Show Me My Money (Reisenfeld & Company v. The Network Group Inc., p. 313)Why does the court see this case as involving a quasi-contract as opposed to an actual contract? What other case law does the court rely on in finding precedent/support for compensating Reisenfeld? Does this decision appear to follow the golden rule guideline set forth in Chapter 2 (pp. 27 and 28)? Describe another example of an implied-in-fact or quasi-contract that you have experienced or is mentioned in the text. Note: please read all the information correctly before you begin the assignment I have also copy and paste pages 27 and 28 that you would need to complete the assignment. CASE 13-3 REISENFELD & CO. v. THE NETWORK GROUP, INC.;BUILDERS SQUARE, INC.; KMART CORP. U.S. COURT OF APPEALS FOR THE SIXTH CIRCUIT 277 F.3d 856 U.S. App. (2002) Network Group (“Network”) was contracted by BSI to assist in selling or subleasing closed Kmart stores in Ohio. A few years later, Network entered into a commission agreement with Reisenfeld, a real estate broker for Dick’s Clothing and Sporting Goods (“Dicks”). Dicks then subleased two stores from BSI. According to executed assignment and assumption agreements signed in November of 1994, BSI was to pay a commission to Network. Network was then responsible, pursuant to the commission agreement with Reisenfeld, to pay a commission of $1 per square foot to Reisenfeld. There was no direct agreement made between BSI and Reisenfeld. During this time, Network’s sole shareholder was defrauding BSI. This shareholder was convicted of several criminal charges stemming from his fraudulent acts. Network was ordered by the district court to disgorge any commissions received from BSI, and BSI was relieved of any duty to pay additional commissions to Network. As such, Reisenfeld never received his commission related to the Dicks sublease. Reisenfeld sued in state court for the $160,320 in commissions he had not been paid. In addition to suing Network, Reisenfeld also named BSI as a defendant. The suit alleged, among other things, that based on a theory of quasi-contracts, BSI was jointly and severally liable for the commission.JUDGE BOOGS: . . . A contract implied-in-law, or “quasi-contract,” is not a true contract, but instead a liability imposed by courts in order to prevent unjust enrichment. … Under Ohio law, there are three elements for a quasi-contract claim. There must be: (1) a benefit conferred by the plaintiff upon the defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances where it would be unjust to do so without payment. … There is no disagreement as to the first two requirements. It is clear that Reisenfeld’s work as broker benefited BSI and that BSI was aware of the work Reisenfeld was doing. The disagreement rests on the third requirement—whether it would be unjust for BSI to retain the benefit it received without paying Reisenfeld for it. … Unreported Ohio Court of Appeals cases support the proposition that, in the contractor/subcontractor context, when the subcontractor is not paid by the contractor and the owner has not paid the contractor for the aspect of the job at issue, the subcontractor can look to the owner for payment under a theory of unjust enrichment. … Further, another Ohio case, in dicta, supports the proposition that nonpayment by the owner would make payment on an unjust enrichment theory appropriate. … [H]ere, BSI has not paid Network on this contract, and the losses suffered by BSI at Network’s hands were “soft” losses of additional profits Network might have made, rather than quantifiable losses (due, for example, to theft) that might be held to constitute payment. … Therefore, though not controlling of this matter, the Ohio contractor/subcontractor cases involving property owners who have not paid the contractors provide persuasive support for the proposition that Reisenfeld may hold BSI accountable on a theory of quasi-contract for the benefits it provided to BSI, and for which it was not compensated by Network. … Of course, liability under quasi-contract does not necessarily imply liability for the amount of money promised Reisenfeld under its contract with Network. Instead, the proper measure of liability is the reasonable value of the services Reisenfeld provided to BSI. We must therefore vacate the district court’s order and remand the case for a determination of value. REMANDED for consideration of damages. CRITICAL THINKINGWhat words or phrases important to the reasoning of this decision might be ambiguous? What alternate definitions are possible? How does this ruling appear to be defining the words or phrases? Would another choice affect the acceptability of the conclusion?Provide an example of one piece of new evidence that might lead Judge Boggs to a different conclusion, and explain how this information changes the consideration. ETHICAL DECISION MAKINGDoes this ruling establish a positive precedent in terms of the potential effect on future participants in disputes of this sort?Does this decision appear to follow the Golden Rule guideline? Why or why not? How is this question particularly relative to the person making the judgment, and what sorts of interpersonal differences might lead to a variety of responses?p. 314VALID, VOID, VOIDABLE, AND UNENFORCEABLE CONTRACTSWhat everyone hopes to enter into, of course, is a validA term applied to a contract that includes all four elements of a contract—agreement (offer and acceptance), consideration, contractual capacity, and legal object—and thus is enforceable. contract, one that contains all the legal elements set forth in the beginning of this chapter. As a general rule, a valid contract is one that will be enforced. However, sometimes a contract may be valid yet unenforceableA term applied to a contract that, because of a law, cannot be enforced by the courts. when a law prohibits the courts from enforcing it. The statute of frauds (Chapter 18) requires that certain contracts must be evidenced by a writing before they can be enforced. Similarly, the statute of limitations mandates that an action for breach of contract must be brought within a set period of time, thereby limiting enforceability. A voidA term applied to a contract that is not valid because its object is illegal or it has a defect that is so serious that it is not a contract. contract is in effect not a contract at all. Either its object is illegal or it has some defect so serious that it is not a contract. If you entered into a contract with an assassin to kill your business law professor, that contract would be void because it is obviously illegal to carry out its terms. A contract is voidableA term applied to a contract that one or both parties have the ability to either withdraw from or enforce. if one or both parties has the ability to either withdraw from the contract or enforce it. If the parties discover the contract is voidable after one or both have partially performed, and one party chooses to have the contract terminated, both parties must return anything they had already exchanged under the agreement so that they will be restored to the condition they were in at the time they entered into it. Certain types of errors in the formation of a contract can make it voidable. Typically, the person who can void the contract is the person the court is attempting to protect, or the party the court believes might be taken advantage of by the other. For example, contracts by minors are usually voidable by the minor (Chapter 16). Contracts entered into as a result of fraud, duress, or undue influence, as described in Chapter 17, may be voided by the innocent party. In the opening scenario, Morrow attempted to prove that the Dispute Resolution Program was a voidable contract because it did not include mutual promises, could be changed at any time without approval, and lacked genuine assent from the employees.EXECUTED VERSUS EXECUTORY CONTRACTSOnce all the terms of the contract have been fully performed, the contract has been executedA term applied to a contract whose terms have all been fully performed.. As long as some of the terms have not yet been performed, the contract is executoryA term applied to a contract whose terms have not all been fully performed.. If Randolph hires Carmine to paint his garage on Saturday for $800, with $200 paid as a down payment and the balance due on completion of the job, the contract becomes executory as soon as they reach agreement. When Randolph makes the down payment and Carmine’s work is half complete, it is still executory. Once the painting has been finished and the final payment made, the contract is an executed contract. In the opening scenario, Hallmark assumed that any employee who remained at the company had executed the contract.FORMAL VERSUS INFORMAL CONTRACTSContracts can be formal or informal. Formal contractsA contract that must have a special form or must be created in a specific manner. have a special form or must be created in a specific manner. The Restatement (Second) of Contracts identifies the following four types of formal contracts: (1) contracts under seal, (2) recognizances, (3) letters of credit, and (4) negotiable instruments. When people hear the term formal contract, what often comes to mind is a contract under seal, named in the days when contracts were sealed with a piece of soft wax into which an impression was made. Today, sealed contracts may still be sealed with wax or some other soft substance, but they are more likely to be simply identified with the word seal or the letters L.S. (an abbreviation for locus sigilli, which means “the place for the seal”) at the end. Preprinted contract forms with a printed seal can be purchased today, and parties using them are presumed, without evidence to the contrary, to be adopting the seal for the contract.p. 315 COMPARING THE LAW OF OTHER COUNTRIES A Special Kind of Contract in IraqWhile most foreign states recognize the marriage contract, a different kind of marriage contract, sanctioned by Shiite clerics, is legal in Iraq. Called muta’a (“contract for a pleasure marriage”), it can last anywhere from an hour to 10 years and is renewable. Under the contract, the male typically receives sexual intimacy, in exchange for which the woman receives money. For a one-hour contract, she can generally expect the equivalent of $100; for a longer-term arrangement, $200 a month is typical, although she might receive more. The couple agrees to not have children, and if the woman does get pregnant, she can have an abortion but then must pay a fine to a cleric. The male can usually void the contract before the term ends, but the female can do so only if such a provision is negotiated when the contract is formed. Muta’as originally developed as a way for widows and divorced women to earn a living and for couples whose parents would not allow a permanent marriage to be together. Many women’s rights advocates, however, see these contracts as exploiting women and are opposed to their increased popularity after the fall of Saddam Hussein in 2003. But as the war in Iraq continues to produce greater numbers of widows, increasing numbers of them are turning to this method of putting food on the table for themselves and their children.Source: Rick Jervic, “’Pleasure Marriages’ Regain Popularity in Iraq,” USA Today, May 5, 2005, p. 8A; Bobby Caina Calvin, “In Shiite Iraq, Temporary Marriage May Be Rising,” McClatchy News,www.mcclatchydc.com/103/story/21584.html (accessed June 9, 2009). PP 27-28 For instance, a manager might be deciding whether to fire an employee whose performance is less than impressive. In making this decision, the manager explores alternative visions of key values such as justice and efficiency and then makes choices about which action to take. Values and their alternative meanings are often the foundation for different ethical decisions. To avoid ambiguity, many companies summarize their values in brief statements. Nortel Networks’ statement of core values, shown in Exhibit 2-7, identifies for Nortel’s stakeholders which positive abstractions guide its business decisions.HOW DO WE MAKE ETHICAL DECISIONS?Making ethical decisions has always been one of our most confusing and important human challenges. In the process of meeting this challenge, we have discovered a few general, ethical guidelines to assist us. An ethical guideline provides one path to ethical conduct. Notice that all three ethical guidelines below reflect a central principle of business ethics: consideration for stakeholders.The Golden Rule. The idea that we should interact with other people in a manner consistent with the way we would like them to interact with us has deep historical roots. Both Confucius and Aristotle suggested versions of that identical guideline. One scholar has identified six ways the Golden Rule can be interpreted: 1. Do to others as you want them to gratify you.2. Be considerate of others’ feelings as you want them to be considerate of yours.3. Treat others as persons of rational dignity like you.4. Extend brotherly or sisterly love to others, as you would want them to do to you.5. Treat others according to moral insight, as you would have others treat you.6. Do to others as God wants you to do to them. Exhibit 2-7Core Values: A Guide to Ethical Business Practice NORTEL NETWORKS’ CORE VALUES 1. We create superior value for our customers.2. We work to provide shareholder value.3. Our people are our strength.4. We share one vision. We are one team.5. We have only one standard—excellence.6. We embrace change and reward innovation.7. We fulfill our commitments and act with integrity. New ways of organizing people and work within the corporation are giving each of us more decision-making responsibility. Given the complexity and constantly changing nature of our work and our world, no book of hard-and-fast rules—however long and detailed—could ever adequately cover all the dilemmas people face. In this context, every Nortel Networks’ employee is asked to take leadership in ethical decision making. In most situations, our personal values and honesty will guide us to the right decision. But in our capacity as employees and representatives of Nortel Networks, we must also always consider how our actions affect the integrity and credibility of the corporation as a whole. Our business ethics must reflect the standard of conduct outlined in this document—a standard grounded in the corporation’s values and governing Nortel Networks’ relationships with all stakeholders. Regardless of the version of the Golden Rule we use, this guideline urges us to be aware that other people—their rights and needs—matter.p. 28 Let’s return to the ethical problem outlined at the beginning of this chapter. Using the Golden Rule as your ethical guideline, how would you behave? Would you hide the information about the chemicals used to make your toothpaste, or would you disclose the information? Put yourself in the consumer’s position. As a consumer, would you want to know that your toothpaste contained a potentially toxic chemical? Are there other stakeholders in the organization whose interests should be the focus of your application of the Golden Rule? The focus on others that is the foundation of the Golden Rule is also clearly reflected in a second ethical guideline: the public disclosure test.Public Disclosure Test. Applying what you have learned to the ethical dilemma faced by the Chinese toothpaste manufacturers, suppose you decide to ignore the complaints about the use of diethylene glycol instead of glycerin. Now suppose that your decision to ignore the complaints is printed in the newspaper. How would the public react? How would you feel about the public’s having full knowledge of what you intend to do? We tend to care about what others think about us as ethical agents. Stop for a moment and think of corporations that failed to apply the public disclosure test and generated negative reactions as a result. For example, in July 2006, a company named Trafigura attempted to dump waste from one of its ships at a port in Holland. The ship initially reported that it was dumping “regular slops,” or wastewater from the ship’s hold, and agreed to pay $15,000. As the port’s workers began to empty the waste, they noticed that the waste had an unusual consistency and smell. Upon testing, the workers discovered that the waste was toxic and would cost $300,000 to treat and dispose of properly. Trafigura refused to pay, insisting that the waste was not toxic. Trafigura had its waste reloaded onto the ship and left without paying to dispose of any of the waste. The ship then headed toward Africa, where Trafigura had reportedly found a company capable of disposing the waste. The disposal company, called Tommy, was allegedly a shell corporation created by Trafigura specifically for this job. Tommy charged Trafigura a mere $20,000 to dispose of the toxic waste. The waste was pumped from the ship into trucks that drove into Abidjan, an extremely poor part of the Ivory Coast, where the waste was dumped in 18 different residential areas during the night. The waste was not treated in any way. Over the course of the following days, people throughout Abidjan suffered from headaches, nausea, open sores on their skin, and even death. At least 10 people died from exposure to the toxic waste, and tens of thousands of people were injured. When the international community heard that tons of toxic waste had been dumped in impoverished residential areas, the outcry was noticeable. Trafigura disclaimed all blame, saying first that the waste was not toxic and second that the company at fault was Tommy, the company that physically dumped the waste in Abidjan. As a result of the companies’ actions, criminal charges were filed against some of the key players. In October 2008, the Nigerian man who hired the trucks that dumped the waste was sentenced to 20 years in prison, and an Ivorian port official was sentenced to 5 years in prison. Seven other port and government officials were acquitted at trial.
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