You are an attorney in Garrett's Landing, a small city in one of the southern states. You
Question:
You are an attorney in Garrett's Landing, a small city in one of the southern states. You have just been consulted by Arthur Barlow, proprietor of a florist shop in your city, who tells you the following story:
"Several years ago I went to work for Sam and Martha Stewart as a clerk in their florist shop, over by Good Samaritan Hospital, on Mackenzie Street. I'd only been out of high school a few years, had a few jobs, none of which seemed likely to go anywhere much; this seemed like a chance to learn a business from the inside, and from people who were getting on in years and might be willing to take me in as a partner eventually. Well, the business did well enough, and they paid me a decent salary, so I stayed on, and just when I was getting up enough nerve to ask whether they might be willing to take me in as a partner, Martha died very unexpectedly. Naturally, this threw Sam pretty badly, and for a while there I pretty much ran the business single-handed.
"When Sam got on his feet again I was about to make him an offer when he surprised me by making me one. He said he'd decided to retire, said he thought he might sell his house, go and live with his daughter over in Marshallsburg, and did I want to buy the business? I said I sure did, if the price was right. We talked it over, and he said there were eight years to go on his lease, and he was sure Mrs. Duval, the owner of the building, would agree to his assigning the lease to me, and that he'd sell me the business for $100,000 — that is, $80,000 for the fixtures, office equipment, and inventory and $20,000 for good will. That struck me as a real good price, knowing what I did about the earnings of the shop. I said the figure was all right with me, provided I could pay him $20,000 now and $20,000 a year over the next four years; that way I could pay him out of the earnings of the business. He said that was acceptable to him, and he showed me the bill of sale that Jonah Cartwright's lawyer had drawn up nearly 30 years ago when old Cartwright sold the business to Sam. (It was called Good Samaritan Florist Shop then, just like it is now.) I read it through and said it sounded okay to me and told Sam to draw up one just like it, and that would be our contract. I raised the $20,000 by borrowing from my uncle, and I took over the shop.
"Well, all that happened last March, and since then I've been running the shop myself, with one helper. So far it's gone pretty good. This week, though, I got a real shock. The Board of Trustees of Good Samaritan Hospital announced — maybe you saw the story in the paper? — that the hospital was merging with Mercy Hospital, over on the other side of town, that a new wing would be built on Mercy, and the old Good Samaritan Building would be torn down. I don't have to tell you, I guess, what a bad piece of news that is for me. My shop is in an old part of town, and the best part of my business is from people who come to visit sick folks at the hospital; both the new shopping centers in town have florists, and I can't compete with them for the suburban trade. Without the hospital, I'm dead. It's been there for 80 years; I never dreamed it wouldn't be there forever. What really gravels me, though, is old Sam Stewart. I can see now why he made me such a good price for the business. I'm sure he knew the hospital was planning to close. A decision like that, it isn't made overnight, they must have been considering it as long ago as last March. And Sam's cousin, Maureen Leonard, she's a doctor at Good Samaritan, and she's on the governing board there. Sam saw the handwriting on the wall and unloaded on me, I know he did. And what I want to know is, what can I do about it?"
Before attempting to answer his question, you ask Barlow to show you the "Bill of Sale," signed by Stewart and Barlow as Seller and Buyer. It recites that Stewart is selling to Barlow "all the assets, stock in trade, fixtures, and good will of the business presently operated by Seller as 'Good Samaritan Flower Shop,' on Mackenzie Street, in Garrett's Landing." It also contains the following language: "Seller represents and warrants that he is the owner of, and has full power to convey, the property which is the subject of this Bill of Sale. Seller makes no other representations or warranties whatever with respect to this property, and Buyer's acceptance of this Bill of Sale so acknowledges." The document also contains a promise by Barlow to pay Stewart $20,000 on delivery and $20,000 a year for the next four years; the promise is not qualified or conditioned by any reference to the earnings of the business.
What causes of action could Mr. Barlow assert to rescind the agreement with Mr. Stewart? Evaluate the likelihood of success of these causes of action?
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts