force Majeure," and that henceforth it would be charging WEPCO the higher rate applica- ble to shipments without a backhaul. WEPCO sued the railroad for breach of the force majeure provision in the contract, contending that the railroad waited over two plus years to increase rates. The railroad contends that the clause should be interpreted as written. Decide. [Wisconsin Electric Power Co. v. Union Pacific Railroad Co., 557 F.3d 504 (7th Cir.)]

question 14.) Beeson Company made a contract to construct a shopping center for Sartori. Before the work was fully completed, Sartori stopped making the pay- ments to Beeson that the contract required. The contract provided for liquidated damages of $1,000 per day if Beeson failed to substantially complete the project within 300 days of the beginning of con- struction. The contract also provided for a bonus of $1,000 for each day Beeson completed the project ahead of schedule. Beeson stopped working and sued Sartori for the balance due under the contract, just as though it had been fully performed. Sartori defended on the ground that Beeson had not substantially completed the work. Beeson proved that Sartori had been able to rent most of the stores in the center. Was there substantial performance of the contract? If so what would be the measure of damages?

Additional Question:

In letters between the two, Rita Borelli contracted to sell "my car" to Viola Smith for $2,000. It was later shown that Borelli owned two cars. She refused to deliver either car to Smith, and Smith sued Borelli for breach of contract. Borelli raised the defense that the contract was too indefinite to be enforced because it could not be determined from the writing which car was the subject matter of the contract. Is the contract too indefinite to be enforced?